Getting lean through value-driven maintenance

London - Today's consumers typically demand high availability of products that are adjusted to their specific needs with short delivery times and without accepting less quality or higher costs. To be able to compete in these markets and in the global economy many companies are now moving to lean manufacturing’.

But what is ‘getting lean’ exactly and how does is affect maintenance, how can maintenance contribute to it and how to derive the maintenance strategy from it?

Many maintenance managers are struggling with those questions in daily practice. Is ‘Lean’ just a set of well known best practices that are now suddenly tagged and hyped as being ‘lean’ or are there actually maintenance management methodologies available that really link up with lean thinking?

Many are still considering lean as a set of tools for the shop floor to squeeze any waste out of their activities, in fact as just another way to cut costs. But it is far more than that. Lean thinking is a complete business system based on a set of principles to realize an efficient and effective production system, mainly developed at Toyota.

The current performance of Toyota shows that they are quite successful. But it is not limited to the automotive industry only. Today many companies in different industries apply these principles with success:

* DSM realized a sustainable 30% cost reduction by implementing gatekeeping, no change mentality, asset based budgeting and standardized work processes without jeopardizing Asset Utilization nor SHE.

* DAF Trucks realized an uptime improvement of 27%, meaning 14.000 extra produced trucks yearly, by systematically reducing waste during the weekly shutdown.

* Smurfit Kappa Packaging improved equipment output with 8 OEE percentage points, resulting in lower stoppages and defects, while reducing maintenance costs with 25%. The cash flow result of more output at lower costs equals a 15% improvement of company profitability.

* Cement Australia applied a MRO segmentation strategy to optimize stock levels throughout their production plants and reduced inventory value by 40% without jeopardizing Asset Utilization.

The basis of Lean is to organize a distinct set of activities to create the value the customer is paying for. Lean thinking starts by defining what customer value is instead of ensuring that the companies’ assets are running smoothly. From that the steps can be derived that necessarily must be taken to create the customer value, in other words the ‘value stream’.

Consequently the processes are defined or redesigned to optimise the total product flow and to ensure an uninterrupted sequence in line with the customer demand. Any non value-adding activity will be removed, because it only distracts and costs extra money. So the manufacturing process itself is reengineered, but what does it mean for the maintenance of the process equipment?

Defining lean maintenance

Of course it sounds challenging to aim for lean maintenance, but what it means exactly is rarely defined properly. In the majority of cases qualitative statements are used like: a lean organization delivers consistent uptime week to week, minimizes impact on production, delivers its work as planned, has ‘spot on’ budgeting, et cetera.

Although it is very positive that this will stimulate a much more professional attitude towards the maintenance process, we still don’t know how far we are from this level and when it will ever be reached. What is the business impact of a consistent, but 3% too low equipment uptime? How much cheaper would our maintenance be if we accept a 90% weekly schedule compliance instead of aiming for 100%? Even a highly rewarded quantitative method like Six Sigma hasn’t brought breakthrough results in the maintenance arena, mainly because maintenance data is too poor to apply these kinds of statistical techniques.

Lean maintenance must be all about eliminating waste, so distinguishing between value adding and non-value adding maintenance activities. But in contradiction to the detailed description in lean manufacturing of how to eliminate non-value adding production activities, in lean maintenance there is no definition yet which activities to eliminate and which not.

But the answer indeed is in exploring (added) value potential. To be honest, the word value is used and misused often in maintenance literature lately. The value (potential) of maintenance has been clearly described in a book entitled Value Driven Maintenance (VDM).

VDM is claimed to be the first and so far only methodology that shows a maintenance organisation how to reveal its value potential, set clear and realistic improvement targets, give focus and embed continuous value creation in the organisation. It focuses on dynamic measuring of value creation opportunities, selection of the most appropriate steps/techniques to go after the potential instead of advocating one best technique for all situations.

Being able to show the actual added value of maintenance in a business perspective has helped a lot to put the topic of maintenance on the agenda of the Board. But VDM is more than a set of financial formulae or a new language to ‘impress’ the board. It gives the modern maintenance manager a practical ‘planning & control’ framework that links up with lean thinking by prioritising between breakthrough measures and nice-to-have initiatives.

In short, VDM shows that there are four relevant value drivers in maintenance. For all four value drivers, maintenance can help to increase a company’s economic value. In a market where there is more demand than supply, greater machine availability results in more products, more income and thus higher value.

In fact it is about securing that the production flow is not interrupted. Focus here is ‘zero maintenance’, which does not mean no maintenance at all, but no ‘unexpected’ maintenance. However focusing on a higher availability and producing more products than the customer is asking for is non value adding. An example of waste reduction as defined by Volvo Cars is to minimize the mean-time-to-repair losses. In other words limit waiting times in repairs because of lack of skills, spare parts or documentation.

On the other hand, lower maintenance costs produce higher value by avoiding expenditure. Doing things in a more efficient way (reduce waste) or being more effective, for example losing less money by avoiding expensive breakdown repairs. The same applies to resource allocation.

One example is a technical storeroom. Smarter inventory management of spare parts can enormously increase value for a company; by having the rights spares on stock or by reducing obsolete stock. Similarly, safety, health and environment (SHE) affects value - as accidents tend to necessitate substantial expenditure.

Damage caused to personnel, environment and image, for example, will increase expenditure. An even greater danger is loss of the license to operate because of inability to comply with SHE legislation. No license to operate means no production and no income - an understatement for being too lean.

So the main focus of maintenance is to create value and reduce waste while minimising the interruption of the production flow. If maintenance succeeds it delivers stability in the production process and consequently operators can focus on quality.

The value potential of each driver can be determined by the market dynamics and the performance gap  - current performance compared to industry peers. For this, the VDM benchmarking service has been available for many industries since 2004 and the use of maintenance benchmarking information will only be accelerated by current EFNMS Benchmarking initiatives. Once you know where the biggest value potential is, attention shifts to how to realise it in an effective and efficient way.

Accelerating lean benefits

Or in other words “Which are the core competences for our maintenance organisation”? Those core competences can be derived from a competence model, which provides a coherent control framework for lean maintenance decision making.

This model has proved to be an excellent means to communicate the current state of affairs, the biggest bottlenecks and challenges, the desired future state and the logical highlights of the improvement agenda to get there. It helps to identify the competences of the maintenance organisation that create most value for the customer.

So instead of trying to improve everything it helps to focus on those competences that are most important from a business perspective. Depending on the market situation some companies focus on the right-hand value circle and others focus on the left-hand value circle.

Now that we know the important competences, the next step is to organize and control them in the right way. For this purpose VDM puts forward best practices from leading maintenance organizations. A few examples are TPM, value driven RCM and asset-based budgeting.

The first step of value-driven RCM consists of the identification of the assets that have the highest impact on the value stream of the organization. Main reason of the value ranking of the assets is to determine where the focus and attention of the resource capacity available should go to (focus) and what maintenance strategy is justified.

Using these best practices, a technical department can quickly become a professional maintenance organization that adds value to the overall business performance. To ensure that the new way of working is embedded in the day to day business these best practices are translated into a standardized process map; a set of 50 reference process flows and descriptions, including roles and responsibilities. This process map contains value adding activities and related best practices per competence and excludes the non value adding activities.

The most challenging part of lean thinking probably is the continuous improvement cycle. Value must be created and waste reduced by continuously improving the core competences. To monitor this continuous improvement the VDM Control Panel is embedded in some leading EAM systems like Maximo, Infor EAM and SAP EAM.

It monitors the actual progress of your improvement activities and spots new opportunities. The number 1 problem equipment, if properly ‘attacked’, will eventually fall from the top-N list but, like always in real-life, new problem equipments will show up. One of the powerful analysis features of the VDM control panel is to correlate bunches of relevant data into a logical action strategy.

For example the correlation between number of failures and number of inspections per (main) equipment. It shows at a glance the effectiveness of the current inspection policy. If an equipment indicates ‘frequent inspection, hardly any repair from inspection or breakdown’, it is worth to analyse to lower the inspection frequency or eliminate the inspection task completely.

However ‘frequent breakdowns, no inspections’ obviously indicates a new equipment failure mode that hasn’t been tackled in the maintenance plan before. The VDM Control Panel is an excellent starting point for focused problem solving and decision making (root cause analysis, 5 Why’s, etc).

But the real benefit of VDM in a lean environment is not just a state of the art process map or IT solution. It is the guidance for the maintenance organization to know why to improve, where to improve and how to improve. Not ideological, but in a way that is in line with the lean manufacturing thought, that it creates tangible cash flows for the company and reduces waste where possible. Not based on a ten year journey, but with realistic milestones year after year, achieving a true continuous improvement mindset.

Conference Communication is organising the Getting Lean via VDM conference in Warwick, 17-18 June. Anyone interested can visit the website www.maintenanceonline.org for more information.