05/06/2008
In today's precarious industrial economy, outsourcing may be the solution your company's looking for.
APICS e-News
In this two-part series, we explore the various factors that contribute to production equipment maintenance, defined as a noncore competency, and examine how companies can successfully outsource this key business function. Part 1 of this series looked at defining core competencies in a changing economic climate and identified some of the benefits to outsourcing equipment maintenance in a slow economy. Part 2 examines how to weather the business and employee transitions that accompany outsourcing production equipment maintenance.
During times of economic downturn, plant managers seem to deal with one fire after another. It seems like everything on their plates is an emergency. Additionally, little margin for operating error exists, because any negative activity will have a large impact on plant performance.
Plant managers must keep a tight grip on the plant's rudder and ensure everything runs according to plan. However, plant managers can only afford to focus their attention on the core activities. If maintenance is outsourced to a reliable supplier, there is one less issue management must deal with on an incident-by-incident basis. With equipment maintenance in the hands of professionals, managers can apply all necessary resources to the other hot spots in the organization.
In a struggling economy, plants are running very close to the edge. There is significant risk when anything goes wrong with production, and strategic initiatives are generally directed toward trying to get the most with the least and managing fires as they arise. The risks associated with machine failure are great, due in large part to reduced staff, both in production as well as in support areas; reduced or stopped replenishment purchasing and, subsequently, "bare bones" spare parts inventories; scaled back preventive maintenance (even for rudimentary tasks) due to limited staff and time to focus on anything but machine-down situations.
It is imperative that maintenance personnel do not fall down in their responsibility to ensure that equipment is in good working order. Having a professional maintenance organization responsible for machinery takes much of the pressure and risk out of ensuring that production equipment is ready to run at all times.
The risk associated with reduced morale can also be minimized. There is usually a considerable amount of personal stress and cultural upheaval associated with production schedule cutbacks and staff reductions. The outsourcing decision also brings about stress within the organization. Too often, plant managers decide not to outsource during difficult financial times instead of using the difficult times to make appropriate changes—including outsourcing.
However, it is far easier for employees to get through the emotional changes at one time rather than endure multiple changes made in stages. When stress and tension are dealt with up front, the plant workers can prepare to move on with the business of making money.
In down economies, plant managers usually cut all fat that may exist in the staff. Often, the cuts slice into muscle as well, including the technical and support resources and maintenance, which are essential to the success of the plant. This situation is more pronounced in focus factories and presents a significant problem for smaller facilities.
Maintenance knowledge in these plants is generally restricted to the combined experience and expertise of the current staff, and keeping senior-level technical employees during slow economic times can be costly. Tapping into the knowledge and expertise of a much larger, professional maintenance organization helps to alleviate the dependency on limited internal resources, providing "big plant" resources without the high costs associated with that level of expertise.
The most important reason to consider outsourcing maintenance during an economic downturn is that the plant will need all the processes, systems, and methodologies of effective maintenance firmly in place when business comes back. If ineffective, inefficient maintenance practices are perpetuated during slow times, the speed and pace of the recovery will not enable best practices to be established as business returns. Maintenance managers will prove woefully inadequate to handle the demands of increased production and meet the greater need for equipment reliability.
Market share gains will be achieved on the upswing by those plants that are best prepared to handle the influx of new orders. By installing maintenance best practices during slow times, companies can be fully prepared and ready to provide the increased service levels demanded by the equipment. Additionally, companies that are prepared for an economic upswing will be ahead of the competition in terms of responsiveness to new orders. Dealing with all the various outsourcing issues during plant slow times enables a careful and well-thought-out maintenance transition.
By outsourcing maintenance during slow business cycles, significant improvement can be made with little responsibility falling on the internal staff. Internal employees can focus on the core issues of maintaining or growing market share through the tough times, while the professional maintenance contractor can focus on ensuring the equipment will run when needed.
Outsourcing equipment maintenance enables plants to better handle the critical profitability issues that must be addressed in slow times while simultaneously preparing the plant to be more efficient and productive when the economy turns. It is an idea worth investigating.