Without effective maintenance planning, operational costs cannot be well managed nor reduced. Just cutting budgets, year after year, will result in less planned preventive work and therefore more reactive and breakdown work leading to higher expenses.
In this article, we’ll explore how and why to invest in improving SAP maintenance planning and scheduling to reduce resources, reduce downtime, gain better control on spending, and optimize your budgets.
Key Budget Challenges without Effective Maintenance Planning
“When looking at maintenance costs, the most important concept that you must remember is that your organization's behaviors change the resulting cost numbers. Forcing the cost numbers will not change behavior,” writes Sam McNair of Life Cycle Engineering.
It seems obvious but recognizing that behaviors (see box below) drive costs is a tenet that not all maintenance organizations put into practice and operationalize at the highest levels.
Behaviors That Impact Maintenance Costs
Sam McNair of Life Cycle Engineering
The Real Cost Impact of a Reactive Culture
According to the Marshall Institute, A Measured approach to Uptime, "It is widely accepted in the maintenance industry that a well-planned Work Order is about 3 times less expensive than the same unplanned reactive Work Order, and that Emergency repairs may cost as much as 5 to 7 times more than planned work, which can obviously have a huge impact on the bottom line".
When you consider the amount of time it takes to respond to a call, troubleshoot the problem, obtain the spare parts, and then the impact from loss of production, it is not hard to see that shifting the culture from reactive to planned maintenance can have a big impact on your maintenance budgets (and the control of your maintenance budgets).
How much of an impact? According to Richard Lamb, P.E., CPA, President of Cost Control Systems, “Based on our experience, the ability to budget and control maintenance cost can increase income by 10 to 30 percent during strong business cycles, and over 100 percent during weak cycles. It may be the difference between profit and loss in the worst business cycles… Industry benchmarking has found that total maintenance cost can be reduced by 10 to 35 percent.” As you can see, with effective maintenance planning, you can make a material impact to your business.
Foundations for Improvement
The maintenance budget is generally a large block of money that is broken down into major cost areas: labor, materials, contract services, and other related expenses. This structure lacks the definition to truly create budget forecasts. Budgeting needs to be done at a more granular level with the recognition that maintenance is a complex and variable function. To get started, you must build a foundation on which to understand the cost drivers and levers to be able to control and reduce spending.
1. Pursue Asset-based Budgeting
Most maintenance costs recur annually but vary by asset. Therefore, the development of the maintenance budget should be done on an asset basis (or a group of similar assets). By looking at the history of repairs by asset, you can more accurately predict the future costs to maintain and repair the asset. Quickly you will be able to see the “bad actors” and in turn, create focus for your improvement efforts.
Creating budgets at this level will make it easier to forecast and justify maintenance spending. When push-back on a budget item occurs, having the ability to drill down to the details will encourage a collaborative, risk-based decision, so that there will be fewer surprises and less finger-pointing when a breakdown does occur.
2. Standardize Processes
Having standard, well-documented procedures for identifying, planning, scheduling, and executing work is certainly a basis for driving greater consistency in maintenance spending. Work approval is also necessary to control spending plus advancing work planning and scheduling processes can bring further value.
According to Doc Palmer's Maintenance Planning and Scheduling Handbook, "Implementing proper planning and scheduling can improve productive maintenance time of a typical organization from 25-35% to 50-55% - almost doubling the ability to get work completed" - which means more planned work gets accomplished resulting in greater asset reliability and reduction of unplanned maintenance costs.
3. Improve Data Capture for Analysis
Although the data needed for asset-based cost planning is available in your SAP system, generally it is not of good enough quality to support the insights needed for cost management. Identifying waste, inefficiencies, and the cause of unreliability, and finding ways to prevent or control those cost items over time, makes it possible to improve overall execution and reduce costs.
Robert Peffen from Management Resources Group, summarized this point as, “One of the most effective ways to control the maintenance budget is to identify and eliminate recurring reliability and maintenance problems. To accomplish this, the data on maintenance work performed must be collected and analyzed. The identified “bad actors” should be ranked according to the severity of impact to the business. Root Cause Analysis should then be applied to eliminate the causes of failures.”
With data capture comes the ability to pursue more advanced maintenance strategies such as Reliability Centered Maintenance. With RCM, the focus is on keeping machinery and assets up and running at maximum capacity while minimizing maintenance costs. It is accomplished by defining the maintenance approach (preventive, predictive, run-to-failure) by asset.
4. Change Reactive Mindsets
The maintenance manager alone cannot succeed in controlling maintenance costs without the support and collaboration of the whole operations team. Rafael Padilha, Director for Reliability and Continuous Improvement at Ingredion described the cultural challenge well. In this webinar, he describes that “when you don’t have a reliability culture, it is difficult to convince the plant manager, the operations director and others to stop production for preventive maintenance; but you have to do this or you will never achieve reliability.” He goes on to explain how he successfully turned around reactive maintenance organizations and achieved significant cost reductions as a result.
Key Actions to Get Started
5. Improve use of SAP EAM system
Evidence demonstrates that best practice planning and scheduling is key to improving maintenance staff productivity, increasing equipment uptime, and reducing costs. But SAP PM isn’t that easy to work with as noted by a major analyst in their 2020 survey of ERP EAM Functional Satisfaction, the top functions related to maintenance management that have the biggest gap in customer satisfaction included:
- Workforce Data for Scheduling – The capability of tracking workforce availability, qualifications, and skills for assignment to specific maintenance jobs
- Work Scheduling – Automating the assignment of tasks to resources over a period of time
Companies that use SAP can benefit significantly from a specialist software tool that provides an intuitive interface to SAP data and automates many of the routine steps of planning and scheduling. The result can be significant as noted by Doc Palmer, “Work coordination from planning increases wrench time from the 35 percent of a typical good maintenance force to as much as 55 percent. Fifty-five percent divided by 35 percent yields a 1.57 improvement. This means 30 people with planned and scheduled work could perform the work of 47 people. Investing in a single planner creates a 17 person increase to the workforce!”
6. Invest in Predictive Technologies
To save time and money in preventive maintenance, invest in the technologies to trigger a preventive maintenance task to replace pre-set schedules. Predicting a change in asset condition such as rising temperatures, increased vibration, or noise, can allow for fewer preventive maintenance tasks being conducted annually. Sensors and other Industrial Internet of Things (IIoT) devices provide such data along with embedded smart technologies in many of today’s production systems.
7. Improve Technology for the Workforce
Keep data digital throughout work processes supports data capture and process consistency. For technicians, replacing paperwork orders with mobile devices has been proven to increase wrench time resulting in more work completed by fewer technicians. Additional cost-saving benefits typically include a 90% reduction in the time to dispatch orders, 70% reduction in the time to capture field notes, and 100% reduction in printing costs.
Ambev, a subsidiary of ABInBev, the largest brewery in the world, saved over 7.2 million sheets of paper per year ($360,000) by replacing paperwork orders with mobile devices! In addition, they reduced their MTTR (Mean Time to Repair) by 79% – from 24 to 5 days, reduced downtime, increased production, and increased the productivity of their technicians and workers by 15%.
8. Establish and Track Leading Indicators
As you invest in technology and tools to save money in maintenance costs, it is important to be able to objectively demonstrate the results in terms of key performance metrics. These metrics are also important for the ongoing optimization of maintenance activities. According to Robert Peffen, the following performance measures are a good basis to start driving improvements:
- Total Work Backlog – in Man-hours – This is a measure of all of the work in the maintenance system that has to be executed
- Planned Work Backlog – in Man-hours – This is a measure of all of the work in the system that has been planned for execution
- Percent Planned Work – This is the ratio of planned work versus unplanned work that is performed within a period of time
- Percent Scheduled Work – This is the measure of the quantity of planned work that is placed on a schedule for execution
- Percent Weekly Schedule Complete – This is a measure of the quantity of work that is scheduled versus what is actually completed within a designated time period. Measuring schedule compliance.
Percent PN and PdM – This is a measure of the quantity of predictive and preventive maintenance performed versus the total quantity of work in a scheduled period. More on improving maintenance effectiveness ratios.
It is impossible to cut maintenance spending and achieve reliable equipment performance at the same time without effective maintenance planning. Although it may seem challenging, making progress with these proven methods and tools can be just the beginning of a path towards effective maintenance planning, improving maintenance ratios, and continual improvement in maintenance budgets.
Build your Business Case
Spending proposals that significantly reduce the largest sectors of your organization's budget usually are the most appealing to management. So, start to build your business case with our whitepaper, “Unleash the Power of SAP and Save”. In this paper, you can further explore the savings impact of planning and scheduling software for asset-intensive industries. The paper also reviews how to measure your current status and calculate your own potential savings.
How Sigga Can Help
Here at Sigga, we have been helping asset-intensive industries with SAP to drive digital transformation and mobile initiatives in industrial maintenance for 20 years. Consider the Sigga Planning & Scheduling solution, it is the most complete and flexible automation solution for SAP PM. The solution replaces routine process steps to check capacities, create schedules and track results. In addition, the solution closes the gaps in SAP PM functionality with features like the ability to maintain details on technician skills and availabilities.
The Sigga Mobile EAM solution is the leading mobile maintenance software for SAP environments. Companies like Ambev, Ingredion, Danone, Saint Gobain, Unilever and more have gone mobile and significantly increased operational efficiencies and reduced their maintenance budgets.
For end-to-end integrated experiences, we also offer a Mobile Warehouse and Inventory solution to further streamline processes and drive efficiencies.
At Sigga, it is our mission to empower companies to achieve their mobile digital transformation goals by providing best-in-class software technology.
Read more about Sigga Solutions and how we can help you optimize budgets with effective maintenance planning.