Audits provide framework and benchmarks for continuous improvement for three key areas-management, systems and procedures, and personnel and resources

Maintenance Audits Provide Building Blocks

Pulp and paper companies are faced with fierce competition from global imports and a continuing level of inadequate returns to shareholders, so change is imperative to remain competitive. Many organizations have utilized audits in safety, quality, or environmental and financial management, but few have considered maintenance audits as a way to impact performance and profitability.

WHY FOCUS ON MAINTENANCE? The basic maintenance costs at pulp and paper mills-including labor, materials, and subcontractors-represent between 10% to 30% of the total cost to make the product. Furthermore, the effectiveness of maintenance directly affects equipment performance. Taking into account cost of downtime due to equipment maintenance, the total cost of maintenance can be up to twice the basic cost. In fact, the cost of maintenance is often more than the EBIT earned by a company.

Reliability of plants has a major impact on meeting customer service requirements. A 1% reduction in maintenance downtime can add at least 5% to the bottom line. Furthermore, effective maintenance plays an important part in safety and environmental performance.

As competitive pressures grow, management must look for ways to reduce costs and improve profitability. Quite often in the maintenance area, this decision does not extend beyond a reduction of employees, contractors, spares, and training when better options may exist. This is because such decisions are often made without a real understanding of the consequences, and most importantly, without understanding the real cost drivers.

Papermakers are good at making strategic product decisions because that is their core competence. However, most business owners are not qualified to make extensive maintenance decisions because maintenance is not their core competence. The maintenance audit was developed to give top-level (non-maintenance) management a realistic understanding of maintenance with essential recommendations to achieve business goals.

CASE STUDIES. Some typical scenarios showcase reasons companies may want to conduct maintenance audits.

Scenario 1: A paper company was in the process of purchasing three paper mills in different locations. These mills were not meeting performance standards, and there appeared to be a need for quick improvements to the process, the organizational structure, and the overall maintenance performance.

The new owners reviewed the papermaking operations and knew what was required to achieve business budget requirements. They requested a maintenance audit to understand their total investment needs.

The audit revealed the need for a greater investment in maintenance tools, systems, organizational structure, training, and maintenance strategy effectiveness. With this information available, the owners recognized the potential for a quick return on their investment by concentrating on their core business-papermaking-and outsourcing maintenance to a company whose core competence was the business of maintenance. The result was a significant improvement in plant performance and, at the same time, a reduction in maintenance costs.

Scenario 2: The management of an integrated paper mill was concerned that its maintenance organization was predominantly reactive. The operations staff had little ownership of the equipment, total plant uptime was below budget expectations, there were uncontrolled equipment failures, and employees exhibited limited understanding and control of costs.

The company used a maintenance review to document the total business, comparing key elements in management, systems, and services with business expectations. Additionally, a gap needs analysis was carried out with reference to investments and potential savings in fixed and variable costs.

Consequently, a strategic improvement plan was developed using the benchmarks provided from the review with specific business targets in mind. The project was a success because management committed itself to refocusing the organization on business requirements and reestablishing a balance of needs and improvements.

Scenario 3: The corporate body of a company with seven mills at different locations wanted to improve overall plant performance and increase profitability. The company used the maintenance audit process to identify opportunities for improvements at each site and to create common benchmarks, standardization, transfer of best practices, methods, tools, and resources.

The audit was customized to represent the business and was sold to the company. A working team of plant managers was formed so that they could be trained in the maintenance audit and best practice maintenance business. An audit engineer was assigned to the working team to lead the project and to assist in developing individual plant improvement programs and corporate benchmarking requirements.

Figure 1. Maintenance audits focus on three key areas–management, systems and procedures, and personnel and resources–with each area made up of key elements and vital links to determine organization effectiveness and success.

WHY CONDUCT AUDITS. The main reason for conducting maintenance audits is to improve plant performance and to increase profitability. Put simply, companies produce a marketable product for profit, and businesses invest in equipment and processes to produce this product with confidence. However, the availability and productivity of the equipment and processes is determined by the "maintenance effectiveness."

Many companies do not have a core competency in maintenance management and, in particular, do not understand true consequences of maintenance inefficiencies. Much of maintenance is reactive (breakdown-based). To achieve sustainable improvement, this must shift to a proactive, systematic approach.

The maintenance audit identifies effectiveness and maturity of key elements in the maintenance business to support this systematic approach and provides accurate data for decision-making with the best interest of the company, business, and organization in mind.

THE FOCUS OF AN AUDIT. The audit focuses on three key areas that encompass all of the activities necessary to ensure a successful approach to maintenance. These include management, systems and procedures, and personnel and resources (the workforce). As illustrated in Figure 1, each of these areas is made up of key elements and vital links to determine the effectiveness and success of the organization.

Management responsibility is aligned with the value chain of the business and represents the who, what, why and how to successfully maintain or capture market share of the product. Most importantly, management determines the business reasons for maintenance.

Systems and procedures are the tools either imported or developed within the organization to effectively administer management's visions and requirements and to provide best practice assistance to the workforce.

Personnel and resources (workforce) carry out the work within the performance expectations of management.

The links between these three are the reasons and drivers of organizational culture and directly represent management's commitment and leadership.

A thorough maintenance systems audit has to question all of these areas to present a total understanding of the business. Management will then have a benchmark with appropriate recommendations to minimize waste of resources and employ best practice principles in line with the business plan.

The audit process is conducted on site and reviews key elements systematically. This is done by:

- Interviewing key people in the organization (including preferred suppliers and preferred contractors)

THE AUDIT EVALUATION TABLE.The audit evaluation table is formatted to provide an objective assessment of each element. The purpose of this is to provide the auditor with an understanding of the status of the maintenance function development within the company.

The audit evaluation table featured in Figure 2 is based on continuous improvement principles. The top represents the most specific, advanced level of assessment. Similar evaluation tables are commonly used to represent progress in maintenance organizations.

Figure 2. This audit evaluation table is based on the principles of continuous improvement.

Figure 3. Audit summary sheets are commonly used to prepare short and long-term improvement programs.

MAINTENANCE AUDIT RESULTS. It is imperative that the audit results are represented in a format understood by management and the people audited. Carrying out a presentation before and after the audit ensures maximum understanding and cooperation.

Audit results are provided in the following format:

Based on the audit results and recommendations, a continuous improvement plan should be developed and implemented to achieve optimal results.

Audit summary sheets for each principal function are shown in Figure 3. These summary sheets are commonly used to prepare short and long-term improvement programs focused on recommendations and requirements.

For example, if management agrees that "financial control" is an element that has to be improved to better manage maintenance expenditure and asset performance, the following decisions have to be made:

- The level of control that should be achieved in the next one to two years

As each element result is compared with the business plan, management can use a "report summary" to represent the continuous improvement plan required to achieve future business direction.

If this is carried out correctly, management will invest wisely to improve the principal elements to achieve their goals. Furthermore, they will also provide a plan for the future that can be reviewed to ensure that the improvement plan is on target.

Joe Zancolich is senior maintenance consultant, Siemens Westinghouse Technical Services, a business of Siemens Energy & Automation, Inc.