Copyright © 2008 Rockwell Automation, Inc. All rights reserved. Strategic Approach to Maintenance Customer Support and Maintenance Rockwell Automation

2 Topical Outline Your Key Maintenance-related Issues –Issues Across Plant Roles –Overall Equipment Effectiveness –Return on Net Assets Strategic Approach to Maintenance –Common Maintenance Strategies –A Simple Approach to Strategic Maintenance Rockwell Automation Maintenance Services

Copyright © 2008 Rockwell Automation, Inc. All rights reserved. What are your Maintenance Issues? Executive Management Purchasing Engineering Production Maintenance

4 Key Executive Management Issues Return on investment –Productivity –Cost of operations –Overall Equipment Effectiveness (OEE) Economic/market conditions Customer satisfaction, quality, and delivery Safety Environmental and regulatory compliance MAINTENANCEMATTERS 18% of maintenance activities are considered to be unnecessary (ARC Advisory Group)

5 Key Purchasing Issues Price Vendor reduction Supplier stability Delivery Payment Terms MAINTENANCEMATTERS Manufacturers in the U.S. are estimated to spend over $100 billion on annual maintenance activities

6 Key Engineering Issues Machine design meets functional requirements Meeting project timelines Total cost of ownership –Capital budget constraints –Life cycle costs –Standardization Personnel bandwidth - more with less Keeping up with technology changes Ensuring long term support Access to technical resources and information MAINTENANCEMATTERS 30%-40% of equipment breakdowns are caused by poor design or equipment condition (MCP Consulting)

7 Key Production Issues Lost revenue or excessive overtime as result of unscheduled downtime Scrap or waste Downtime Aging/obsolete technology Safety Operator skill sets Right parts at right time Maximizing equipment life MAINTENANCEMATTERS Typical Cost of Unplanned Downtime by Industry (per hour): Steel$42,000Paper$36,000 Rubber$25,000Plastic$12,000

8 Key Maintenance Issues Maximizing equipment life –Time to fix equipment right vs. up-time demands –Root cause determination / elimination –Availability of reliable spares Budget constraints –Target of lean initiatives –High inventory costs –Workforce efficiency (doing more with less) Maintaining competency –Keeping up with technology changes –Lack of domain expertise or skills –Age of workforce Unplanned downtime –Unscheduled work orders & overtime MAINTENANCEMATTERS Every 10 retiring maintenance workers are replaced by 3 to 7. (Plant Services)

9 Your What are Your issues? ROI & Total Cost of Ownership Economic/market Conditions Budget Constraints Safety Price Maximizing Equipment Life Supplier Stability Vendor Reduction Function Skill Sets and Bandwidth Payment Terms Lost Revenue Scrap or Waste Downtime Meeting Project Timelines Aging/obsolete Technology High Inventory Costs

10 Turning Issues into Resolutions Steps to improve productivity / profitability –Identify top productivity / profitability related issues that maintenance can impact –Identify the tasks that can impact these issues –Align metrics around these tasks that “link” to overall objectives of the plant

Copyright © 2008 Rockwell Automation, Inc. All rights reserved. Overall Equipment Effectiveness Availability Rate Quality

Copyright © 2008 Rockwell Automation, Inc. All rights reserved. Overall Equipment Effectiveness Defined OEE % = Availability % x Rate % x Quality % –Availability – planned uptime (not including scheduled downtime) –Production Rate – speed at which line runs –Quality – total units produced less scraped units or waste Example –Plan was to run line for 420 hrs to produce 2100 units, it actually ran 390 hrs and produced 1750 units and incurred 17 defective parts Availability % = Actual Operating Time / Net Planned Time 93% = 390 / 420 Rate % = Actual Parts Produced per hr / Ideal Parts Produced per hr 90% = (1750/390) / (2100/420) Quality % = (Total Parts Produced - Defects) / Total Parts Produced 99% = ( ) / 1750 OEE = 93% x 90% x 99% = 83%

13 Availability MAINTENANCEMATTERS What if downtime events could be avoided or minimized?

14 Quality MAINTENANCEMATTERS What if root causes of quality issues could be identified and corrected before they became an emergency? Typical Quality Potential Quality with Strategic Maintenance Maximum Allowable Defects Defects (units)

15 Rate MAINTENANCEMATTERS What if performance improvements could come on line faster? Planned Rate Current Rate

16 Overall Equipment Effectiveness Maintenance Levers Rate % Quality % Availability % OEE x x = How much impact would reducing or eliminating downtime have on plant productivity? What if maintenance could identify and fix the root causes of quality problems? What would be the value of implementing production rate enhancements ahead of schedule? OEE improvements by eliminating downtime, fixing root causes of quality issues, and improving production rate

17 Maintenance Budget Stability MAINTENANCEMATTERS What does stable MRO spending mean to production and quality?

Copyright © 2008 Rockwell Automation, Inc. All rights reserved. Return on Net Assets Revenue Costs Assets

19 Return on Net Assets Defined RONA – Income less Costs versus total Assets –Income - total earnings reflecting revenues –Costs - depreciation, interest, taxes, and other expenses –Assets - tangible property, cash, accounts receivable, and inventory How can Maintenance affect RONA? –Increase plant productivity –Decrease maintenance expenses –Decrease spares inventory

20 Maintenance is commonly tasked with reducing expenses in order to affect company financial goals Reducing maintenance assets has a much larger incremental impact on RONA while further reducing expenses Return On Net Assets Maintenance LeversAssets Revenue (thru OEE) RONA Expenses - = Focusing on improving Overall Equipment Effectiveness has a continuous impact on plant revenue While focusing on Expenses improves RONA, reducing Assets has a larger impact and increasing Productivity is ongoing

Copyright © 2008 Rockwell Automation, Inc. All rights reserved. Strategic Approach to Maintenance

22 How Do You Get Started? Six Sigma TPM Streamlined RCM Kaizen RCM PM Optimization TLC 5 Ss Lean Root Cause Analysis Proactive Maintenance PAM RbD Cb M Asset Optimization

23 At the end of the day, there is a simple approach that can not only be deployed today…. …but also built around 3 modes of maintenance commonly used today A Simple Approach R E A C T P R E V E N T P R E D I C T Maintenance can become a Business Asset if we match Financial and Productivity issues with Strategic Maintenance resolutions.

24 Common Maintenance ModesPredictive Preventive Preventive Reactive Reactive -Run it till it breaks -No routine tasks to perform -Maintenance tasks are performed when a need is identified -Uses comparative data to access probability of future events -Time based strategy -Attempts to anticipate and plan for downtime -Don’t spend money until you have to -Improves resource planning -Improves and validates spare parts inventory -Predict catastrophic failures -Assists in identifying root causes -Lowers total cost of ownership -Most expensive approach -Downtime events are longer and unplanned -Activities performed regardless of need -Takes time and commitment that is commonly missed -Requires upfront investment and commitment -Requires additional skills and knowledge CHARACTERISTICS CHARACTERISTICS ADVANTAGES DISADVANTAGES

25 Scenario # 1 Automotive Stamping Line –Secondary stamping press used to produce a low volume part –Press is 10 years old but runs well, minor breakdowns 1-2x / year –Downtime would not immediately effect any upstream or downstream process –High volume stamping machines elsewhere in plant

26 Scenario # 2 Glass Float Line a rate of 60’ / minute –Continuous process line, maintains a redundant back-up system –Line is only 3 years old, runs well…few problems –Runs 24/7/365 capacity, production is sold out –Downtime cost could be very high to catastrophic

27 Scenario # 3 Aluminum Can Line –Produces 500,000 cans / hour –Downtime events have been known to create downstream effect at the filling station –Line is 8 years old, still runs to specification –Line running at 70% capacity, runs 2 shifts –Most failures are sporadic and known to occur as a result of an oil build up around the gearboxes on the conveying system. –Plant runs primarily 2 shifts

28 Applying a Strategic Approach Apply a Predictive approach –On your critical and essential parts of production When downtime avoidance is critical If product quality is affected Where repair and replacement costs are high Apply Preventive approach –For your people, networks, spare parts, and equipment When failure modes or issues are well established Where warranty procedures require it When cost of repair or replacement is relatively small Apply a Reactive approach –To handle unexpected issues and in remaining areas When length and frequency of downtime is not critical Where product quality is unaffected by downtime If repair and replacement costs are not an issue

Copyright © 2008 Rockwell Automation, Inc. All rights reserved. Rockwell Automation Maintenance Services

30 Eliminate Downtime Events Produce to Spec Stabilize Budget Reduce Downtime Duration Speed to Change Predict Prevent React Equipment People Remote Monitoring & Diagnostics (Modem) Service Assessments (IBE) Instructor Led Training (Standard, Custom / Tailored) Phone Support (TechConnect) Self Paced Training (Job Aids, Workstations) Condition Monitoring (ICM) Network Services Spare Parts Agreements (PMA) Scheduled & Emergency On-site Services (Embedded Engineer, RASA) Repair & Renewal Parts Services MRO Process Management (RAAMP) Maintenance Strategies Build Collaboration applies the right maintenance solutions to solve real needs. RA Strategies to Match Maintenance Needs

Copyright © 2008 Rockwell Automation, Inc. All rights reserved. Strategic Maintenance Customer Support and Maintenance Rockwell Automation