Guest post by Ken Latino.
Have you ever noticed how much emphasis is put on the maintenance budget in an industrial facility? While maintenance cost is usually just a fraction of what is spent on other costs like raw materials, energy costs and other input costs, it get 95% of the attention. This is because many think that every dollar spent on maintenance is a wasted dollar. With this attitude, it causes those at the plant level to make extremely difficult decisions of cost versus risk. The lower the budget, the more risk has to be taken.
Imagine if instead we viewed maintenance cost as a means of value creation. Imagine if we saw those maintenance dollars as investments into the long term sustainability of the plant’s assets. Spent properly, maintenance can have a profound impact on the long term profitability of a facility. Those who believe maintenance is a necessary evil might also believe that maintenance dollars are only spent on fixing failures. While that can be true for highly reactive facilities, it is not the case for more progressive facilities that are focused on getting the highest level of performance from their assets.
I believe it is the right, and the responsibility, of upper management to ask how maintenance dollars are being spent. However, it is also their responsibility to ask how reliably the facility is running. Plant level management should be able to demonstrate that maintenance dollars are being spent responsibly to eliminate or at least mitigate risk. If the plant is over spending in maintenance and they are also unable to meet profitability commitments due to runnability, then there are likely issues with reliability and a plan must be put in place to get back on track. On the other hand, if a facility is exceeding profitability commitments with some over spending in maintenance, they are successfully spending to reduce risk and adding significant value. Just remember, spending that extra dollar in maintenance might actually return 2 or 3, but not spending that extra dollar might have the opposite effect. What are your thoughts on whether maintenance is just a necessary evil or if it is a means of value creation?