The recession which started in 2008 has affected all industry sectors, aluminium being no exception. The LME has since then dropped from a high of nearly $ 3200 per ton at its peak and is now hovering around $ 1800 in the face of lower global demand. That is nearly a fall of 43 %. Only a few aluminium producers have been able to sustain this shock. It has led many companies to scale back their production, some others to shutdown while for many it translates to cutting cost to remain competitive. The economic and political realities have forced managers to reduce cost.
In a typical world class aluminium smelter, the cost of maintenance is 2 – 3 % of the total cost of production. In a badly managed unit this could be 5 % or more. Most large companies lose between 2 and 16% of annual turnover due to downtime. Besides aluminium industry, in many large scale plants, the maintenance cost accounts for 40 % of the operational budget. Therefore how maintenance is carried out can sometimes decide the survival of a company.
For a newly set up unit like EMAL ( Emirates Aluminium), a unit of recently formed entity EGA (Emirates Global Aluminium), it becomes a question of survival due to the huge capital investment and cost of borrowing. Even for old aluminium smelters, especially those in countries with higher energy cost; cost reduction is essential to remain competitive.
Cost of production is weighing heavily across all regions in all industry segments due to low global demand. Therefore EMAL took a strategic decision to explore proactive maintenance as a means to reduce cost and it has been quite successful in this regard. According to DuPont, maintenance is the single largest controllable expenditure in a plant. Rather than resorting to some old methods of cutting people or restricting employee welfare facilities in such tough economic times, it will be prudent for companies to look into this controllable expenditure. The experience of EMAL in this regard is a case in point. The problem of high maintenance cost has reached a crucial stage, but as some companies like EMAL have found out and realized, maintenance costs can be cut drastically by adopting and practicing a proactive approach.
When one takes a closer look at the maintenance activity, it is found that many organizations are in a fire fighting mode. In the process they end up spending more. But, that is just the tip of the iceberg. There are lots of hidden costs as a consequence of the machine downtime. The opportunity cost is very high. A successful proactive maintenance strategy assures that production targets are met and with required quality output while still incurring lower maintenance cost.
Why a company should adopt Proactive maintenance:
- To reduce breakdowns and hence to reduce loss due to production opportunity
- To elongate life cycle of the machine
- To have better inventory control and
- To increase labour productivity
- To sustain and remain competitive in the market place
The challenge lies in achieving the desired change in mindset. Therefore the thinking process is an important aspect of the roll out. Maintenance function needs to be seen as a profit center rather than as a cost center. Maintenance expenditure has to be treated as an investment rather than as a cost, a radical deviation from traditional thinking.
To begin with, the first question that needs to be asked is “What is Maintenance?”. This definition is important because the treatment differs based on how we define it. A Verb treatment would define a maintenance activity as “To repair or to fix a piece of equipment or to attend a problem to keep an equipment running “. In its very DNA of this approach lies the reactive mode of response. Whereas a Noun treatment would describe it as ” A process or system or methodology of keeping an equipment running”. Note in this case the focus is on the process, method and the system.
The second question that needs to be asked is whether Maintenance is a service or a product. A service relationship will tell maintenance to be fast acting which means responding to breakdowns fast and resolving them quickly. This is a reactive approach and most of the time will require many more manpower resources to achieve the desired level of response. A product approach in contrast considers maintenance as a product ( read capacity) to the customer. Maintenance function is viewed as a producer or protector of ‘Capacity’. This is an important revelation. Stated again, the maintenance function is a process that produces or protects capacity, which is the product.
It is important to understand what Proactive maintenance actually means to an average maintenance technician or Engineer working on the shop floor. It’s important to trust the ability of the employees. They must be encouraged to solve problems, think of long term solutions to chronic and frequent failures. They must be empowered to try out their ideas on field and test them if they work. Their ideas and efforts must be valued and they must be allowed to make equipment modifications within established guidelines. The trust of the hourly employee is demonstrated by allowing participation in meetings and seminars at other plants.
Maintenance employees must learn to keep clean, well operating equipment rather than learning the heroics of recovering from a breakdown. They must make rounds of the plant to detect early signs and symptoms of failures and report it to the supervisor or management to take action. There should be a reward system for such acts. In other words they must develop a taste for proactiveness. Equipment check sheets are an integral part of proactiveness and forms the first step towards proactive maintenance.
According to major industries throughout the world, it’s time to get rid of old ideas on machine maintenance. The cost-saving trend is toward a maintenance program that targets the root causes of machine wear and failure. Predictive and preventive methods are out; proactive maintenance is in.
EMAL has recognised this since the beginning of its journey towards cost and quality excellence. Its focus on proactive maintenance driven by top management and well implemented down the line has resulted in substantial savings for the company. Coupled with its suggestion scheme, proactive maintenance has become successful to a large extent. Although the journey is not yet over, the savings achieved so far promises lot of potential to become a cost leader in future.