Measuring the value of asset management

April 15, 2009
by Steve Gahbauer, Contributing Editor

Establishing metrics for production processes helps justify current activities and supports new initiatives.

Photo: Stock

Machinery and other production equipment are a manufacturer’s greatest capital investment, but many plants don’t have a consistent method of measuring the value of activities aimed at maintaining these assets.

Developing a methodology for measuring production processes provides guidance for required maintenance activities and demonstrates their impact on return on investment (ROI), says Scott Teerlinck, director of commercial marketing customer support and maintenance for Rockwell Automation Inc. in Milwaukee. He offers the following tips for measuring your maintenance program’s effectiveness.

• Clearly define and communicate goals. Focus on the most relevant performance information. Today, plants are turning to a variety of financial metrics, such as return on net assets (RONA). It calculates how well production assets are leveraged to generate profit, and how maintenance impacts the three variables: plant revenue minus costs divided by net assets.

Overall equipment effectiveness (OEE) confirms how efficiently a machine or production line is running by measuring the percent of operating effectiveness after deducting losses resulting from downtime, equipment performance and quality. OEE represents the total of availability times utilization rate times process efficiency times quality. The product of these ratios is the relative value a machine contributes to full production.

• Properly collecting and analyzing the data. If any part of the plant fails, such as the power grid, HVAC, or the water-treatment system, production could come to a costly standstill.

Advanced condition-monitoring technology allowed the semiconductor manufacturer to design and implement a comprehensive predictive maintenance program that monitors, analyzes and tracks equipment performance while observing operating conditions locally or remotely across multiple product sites.

The program turned up countless minor and several-hundred major vibration problems, which were corrected before a prolonged production shutdown occurred saving a potential $1.4 million. As a result the company has realized a five-for-one return on investment for the condition monitoring equipment.

• Do a complete review of maintenance operations and the physical asset management process. This identifies performance issues and suggests corrective action. Evaluating maintenance’s contribution to the bottom line provides a baseline for making improvements and validating results that determines which maintenance activities will have the biggest impact on core business objectives and identifies key areas where maintenance practices can be upgraded.