aiche webinar series maintenance and reliability for ... · pdf filemaintenance and...

David Rosenthal, P.E. Reliability Delivery and Asset Management Manager

Jacobs Engineering Group Houston

AIChE Webinar Series Maintenance and Reliability for Chemical Engineers Part 4 –

Presentation Contents

• Purpose

• Why is Reliability Improvement needed?

• Where are you in this journey?

• Assessment and the Journey

• Justification for Improvement

• Benchmark and Margin Analysis

• Closing

David A. Rosenthal, PE.

• Reliability Delivery and Asset Management Manager, Jacobs Engineering Group

• Reliability Manager, Southern Region, Marsulex Refinery Services, Texas City

– Coke cutting, handling, and transport assets

• Maintenance Director, MEMC Electronic Materials, Pasadena

– Polysilicon manufacturing for solar cells and electronic components

• Reliability Consultant, Celerant Consulting, Lexington, MA

– LANXESS, Butyl Rubber Manufacture, Sarnia, ON

– Kellogg's, Snack Foods Division, Battle Creek, MI

• Maintenance and Reliability Manager, Rohm and Haas Company, Deer Park, Texas

– Acrylic Acid, Ethyl Acrylate, Butyl Acrylate, Sulfuric Acid manufacturing

• Manager of Manufacturing Excellence, Rohm and Haas Company, Bristol, PA

• Reliability Engineer, Rohm and Haas Company, Bristol, PA

• Technical Manager, Rohm and Haas Company, Bristol, PA

– Acrylic Emulsions manufacturing

“Reliability and Maintenance leader with over 30 years of Chemical and Process Industry experience”

• MS in Chemical Engineering, University of Texas, 1981 • BS in Chemical Engineering, Drexel University, 1979 • President American Institute of Chemical Engineers, 2012 • Member of Society of Maintenance and Reliability Professionals

Where we left off (Part 1)…

• Maintenance focus is on restoring function to meet production requirements.

• Reactive maintenance must be first addressed .

• The impact on the business is the first consideration when evaluating the reliability and availability of the process

• The business case for reliability lies in the “hidden plant”.

• Asset Management is about assets delivering the required function and level of performance in terms of service or production (output).

• Continuous improvement in the performance of the assets lies in the analysis of history and the developing of the appropriate care plan that addresses its failure modes.


• 90% of failures are random.

• The highest risk for failure is when the machine is new.

• The earlier failure is detected the “cheaper” it is to restore its intended function.

• Maintenance alone cannot detect all failures.

• Chemical Engineers play a role in process reliability and working with Maintenance

• RCM and FMEA’s determine asset care

• Ownership is a vital element of a reliability-based culture

• Operator care is an important element of a care plan


• Maintenance Execution – Identification is key to efficient and effective asset care and repair execution – Work Flow and RACI diagrams

• Maintenance Strategy – Critical asset care needs to be established to attain proactive care goals – Nomenclature, Hierarchy, Criticality, RCM / FMEA, and Asset

Care Plans

• Defect Elimination is needed to minimize the probability of repeat failures and to identify unseen failure modes – Root Cause analysis, 5 Whys, Cause and Effect diagrams, Bad

Actor control, and MTBR / MTTR

Purpose

Provide guidance for justifying attainment of maintenance and reliability practices based on their connection to the strategic business drivers for the site.

MAINTENANCE AND RELIABILITY FOR CHEMICAL ENGINEERS – Part 4 – Business Case Development

Why is Reliability Improvement Needed?

Need for a Strategic View of the M&R Connection to Business Improvement

Must get out of the weeds – Language of maintenance

View the World-Class Decision from a

Strategic Business Viewpoint

Need to connect M&R to a

business driver – Talk the language

of business

Maintenance versus Business Strategy “Fit”

Understand the strategic mission of the facility to the business.

• Cash “cow” generator versus growth through investment

• True Business Case Exists for Achievement - Competitive

• Core Value of the company – Safety, Quality, etc.

• “Burning Platform” present – survival of the business

Where Does Your Business Compete?

• Cost

• Quality

• Performance

• Delivery Time and Delivery Time Reliability

• Flexibility

• Innovativeness

• Others ?

Questions •How does Maintenance and Reliability enable your business to compete in the above factors? • What barriers are presented by maintenance to achieving competitive advantage? •Which factors are minimum requirements to compete the marketplace and which are differentiating?

How Does M&R Drive Competitiveness

Driver Compete in the Marketplace Differentiating

Cost Maintenance personnel are multi-skilled and minimize MTTR

Operations performs some maintenance and proactive tasks

Quality Maintenance care ensure all quality-control related assets are calibrated and operational

Maintenance specialists develop new technologies to ensure new quality measures can be implemented

Delivery Asset reliability minimizes risks to meeting customer orders

Customers “see” into site scheduling and delivery systems

Flexibility Operations and maintenance adjust equipment care schedules based on scheduled demand and mix

Maintenance personnel can be flexed in or out of production roles

Innovativeness Maintenance establishes equipment care strategies for new equipment

Operations and maintenance can work self directed to change equipment configuration


Assessment and Auditing

Where are Your M&R Practices?

• Assessment – Understand Current Practice State and Rank Against Benchmarks – Plenty of assessment tools available through third party or internal

resourcing

– Data generation is the toughest part of any assessment

– Not all practices need to be at the same level of implementation • Leadership and Organization • Preventive Maintenance/ Essential Care and Condition-based monitoring • Maintenance Work Process - Planning and Scheduling • Defect Elimination - Root cause problem elimination • Maintenance Materials Management - Stores • Facilities and Tools • Engineering’s interface with Maintenance • Technical Database • Mechanical and Reliability Skills Development

– A site’s level of M&R practice implementation places that site on a “spot” on the journey

Maintenance Metrics

Metric Description Benchmark

Maintenance Schedule

Compliance (%)

# Weekly WO Completed/# WO scheduled

(Weekly)

>85%

Planned Maintenance (%) Total WO’s Planned / Total WO’s for the Week >80%

Emergency Work (%) Total Emergency WO/Total Number of WO’s <10%

Backlog (Weeks) Estimated MH’s for Outstanding and Upcoming

WO’s for Craft / Total Manpower Capacity

Weekly Available MH’s for Craft

4-6

Craft Labor Utilization (%) Actual Hours WO’s Minus Delay Hours/Total

Capacity Hours Available

>85%

Planning Efficiency (%) Total Actual Hours for Completed Planned and

Scheduled WO’s/ Planned Hours for Planned and

Scheduled WO’s

>80%

Mechanic Wrench Time Total Mechanical Hours On Tools/Total

Maintenance Hours Available

20-40%

PM Compliance (%) Total # PM WO’s Executed Per Schedule / Total #

PM WO’s Scheduled (Weekly)

>90%

Reliability Metrics

Metric Description Benchmark

Proactive Work Scheduled

(%)

Number of PM’s and PdM WO on the weekly

schedule / Total WO on schedule

>40%

Pump MTBR (Months) Total Number of Pumps x Reporting Period/

Total Pump Repair WO’s in the Same Reporting

Period

>36 Months

Mechanical Availability (%) Production Losses (Hours) from Mechanical

Failure/ Total Available Production Hours

>95%

$ Maintenance /

Replacement Asset Value

$ Annual Maintenance Budget / RAV (%) 2-3%

RCA’s and FMEA’s Held for

Bad Actors / Total Bad

Actors (5)

Root cause investigations and Failure Mode and

Effects Analyses held for Bad Actors / Total Bad

Actors

>75%

Stores Service Level (%) Number of Items Delivered as Promised/Total

Number of Items Requested

>95%

Stores Value /RAV (%) Current Book Value of Stores / RAV (%) 0.5%


Where is your site on the journey?

Defining the Journey P

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Don’t Fix It

Federal behaviors

Rewards:

Motivator:

Behavior:

Staged Decay

Short term savings

Meet Budget

Decaying

Planned

Reactive

Regressive

Fix it after it breaks

Fix it before it breaks

Strategic Don’t Just Fix It,

Improve It

Overtime

Heroes

Breakdowns

Responding

No Surprises

Competitive

Avoid Failures

Planning

Competitive

Advantage

Uptime

Org. Discipline

Best in Class

Growth

Org. Learning

Proactive

Eliminate

Defects

Improve

Precision

Redesign

Value Focus

Predict

Plan Schedule

Coordinate

Cost focus

Alignment

(shared vision across

BU)

Integrating

(supply

logistics, mfg.,

mktg.)

Differentiating

(new system

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Alliances

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Defining the Journey : SAMI Pyramid Asset Healthcare Model©

Defining the Journey

Multiple crafts

All work on schedule

BOM’s identified

Core crafts identified

Operators Report Issues

Work ID and Priority in use

WO’s have estimates

On shift 24 Hours

1 Week Schedule

Reliability job not defined

Company standards in use

Job descriptions for all

Mgr focus on execution

Critical parts identified

CMMS cost recording

No system in use

Multiple crafts

All work on schedule

BOM’s identified


Operators Report Issues

Work ID and Priority in use

WO’s have estimates

On shift 24 Hours

1 Week Schedule

Reliability job not defined

Company standards in use

Job descriptions for all

Mgr focus on execution

Critical parts identified

CMMS cost recording

No system in use

Multi-skilled

CMMS field interface

Approved Vendors

Leveraged contractors

TPM, Checklists in use

Operations in RCA

Labor standards in use

Crafts on days only

Scheduling in CMMS

Operators as owners

Following procedures

Maint. Support on days

Maint. Focus on CBM

Parts delays removed

Analysis reduces costs

Loss hierarchies defined

Multi-skilled

CMMS field interface

Approved Vendors

Leveraged contractors

TPM, Checklists in use

Operations in RCA

Labor standards in use

Crafts on days only

Scheduling in CMMS

Operators as owners

Following procedures

Maint. Support on days

Maint. Focus on CBM

Parts delays removed

Analysis reduces costs

Loss hierarchies defined

Craft training

Proactive schedules

MRO strategy in use

Maintenance strategy

Operators use CBM

Root cause done

Labor against assets


Prioritization in use

Reliability / AM Strategy

Maintenance procedure

Reliability Eng exists

Mgr focus on downtime

Parts levels optimized

Costs at correct asset

Loss systems created

Craft training

Proactive schedules

MRO strategy in use

Maintenance strategy

Operators use CBM

Root cause done

Labor against assets


Prioritization in use

Reliability / AM Strategy

Maintenance procedure

Reliability Eng exists

Mgr focus on downtime

Parts levels optimized

Costs at correct asset

Loss systems created

Advanced skills level

Specs on parts

Engineering / QC specs

Contractor participate

Operators review design

Failure history in use

Standard labor in Capital

Mechanics attend RAM

Capital scheduling

RAM use in Capital

LCC / RCM Used

Capital work integration

Maint. Focus on RAM

Parts Standardization in use

Input for LCC

Losses drive projects

Advanced skills level

Specs on parts

Engineering / QC specs

Contractor participate

Operators review design

Failure history in use

Standard labor in Capital

Mechanics attend RAM

Capital scheduling

RAM use in Capital

LCC / RCM Used

Capital work integration

Maint. Focus on RAM

Parts Standardization in use

Input for LCC

Losses drive projects

PlannedYears 1-2

ProactiveYears 2-4

OperationalExcellenceYears 3-5

Designed In ReliabilityYears 4-6

Craftsmen Activity

Supervisor / Planner

Materials

Labor

Operator Maintenance

Types of Maintenance

Labor Costs

Craftsmen / Contractors

Work Scheduling

Reliability Organization

Engineering and Investment

Maintenance Support

Maintenance Organization

Spares Inventory

Maintenance Cost

Reliability Losses

FACTORS

Craftsmen Activity

Supervisor / Planner

Materials

Labor

Operator Maintenance

Types of Maintenance

Labor Costs

Craftsmen / Contractors

Work Scheduling

Reliability Organization

Engineering and Investment

Maintenance Support

Maintenance Organization

Spares Inventory

Maintenance Cost

Reliability Losses

FACTORS

Journey to World Class


Justification for Improvement

How Much Is It Worth To Achieve the Next Level?

• Determining the next level of performance establishes the business case for improvement – Constraint Management considerations – Where to apply improvement?

– Defining the next level desired – planned?, proactive?

• Costs to Achieve • Consulting Resources

• More Staff / Mechanics / Planners / Schedulers

• Meeting Time to Establish and Monitor Plan

• Increased Parts Inventory Level

• Maintenance Strategy Development

• Training

• Procedure Writing

• Engineering redesign

How Much Is It Worth To Achieve the Next Level?

• Savings - Means for Justification – Uptime – more sales margin from increased production

– Supply Chain reliability

– Lower operating costs

– Lower energy costs

– Less waste

– Out of-Pocket Savings - People – FTE Only!

– Less Parts and Materials

– Less overtime

– Lower Contracted Labor / Special Services

• Return on Investment / Payback – Exceed company guideline hurdle rates

– Compared against other investments

– Not your typical project – culture forming takes time

– Two years in minimum to recognize change

Justification: Benchmark Analysis

Metric Unit Value

Maintenance Cost – Annual $MM

Replacement Asset Value of the Facility $MM

Maintenance Cost/ RAV %

Maintenance Cost / RAV (Benchmark) (2-3%)

%

Total Maintenance Cost Projected Opportunity $

Composition of Maintenance Cost Opportunity - People

Number of Mechanics Crafts Only

RAV / Mechanic (Current) $MM

RAV / Mechanic (Benchmark) ($6 - 8 MM RAV /Mechanic)

$MM (at 7MM/Mechanic)

Maintenance Labor Projected Opportunity $MM

Justification: Benchmark Analysis

Composition of Maintenance Cost Opportunity – Carrying Cost and Parts

Units Value

Storeroom Inventory/ RAV %

Storeroom Inventory / RAV at Benchmark

(Benchmark - 0.5%)

$MM

Storeroom Inventory (Difference) $

Storeroom Carrying Cost Opportunity (At 10 – 20% Carrying Cost)

$

Parts Costs (Current) 1.5 Parts / Labor

$MM

Parts Cost (Benchmark) 1:1 Parts / Labor

$MM

Parts Cost ( at Target) 1.25 Parts / Labor

$MM

Total Parts Cost Opportunity $

Justification: Major Driver is Margin

• A more reliable supply chain and additional sales from increased production has the greatest impact to a business.

• Additional production generally requires only variable costs while fixed costs remain the same.

• May allow a site to differentiate themselves to attain market share.

• May allow a company to forgo constructing new faculties.

Major Driver is Margin

Pre-Tax Profit

Fixed Cost = $35 Million

+ 0

-

Break Even Point

Slope of Line is Variable Margin 60%

Production

Base Case Sales Revenue

= $90 Million at 60% Uptime,

Profit = $19 Million

New Case Sales Revenue = $105 Million = 10/60 x90 at 70% Uptime, Profit = $28 Million

0.6 x 15MM sales =$9 Million or about 50% increase in profit

How Much Is It Worth? – Margin Example Calculation

Step Description Comment

Operating Days/Year Days Usually 365 Days

Unavailability (Planned) % % Total Unavailability - %

Turnarounds % Minus Turnaround Allocation

Mechanical (Remaining) % Mechanical Unavailability - %

Others (Planned) % % Other Unavailability - %

Change Out (Planned) % % Cleaning, etc - %

No Raw Materials (Planned) % % No demand - %

Actual Production Time Days / Year Days Remaining

Non -Operating Days/Year Days / Year 365 – Days Remaining

Output / Year (Planned) Lbs / Year Supply Chain estimate

Production Rate (Planned) Lbs / Hr Converted to Lbs/Hr Actual

Sales Revenue (Estimated) $ / Lb Sales Cost/ Lbs

S&A and Operating Cost Fraction % Directs and Indirect Costs

Margin Revenue $ / Lb Sales Costs – Direct and Indirect Costs

Increase in Availability Additional Yr Lbs Estimated Improvement in Availability

Total Business Case Opportunity $ Fractional Improvement x Margin

Reaching the Next Level

• A site’s business has ranked on-time delivery as an market qualifying factor. The main causes for missed shipments were equipment failures. The site needs to move from its current 85% equipment availability to 90% in a year. They do not have competitive advantage for on-time delivery

– Eliminate bad actors

– Improve the amount of planned work

– Improve maintenance strategies

– Identify critical parts

– Improve mechanic skills sets

• Site will plan its next 1-2 years to achieve this next level.

• The key action is the selection of practices that will enable the site goal.

Planned Journey – T Map

T-MAP TEMPLATE - RELIABILITY

2013 2011 2012

2013

2011

2012

FROM

TO Stop The Equipment From

Breaking

Prioritize Work Everyone Involved in Reliability

Redesign the PM System

Plan Only The

Work Needed


Closing

Summary

• A site within a company’s manufacturing structure must understand its “position and purpose” in their business

• Before understanding the business case for M&R improvement, the site should understand which factors allow it to compete in the marketplace.

• After understanding these factors, the impact of M&R on those factors should be understood.

• The site should then assess itself against M&R benchmarks to understand the current state of its M&R practice implementation.

• The next level is set by a well-defined journey for M&R improvement.

• The next level can be justified “loosely” by benchmark analysis or by a margin analysis which includes costs benefits for the site.

Thank You

David Rosenthal, P.E., CMRP

Reliability Delivery and Asset Manager

Jacobs Engineering Group

[email protected]

(832) 351 –6630 (office)

(215) 620 –2185 (cell)

mailto:[email protected]

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