Better Maintenance, Procurement Procedures Increase Productivity, Cost Savings

Agencies responsible for water pollution control are generally successful at controlling costs and giving effective service at efficient rates. Operational costs are what most agencies focus on because they represent the largest component of the budget. However, maintenance—an often overlooked or understudied component of costs—usually represents the largest controllable segment of the budget.

Closely associated with maintenance costs are procurement and supply expenses. Production is usually the largest portion of the budget, however many of the costs and procedures are fixed, or locked-in, therefore potential savings are limited.

A review and realistic assessment of current maintenance and procurement procedures usually offers greater potential for improvements in costs and service. Savings in the range of 10% to 25% of the maintenance budget are attainable as are additional savings in purchasing and production.

In many facilities, the maintenance and procurement functions have evolved on an as-needed basis; as the plant grows and problems are encountered, maintenance attacks each challenge as an individual problem with relatively little effort at producing an overall optimum organization and system. The people working in the department often are very good at day-to-day activities but do not have the time, experience or incentive to organize activities for maximum efficiency and cost effectiveness. They often are too busy taking care of the day-to-day problems to step back and look at the overall picture.

Obtaining Maximum Efficiencies in Your Operation
To ensure that you are obtaining maximum efficiencies in your operation, there are certain areas that should be closely examined.

1. Equipment Reliability – If you are depending primarily upon breakdown maintenance, the timing of equipment downtime is dictated by the equipment and not planned by your people. This often results in very disruptive production losses, even if standby equipment is available. Planning and scheduling techniques can greatly improve equipment availability and reliability.
2. Maintenance Productivity – It is estimated that most plants have an average of 30% productivity within their maintenance force. While 100% productivity is not practical, it is usually possible to raise productivity to the 60% range. This increase results in better utilization of manpower and reduced costs, and oftentimes a higher quality of work because the average worker is happier—and proud of his work—if he is productive.
3. Maintenance Software – Most departments are sold on the fallacy that software will magically solve their maintenance problems. Usually, when they find that it did not produce magical results, they become convinced that new and improved software will solve their problems. The facts are that software does little good (and sometimes even produces negative results) if there are not manual systems in place to utilize the capabilities of the software. For instance, it is relatively easy for software to track and produce a backlog report, but it's just a piece of paper unless it's assured that the input is accurate and that the output is actually used to make decisions and improvements. Up-front work is essential when evaluating and setting up a computer system; the desired results must be determined and then work backwards to select the correct software and set up a system to collect the data and utilize the results.
4. Procurement and Maintenance Coordination – Maintenance is procurement's largest customer. Perhaps not in volume or cost, but definitely in complexity and special requirements. The lack of parts also is a common complaint of maintenance and often a major cause of poor productivity and equipment availability. Therefore it is important that maintenance plan ahead for as much of their work as possible to ensure that parts requirements can be filled in a timely (and economical) manner. Maintenance people must be actively involved in inventory control and in making recommendations. The software used by maintenance should be compatible with the procurement software.
5. Procurement Effectiveness – Planning maintenance work is essential to the success of getting parts to the maintenance department on a timely and cost-effective base. Materials requirements planning and job kitting (see #11) can improve parts availability, reduce idle time waiting for parts and reduce inventory carrying costs and the unit price of purchased supplies. Unplanned and unscheduled maintenance work creates emergency/rush transaction requests. Emergency/rush requirements will increase maintenance part costs because vendors will charge more for the part and because special freight handling or part pick up requests increase transportation costs.
6. Bills of Material – Bills of material are lists of parts required for on-going/repeat maintenance work. The standard maintenance job should include information on parts, equipment, resources and "standard" time to complete the work. The bills of material should cross-reference spare part information to the equipment manufacturers' part number, and include information on company stock number and quantity required for the job. Also, if the part is carried in inventory and it is not purchased from the equipment manufacturer, the warehouse should include the vendor's and equipment manufacturer's numbers in warehouse catalogs.
7. Spare Part Stations – Low-unit-price materials and frequent-use items should be stored near maintenance work areas. The warehouse or inventory management department should be responsible for replenishment of materials in the bins. The maintenance and purchasing departments should be responsible for identifying items to store in the spare part stations.
8. Spare Parts Committee – A spare parts committee should be established to formulate policy on spare parts to stock at the treatment plant and for determining the initial order quantity and minimum quantity to keep in stock. This committee also should be responsible for reviewing "inactive" spare parts and determining the status of these items. The committee members (at least four) should be selected from maintenance, materials Management, finance and engineering.
9. Spare-Parts Coordinator – A spare-parts coordinator should be established to coordinate spare parts required for planned and unplanned maintenance work. The coordinator's work should be linked with the maintenance planner position. Information must flow quickly and accurately from inventory and non-inventory requests so the planner can schedule maintenance work when parts and resources are available. The spare parts coordinator's job duties may be a part-time responsibility for small and mid-size plants. This person reports to the purchasing or inventory manager.
10. Contracts and Blanket Purchase Agreements – These agreements should be negotiated for frequent use, critical and high-value purchase materials. The agreements should include methods for approved maintenance personnel to release materials/spare parts required. The approvals should include dollar level and commodity controls that reflect the policy of the plant or agency responsible for managing the treatment plant.
11. Job Kits – Spare parts and materials required for "standard" and planned maintenance jobs should be picked from warehouse stock and placed in a "job kit". Job kit parts should include non-stock items. Non-stock items should be placed in the kit immediately upon receipt. The parts should be placed in the job kit before the scheduled job's start date and information on the parts kit should include the work order number or maintenance task number.
12. Un-used Materials – Maintenance should return un-used materials to the warehouse. The practice of keeping unused parts in the maintenance department's work areas is not an effective or efficient method to manage spare parts. This practice leads to maintenance costs being inaccurate because the unused part is charged to maintenance and to a piece of equipment. Costs are higher than they should be.
13. Customer Satisfaction – If maintenance is conducting its business in a proactive and efficient manner, the ultimate customer, the ratepayer, will benefit from cost effective and reliable service. Maintenance also should look at production as an intermediate customer in that it is their job to service the equipment in such a way that production is able to do their job efficiently. Maintenance done in a planned and scheduled system better serves both levels of customers.

Making Improvements in Your Facility
Many tools are available to help make improvements in the desired areas. They include:

1. Evaluate the Basics – It is difficult to make high tech improvements if the basics are not in place.
2. Focus – Trying to head in too many directions at once will produce poor results; focus on basics first, then move on to more sophisticated methods.
3. Management Support – Change is always difficult to bring about; all concerned must see that management is serious about making progress.
4. Employee Involvement – The best ideas will come from the troops. Keep them involved and motivated.
5. Planning and Scheduling – A good workable daily work schedule that fully work loads each employee with tasks that are organized with parts, tools and equipment available is the best way to improve productivity.
6. Outside Help – There is usually a distinct advantage to having an objective view from someone outside the immediate organization. The consultant should be used to evaluate the current situation, make recommendations as to changes needed and to help in keeping improvements on track. Your people must be involved in all steps so that they feel ownership of the improvements and have a vested interest in making sure that the gains are long term and on-going.

Moving from Reactive to Proactive
Maintenance can be moved from a reactive basis to a proactive one with resultant improvements in efficiency, costs, worker morale, and customer satisfaction. Taking the time to evaluate your maintenance and procurement effectiveness—then put together a focused and dedicated program to make improvements—will pay excellent dividends. A work plan and schedule with task start and complete dates, resources required for the task and milestones should be developed for the maintenance improvement project.

About the Authors:
Roger Christensen is a mechanical engineer with over 35 years of experience in maintenance management and maintenance materials in variety of operating environments. He has been a consultant to industry for over 15 years and is currently associated with Procurement Services Associates as a senior consultant. He has developed and implemented maintenance programs that increased mechanical availability and reduced maintenance costs.

Dan P. Plute is CEO of Procurement Services Associates, a professional services company that specializes in providing technical assistance to public entities and private companies. The consulting experience includes projects in materials management, maintenance materials and contract/supply management. His experience includes re-engineering studies, program management, and designing and implementing maintenance materials programs for wastewater treatment plants in California and for international companies.

Procurement Services Associates has offices throughout California, and may be reached at their headquarters at 61 Chilpancingo Parkway, 2nd Floor, Pleasant Hill, CA 94523-1334. Phone 925-685-4289; fax: 925-671-2844; E-mail: purchasers@procurementservices.com.