Wringing the Rag Out


November 1, 2008

Understanding the various levels of machinery components – and their corresponding replacement schedules – will help operators leverage equipment life.

by Gerald Green

Whether an aggregates producer owns one machine or a large fleet, leveraging its equipment management plan to wring the most out of its asset for the lowest owning and operating cost can be tricky. Often times, operators believe the way to get the most from their machinery is to push the major equipment components (including engines, torque converters, transmissions, differentials, and final drives) to the point just before they fail. In reality, this may not be the best way to get the most out of equipment.

Most major components have three levels of parts in them. These levels include the following:

Level One: Parts and pieces that are designed to carry the brunt of the load and wear. Examples of these in an engine include bearings, rings, seals, and gaskets. These parts have a design life of one overhaul. They are designed to protect the major components that are attached or combined with such parts as connecting rods, crankshafts, and pistons.

Level Two: These parts and pieces are designed so that – with proper care, planning, and maintenance – they should last through two rebuild cycles. In an engine, examples of these include pistons, liners, camshafts, and lifters. Manufacturers may offer educational materials and specifications designed to assist operators and dealers in making “reusability” decisions on their parts.

Level Three: These pieces and parts should last several rebuild cycles. Examples of these in an engine include crankshafts, blocks, or major castings such as heads and covers.

Most equipment management experts agree that with the right planning, 80 percent of earthmoving equipment repairs should be scheduled in advance of failure. Yet, they estimate that 80 percent of repairs actually occur after catastrophic failure. Experts also note that, even without figuring in lost production, failure repair costs typically run triple the costs of repairs made prior to failure.

With a better understanding of the types of pieces and parts inside a major component, an operator can begin to formulate improved equipment management strategies. As an equipment-condition monitoring strategy is developed, an operator may be tempted to run equipment past its projected point of overhaul. After all, “If it isn’t broke, don’t fix it!”

In reality, this may press into the life cycle of those critical, potentially reusable Level Two parts. When the component is finally rebuilt, the operator may find that the risk factor of a progressively worn Level Two part no longer makes it a candidate for reuse; causing more parts to change at overhaul. This exponentially escalates cost even though the component did not stop performing or fail. In other cases, an operator may feel that downing the equipment to overhaul uses up too much potential production so an exchange or remanufactured component is used. In the process of rebuilding these exchange components, the dealer or manufacturer rebuild entity may be forced to install all new Level Two parts because of the lack of component history and to mitigate the risk of failure.

In the worst case scenario, an operator may press so deep into the life cycles of Level Two parts that those very expensive Level Three parts may be damaged. In fact, a metric of equipment management capabilities can almost be constructed by measuring the amount of expenditures made on these Level Two and Three parts before their planned capable usage.

That’s why a comprehensive equipment management plan that covers all aspects of productivity, service, and maintenance is so important. It is especially critical because today’s sophisticated equipment requires preventive maintenance and repair at the optimal time. If that doesn’t happen, an operator can incur unnecessary and costly expense tied to replacement of Level Two and Three parts and pieces.

Robust equipment planning

With the complexities of today’s business environment, managing in a proactive mode is essential to make best use of plan outages and to maximize the amount of preventive and predictive repairs that can be made. Companies such as Caterpillar are even building in measurements in efficiency during these predicted downtimes. This will enable an operator to coordinate multiple system repairs and planned repair/rebuild events to take full advantage of planned equipment outages. In addition, condition-monitoring systems will leverage technology so a “manage-by-exception” methodology in what’s happening with the equipment can be incorporated. This will allow operators to address problem indicators before they become problems.

Essentially, by managing equipment, an operator reduces risk of operating profitability because of good maintenance, repair planning, and proactive condition monitoring. Equipment management helps detect problems, minimize downtime, increase equipment availability, and maximize equipment life. It also adds value to equipment at resale because the operator can provide prospective buyers with a detailed record of well-performed maintenance. In other words, compiled with good planning and execution, it will truly “wring out the rag” for an equipment experience that will provide the most productivity, with the highest utilization, and at minimized owning and operating cost yielding maximum profitability for an organization.

Five steps to maximizing equipment

With this in mind, operators should review the five steps leading to a path of maximizing equipment productivity and utilization while minimizing owning and operating cost.

Step 1. Understand the entire equipment life cycle.

ú  Determine the expected ownership period to affect the overall equipment operating cost. With a true understanding and control of owning and operating costs, an operator can determine what each machine costs to operate and how much should be charged for a project. The resulting profit margin can also be calculated.

ú  Develop an ownership plan and build a maintenance schedule during equipment acquisition or immediately following equipment rebuilds. Consider an operator who owns a wheel loader operating 2,000 hours per year for 10 years, for a total of 20,000 equipment hours. During the life of the equipment, the operator knows the major components will require an overhaul before reaching 20,000 hours.

Depending on the expected ownership period, completing the overhaul too early adds risk to the planned equipment disposition. Yet, performing the overhaul too late inflates the overhaul cost and rebuild life. Relying on an equipment management plan, the owner decides the overhaul should take place at 12,000 hours – when a planned overhaul maximizes parts re-use and reduces downtime.

ú  Make informed equipment decisions. Deciding whether to buy, rent, or sell is a lot easier when taking the entire equipment life cycle into account. By calculating life-cycle costs, an operator can make an informed decision about each and every machine.

Step 2. Incorporate technologies into the plan to leverage the value of sophisticated equipment.

ú  Create an equipment management plan using software and related technology tools. To manage today’s sophisticated equipment, an operator needs more than anecdotal reports from the field and sticky note reminders that a machine needs an oil change. Technology will help operators leverage the full value of their equipment.

Depending on the size of an organization, the appropriate technology solution may be as simple as installing an equipment management software application on an existing system. Or, the solution may require a robust rollout of onboard equipment technology linking to an online system.

An online, Web-based condition monitoring and backlog management information system may offer readily available, around-the-clock information from the convenience of the operation or any location with an Internet connection. Once connected to the Internet, an operator can download utilization information, operator events, fault codes, SOS results, active and passive backlogged events, and other real-time information to make better decisions and manage costs. It’s also becoming more common to use laptops and “pocket technicians” out in the field to diagnose equipment and locate parts via the Internet.

ú  Develop integration with existing processes and systems and Smart Products. If operators haven’t already heard of Smart Products, chances are they soon will. Integrated with other systems, Smart Products “think, act, and communicate” smart. Smart Products combine the best in satellite technology, Web security, e-commerce, Global Positioning Satellite (GPS), and mapping technology to provide an operator with a common view of the entire fleet.

Smart Products possess information-sensing capabilities, on-board diagnostics, and controllers and networking communication capabilities. They also provide data to managers as an information display based on individual preferences and unique needs. The most robust systems automatically prioritize alerts, allowing an operator to manage by exception and focus its resources on critical areas.

ú  Tap the expertise of equipment dealers and original equipment manufacturers (OEMs). An equipment dealer should be able to make recommendations on the technology and application best aligned with an operator’s business. Many OEMs also provide staff training programs on the effective use of technology. Some offer options for operators to order parts or obtain information online.

Step 3. Foster an equipment management mentality throughout the organization.

ú  Embrace this as a change-management initiative. For some in an organization, the implementation of an effective equipment management program may initially create some uneasiness. That’s understandable, since they may have been working in a reactive, “put out the fires” mode for years. For others that possess less technical savvy, they may doubt their ability to learn a new system.

To erase fears and doubts, train everyone in the organization on the basics of the equipment management program, from accounting manager to mechanics – everyone. Communicate both short- and long-term goals and successes to convince the team that this is a long-term strategy. It is the organization’s future.

ú  Designate dedicated equipment management program responsibilities. When the right person is designated to champion the cause, implementing an equipment management program within the business will be more focused and timely – which translates to greater rewards at an accelerated pace for the organization.

Step 4. Conduct site and system analysis.

ú  Analyze job sites, maintenance departments, maintenance products, and management systems.

ú  Discover needed products, systems, and support to get the most effective and efficient use of equipment.

ú  Review existing resources.

ú  Determine specific gaps in resources and equipment.

ú  Construct a plan for every piece of equipment.

Once specific gaps in maintenance resources and levels of expertise are identified, a cost-effective equipment management plan for the entire life cycle of equipment can be developed. The plan should include additional training for a limited repair staff in order to make them as efficient as possible.

A site operations and maintenance advisor (SOMA) may help facilitate this step. Equipment dealers may be able to assist operators in obtaining a SOMA site assessment. This process will help identify the effect an operation’s current status has on component life and assist it in constructing a process improvement plan.

Step 5. Implement a machine-specific project management system.

ú  Register all equipment, assets, and records about scheduled events in a project management system. First, enter all basic equipment model and serial number information into the system. Using the serial number, the system should allow knowledge-based decisions about component life, before- and after-failure risk, and the timing of preventive maintenance for specific machines.

ú  Provide proactive information regarding those events using the system to schedule resources and record each event’s completion. For example, suppose the system alerts an operator that 16 of 40 pieces of equipment are scheduled for an engine overhaul within the next 18 months. The operator can prepare a schedule to minimize equipment downtime. In addition, the system can develop alternative solutions, e.g., rental options, then record completion of each event immediately after it takes place.

ú  Use “manage-by-exception” systems to track the success or failure of planning. With a solid understanding of the business environment, needs, and resources, an operator can detect opportunities for improvement. For example, the system notes that a particular model is always behind on preventive maintenance. This may indicate that repair technicians lack the tools and expertise to complete the repair on that particular piece of equipment. Once this realization is made, an operator can take action to get the equipment back on schedule.

Outsourcing vs. doing-it-yourself

If equipment management is outsourced, the operator shifts the risk and responsibility from the business to the dealership. To help determine if outsourcing is the right alternative, the following questions should be answered:

ú  People – How will I find, train, and retain competent equipment maintenance personnel?

ú  Management – Where will I find the leadership within the organization to move from unplanned, reactive maintenance to planned, proactive maintenance?

ú  Performance measurement – Do I have the people and processes in place to perform equipment analysis, elevate the use of equipment management technology, and learn and adapt from performance measurements?

ú  Parts and maintenance supplies – Where will I find time to address repairs, procurement, management, ownership, warranty administration, and total cost of ownership issues?

ú  Costs – How do I maximize the value of every dollar spent on maintenance and reduce the costs associated with poor maintenance?

If an operator can readily answer these basic questions and equipment management is truly a core competency at the business, then the operator can concentrate on improving its maintenance organization. But, if an operator struggles for answers, then outsourcing all or part of equipment management may be a viable option.

Once again get started

Implementation of equipment management will be an evolutionary process for operators and their team. And there is no better time to start implementing it than right now.

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