01/01/2009
Outsource Maintenance
Twin Plant News
A bad economy may be the best reason to outsource equipment maintenance.
One U.S. company, Illinois-based Advanced Technology Services, has opened a Mexico headquarters in Monterrey, N.L. and branches in four other Mexico cities to provide outsourced maintenance in that country. Advanced Technology Services, Inc. is the industry leader in managed production equipment maintenance, industrial parts repair and IT solutions. ATS provides expertise in factory production asset management through the local skilled workforce for established and prospective ATS customers conducting business in Mexico. The Mexico operation marks the first step in the company’s international expansion plan.
Founded in 1985 as an offshoot of Caterpillar, ATS employs more than 2,200 people across the United States and is a member of the National Association of Manufacturers. ATS is headquartered in Peoria, Ill.
In today’s economy, business and industry are tightening belts wherever possible and moving into survival mode. All non-essential functions have been cut or eliminated. The short-term view would seem to make it more difficult for managers to consider outsourcing. How can outsourcing provide return on investment in this economy? ATS President Jeffrey Owens says plant managers can actually maintain or increase production levels at a lower cost by outsourcing maintenance to the experts.
Effective maintenance can add 5 to 10 percent to the plant’s bottom-line profitability by reducing the downtime of production equipment. If the equipment is not offline for repair, it will be more productive.
Example
A major remanufacturer in Mexico was plagued with excessive machine downtime which was restricting total production capability. Average downtime was around 15 hours per machine throughout the plant. And critical machines were down an average of 20 hours per month. The remanufacturer needed a solution to increase output.
ATS developed a new maintenance program that used root cause analysis and data-driven facts to determine whether to repair, rebuild or replace current equipment. ATS’ suite of predictive tools including thermography, vibration analysis and ultrasound were incorporated into the maintenance process. Equipment history files and OEM recommendations were brought together to form an extensive data library. This aided ATS in its preventative maintenance efforts. Safety metrics were also reviewed and plans for improvement were quickly implemented.
For maximum effectiveness, the maintenance team was closely integrated with the manufacturer’s production team. This allowed ATS to work around production schedules to keep machines up and running. In addition to maintenance, ATS drove continuous productivity improvements throughout the plant with Green Belt technicians on several Six Sigma projects. ATS’ use of the Six Sigma concept helped its customers achieve higher productivity.
As a result, ATS has helped this manufacturer accomplish the following:
- To ensure mean time to repair is less than one hour.
Achieve machine availability greater than 99.15 percent.
- Increase machine availability by 25 percent on average throughout the plant.
- Reduce the total maintenance cost to the manufacturer by more than $125,000 per month.
- Attain a total annual savings of $1.5 million.
- Go more than 365 days without a lost-time accident, which was the manufacturer’s number one concern.
A common outsourcing mistake is focusing solely on labor. The mistaken belief is that the service provider can do the maintenance better than the in-house staff. However, ATS addresses the entire maintenance process. In addition to the labor component, improvement should be included in each of the maintenance processes (i.e., work order process, proactive maintenance process, parts process, etc), maintenance leadership, maintenance spare parts and supplies, a Computerized Maintenance Management System (CMMS), and maintenance tools and technologies.
And turning maintenance over to someone else frees management to concentrate on the company’s core competencies.
Other benefits include:
- Reduced total cost to produce.
- Fewer risks.
- Overcoming internal resource limitations.
- Preparing for the economic recovery.
Minimizing Risks
In a down economy, there is most likely reduced staff in production and support areas. Spare parts inventories are at bare bones since replenishment purchasing has been slowed or stopped; and rudimentary preventive maintenance tasks are scaled back as time will only allow the limited staff to react to machine down situations. The risks associated with machine failure are great.
Having a professional maintenance organization responsible to see that everything goes well with machinery takes much of the pressure and risk out of ensuring that production equipment is ready to run at all times.
Overcoming internal resource limitations
In down economies, plants usually cut out all fat that may exist in the staff. Oftentimes, 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 these smaller facilities. Maintenance knowledge in these types of plants is generally restricted to the combined experience and expertise of the current staff, and keeping senior level technical resources 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.
Preparing for the recovery
If ineffective, inefficient maintenance practices are perpetuated during slow times, the speed and pace of the recovery will not allow best practices to be established as business returns. Maintenance will be inadequate to handle the demands of increased production and 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, you are ready to provide the increased service levels that will be demanded by the equipment.