Reliability Management: Why Diversification Is Important

As a professional community, we in the plant reliability management industry value the traditional definitions of diversity (e.g. race, gender, ethnicity, religion, lifestyle, etc.), which enables more effective decision-making by increasing perspective, creativity and "outside the box" thinking.

However, of equal importance, we as a professional community must diversify participation in reliability management based upon functional job classification.

Traditionally, we've attempted to manage and improve the reliability of manufacturing and process industry plants primarily from the maintenance department. This approach has failed to deliver the full potential that plant reliability management has to offer.

As a professional community, we're too heavily weighted with maintenance pros. We need to involve a diverse cross section of people who affect and/or are affected by plant reliability, both in manufacturing companies and within our professional organization, the Society for Maintenance and Reliability Professionals.

Figure 1. Breaking down the components that contribute to plant reliability.

The SMRP Diversity Committee is committed to driving diversity within the organization. It is important to diversify along the lines of the traditional definitions of diversity to gain perspective and insight. However, diversifying our community with professionals outside of the maintenance function is absolutely critical to delivering on our mission.

This article will argue that diversification in reliability management must include people from all of the functional activities that affect and are affected by reliability, both inside and outside of the organization.

Role Playing

As a function, the maintenance team's primary responsibility is to restore the reliability of a machine or process.

But to drive the greatest returns to the organization and insure that we satisfy our customers, we need to manage the full scope of reliability management, which includes our plant, process and machine design and procurement teams; original equipment manufacturers and installers; our sales and marketing teams; production and operation teams; accounting, finance and information technology teams; distribution teams; and, of course, our customers. The effort must be led and driven by senior management (see figure).

We'll discuss the roles played by each of these functional participants and make a case for diversifying our community to increase their participation in the reliability process.

Plant, process and machine design, manufacturing, installation and commissioning: Applying a human body analogy, design represents the genetic code - or DNA - for the plant, process or machine. Manufacturing and installation is analogous to prenatal care. Commissioning is analogous to infant nutrition and pediatric care.

Just as DNA, prenatal care and early life care influences a person's length and quality of life more than any other factor, process and machine design manufacturing, installation and commissioning (DMIC) affects reliability more than any other function over the course of an asset's life cycle.

The degree to which design engineers and managers consider reliability, operability and maintainability at the outset of the design process largely determines how much value the machine or the plant can create for the firm's shareholders.

Traditionally, firms focus on achieving functional capability at the lowest up-front purchase price. Focusing DMIC efforts to minimize the cost of ownership over the life cycle of the plant or machine, or more accurately to maximize value creation over the life cycle of ownership, requires that these teams build reliability, operability and maintainability into the design at the outset. This requires a cross-functional effort of diverse experts.

At a minimum, that includes production and maintenance experts. Failure to diversify participation to include the DMIC function in the reliability management process sets the stage for poor reliability, which adversely affects availability, yield, quality, safety and operational costs. We must actively pursue their participation in our community.

Product sales and marketing: We don't often think about the role a manufacturer's sales and marketing team plays in managing reliability. It is really quite significant. First, the sales and marketing team determines what demands are going to be placed on the production team - both in terms of volume sold, and variability of demand and the product mix.

Failure to educate sales and marketing professionals about plant operations and reliability can result in a number of issues that can compromise reliability. For instance, customers often specify products that require customization in terms of the product, packaging, delivery, etc. Failure to discuss with the production team how the customization will affect changeover time, throughput or other aspects of meeting the customer's demand can seriously jeopardize margins on the sale.

Also, contracted delivery dates can significantly affect plant reliability. Most machines run best under constant and continuous load conditions. Anything we can do to level the load will positively affect reliability. Sometimes it's better to negotiate highly disruptive points with the customer in an attempt to reach a compromise. And in some instances, it's best to walk away from the business.

Also, when the market for the firm's product is hot, sales wants to pounce on the opportunity - "make hay while the sun shines," the saying goes. However, for a plant, the risk of failure increases on a fairly linear slope as a function of time.

This is the result of the compounding affect of misoperation, deferred or poorly completed PMs and time and condition-based maintenance tasks, and the contribution of time-dependent failure modes. That's why firms schedule periodic outages. The risk of disappointing a customer, losing a sale and possibly incurring non-delivery penalties because we fail to produce and deliver the product per the terms of the contract increases as time goes by.

When the sales organization estimates the pro forma profitability of a sale, they typically assume a 100 percent likelihood of delivery. In fact, the risk-adjusted profit changes as a function of time. In other words, it's imperative that we diversify to include manufacturing sales and marketing professionals in the reliability management equation and invite them to actively participate in our community.

Procurement and supply chain management: According to a 10-year study at Georgia Tech, supply chain disruptions account for a 31 percent reduction in profit, a 1.2 percent decrease in sales and a 1.7 percent increase in costs for manufacturing firms.

Those numbers are significant! The study revealed that internal problems are responsible for 33.6 percent of the disruptions, suppliers account for 14.5 percent and customers can take credit for 12.8 percent. The two biggest categories, accounting for nearly half of the reduction in profit, can be attributed to procurement and supply chain management.

A recent study revealed that 43 percent of American manufacturing companies are, at some level, attempting to adopt the Toyota Production System (a.k.a lean manufacturing).

A major tenet of lean is to reduce waste by minimizing the costs associated with holding raw material, work-in-process (WIP) and finished goods inventory. Inventory serves as a buffer to protect the firm against process stoppages or slowdowns.

When inventory seems to approach just-in-time (JIT), the buffer is lost. A stockout of production inventory or maintenance and repair parts can seriously affect process reliability.

Likewise, procurement and supply chain professionals determine the number of items we have on hand and the number of suppliers. Trying to lean down inventory variability and the number of suppliers can produce waste and unreliability by force-fitting items - square pegs in round holes.

Too much variability in part numbers and suppliers creates waste and unreliability as a result of excessive complication. Any effort to drive manufacturing reliability without diversifying our community to include procurement and supply chain pros is seriously flawed. Their impact is just too great for us to exist without them.

Production and operations: Most reliability management initiatives are driven by the plant's maintenance department. This is an unfortunate situation. The truth is, reliability never was about maintenance - it has always been about production and operations.

It is the production and operations team that has the responsibility to deliver quality products on-time to customers. Machine and process reliability management drives availability, throughput or yield and, to a lesser extent, product quality - the three elements of overall equipment effectiveness (OEE). Reliability management is all about driving OEE, and OEE is all about delivering quality product on-time to customers.

So, how can the maintenance department drive OEE? It's pretzel logic when they do. Production and operations management must own and drive OEE. The plant manager owns OEE for the plant. A line manager or supervisors owns OEE for his or her line, and the operator owns OEE for his or her machine or process. It's that simple.

There is no need to say more than this - any effort to uncover the benefits offered by plant reliability management without active and participative engagement from production and operations professionals is destined to fall short of its potential.

Our community is presently made up predominantly of maintenance professionals, which creates a functional imbalance. If we fail to diversify by attracting production and operations pros to our community and to our quest, we'll be disappointed.

Senior management: We saved senior management for last, because we have a serious problem. Somehow, probably due to our failings as a community to communicate the real essence and definition of reliability, most senior managers view reliability as being synonymous with maintenance.

Of course, they view maintenance as being synonymous with cost. Senior managers know that for a manufacturing firm, return on net assets (RONA) drives profit, economic value added (EVA) and share price growth. However, if they don't understand that reliability drives availability, yield and quality - the elements of OEE - and that OEE drives RONA, we'll have trouble achieving our full potential.

Compounding matters, senior management must understand that driving OEE and effectively managing operational costs with reliability management requires a cross-functional effort that includes process, plant and equipment design, procurement, manufacturing, installation and commissioning; sales and marketing; production and operations; and management and maintenance.

While it may be unrealistic to expect a large number of senior managers to become actively involved with our community, they must gain an adequate understanding about our value proposition to ensure that our community does become diversified to include the other affecting functions. Without their leadership, functional diversification will be challenging.

For our community of plant reliability professionals to succeed, SMRP must diversify its membership to include participation from all the functional pros that influence reliability.

This article has tried to offer some food for thought regarding the important roles professionals outside of the maintenance profession play in the reliability equation. It is by no means comprehensive. Other functional pros, including human resource/talent management, finance and accounting, information technology, etc., substantively affect the ability to succeed.

It's time for you to team up with the SMRP Diversity Committee and help to diversify our community, both in terms of the traditional definitions of diversity and especially in terms of functional professional focus.