Reliability and maintenance (RAM) are being leveraged worldwide as competitive advantages in the hydrocarbon processing industry (HPI). Yet, most manufacturing operations continue to struggle with unreliability and subsequently high maintenance costs. The change in the global business environment has driven RAM performance to new levels, surpassing benchmarks that have been quoted for decades.
A leading performance improvement company for the global energy industry has collected and analyzed more than 30 years of performance data through its International Study of Plant Reliability and Maintenance Effectiveness (RAM Study).1 The data shows that there are two distinct cultures in the RAM communitytraditional and progressive.
The traditional culture believes that failures are inevitable. Companies operating in a traditional culture view equipment failure as normal, and they behave passively as if they have no influence over the outcome. In contrast, companies operating in a progressive culture strive for failure-free operations; everyone is focused on defect elimination and uninterrupted operation.
The focus in a traditional manufacturing environment has been on driving maintenance costs down. Rather than eliminating the root cause of these costs, traditionalists focus on optimizing their reactive environment, as shown in Fig. 1.
Fig. 1. RAM optimization with corresponding
Companies operating in this mode are plagued by perpetual equipment failures, and constantly changing priorities and maintenance schedules. Although there is a focus on driving down maintenance expenses, these costs are primarily determined by the volume of maintenance work, which is largely uncontrollable.
Best performers in this environment have maintenance costs that approach 2% of the plant replacement value (PRV). While this figure was quoted for decades as world class, at best, it is average performance in the present global environment.
Traditional maintenance cultures suffer from frequent production interruptions, subsequent production limitations, excessive offspec product generation, and, ultimately, unsustainable margins that can quickly turn into operating losses. Result: Capital replacement costs are considerably higher, thus further eroding company profits.
Penny wise and pound foolish traditionalist
The consequences of continuing to operate in a traditional maintenance environment are many. A larger maintenance organization must deal with excessive equipment repairs and replacements that come with a larger workforce and higher number of failures. Total direct costs in the form of craft labor and repair materials are significantly higher in this environment. The loss of valuable production capacity is often overlooked in the traditional maintenance culture, where all eyes are focused on maintenance costs.
The old adage penny wise and pound foolish is applicable here. While trying to minimize maintenance costs (penny wise), untold profits are lost (pound foolish) due to maintenance-related downtime. Additionally, traditional maintenance organizations lack discipline relative to controlling turnaround scope. Everything imaginable gets loaded into the turnaround, so their durations are longer even though they occur more frequently.
The focus in the progressive manufacturing environment is on driving up reliability. Progressives recognize that the root cause of maintenance cost is equipment failure; consequently, these companies focus on defect elimination.
Although these companies also streamline maintenance work processes to optimize efficiency, they are not distracted by continuous equipment failures. Such groups know that each 1% increase in mechanical availability results in a 10% reduction in maintenance cost.
The best performers have maintenance costs approaching 1% of PRV. And mechanical availability in progressive maintenance environments is 97% or higher, with the best performers approaching 99%, which includes annualized downtime for turnarounds, as shown in Fig. 2.
Minimal downtime for the progressives
The most significant benefit of a progressive culture is the reduction in maintenance-related downtime caused largely by corrective maintenance due to unplanned equipment failures. Total maintenance downtime is also influenced by planned downtime, such as turnarounds, as shown in Fig. 3.
Fig. 3. Best performers vs. others in planned
and unplanned maintenance activities as
recorded downtime (equipment unavailability).
Progressive maintenance organizations have reduced the frequency of turnarounds to an average of five to seven years, in comparison to traditional maintenance organizations that do so every year. Progressive organizations have also controlled the duration of their turnarounds by limiting the turnaround scope to work that can only be done during a turnaround.
REACTIVE VS. PROACTIVE MAINTENANCE
The type of maintenance work performed by traditional organizations is reactive in nature; something is broken, and it must be repaired or replaced. By contrast, the majority of work in a progressive environment is proactive, continuously monitoring the condition of critical equipment so problems can be resolved prior to failure. If you viewed the entire spectrum of maintenance behaviors from totally reactive to totally proactive, you would find a bell-shaped curve with a long tail on the right side, representing the large number of traditional maintenance organizations in transition, as shown in Fig. 4. On the left side of Fig. 4, the curve is rather steep, as there is a limit as to how good you can be. Every manufacturing site is somewhere on that continuum, with most moving incrementally in the proactive direction. Those at the far end of the reactive side of the curve continue to shut down, as their operation is no longer competitive, and it cannot be sustained.
Fig. 4. RAM performance distribution.
Risk averse vs. Risk minimization
Traditional maintenance organizations are largely risk averse; fear of change drives their behavior. Progressive maintenance organizations are constantly working to improve, and do not accept the status quo. As a result, progressive maintenance organizations continue to improve, while traditional maintenance organizations fall further behind. Manufacturing organizations are most vulnerable when shutting down or starting up equipment. Being able to operate in steady-state conditions within a progressive maintenance culture enables companies to minimize exposure and subsequent risk.
PATH TO WORLD-CLASS PERFORMANCE
World-class manufacturers achieve high reliability at lower cost. These companies recognize the value of reliable operations and focus on failure elimination. These best performers build reliability into their corporate strategy and compete effectively in the global marketplace.
From an operational perspective, a progressive maintenance culture offers numerous advantages. The reduction in downtime achieved through the increase in equipment reliability provides additional (spare) capacity. Companies with this advantage enjoy greater margins on their products as maintenance costs are distributed across greater production.
In addition, superior product quality can be achieved and sustained through uninterrupted operations, leading to a net result of increased revenue and greater profitability. The detrimental effects of operating in a traditional maintenance culture can make the difference between staying in business and being forced out. Because the majority of the competition continues to suffer from reactive maintenance, progressive organizations can afford to ship their products anywhere in the world and undercut local producers.
However, the world is changing and becoming more dynamic. While initial indications revealed that progressive organizations were more likely found in developing regions, established manufacturers are beginning to embrace reliability. Soon, no one will be immune to global pressures. It takes years to transition from a traditional maintenance environment to a progressive one. Every day you delay puts your operation more at risk. The path to world-class RAM performance begins with the first step. What are you waiting for? HP
Solomon Associates is the leading performance improvement company for the global energy industry and the author of this study.
Al Poling is a project manager with Solomon Associates, where he works with clients to identify performance improvement opportunities through participation in The International Study of Plant Reliability and Maintenance Effectiveness. He started his technical career as a maintenance and reliability engineer, and has held plant and corporate leadership roles in maintenance and reliability with several companies. Mr. Poling is a certified maintenance and reliability professional (CMRP). He served as the technical director for the Society for Maintenance and Reliability Professionals (SMRP) from 2008 to 2010. Mr. Poling has presented at numerous reliability and maintenance conferences nationally and internationally. Additionally, he has published several white papers and articles on reliability, maintenance and related topics.