CUT COSTS OR IMPROVE RELIABILITY? by ProQuest

VIEWS: 13 PAGES: 4

More Info
									                                                                                                                                       maintenance




By CHRISTER IDHAMMAR

How mills can approach reliability and maintenance in a recessionary
market where better execution is more important than ever


CUT COSTS OR
     IMPROVE RELIABILITY?

                              I
                                    n 1980 I conducted the first seminars titled Reliability,       Another reason for these cycles is the short-term focus
                                    the future competitiveness factor. Looking back I real-     on maintenance costs instead of a longer-term focus on
                                    ize how true the title of these seminars was. Anyone        what drives these costs. If management of maintenance
                              with financial assets can buy the same equipment and              emphasizes more on long-term improvements of reliability
                              processes. With the same, or older, manufacturing equip-          and speed of throughput, steady improvements of faster
                              ment and processes the last significant competitiveness           throughput and lower maintenance costs will follow.
                              tool is to increase manufacturing reliability and speed up
                              throughput of product you have sold. This has of course           C A P I TA L A N D M A I N T E N A N C E C O S T S
                              always been true but in the past 40+ years the increase/de-
                              crease of investment in maintenance and capital has gone          I have always claimed that there is a strong correlation
                              up or down depending on good or bad financial times. For          between maintenance costs and capital spending. In
                              many years, pulp and paper producers built bigger and             an economic downturn, one thing to do to reduce costs
                              faster machines than their competitors. This resulted in          includes postponing or eliminating capital work. This will
                              overcapacity and lower pulp and/or paper prices which, in         have the following effects:
                              turn, forced cycles of shutdowns and mergers.                     •	Maintenance	costs	for	the	affected	assets	will	go	up	
                                                                                                  within the next one to four years because they will
                                                                                                  require more maintenance.
                                                                                                •	Many	necessary	investments	will	be	hidden	in	the	
                                                                                                  maintenance budget. If some capital work has to be
                                                                                                  done, but there is no money in the capital budget, the
                                                                                                  work will be done anyway using funds from the mainte-
                                                                                                  nance budget.
                                                                                                     Long-term versus short-term: If a company is driven by
                                                                                                next quarter or annual financial results it will be difficult to
                                                                                                justify long term investments. Privately held companies are
                                                                                                not driven by short-ter
								
To top