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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.
Where we left off (Part 2)…
• 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
Where we left off (Part 3)…
• 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
MAINTENANCE AND RELIABILITY FOR CHEMICAL ENGINEERS – Part 4 – Business Case Development
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%
MAINTENANCE AND RELIABILITY FOR CHEMICAL ENGINEERS – Part 4 – Business Case Development
Where is your site on the journey?
Defining the Journey P
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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
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
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
Core crafts identified
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
Core crafts identified
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
MAINTENANCE AND RELIABILITY FOR CHEMICAL ENGINEERS – Part 4 – Business Case Development
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
MAINTENANCE AND RELIABILITY FOR CHEMICAL ENGINEERS – Part 4 – Business Case Development
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
David.rosenthal@jacobs.com
(832) 351 –6630 (office)
(215) 620 –2185 (cell)
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