Cost of Unreliability

H. Paul Barringer

The cost of unreliability is a big picture view of system failure costs, described in annual terms, for a manufacturing plant as if the key elements were reduced to a series block diagram for simplicity. It looks at the production system and reduces the complexity to a simple series system where failure of a single item/equipment/system/processing-complex causes the loss of productive output along with the total cost incurred for the failure. If the system IS sold out, then the cost of unreliability must include all appropriate business costs such as lost gross margin plus repair costs, scrap incurred, etc. If the system is NOT sold out, and make-up time is available in the financial year, then lost gross margin for the failure cannot be counted. The cost of unreliability is a management concern connected to management’s two favorite metrics: time and money.

Why: In private enterprise, failures must be concerned from a financial view point and not a gear-head approach of simply counting the number of failures; and you must speak the language of the enterprise which describes events by monetary measures over a period of time. The annual cost for failures is usually not stated in a clear cut manner nor is failure costs summarized by system/sub-system to identify the weak links in a monetary fashion so that appropriate action is taken to reduce the annual cost of unreliability by building a clear Pareto distribution to attack the vital (high cost) areas with an action plan to reduce failures (unreliability) and to reduce the cost of unreliability.

When: For new a new plant, this can be a design criteria to limit costs of unreliability for competitive reasons in the marketplace, i.e., by plan, the hidden costs of failures is made obvious as a portion of the strategic plan. For an existing plant, this can be an exercise in defining the cost of unreliability and building a long term plan to reduce the cost of failures as a portion of the tactical plan.

Where: This activity is best performed with high level involvement of the management team to provide fundamental understanding of the size of the icebergs about to rip out the underbelly of the plant and to involve the organization in a plan to reduce the costs so that profits are pushed upward because of the improvements. If the cost of unreliability cannot be reduced, then the costs become extra weight for the saddle bags in the race for survival.

H. Paul Barringer of Barringer & Associates, Inc.

How to Fix the 70/30 Phenomenon

When you ask front line supervisors or team leaders if all people in their teams are performing to the same standards or if some are doing more work and achieving more results than others, you will often get the same answer. All over the world, the most common answer, after some analysis, verifies that about 30% of the people do 70% of the work.

Zen and the Art of Managing Maintenance

Unfettered expression and spiritual satisfaction? How does this relate to managing a maintenance department, especially one in the U.S. Postal Service? Open your mind. Take a page from the Zen Buddhist monks who preach: When you are quiet and listen, you become aware of sounds not normally heard. USPS maintenance leaders are listening and beginning to understand that maintenance success doesn't come through closed minds and closed doors.

Why do maintenance improvement initiatives fail to deliver? (Hedgehog or Fox?)

It is not uncommon that many reliability and maintenance improvement initiatives fail to deliver expected results. Why is it so? Some of the most common causes I have observed include:

Why Maintenance Improvement Efforts Fail

Why do improvement efforts fail or perhaps not sustain the gains? There are many reasons, but those most often stated are “lack of commitment” and not “following the process”. But why is there lack of commitment, and why aren’t processes followed? Here are a few of the reasons that I’ve seen:

TPM and RCM: Whirled Class

When a piece of production machinery broke down at the Whirlpool plant in Findlay, Ohio, several years back, it was accepted practice for the machine operator to call maintenance and then sit back and wait for the problem to be fixed. Critical information and knowledge was not shared between the operator and maintenance technician. Like many companies, these workers were stuck in traditional roles - operators run the machines, maintenance fixes the machines, and the two do not cross. As a result, productivity opportunities were missed.

Where Do Maintenance Professionals Come From?

Many managers are unaware that best-in-class companies routinely design-out maintenance at the inception of a project. That, clearly, is the first key to highest equipment reliability and plant profitability. Whenever maintenance events occur as time goes on, the real industry leaders see every one of these events as an opportunity to upgrade. Indeed, upgrading is the second key, and upgrading is the job of highly trained, well-organized, knowledgeable reliability professionals.

TPM and Tecate: The New Translation

The true translation — might it be proper to say a new and improved translation? — is being used today by Cervecería Cuauhtemoc Moctezuma, one of the largest brewers of beer in Latin America. Known throughout this company as Mantenimiento Alto Desempeño (MAD), or translated as High-Performance Maintenance, the concept of TPM is alive and well at the company's six plants in Mexico. Perhaps the best example is at CCM's brewery in Tecate, located a short drive from the U.S.-Mexico border on the Baja California peninsula.

Cost of Unreliability