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Al Poling RAM Study Project Manager HSB Solomon Associates LLC Dallas, TX Reliability and Maintenance (RAM) 27th Brazilian Congress on Maintenance Rio.

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Presentation on theme: "Al Poling RAM Study Project Manager HSB Solomon Associates LLC Dallas, TX Reliability and Maintenance (RAM) 27th Brazilian Congress on Maintenance Rio."— Presentation transcript:

1 Al Poling RAM Study Project Manager HSB Solomon Associates LLC Dallas, TX Reliability and Maintenance (RAM) 27th Brazilian Congress on Maintenance Rio de Janeiro, Brazil September 12, 2012 The Path to World-Class Performance

2 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 2 “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” - Charles Darwin Survival in Nature

3 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 3 “It is not the strongest, nor the most intelligent that survives. It is the one that is the most adaptable to change.” “Reliability and maintenance are tools in the manufacturing survival tool kit!” - Al Poling Survival in a Global Market

4 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 4 Reliability and Maintenance Benchmarking Benchmarking is the use of actual operating data to compare performance of multiple entities (e.g., companies, sites, production units, etc.). A benchmark is a performance threshold used for comparative purposes (e.g., first quartile, median, etc.). Benchmarks can be average values (e.g., overall average, better half or poorer half average, etc.) of a peer group’s performance indices. Benchmarks can also be any breakpoint used to distinguish performance between better and poorer performers.

5 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 5 Reliability and Maintenance Benchmarking Reliability Maintenance Monetized margin loss (maintenance downtime times standard margin) due to a facility’s mechanical unavailability and failure to perform as designed compared to peers in the same industry The normalized cost of conserving a facility’s physical assets so they operate at design performance levels compared to peers in the same industry

6 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 6 International Study of Plant Reliability and Maintenance Effectiveness (RAM Study) Implemented in 1996 to compare company, site, and unit  Maintenance Costs  Mechanical Availability Process Industry  Chemicals and Petrochemicals  Refining Redesigned in 2010/2011  Focused on Factors that Impact RAM Performance  Utilizing Contemporary Measures of Performance Benchmarks Against Better Half Average Performance

7 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 7 RAM Study – Core Indices Maintenance Cost Index (MCI) Maintenance Cost Type  Expense  Capital (replacements due to end of life) Maintenance Cost Categories  Labor  Material  Overhead/Support Maintenance Work Types  Corrective  Preventive  Predictive/Condition Monitoring Maintenance Work Categories  Routine Maintenance  Turnarounds Including Short Overhauls

8 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 8 RAM Study – Core Indices Mechanical Availability Index (MAI) Captures all reliability and maintenance related downtime  Breakdown  Turnarounds and Short Overhauls  Slowdowns and Rate Reductions Monetizes all reliability and maintenance downtime  Assigns a standard margin for each production unit  Plant replacement value (PRV) × 40% × annual RAM downtime Captures downtime by equipment category  Rotating  Fixed  Instrument/Electrical Benchmarks Mean Time Between Failure (MTBF)  Pumps, compressors, motors, heat exchangers, etc.

9 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 9 RAM Study – Core Indices Reliability & Maintenance Effectiveness Index (RAMEI) Reports Net Performance Gaps  Reliability  Maintenance Highlights Areas of Excellence  Where performance is equal to or better than first quartile performance  Need to understand what enables excellent performance and replicate throughout the site Sums Total Improvement Opportunities  Maintenance Cost Improvement Opportunities  Mechanical Availability Improvement Opportunities Provides a Basis for a Performance Improvement Plan

10 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 10 Reliability and Maintenance Culture Behaviors are driven by the local culture There are two distinct cultures in the reliability and maintenance community  Traditional Culture – based on the belief that failures are inevitable, so they focus on being good at reacting  Contemporary Culture – based on the belief that failure- free operation is the objective, so they focus on failure elimination

11 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 11 Traditional Culture High Maintenance Costs (Cost/PRV >1.4%) Low Equipment Reliability (<96.7% mech. avail.) Reactive Culture (reinforce reactive behaviors) Majority Corrective Maintenance (80/20) Annual Turnarounds (T/As) with Little Scope Management Change (Risk) Averse Focus on Optimizing Reactive Behaviors Reinforce the Current Culture and Related Behaviors Inefficient and Ineffective Organizations

12 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 12 Consequences of Traditional Reliability and Maintenance Increased risk of a catastrophic incident Higher recordable injury rate Increased downtime, therefore less production More off-spec product, thus lower margins Larger replacement capital requirements (4–10%) Reduced revenue, therefore lower profit Resource intensive Lower return on assets Cannot compete in a global marketplace

13 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 13 Contemporary Culture Low Maintenance Costs (Cost/PRV <1.4%) High Equipment Reliability (>96.7% mech. avail.) Proactive Culture (reinforce proactive behaviors) Majority Condition-Based Maintenance (80/20) Efficient and Effective Organizations Failure Averse Low T/A Frequency (5–7 years) w/Scope Management Accept Failure-Free Operation as Normal Focus on Optimizing Overall Performance

14 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 14 Benefits of Contemporary Reliability and Maintenance Lower risk – both safety and environmental Uninterrupted operation Higher product quality Increased throughput Higher return on assets Smaller replacement capital requirements (0–2%) Increased revenue and profits Optimum resource requirements Competitive globally

15 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 15 Traditional vs Contemporary Reliability and Maintenance Which one are you? How do you know? You know by measuring and comparing performance!

16 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 16 The Relationship Between Reliability & Maintenance Reliability and Maintenance Are Inextricably Linked Reliability Maintenance Cannot cost cut your way to improved reliability Maintenance costs are driven by reliability…or the lack thereof Best performers achieve high reliability at low cost! Poor performers have high cost with low reliability! Each 1% increase in mechanical availability can translate into a 10% reduction in maintenance cost!

17 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 17 Traditional Approach Pressure Applied Here Reliability (Margin) Maintenance Costs

18 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 18 Initial Traditional Result Pressure Applied Here Lower Reliability (Margin) Lower Maintenance Costs

19 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 19 Long-Term Traditional Result Lower Reliability (Margin) Higher Maintenance Costs

20 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 20 Contemporary Approach Reliability (Margin) Maintenance Costs Apply Pressure Here

21 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 21 Progressive Result Higher Reliability (Margin) Lower Maintenance Costs Apply Pressure Here

22 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 22 Maintenance Costs Total Reactive Proactive 100%Mechanical Availability RAM Optimization

23 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 23 Costs Total Cost Lost Revenue Maintenance Cost 100%Mechanical Availability Profit Optimization

24 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 24 Path to First Quartile High Mechanical Availability and Low Cost Low Mechanical Availability and High Cost < > >10 Maintenance Cost, % (US $/PRV) Mechanical Availability, % Not Sustainable Effectiveness Efficiency and Cost Industry Leaders Facility Sustainable

25 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 25 World-Class Manufacturers Recognize the value of reliable operations Focus on failure elimination (uninterrupted operation) Build reliability into their corporate strategy  Engineering Design  Procurement  Operation Compete effectively in a global marketplace

26 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 26 Summary If maintenance costs are not below 1.4% of plant replacement value, you are not a world-class performer. If mechanical availability is not above 96.7%, you are not a world-class performer. Best performers continue to get better while poor performers continue to fall further behind. Regrettably, for some, it is already too late! The path to world-class performance begins with the first step… what are you waiting for?

27 Proprietary and Confidential © 2012 HSB Solomon Associates LLC 27 Questions? Thank You! Al Poling RAM Study Project Manager HSB Solomon Associates LLC Dallas, TX


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