This is easy to understand; however, the devil is in the details.
When making maintenance decisions that require reducing or stopping
production, leadership must be a high degree of confidence that any
action they take is the right action to produce the highest benefit
for the entire company.
They must be able to justify the reduction in production for
maintenance reasons to be the right action for the overall good of
the company. This is often difficult because of the lack of
technical mechanical knowledge available to the executive decision-maker at a
critical moment. This transfer of knowledge from maintenance to
management must be accomplished in just
the sixty seconds. If enough understandable information is
passed, the executive will probably grant another five minutes.
It is in these six minutes that leadership, finance,
operations and maintenance get the opportunity to make the best
decision. I use two primary tools to condense the Early
Intervention issue into one minute.
The first is “Computing
the True Risk/Reward Ratio for Deferred Maintenance”.
When an asset requires attention, the maintenance manager uses this
form to condense the information. The Early Intervention cost to act
before the asset is operated to failure, including expected
downtime, is entered and totaled.
The next part of the form contains all the expected Breakdown Event
costs including direct maintenance costs if the asset is
operated to failure including downtime and expected indirect
costs such as known lost sales, rented temporary equipment, etc.
This partially completed form is then presented to the leadership
and asked to provide a value for the intangible costs
associated with a breakdown event such as safety, customer
relations, unwanted regulatory attention, and legal issues.
The numbers are totaled and the Early Intervention numbers are
divided into the Breakdown Event numbers. This produces the True
Risk/Reward Ratio for Deferring Maintenance for the case being
examined. If the form is filled in except for the leadership’s
input, the leadership can add their knowledge and reach a
preliminary decision in less than one minute. The decision
will be simple because the risk/reward ratio in dollars is seldom
less than 40:1 and the downtime ratio is seldom less than 15:1. This
will get the additional five minutes.
Just because the decision is simple does not mean the execution will
be easy; however, because everyone involved is in the room at the
same time all the options can be examined (Not just direct
maintenance costs.) and leadership can use the five minutes
very effectively to make the best decision for the overall good of
the company. Once the decision is made, everyone knows what is
expected of them and a scheduled Early Intervention can happen.
I encourage the Maintenance Department to store these worksheets by
operating process as a historical source of information to be
quickly applied in future decisions. Once the risk/reward ratio is
known by process, everyone from the operator to the executive can
quickly recognize the gravity of a pending failure. Once the
ratio for failing to act is known, simply multiplying the ratio times the Early
Intervention costs will produce the expected Breakdown Event costs
to the entire company if operated to failure.
The second tool I use is a little more difficult to
understand but easy to use. The “Inverse-Square
Rule for Deferred Maintenance” demonstrates to the
executive management that the expenses to the entire company
incurred during a Breakdown Event are exponential and once initiated
can threaten the very existence of the company. The tool uses the
Breakdown Event numbers collected while computing the risk/reward
ratio above. Once totaled, take the square root of the total.
This number represents the total energy the company will have to
expend to overcome the breakdown event at each exponential level of
failure. The lowest number represented in the progression will
usually be the cost of the primary failure part. If executive
leadership has seen the result of several worksheets and believes
the breakdown costs are exponential, they will be willing to do
whatever is best for the company to avoid a breakdown event by
scheduling an Early Intervention.
I also teach it is necessary to create a “Corporate Memory for
Maintenance” to manage maintenance across multiple fiscal
periods, turnover in technical personnel, and changes in leadership.
If the executive leadership demands this tool, then future decisions
can be made with confidence even when being pressed by the most
demanding production decisions.