Maintenance was never a core competency for this Swedish manufacturer. Now working with an outside service provider, the company truly understands the meaning of "win-win."

Stainless steel is the fastest growing metal market in the world, not only for its popularity in kitchen appliances but industrial applications as well. The Outokumpu Stainless Hot Rolled Plate (HRP) factory in Degerfors, Sweden serves the latter.

Outokumpu Stainless is one of the world's four largest producers of hot rolled plate with one of the widest range of products and steel grades within the stainless steel industry. Our Degerfors factory alone produces 120 thousand tons per year. The plates are extremely resistant to corrosion and wear, making them popular in challenging applications and environments including pulp & paper, oil & gas, chemicals and power generation.

Because our customers depend on us to keep our production lines running, we looked outside the company for maintenance assistance. Gradually, we increased our reliance on contracted maintenance services ("outsourcing") and raised the bar to higher standards. The strategy has led to our current full-service, performance-oriented, maintenance- management agreement.

Outsourcing evolution
When the plant opened in 1996, we had extensive knowledge of stainless steel production, but little in terms of equipment maintenance. To alleviate the burden, some maintenance tasks were managed internally and others were contracted out on an hourly basis to various service providers. At its peak, about 100 individuals were involved in plant maintenance activities.

For three years, our operational effectiveness (OE) and production availability were high, yet our maintenance costs were prohibitive. The break/fix approach was expensive, and tensions ran high between maintenance and production personnel.

By 1999, maintenance was still not a core competency for us. Thus, we resolved to

forgo all maintenance responsibility and consolidate it under a single, more conducive contract. We chose to contract 100% of our corrective and preventive maintenance activities in Degerfors under a jointly developed, hourly-based ABB Full Service maintenance agreement.

The agreement established performance objectives that subjected the service provider to bonuses or penalties depending on its performance. This approach allowed the contractor to share the risks and rewards of plant maintenance, and provided the incentive to continuously improve performance. Soon, we had approximately 65 ABB Service employees working at the plant.

In 2001, the arrangement was transitioned from hourly rates to a fixed price...(Read whole article)