Looking at the big picture, if you 're not measuring it, you 're not really managing it.

As manufacturing and production equipment often represent a company's single largest capital investment, maintenance of these assets can significantly impact the bottom line. Many organizations face problems when they have not established a consistent method to measure the value of maintenance activities, which results in their underestimating the impact maintenance has on financial performance.

Developing a methodology for measuring your processes provides guidance for needed maintenance activities and shows a continual impact on ROI. After you establish metrics for maintenance activities, you also can justify the value of current activities and support the case for new initiatives. This is especially true when initiating major changes in strategy, such as moving from a reactive operation to a proactive one. Without tangible evidence in the form of objective performance data, obtaining full buy-in support from management is more difficult to achieve.

Determining what to measure
The cornerstone for any successful Strategic Maintenance plan begins with clearly defining goals. Without adequately defining the desired performance—along with the reasons for it—companies often may generate a long list of metrics, yet overlook many that are vital to making critical performance-enhancing decisions.

While most companies collect performance data, the challenge is to select information that has meaning to the bottom line. These types of powerful metrics directly measure the impact of maintenance efforts on the company 's Key Performance Indicators (KPI's).

Today, companies are turning to a variety of financial metrics, such as Return On Net Assets (RONA), which is commonly used by plant management. RONA calculates how well a company converts assets to sales, and, therefore, profits. Maintenance specifically impacts three main variables of the equation: Plant Revenue minus Costs divided by Net Assets.

Other metrics used today are associated with plant productivity, such as Overall Equipment Effectiveness (OEE). Many times OEE is used in conjunction with RONA, as it is an extension of Plant Revenue. OEE is a statistical metric to determine how efficiently a machine is running. It is calculated by multiplying a machine 's Production Rate, Quality and Availability. The combination is the value a machine contributes to the production process.

All companies have data and information, but many do not collect and analyze it to make informed decisions. Results from metrics can help companies lower inventory costs, reduce spares and boost availability and uptime. Maintenance impacts all of these features, but it is commonly used with downtime.

Case in point
A leading semiconductor manufacturer 's decision to migrate toward a more predictive maintenance strategy was directly tied to its business goals. In an industry where a few hours of downtime can result in millions of dollars in losses, success is measured by uptime.

In semiconductor manufacturing, every part of the facility plays a critical role in the process. If any part of the facility fails, such as the power supply, HVAC or water-treatment system, production could come to a rapid—and costly—standstill. Using advanced condition-monitoring technology, the company designed and implemented a comprehensive predictive maintenance program that allows it to effectively monitor, analyze and track equipment performanceÐobserving operating conditions locally, as well as remotely, across multiple production sites.

The reality is that replacing a fan or pump motor is a fraction of the cost of having a fabrication line down for any amount of time. If production is down for even one or two hours, the lost revenue would far exceed the cost of a replacement motor, or any other ancillary component.

Since implementing its predictive maintenance program, the company has found countless minor vibration issues and identified several hundred major vibration problems, helping it avoid prolonged production shutdowns. More specifically, it has realized a five-to-one return on investment, and the program helped the company avoid estimated lost-production costs of more than $1.4 million in a single year.

The big picture
A complete review of maintenance operations and the physical asset management process can help identify equipment and operator performance issues and outline recommended corrective actions that can be implemented through maintenance initiatives. For example, in critical applications, companies may want to have a redundant or back-up piece of equipment in place to avoid production interruptions in the event the primary equipment needs to be shut down or replaced.

This type of in-depth evaluation is important because it gives you a baseline as to...(Read whole article)