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Making the business case for reliability

06.01.2012  |  Hollywood, Paula,  ARC Advisory Group, Dedham, MA

Keywords: [maintenance] [reliability programs] [automation] [asset management] [reliability engineers] [risk-based inspections] [reliability-centered maintenance] [enterprise asset management]

The global process industries lose $20 billion, or 5% annual production, due to unscheduled downtime and poor quality. ARC estimates that almost 80% of these losses are preventable. In fact, 40% of these losses are largely attributable to human error. The greater use of automation may have reduced the need for manpower. Conversely, maintenance costs and cost of ownership have increased under these conditions. Ineffective maintenance accounts for $60 billion spent annually. In addition, manufacturers are under pressure to place more emphasis on safety and environmental impact.

Reliability and asset performance management

The “if it isn’t broke, don’t fix it” approach to maintenance is a thing of the past. The increased amount and complexity of automation equipment in use by processing plants requires a higher order approach to maintenance. Maintenance costs are a significant component of total operating costs of all process manufacturing plants, representing about 15% to 60% depending on the industry segment.

A maintenance strategy should be driven by an organization’s overall business goals. It should be properly aligned with the associated business strategy. This includes a clear understanding of the benefits and costs associated with the initiative, a cultural commitment to implementing the results, and a commitment to update the program on a continual basis.

In asset management terms, “reliability” refers to the probability that an asset will function as intended, over a specified period, under a specified set of conditions. As a component of a comprehensive asset-performance management (APM) strategy, reliability focuses on optimizing asset availability and utilization.

From a reliability perspective, adhering to an APM strategy can improve workforce and financial performance. With a combined view of asset availability and other operational constraints, workers can make information-driven decisions. APM also provides key performance indicators for tracking the effectiveness of the programs in concert with each other.

In its simplest form, APM integrates and analyzes information from various reliability applications such as reliability-centered maintenance (RCM), risk-based inspection (RBI), preventive maintenance (PM), enterprise asset management (EAM) and other plant asset management (PAM) solutions to provide a comprehensive view of asset reliability and enable reliability to be evaluated against a multitude of benchmarks.

ARC recently conducted a web survey of end users in the process industries to learn more about their experiences with reliability initiatives. We asked end users to characterize the status of their reliability initiatives, the drivers behind them, how they were implemented, what worked, what didn’t work, and the metrics applied. Survey respondents included reliability engineers, managers or coordinators, operations managers, maintenance managers, technicians or planners, facilities managers, and C-level decision makers from a variety of industries. We report our findings here.

  Answers to survey question, Do you have a
  strategy and plan for sustaining reliability at your
  plant?



Reliability and the bottom line

Reliability initiatives frequently require resource allocation or, at minimum, a re-allocation of financial, human and/or equipment resources. To gain the C-level support required for such a substantial undertaking, ARC recommends developing a business case that outlines the objectives and resource requirements and quantifies the business benefits. Support from C-level executives is critical, since they both control the purse strings and have the authority to affect the organizational transformation required for a positive outcome.

Decision makers need to understand the impact of reliability on the bottom line. The business case should include a realistic assessment of present circumstances compared with the outlook on the enterprise following implementation. It may be advisable to enlist the services of an objective third party to do the assessment and to make recommendations based on industry best practices. Clearly defined strategic goals, and the associated business risks and benefits, should be presented in financial terms—the language of business. Potential revenue growth from increased uptime and reduced maintenance, labor, inventory, energy and insurance costs that the reliability program can provide should be documented. The business case should also include the costs and risks of maintaining status quo. A documented business case also demonstrates the belief that a reliability initiative will have a positive, measureable and sustainable impact on business results.

More than 40% of survey respondents indicated they had a strategy and plan for sustaining reliability at their facility, supported by a documented business case. The minority reported their strategy was not documented, and was thus less likely to produce the intended results. In ARC’s view, embarking on a reliability initiative without first examining the impact on all affected areas of the plant is a recipe for failure. HP

The author

Paula Hollywood has been covering field instrumentation and other automation technologies for over 30 years. She currently focuses on enabling technologies and strategies for industrial asset performance management. 




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Gary Prager
06.13.2012

Excellent overview of the need for comprehensive reliability programs in the process industries.

I've always felt that reliability and maintainability should be part of undergraduate engineering programs such as chemical engineering and mechanical engineering. Electronic components seem to be the only areas involved in RAM on the college level.

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