Framework

A Framework For Achieving Best Practice In Maintenance

A Conference Paper presented to the West Australian Maintenance Conference
By Sandy Dunn

Introduction

There is nothing permanent except change - Heraclitus (Greek Philosopher - 6th Century BC)

One of the paradoxes of today's business world is that one of the few things that we can rely on to remain constant is the need for change. Yet today even that need for change is itself changing. As technology advances, and what used to be enormous distances are shrunk to insignificance, as national borders diminish in importance, as we are forced to battle in increasingly competitive global marketplaces, the pressures to strive for constant improvement and change in what we do and the way that we do it are increasing in intensity.

Australia's mining houses are facing increased price pressures due to increasingly sophisticated competition from cheaper economies - Brazilian iron ore, Indonesian coal, Russian diamonds. The gold price continues to drop, with only the perpetual optimists forecasting a turnaround. In the public sector, Government commercialization and/or privatization policies are putting huge change pressures on those in the Water, Power and Transport sectors.

On the other hand, this globalization of business presents great opportunities for Australia's larger organizations in the capital-intensive industries who are up to the task. Today we see significant offshore investments being made by organizations such as BHP Minerals, BHP Petroleum, Mount Isa Mines, CRA-RTZ and others. The opportunities for growth are currently limited only by the availability of capital to fund that growth. Globally, research among the boards of major multinational organizations is showing that one of their greatest concerns is the availability of capital to fund their continuing growth. One of the attractions of the CRA-RTZ merger to both parties was the increased ability to attract capital funding that would result from such a merger.

So what has this got to do with Maintenance? Quite simply,

Revenue = Price x Volume

Volume = Maximum Capacity x Overall Equipment Effectiveness

More effective Maintenance works on both sides of the Return on Asset equation. Improved maintenance helps to increase revenues by increasing equipment performance. It also helps to improve ROA by reducing the need for expensive capital upgrades to increase output. It directly and indirectly releases scarce capital funds to fund growth.

This vital strategic importance of Maintenance in the Capital Intensive industries is increasingly being realised at senior levels in Australia's more progressive organizations. This presents both great opportunities and great challenges for Maintenance professionals. Pressure is increasing for change in the way most organisations go about their maintenance. For those that succeed, their efforts will increasingly be noticed at board level. Are you ready for the challenge?

"They say that time changes things, but actually you have to change them yourself." -Andy Warhol.

This paper outlines the key factors that you should consider when establishing a Maintenance Change program in your organization. In doing so, it provides a framework which you can apply to increase the chances of success in your change efforts. The paper draws heavily on Price Waterhouse experience in implementing Maintenance change at many major organizations throughout WA, as well as our international experience in implementing change as articulated in our book "Better Change"

The Six Levers of Change

In developing ideas for solutions to address Maintenance issues, often promising new solutions are rejected out of hand or not seriously studied because the change team imagines that the solutions are "out of bounds", or because the scope that the team has established for itself is not wide enough. Similarly, the team may choose not to look in directions that its members consider "out of bounds".

Large scale change in Maintenance can only be successfully implemented by focusing on all the key "pressure points" in your organization that will repay your efforts. These can be conceptualized as lying along several dimensions. We have found it useful to formalize these dimensions through the concept of the levers of change, as outlined below.

Customers and Stakeholders

Your vision of the present and future may include differences in the way that the Maintenance function, or indeed your entire organization, will (or should) view and segment its customer base.

Products and Markets

The refined focus on customers you envision may be accompanied by changes in the scope and variety of Maintenance services that you are providing to your customers.

Business Processes

There will probably be a gap in the way your Maintenance processes operate now and the way they will need to operate in the future in order to provide better service to your organization. You may already perceive the need to introduce a new set of pointedly relevant performance measures to measure Maintenance efficiency and effectiveness.

People and Culture

Your vision may include differences in the kinds of people you will need, systems and measures for rewarding them, and the culture that sends them daily signals concerning "how we do business" and "what we are all about" in a Maintenance context.

Organization

There is probably a gap between the organization structure today and its best future configuration. New workshops and other facilities may also appear in your vision of the kind of future worth having.

Technology

Finally, your vision may reveal a gap between the information-based technologies in place today and those needed to remain competitive in the future. These could include your choice of Computerized Maintenance Management System, and any other information systems that you may use to support your maintenance efforts.

It is common in change efforts to fail to focus on all the levers of change rather than the one or two that, due to their backgrounds, team members may regard as their province. We have found that successful Maintenance change programs consider all of the levers of change, and implement change in an integrated way, pulling all of these levers in a coordinated and balanced fashion.

Strategic Levers of Change

Of these levers of change, the first two - Stakeholders and Customers and Products and Markets - can be considered as being the Strategic levers of change. As such, they should be assessed before considering the other four, as they set the general strategic direction and focus with which changes in the other dimensions must align.

In a Maintenance environment, these strategic levers involve asking questions such as:

Which areas of the business are we providing Maintenance support to?

Could we be providing Maintenance support services to other potential customers other than those that we have traditionally serviced?

Which Maintenance services should we be providing?

Which Maintenance services would be better provided by contractors?

At an even higher level, you may wish to consider the question:

Should we be operating and maintaining this plant ourselves, or would this be better conducted by another organization?

There is currently a trend towards outsourcing of many, if not all, maintenance services to contractors. It is beyond the scope of this paper to discuss this trend in detail, or to provide guidance to those currently considering this option within their own organization, but beware conventional wisdom (see below). It is important that this decision be made by your organization alone, based on your situation, and with full consideration of all of the details that are specific to your situation. However, questions that you may want to ask when considering this decision include:

How important, in a strategic sense, is the maintenance service in achieving and sustaining long-term competitive advantage in the marketplace?

Is there a competitive market for the maintenance service in the external marketplace?

Where are the points of leverage in the contract maintenance industry that will provide the opportunity both for you and the contractor to obtain gains from an outsourced arrangement?

How efficiently does your in-house operation currently provide the service in comparison with the external marketplace?

How flexible can the contracting arrangement be made to cater for possible significant changes within and outside your organization?

How will longer-term continuous improvement be managed and rewarded?

How long will potential contractors take to achieve significant improvements in maintenance performance?

How easy or difficult will it be to replace the contractor, if necessary?

Operational Levers of Change

If you want the best results from your change effort, it must have the right scope. This may seem obvious, but setting scope and securing freedom of action appropriate to that scope are not simple matters. Is it the Maintenance process, the Maintenance department, or the whole company that needs to be retooled? We will discuss this issue further a little later.

One-dimensional change typically generates either modest improvement in the bottom line, or outright failure. Better change is always multi-dimensional.

If you ask people for better work performance, you must improve their work processes, give them access to the right tools and information, give them the authority to make decisions, measure performance in new ways, and reward them for higher performance.

If you restructure the organization, you must also rethink processes and the line of command, ensure the systems and technology infrastructure supports the new configuration, and revise performance evaluation and compensation to motivate adherence to the new structure.

If you redesign processes, you must also redesign jobs and procedures, change the systems and technologies that support these processes, train people to perform new or different tasks, and remove barriers to change.

If you invest in technologies such as information systems, you must also consider whether they support customer-critical processes, and integrate with technologies now in place that you do not intend to upgrade. Further, you must prepare people to use the new technologies in their new or different jobs.

High performance organizations address change in all of its dimensions. They involve parties not only within their organization, but also those outside its boundaries. An integrated solution will lower costs across the entire system from material supply and work identification, to successful work completion and recommissioning.

In a Maintenance environment, because we come from a technical background, we often focus on the Technology or Processes levers of change, and underestimate the importance of ensuring that the changes made in these dimensions must be balanced with corresponding actions in the other levers of change if the full potential benefits of the change are to be realized. For engineering folk like us, issues of organization structure, people and culture are often seen as being the "soft" issues. While we recognize that they need to be addressed, we do not see them as being ones that deserve major focus, or that provide significant opportunity for improvement in Maintenance efficiency and effectiveness. Consistently we underrate their importance - to our detriment. My colleague Steve Starling will be presenting a paper later in this conference which considers these "soft" issues in more detail.