What is your organization’s cost of maintenance? Seems like an easy question that most maintenance or operations managers should be able to answer; However, when working with our prospects and customers, I often realize that this question appears harder to answer than it should. I believe this can be attributed to many factors. Some reasons are cultural, but most of the time, the lack of maintenance management systems and standardized processes make it extremely difficult to track where money is being spent.
The most common and easiest method of calculating maintenance costs is to simply add the combined total wages of maintenance employees with non-production materials purchased. Again, while this seems simple, without the proper systems or controls in place, you may not be able to gather this data and ultimately leave out large amounts of resources spent from your calculations. For example, do you consider any of the following when calculating your cost of maintenance?
- Production overtime due to maintenance or equipment failures
- Holding costs of unused or obsolete inventory
- Contractor costs
- Capital Projects
So why is this important? Without having a clear understanding of your cost of maintenance or cost per unit produced, you can’t develop a proper maintenance strategy. You may be spending too much in some areas, such as unused Maintenance Repair and Operations (MRO) inventory, and contrary to some beliefs, too little in others.
After evaluating current maintenance expenses and realizing that some changes were needed, I have worked with customers that decided to allocate more money on equipment maintenance. This shift reduced production overtime, equipment downtime and the amount of time it took to produce their products. By spending more, they ultimately decreased their cost of maintenance by doubling capacity and product output, reducing their cost per unit produced and increasing profits.
Every organization is different, but starting with the proper data is critical to developing a strategy that fits your organization. By implementing TabWare CMMS / EAM combined with industry Best Practices and Analytics, our customers are provided with the data needed to create successful strategies and improve their bottom line.
Rich Adams, EVP Professional Services