Maintenance Management Resources Six sigma and lean manufacturing, it's all about money:
Business Industrial Network is your best resource when you need fast solutions. After you view this six sigma area dedicated to learning the true cost of equipment downtime
with time and motion study, please visit our company.
Here are some real examples found on
the internet and testimonials given to us, of increased 'bottom line'
savings, and increased production by reducing downtime. Do you have a story? Please
click here to share it with us.
Pulp Mills Save $3.5 million to $6.5 million
GUELPH, Ontario, Sept. 5, 2000 (Press Release) - Rowan Williams Davies &
Irwin (RWDI) announced today that the firm has successfully assisted pulp mills
to achieve significant improvements in their chemical recovery boiler
A range of $3.5 million to $6.5 million in savings due to reduction in
unscheduled chemical recovery boiler shutdowns has been reported.
The productivity gains reported by the first six mills that used the unique
technology totaled more than 130,000 tonnes of pulp per year. No capital costs
were necessary for 5 to 20 percent increased chemical recovery boiler capacity.
The frequency of water washing was reduced from as many as 8 to 16 times a year
to only one to three times a year. Dramatic reductions in odorous TRS emissions,
corrosion and soot blowing steam occurred while increases in thermal efficiency
were noted. (source)
Emerson Process Management unveils e-fficiency® service
The adoption of e-fficiency has been impressive - its quick, cost-effective
deployment has allowed customers to make significant savings in the range of $1
million to $8 million per year by making informed decisions on poorly operating
The average skilled tradesman changes jobs about every 3 ½ years. But
according to the U.S. Department of Labor, it costs a company one-third of a new
hire’s annual salary to replace him or her. Using the average annual labor
cost of $50,000.00 that Preston Ingalls shared years ago, this amounts to about
$16,500.00 lost. Even if your company only has about 15 maintenance people that
is almost $250,000.00. This can equate to $5,000,000.00 in shipped sales, where
you did all the work but you won’t see a dime of profit. (source)
August 1998 Field Report: SPM Instrument, Inc.
As an example, Peplow recalls the case where a customer had an exhaust blower
assembly that was functioning so poorly that its life expectancy was barely
between 4 to 6 weeks, causing numerous production bottlenecks. "The worst
part was that they never knew when it was going to quit on them," explains
Peplow. Downtime was typically 6 to 8 hrs. because of secondary shaft damage,
and downtime costs reached to $3,000 to $4,000 per hour.
Business Industrial Network Survey (case 547)
Below is from session on 4-20-00, with a maintenance
manager in a large envelope factory. As you can see, he confirms the big dollars
lost in down time. He also touches on the profitability of providing parts
plant down = $150,000hour = $6,250
Per Machine downhour = $3,000
Parts costfrom $10- $7,500+
Shipping of partsfrom $20 - $700+
Time to wait for
repair partFrom 3hr - 3 days
Data Collection and Reporting System
As a result of using the VT400, Automotive Manufacturer Production identified
that it could produce one additional car with the VT400 System per 24-hour
production period. The cost savings realized during each 24-hour period was
$480.00. This savings came from the increased efficiency of utilizing the fixed
factory overhead cost. Scrap and re-work cost was not considered. A savings of
$480.00 per day results in a savings of $2,400 per 5-day week.
In another factory the VT400 system was installed to satisfy the need for
improved communication between production workers and support personnel.
Wireless Call Boxes were strategically placed along the line to enable
production personnel to request assistance without leaving their work stations.
After analyzing actual data collected and reported by the VT400 system, plant
management realized that the line was producing one additional assembly per week
due to reduced downtime. The inventory value of each assembly is $4,200.00. In
one 4-week period, the plant was able to realize an additional $16,800 in
production output. (source)
Business Industrial Network Survey (case 228)
I am production foreman at a plant that produces sodium phosphate. Plant
startup takes 24-48 hrs, and shutdown at the end of a production run takes 12.
Out of a ten-day run, that means that one twelve-hour shift for downtime because
of a breakdown can cost us as much as 48 hours, depending on how much sodium
sulfate is lost when the system crashes.
Let's see, ten twenty four hour days per run. Less perhaps 48 hours
startup/shutdown, less twelve hours to fix a pump or conveyer, less perhaps 24
hours to get back into production. That doesn't leave very much does it?
Unfortunately, the plant was built in the '60s, and a lot of the equipment is
around that age. Instead of buying new stuff, the parent company, when they
reopened the plant, re-cycled as much as they could. If you want a REAL good
example of the cumulative cost of breakdowns, try this. The company has spent
about 4.7 million on trying to get the plant running, over the past four years.
Northeast Premium Efficiency Motor Initiative
approximately 70 to 75 percent of the electricity consumed by industry is
used to run motors.
about 80 percent of installed motors are 25 horsepower or less. A
premium efficiency 25-hp, 1800-rpm, TEFC 460-volt motor operating 16 hours per
day at 75% load will save $600 per year over a standard motor. Even without a
rebate the payback is less than eight months
A typical 100 HP motor at full
load, continuous operation, costs over $70,000 per year to operate. Using a
premium efficiency motor will save you about $1400 each and every year.* ($0.10 per kWhr)
Rewinding may not pay. Efficiency
can be reduced by 1% to 2% or more. Always calculate the operating costs based
on nameplate efficiency before you make the decision to replace or rebuild.
(annual operating cost = (HP x .746 kW per HP x hrs per year x $ per kWh) /motor
Life cycle costs estimated
Approximately 18% of a facility's operating cost can be attributed to its
control system and associated maintenance.
Recent surveys have also indicated that 80% of requested maintenance is
unnecessary, and, if a problem occurs, only one-third of the time assigned to
the repair is actually spent on the repair. The remaining two thirds of the
maintenance time is spent in diagnosis. (source)
Industrial Network's "Quick
Help" reduce time spent in diagnosis.
The Smart Instrument's New Frontier
DuPont pegged maintenance as "the
single largest controllable cost opportunity, representing $100-$300 million per
year corporate wide."
Plant maintenance is indeed big business. Worldwide costs are
estimated at $69 billion annually, compared to the $23 billion spent on process
instrumentation and controls. Other research puts maintenance expenditures at
9-30% of the total costs of goods sold at a typical process plant, and 4-8% per
year of the replacement value of the process plant itself. (source)
MDI Case History #1
Problem Detected: Bearing defects on the pinion gear shaft.
Description Of The Situation: The drive end pinion bearing was found to have
outer and inner race defects during a vibration survey. This machine experienced
a pinion gear failure 30 days prior. The pinion gear failure was found to be
caused by an improper start-up of the mill while the inching drive was engaged.
This caused teeth to be broken from the gear. The facility replaced the pinion
gear with the only spare gear available (the spare was actually a worn gear
taken out of service over a year prior). The situation at the time the bearing
defects were detected, left the facility with no spare pinion gear. If this
bearing had been allowed to fail catastrophically, the pinion gear could be
ruined. Lead time on a new gear manufacture was 6 weeks at premium expense.
Early detection allowed the bearings to be replaced to avoid major downtime due
to a gear crash and premium cost of repair. (source)
Cost to repair at scheduled
Cost to repair at complete failure
Production loss at scheduled
Production loss at complete failure
Total Cost Of Avoidance:
Donald G. Reinertsen (professor at Cal Tech.) speaking in Chicago
He said that such delays or costs associated with engineering prototypes is
written off or expensed at the time, complying with generally accepted
accounting principles. He went on to explain that in his research he has found
that the average cost of delay (downtime) in the manufacturing industry is 10 to
1. With some lesser managed company's recording numbers as high as 100 to 1.
"Doing something is much better than doing nothing at all"
Preventative maintenance aggressively seeks deficiencies in an electrical
system," says Bremer. "An electrical panel that serves a portion of a
building which supplies computer could cost a company $30,000 per hour if it
went down. A complete electrical preventative maintenance program on this panel,
including testing, cleaning and tightening, typically costs less than $150. (source)
Please visit their page to see the following examples of how forming Root
Cause analysis teams saved money and how much. (source)
8th Largest Steelmaker - $1,150,000
material cost reduction (1995 versus 1997)
Estimated Cost to Conduct
Estimated Returns from RCA:
Return on Investment:
Fine Chemicals - Conservative
estimates report the damaged blend tube held enough green pellets to contaminate
five (5) more railcars of clear product.
(5 Railcars) x (190,000 lbs/Railcar) x ($0.09/lb) = $85,500US
Estimated Cost to Conduct
Estimated Returns from RCA:
Return on Investment:
One of the Largest Refiners in the United States -Estimated
Savings of $7,150,000 ($6,500,000 in Production Losses and Maintenance Labor and
Material Costs of $655,0000)