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Master of Business Administration - MBA Semester IV

OM0015 – Maintenance Management - 4 Credits

(Book ID: B1340)

Assignment - Set- 1 (60 Marks)

Note: Each Question carries 10 marks. Answer all the questions.

1. Briefly explain the maintenance systems that are practiced in production/service units by providing few examples.

Ans. A way of reducing the plant breakdowns is to select the best maintenance strategy. Widely adopted maintenance techniques or strategies are:

Routine Maintenance

Planned Maintenance

Break down Maintenance or Corrective/ Remedial Maintenance.

Preventive Maintenance

Predictive Maintenance

Condition Based Maintenance

Total Productivity Maintenance

The following sub-sections give a brief explanation of these systems.

1 Routine maintenance

Routine Maintenance (RM) is a procedure followed regularly i.e. a cyclic operation recurring periodically. It includes activities like inspection, cleaning of machines, lubricating systems, small repairs, and so on. For example, checking all compressors first on Mondays, replacing light bulbs, cleaning, repairing any leakages of oil, and lubricating machines daily. RM can be classified as:

• Running maintenance: is the work carried out when the equipment or the machine is performing some operations that is, when the machine is working. These include say greasing or lubricating the bearings or systems, outer cleaning, inspection and so on.

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• Shut down maintenance: certain minor maintenance activities cannot be carried out when the machine is running and hence must be carried out by shutting down the machine. For example, de-scaling furnaces and boilers.

2 Planned or scheduled or productive maintenance

Planned maintenance is the activities carried out according to a predetermined schedule and hence known as scheduled or productive maintenance. It involves inspecting all machineries, overhauling, lubricating, repairing, and carrying out all requisite maintenance before actual break down happens, thus avoiding a situation of emergency maintenance. Planned maintenance reduces the machine downtime, reduces cost of maintenance, and increases productivity as compared to unplanned maintenance.

3 Break down or corrective or remedial maintenance

Breakdown Maintenance is the method of operating the machines to run until they fail and then repair in order to restore them to an acceptable condition. Planned repair or rectifying the problem is carried out when it is more convenient and cost effective. This method is also called as „on-failure maintenance or corrective maintenance‟. It is carried out when an item has failed or worn out, to bring it back to working order. Corrective maintenance is carried out on all items where, failure or wearing out is not significant and the cost is not greater than preventative maintenance.

4 Preventive maintenance

Preventive Maintenance (PM) is based on the idea “Prevention is better than cure”. PM is a regularly scheduled maintenance activity, with an objective to anticipate problems and correct them before they occur. PM is carried out and normally programmed, to prevent an item failing or wearing out by: • Providing systematic inspection. • Using recommended grades of oil. • Periodical lubrication and cleaning. • Detecting and preventing incipient failure.

PM is carried out on those items where a failure would result in expensive consequences. For example, lifts, fire alarms, electricity supply, battery back up at sub-station, sub-station transformers, distribution transformers, circuit breakers, isolators, and so on. The figure 1.1 shows the PM‟s pre-requisites.Routine and planned maintenance includes PM actions, which could be grouped as:

• Fixed-time maintenance: Here maintenance actions are carried out at regular intervals (calendar time). For example, maintenance actions like item replacement, repair and major overhaul.

• Condition-based maintenance: This maintenance action is explained below in the further sub heading.

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• Opportunity maintenance: Here for example: an opportune time to take up the task of repair or reconditioning may arise on those machines, where the work load is not there for that day or product produced on that machine is rejected. The operator has to keep the machine idle since he is waiting for the quality report before producing further quantity.

5 Predictive maintenance

Predictive Maintenance is one of the modern approaches to preventive maintenance. Here sensitive instruments like vibration analyser, amplitude meters, audio gauges, sensors for pressure, temperatures, resistance gauges and so on are used to predict the anticipated failure of machines and equipment. Conditions of the machinery can be checked on line periodically or on continuous basis and maintenance crew can take decision and plan overhaul or repair as warranted. Failure is predicted well in advance using certain techniques like vibration, temperature, misalignments, incorrect installation, rotor imbalance, pump cavitations, oil condition, wear debris analysis, and so on and has proved very effective. Good ability to predict impending failures well in time will result in:

• Maximising the online operations. • Minimising downtime.

• Increased plant and Personnel safety.

• Optimal maintenance.

6 Condition based maintenance

Condition Based Maintenance (CBM) relies on the fact that the majority of failures do not occur instantaneously, but develops over a period of time. CBM involves recording measurement that gives an indication of the condition. For example, increase in vibration levels, temperature soars, increased leakages, and so on. Hence it is a periodic measurement and interpretation of data to determine the need for maintenance. Condition monitoring is merely a tool that is used by crew through touch, smell, and through their experience to make out the existing condition of the equipment or aggregate.

CBM is also known as dynamic predictive maintenance or diagnostic maintenance. In CBM, the plant is not maintained just after some problem surfaces, but much before the possible breakdown. For example operators who work with equipment every day can listen to equipment and identify changes in noise levels and vibrations, and so on. Temperature changes can be photographed through Infrared (IR) thermograph, which gives warning that something is 'not right'. An investigation can be carried out to identify the exact problem.

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2. What are the three stages in the lifecycle management of any machinery? Explain in brief the Life cycle management system

Ans. Asset Life Cycle Management

Every asset has its own life cycle. The managerial efficiency and effectiveness lies with the fact as to how well they utilise the asset within its life cycle. The maintenance methods are used to keep the machines working to its optimum efficiency levels within that life cycle and obtain maximum benefits. With state of art machineries being deployed for production, the demand to produce high quality products to high volumes, demands the best maintenance management system over the life cycle of the machineries. .

As shown in figure 2.1, there are essentially three stages in the lifecycle management of any machinery or equipment namely:

· Acquisition phase.

· Maintenance phase.

· Disposal and replacement phase.

These three phases are shown in the schematic diagram given below and this also indicates the functions that are coming within the purview of the maintenance management.

Figure 2.1: Life cycle management process

The following sub-sections gives a brief description on the three essential stages in the lifecycle management of any machinery or equipment.

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2.3.1 Acquisition stage

The process of the procurement of machineries to the specification evolved for the desired rate of production and commissioning and making them operational at the identified work place is called the acquisition stage. Assets being procured may be new ones or for replacement of the old equipment or some major parts or aggregates being replaced. These are selected and procured after evaluating their capacity to produce and confirms to specifications that suit the job profile. There are many procedures to be followed while procuring an asset like designing, selecting the right machine, having the required physical characteristics and capabilities, and above all the cost of procurement. Once the selected and purchased machinery lands at the production hanger, it has to be installed and commissioned. A trail production must be performed to examine the compliances before being accepted for regular production.

2.3.2 Maintenance phase

The ability to produce and deliver products to market at the lowest cost with minimum lead time depends on the operational performance of the assets created. Operational performance is the combination of the production rate, quantity, and the quality produced as per the targets fixed for a particular period of operations. Hence, dependability is nothing but the reliability and the availability targets, which reflects all about the maintenance phase.

For example, suppose 2000 numbers of clutch plates is scheduled to be produced from a particular machine in 10 working days of eight hours shift, the actual output of that quantity is ensured by maintaining that machine in perfect working condition for complete availability and performance.

2.3.3 Disposal and replacement phase

When an asset is no longer giving the required output to the required quality, and found uneconomical to run, then it is advisable to replace it with a new machinery/equipment. Here the productive life cycle of such a machinery is over and hence requires disposal.

For example, a diesel generator, after using it for many years may not be generating the required power and may consume too much of diesel per unit and demand the replacement of too many high value parts, and warrants disposal. In such cases, the maintenance departments will assess the condition and recommend for disposal. The new machine purchased as replacement will again go through the above said stages.

Now that we are familiar with the asset life cycle management, let us have a brief overview of the functional requirements of maintenance management in the following section.

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3. Explain briefly the metrics that can be developed by the maintenance department to identify the gap and take action to achieving the desired level of performance

Ans. Developing Metrics to Firm Up Improvements

In the previous section, you have studied about the importance of measurement of maintenance performance and the prerequisites and steps involved in the same. Here, in this section, we shall look into how developing metrics help to firm up the improvements. Once the desired data of the performance measures of maintenance of the previous years are compiled and analysed, the management will be in a position to understand the current level of performance and the deficiencies in the critical areas of the machines and equipments for optimum productivity. The data will also indicate the type of breakdowns, time taken to put back the machines to order and skill levels that were deployed.

Maintenance management in consultation with the production managers can analyse the previous year’s performance and decide upon the improvements required in order to improve the overall effectiveness of the maintenance department. They will also fix the next level of the desired performance, which should help in achieving better availability and reliability of the equipments.

When the improvements are planned, it is the job of the maintenance management to execute and accomplish the desired level of performance within a short period. By taking advantage of the time and the cost factor they will be able to improve the effectiveness further.

Figure 3.1: Graphical Representation of Metrics

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The metrics illustrated in the above figure 3.1, indicates the output level of performance on y axis and time taken for the performance on x axis. As can be seen in the metrics, the gap between the current level of performance and the desired level of performance is nothing but the improvements required, which is required to be planned and achieved within the shortest possible time. For this the entire maintenance crew has to work efficiently to assure higher availability of the capital assets.

When the desired level of performance is being firmed up, it is very essential to note that it should be achievable, measurable and has the consent of all concerned in the maintenance management. While fixing the desired level of performance and its measurements, it may be necessary to benchmark similar best practices in the identified critical areas.

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4. Distinguish between preventive and breakdown maintenance

Ans. Break down or corrective or remedial maintenance

Breakdown Maintenance is the method of running the machines until they fail and then repair them, in order to restore them to an acceptable working condition. This kind of planned repair or rectifying of a problem is carried out when it is more convenient and cost effective after a machine’s failure rather than to disrupt the production with Routine Maintenance. It is also called ‘on-failure maintenance or corrective maintenance’. It can be defined as the maintenance, which is done when an item has failed or is worn out, in order to bring it back to its working condition.

Corrective maintenance will be taken up on those parts or aggregates where, the failure or the wear out is not that alarming to affect performance of the running machine. If this intermediate cost incurred is found less than that of the regular preventive maintenance, only then only those parts or aggregates are restored to corrective action.

Repair means restoring an asset by replacing a part, which is broken or damaged, or reconditioning that part to its original or acceptable working condition. The need for repairs can result from normal wear, vandalism, misuse or improper maintenance. Repairs are done after the machine fails and hence this becomes a repair work. For example, a bike may require repair or replacement of some of its parts like brakes, clutches and so on, as it gets worn out due to rough usage and irregular servicing. This type of repairing and bringing the equipment to working condition is called corrective maintenance. Corrective maintenance activities include both emergency repairs (fire fighting) and preventive (or corrective) repairs. This system could be called ‘Operate to Failure (OTP). OTP refers to predetermined action taken after the failure occurs.

This method is expensive as it results in higher maintenance cost, increased downtime, and lost output. It involves hazards, upsets schedules, leads to frayed tempers, puts unnecessary pressure on maintenance staff, and finally disturbs normal delivery commitments.

Preventive maintenance

Preventive Maintenance (PM) is a regularly scheduled maintenance activity, with its sole objective being to anticipate problems and correct them before they occur. We carry out preventive maintenance to prevent an item from failing or wearing out, by providing systematic inspection, detection, and prevention of incipient failure.

In line with management’s policy of obtaining the best value from the maintenance funds, we need to carry out preventative maintenance only for those items where a failure would result in expensive consequences. For example, lifts, fire alarms, electricity supply, battery back up at sub-station, sub-station transformers, air conditioners, generators, and so on. Many of these items also have a statutory requirement for inspection and preventive maintenance. It is very economical to

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carry out preventive maintenance, so that the major break downs are avoided and the possibility of unanticipated production interruptions is minimised.

PM’s prerequisites are:

· Proper design and installation of equipment.

· Periodical inspection of plant and machinery to prevent breakdowns.

· Repetitive servicing and overhaul.

· Lubricate, clean, and up keep.

To prevent break-downs we need to carry out planned service with additional objectives to detect wear points and to ensure perfect functioning by replacing parts. Here the safe overhaul interval is selected, but it is found that a greater number of machine failures are at their peak when a machine gets progressively worse over a period of months or years.

Preventive maintenance could be grouped as:

· Fixed-time Maintenance (FTM): The actions are carried out at regular intervals (calendar time). For example, item replacement, repair and major overhaul.

· Condition Based Maintenance (CBM): It relies on the fact that the majority of failures, do not occur instantaneously but will develop over a period of time. CBM involves recording some measurement that gives an indication of the conditions of the machine. For example, increase in vibration levels, temperature soars, increased leakages and so on.

· Opportunity Maintenance: It finds out the opportune moment for maintenance

Preventive maintenance is carried out at irregular intervals and this interval is determined by seeing the actual condition of the machine.

The following time based activities are practiced to avoid breakdown and ensure smooth production:

· Daily Maintenance – Cleaning, checking, lubrication, and so on

· Periodic Inspections.

· Use of recommended Grades of oils.

· Restoration to recover deterioration.

A Preventive Maintenance System is therefore more expensive than detailed planning. The provision of parts is required to be done, but the process increases reliability, reduces total work-load, reduces down time and ultimately reduces cost if all the activities are done effectively.

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Differences between corrective and preventive maintenance

The following are the difference between corrective maintenance and preventive maintenance:

· Preventive maintenance is designed to prevent or at least to minimise failures or breakdowns. Corrective maintenance is carried out to repair the equipment after fault occurs or breakdown happens.

· Preventive maintenance program controls the repair costs as well as the overall life of the equipment. In corrective maintenance brings back to the original life depending on the extent of damage the earlier breakdown has brought into the equipment.

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5. “Organisations normally adopt a combination of one or more of the above methods. And these options are justified if the resultant savings are more than the total costs associated with any one of these methods” –Substantiate this statement.

Ans. Cost implications of maintenance practicesThe total maintenance cost for equipment is the sum of the losses due to breakdowns, the cost of materials and spare parts used and the downtime costs. While the losses due to breakdown are difficult to estimate in advance, other types of losses indicated below may be ascertained to certain degree of certainty. It is found that as the degree of maintenance increases, the losses tend to reduce. The following are the types of costs associated with the breakdown of the production machine:· Cost of lost sales.· Cost of idle labour, both direct and indirect.· Cost of delays in downstream processes.· Cost of scrap, wastage and rejections.· Start up costs.· Cost of customer dissatisfaction due to delays in supplying the product.Figure 5.1 gives the relationship between the degree of maintenance versus the maintenance cost, the cost of materials and spare parts and the breakdown costs.

Figure 5.1: Maintenance Costs Vs Degree of Maintenance

As can be seen from the above figure 5.1, the degree of maintenance when plotted versus different types of losses with their respective costs, certain pattern and relationships is established. These relationships are: · The cost of materials and spare parts is the cost of replacement parts for repair or modification of the equipment, which include the cost of labour for maintenance. By implementing the preventive functions like planned lubrication, cleaning and application of preventive coating, the life of the equipment goes up. If these actions are taken, it ultimately results in reduction in consumption of materials and spare parts.

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· Preventive maintenance is only effective up to a certain point. In order to create zero breakdown conditions or come closer to it, the level of maintenance requires more replacement of parts and spares thus increasing the relative costs. These costs increase to higher levels is because of the preventive maintenance, where we replace parts under routine parts and before they fail. In other words we replace more components when preventive maintenance is performed, that too it is done periodically with more frequently, as compared to breakdown which is done once the equipment fails totally. · The down time cost is the cost of loss of output due to the equipment being down for repair, replacement, inspection and or modification. This cost is high if there is little or no maintenance, but decreases with an increase in the degree of maintenance. However, as can be seen from the above graph, after certain point, an increase in the degree of maintenance is no longer effective and additional time spent on preventive functions only result in increased downtime costBased on the above relationship pattern, the cost implications on maintenance practices are summarised as follows:· Beyond a point additional maintenance does not result in benefits though the breakdown losses go down, as the increases on downtime costs and cost of spare parts go up. · There is a combination of costs that may lead to a decision not to use the preventive maintenance. Suppose the cost do not decline as the level of preventive maintenance increases, or declined more slowly, then preventive maintenance would not be justified, because the minimum total costs would be incurred. Therefore, the optimal policy would be simply to repair the machine when breakdown occurs. · The capacity of a production system can be increased by ensuring the following, thus saving certain related costs:– Expediting maintenance task and eliminating delays by applying systems and methods and providing adequate maintenance facilities and well trained crews.– Minimising breakdowns by installing a suitable preventive maintenance system and scheduling maintenance jobs during non production shifts or holidays.– Breakdowns can also be reduced by making suitable changes in the design of critical parts or subsystems of equipment.– Maintaining necessary inventory of critical maintenance and replacement parts.– Providing sufficient excess capacity in the production system in critical areas.· Organisations normally adopt a combination of one or more of the above methods. These options are only justified if the resultant savings are more than the total costs associated with the adaptation of any one of these methods· Maintaining quality of the product coming out of the well maintained machines. This should have undergone specific and sound maintenance practices and will reduce the cost of rejections. Also this saves repeated expenditures on frequent replaces that warrants when the job or task accomplished by the maintenance crew is not up to mark. The quality related costs are often ignored, but they can be of great

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significance and better to include in the total cost maintenance. In addition to their direct impact on product quality, there are many intangible benefits of certain realisation by the management and changes in the worker attitude and customer reactions. · In the competitive environment that most of the firms face today, there is growing realisations of the long term cost benefits of good maintenance practices. Maintenance should result in improvements in the system availability apart from maintenance operations at the least cost. But however maximising the system availability will involve proper investments and good planning.

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6. A valuable tool for improving maintenance effectiveness is to use fault tree analysis. What does this tree means and how it is used as a valuable tool for electrical, hydraulic and other complex systems in isolating physical components using circuits and attends to the problem?

Ans. Fault Tree Analysis

Now that we have gained an insight into how to lay out procedures to establish trouble shooting mechanisms, let us now look into procedures for establishing a fault tree analysis.

For improving maintenance effectiveness one of the tools used is the fault tree analysis. In electrical and control systems, failures are linked to certain physical portions of the equipment. For instance, non operation of a set of wiring combinations in an electrical system may result in certain types of failures. To know the root cause of the problem, it may be necessary to isolate the circuit so that the failed segment could be identified immediately. A fault tree is therefore a network diagram of the circuitry that facilitates tracing the component failure to specific portion of the network, thus helping maintenance personnel to directly attend the problem.

Fault tree analysis is a valuable tool for electrical, hydraulic and several other complex systems, where specific physical components can be isolated quickly using circuits or connections.

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Master of Business Administration - MBA Semester IV

OM0015 – Maintenance Management - 4 Credits

(Book ID: B1340)

Assignment - Set- 1 (60 Marks)

Note: Each Question carries 10 marks. Answer all the questions.

1. What are the maintenance planning principles? How they contribute to the

success of planning?

Ans. Planning Principles

Now that we have understood the use of inculcating planning principles in maintenance management, let us look into the principles involved in the same. As mentioned in section 8.7, there are six principles of planning and these are:

1. Organising planning functions with separate responsibility and identity.

2. Making planners to concentrate on future works as one of their primary tasks.

3. Asking planners to maintain simple base files as part of their work systems.

4. Training planners to expertise their job and dictate the job requirements through their dedicated work plans.

5. Helping planners to recognise the skill of the crafts required and arrange.

6. Organising planners to work sample their tasks while execution and hence measure the planning effectiveness.

Let us look into each of these in detail:

1. Organising planning functions with separate responsibility and identity

In this principle, the planning function is organised as a separate function. Personnel who are most experienced and having expertise as craft maintenance crew are selected and assigned to the planning section. This type of selecting within the department and assigning a separate function will further facilitate specialisation not only in planning processes, but also focuses on the future works to be executed.

It is better that these identified Planners report to a different supervisor who will be responsible to providing direction and has an obligation to complete the assigned work in an expeditious manner, with a minimal interruptions.

The planners should engage in preparatory works. Planning activities must flow smoothly across the maintenance department. Planners need to work closely with

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the maintenance crew for proper execution of work with consistency. The crew members will focus exclusively on executing assigned work, and gain advantageous position as all the preparatory works involved is accomplished by concerned planner.

Planning contributes to scheduling also. This scheduling is done in such a manner that the maintenance department will utilise all their resources optimally. The lack of planning effort may decrease the number of work assignments to crew members.

2. Making planners to concentrate on future works as one of their primary tasks

Principle of planning is forward thinking with a foresight. By preparing jobs in advance, the planning facilitates improvement in labor productivity and allows the maintenance crew to start their assigned job without waiting for any resources or with blockages.

After assigned job is completed, the lead technicians or the supervisor gives feedback to the Planning section. The feedback consists of any problems the crew faced while executing the work, any changes they did in the original plan during the execution, and any other information for the planner to use in preparing future plans and schedules. The planners ensure that they will use this feedback in their future planning to improve the overall effectiveness. This valid feedback information as a record is filed separately for their future reference and use.

3. Asking planners to maintain simple base files as part of their work systems

Planning maintains a simple and secured file system, with the file code numbers indicated on it. A separate file is created for each equipment or machinery that is available in production shops and those within the purview of the planning section. Each file will have proper indications of the specific tag number of such machines. This type of file system enables planners to utilise the equipment data and the experience of the previous work. It also helps planners to prepare and improve the future work plans. The cost incurred for each of the previous tasks is also recorded in these equipment files.

In case any decision was taken to replace the equipment or its costly parts, the same is also recorded. As the majority of the maintenance tasks are repetitive in nature over a period of time, this type of maintaining exclusive files with information of work plans, cost and so on, will help assists planners or plant engineers to take suitable decisions on the repair or replacement. All concerned are duly trained on how to use the information from these file for decision making.

4. Training planners to expertise their job and dictate job requirements through their dedicated work plans

Planners use their personal experience and the information available in the file system, as explained above, to develop work plans. Primary responsibility of planners is to avoid anticipated work delays through their plans that include the requirements of quality and safety. To prepare such job plans, which improves the overall productivity, planners will rely greatly on their personal skills and experience,

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apart from using the existing data or information in the equipment files. In case of any unusual maintenance tasks must be carried out and earlier such issues have not propped up, the planners will then consult and take necessary help from Plant Engineering or Production departments.

5. Helping planners to recognise skills of the crafts required and arrange

The Planning section should recognise skills of the crafts required when firming up the scope of the maintenance work. Planners obtain clarifications from the indenting section as to what skills they propose to have in the person for such maintenance jobs. They also ask the intending sections for suggestions, which will help in having a better coordination. The planners then evolve the general strategy for the work to be done such as repair or replace, preventive or breakdown policy. In case procedures for carrying out a job are not specified in the system file, the planners must also evolve a strategy to lay out the procedures for carrying out that job.

This principle dictates that planners calls for a minimum craft skill in the job plan and hence, it depends on the available workforce being sufficiently skilled to execute the job. Accordingly, the craft technicians will use their expertise to make the specified repair or replacement.

Here again the planners and technicians work together over repeated jobs to develop better procedures and checklists. Supervisors must train technicians, wherever applicable and give proper support and guidance. Technicians must execute the job as planned without much deviation. Any deviations from the job plan is required, there must be an approval from the planner before proceeding.

Planners give information required for supervisor to schedule the job and control required while executing. Skilled technicians give the feedback on the executed job plans, thus contributing additional information for future plans.

6. Organising planners to work sample their tasks while execution and hence measure the planning effectiveness

‘Wrench time’ is the measure of workforce efficiency and also ‘Planning and Scheduling’ effectiveness. Wrench time is the proportion of available time -to- work time, when craft technicians are working on a job as planned. Any delay such as waiting for specific job plan, clearance or approvals, machine parts, tools, issue of instruction sheets, traveling to work spot, coordination required with other crafts, or equipment non availability to start the work and so on are all discounted from the wrench time before deciding on the effectiveness.

This principle dictates measurement of how much of time craft technicians have actually spent on their job site versus non productive activities, which determines the effectiveness of the planning program.

Intermediate work sampling of the wrench time gives the measure of how much the planning is helping in the process. Actual wrench time of all the technicians put together is the actual productive time. The deductions made in the wrench time due to delays are non productive time. A detail analysis is done by the planners on the

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non productive time. Any reduction in the non productive time will help improve the productivity and hence, planner’s analysis and action is desired.

Measuring wrench time will also summarise as to how well the other principles are utilised in the process of completing the jobs assigned. Accordingly, the wrench time analysis is an indicator of the effectiveness of the plan, system, and the processes adopted by the maintenance department. As this measurement is critical, it must be as accurate as possible and recorded data can be statistically analysed, which may help in decision making.

2. Explain briefly the ABC classification and reasons behind recommending ABC

and VED classifications for managing inventory of spare parts for maintenance?

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ANS. Classification of Inventories

Let us discuss about the inventory control methodologies that are practiced and see which common method out of these could be adopted in inventory management of spare parts. Inventory of production items, components, and aggregates are classified into groups based on their relative importance with respect to availability, the economy or the lead time for procurement. Inventory items are classified and controlled based on some criterions.

The following are some of the inventory classifications used for production items:

· ABC Analysis – Always Better Control of values.

· HML Analysis – High, Medium and Low unit prices of items.

· VED Analysis – Vital, Essential and Desirable items.

· SDE Analysis – Scarce, Difficult and easily available items.

· FSN Analysis – Fast, Slow and Non-Moving items.

While there are many classifications like the ones indicated above, the method used for classification for inventory control of spare parts are:

· ABC.

· VED.

In the following section, we shall read about the ABC Analysis in detail.

ABC analysis

The inventory of spare parts which are required to cater many machines and equipment in production units usually consists of thousands of items with varying prices, usage rates, and the lead time to supply after ordering. Hence, it is neither desirable nor possible to pay equal attention to all items.

ABC analysis is a basic analytical tool, which enables the maintenance management to concentrate its efforts where results are always greater. ABC analysis suggest the classifying of all inventory parts into three categories A, B, and C on the basis of the annual movement of spare parts for maintenance activities. Given below are the brief explanations of each.

A class items

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These items constitute about 10% of the total number of parts and account for about 70% of the total money spent on inventories. In costly equipments, like, air compressors and diesel generators set, the costly items are the rotor shafts and engine block respectively. In each of these, the requirement for the department may be one in number and in two to three years time for replacement action. Here, the cost of replacement of such an item will be very high. Similarly, replacement of a transmission or gear box, chassis in the truck and wheels, form the A class spares that may be stocked for emergency break down maintenance, as they are not going to move regularly.

B class items

These items generally constitute about 20% of the total number of items and about 20% of the total cost of inventory. These are generally intermediate items. B class items in the equipment generally include the axle rods, differential gears, spindles and head stocks.

C class items

These items constitute about 70% in numbers but account for only 10% of the total cost or purchase in the inventory. In machinery, the items like bearings, gaskets, filters, pins, bolts, nuts, washers, springs, plastic parts, belts, chains, and pulley block come under the C class items.

The above mentioned percentages versus the values have been represented as a graph in figure 9.1 as shown below for a better understanding of the same.

Figure 9.1: Percentages Vs Values of A, B and C items

9.4.2 Features of A, B, C items

Now that we have read about the ABC analysis and the distinguishing factor that classify the entire inventory parts into three categories A, B, and C; let us look into the features of each of these items. The features have been provided in a tabular format for easy understanding as shown in table 9.1.

Table 9.1: Features of A, B, and C items

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A Class Items B Class Items C Class ItemsFew in number Moderate in number High in numberHigh in value Moderate in value Low in valueRigid control required

Moderate control Least control

Low safety stock Medium safety stock Large safety stockOrdered frequently Ordered less

frequentlyBulk orders

Continuous check required

Occasional checks Hardly any check

Multiple sources developed

A few sources developed

Two of three reliable sources developed for each category

C class items of production are of low value and of less consumption and hence planned with low service levels, because the non availability of such items may not stall the entire production. Moreover, since most of them are available off the shelf, the immediate requirements could be purchased.

As compared to the C class item in production management, C class for maintenance may be vital for the proper functioning of the equipment. This implies that it may prevent the entire equipment from running and hence bring the entire system into a grinding halt. This is especially common when such equipment is in the continuous flow process industry.

Similar alternative classification scheme relevant in the maintenance context is the VED [Vital, Essential and Desirable]. It may be beneficial if both ABC and VED classification with certain inventory levels is fixed for maintenance consumables.

The inventory service levels can be higher for C class items compared to A and B class items. By carrying additional units of inventory, the investment does not go up significantly in C class. By a similar logic, the inventory for B class items could be higher than A class items.

9.4.3 Illustration of ABC analysis

Given below is an example of an illustration of ABC analysis.

Ten important spare parts are kept in the inventory as shown below, along with its numbers used per year and the price per unit. Classify the items into A, B, and C class.

Item no

Annual usage

Price/ Annual value

Rank

1 to 10

Desc Annual usage per High to

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(1) (2) Unit

(3)

(4)=2×3 Order

Of (4)

Low of col.(4)

101 3000 1 3000 6 102 42000102 280 150 42000 1 106 22000103 30 10 300 9 109 9000104 1100 5 5500 4 104 5500105 40 5 200 10 108 4000106 220 100 22000 2 101 3000107 150 5 750 8 110 800108 800 5 4000 5 107 750109 300 30 9000 3 103 300110 80 10 800 7 105 200            87550

% Value

(4)/87550

Cum % Class

47.97 48 A25.11 73 A10.3 83 B6.3 89 B4.6 94 C3.4 97 C0.91 98 C0.85 99 C0.33 99.7 C0.23 100 C     

Thus, the classification is as follows:

Class Item numbers % of annual usage Value

% of Number of items

A 102, 106 48 + 25= 73 % 20% (2 out of 10)B 109, 104 89.-73=16 % 20% (2 out of 10)C 108, 101, 110,

107, 103, 105100-89= 11 % 60% (6 out of 10)

As explained earlier, VED classification is also adopted in managing inventory of spares parts in inventory management. The principles used in A, B, and C categorisation is same, which are replaced by V, E, and D respectively, as Vital few represents A, Essential represents B, and Desirable represents C, but the ratio as adopted for fixing the inventory levels of 10:20:70 may vary.

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3. Explain briefly how the principles of scheduling, when followed, will improve the

effectiveness and efficiency of the maintenance management?

Ans. Maintenance Scheduling Principles

Let us now look into the principles involved in scheduling the maintenance activities. Scheduling follows the vision, the principles, the paradigms, and the fact that an effective scheduling will come through effective planning process. The principles used in scheduling are the ones that enable us to achieve the objectives of forecasted skill levels for each task. This can be attained by working with job priorities and allowing the crew to handle day to day jobs and then measure the compliances.

Routine maintenance needs the use of these laid out principles, as they create a framework for successful scheduling of planned work. Each principle sets the guidelines on how the maintenance should handle different scheduling processes.

Six principles that have greatly contributed to the overall success of scheduling are:

1. Scheduler or the planners plan the jobs for lowest required skill levels, to the extent possible.

2. The entire production unit should honour and respect the importance of schedules and the given job priorities.

3. The crew, inclusive of the supervisors forecasts the available work hours of the highest skills, at least a week ahead and indicate to scheduler.

4. Schedule assigns the planned task to cover available forecasted work hours.

5. Crew supervisor matches personnel skills and tasks while allocating the work as scheduled.

6. Schedule compliance of wrench time provides the measure of scheduling effectiveness and hence must be followed by all concerned.

Principle 1

Scheduler or the planners plan the jobs for lowest required skill levels, to the extent possible. Principle 1 specifies that the job planners should, as far as possible, be able to identify the lowest skill necessary to complete the scheduled work. The conflict here is that the supervisor, who is supervising the task, has the higher skill capability and expertise needed to guide the lowest skills while executing the job effectively.

If required the supervisor can change the skill level, based on its availability while allocating the job as scheduled. In case this change is made, the same should be recorded for future reference by supervisor, as well as, the planner or the scheduler.

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Job plans should provide information about the number of persons required, lowest craft skill level, work hours or wrench time per level, and the job duration of the scheduled task. While evolving these, previous data available will be referred too.

Additional support required, if any, is also specified. Questions like-Does the job require mechanics or machinists? Does the job require three helpers to assist a certified electrician, when some urgent priorities are specified?

Principle 2

The entire production unit should respect the importance of schedules and job priorities. Schedules prepared by the scheduler may be weekly, monthly or for the full year. These schedules when released must be adhered to by the maintenance crew members without any deviations. They should also work as per the priorities mentioned in the work orders and as far as possible, should prevent undue interruption in schedules. They should know that the priority for the work is fixed by either the planner or the scheduler and is based on certain decisions taken at higher levels and as per the established plant guidelines

The scheduler may review the schedule periodically and adjust, but of course this is done in coordination with crew members, planners, and the plant manager. Plant priority should be given importance while the schedule for work and all involved should treat the priority fixed as the primary consideration.

Advance scheduling of enough work for the entire week may set the goal for maximum utilisation of the available craft hours. Through this, they can achieve effectiveness in their scheduled work. This type of scheduling will also ensure that sufficient and right work is assigned to the crew.

Inefficiency of the entire task force peeps in if there are any interruptions by lower priority jobs coming in the way of urgent jobs that are in progress. This swapping of a running job and taking an urgent one should be resorted to, only when a true emergency arises. This swapping of the job and taking a new lower priority job must have agreement from the scheduler. In such cases, it is found that it may be better to delay the identified job in full rather than completing half.

Principle 3

Develop a week’s schedule for each crew and craft hours required. First two principles form the base for working on principle 3. Most of the production divisions prefer the scheduler to work on weekly schedules, so that the maintenance crew could be fully occupied and the continuous work on maintenance activities goes ahead. Accordingly, the scheduler develops a week’s schedule for each crew based on the available craft hours against the actual hours required. They also forecast the highest skill required, firms up job priorities, and give details of the information available for such job plans.

Scheduler selects among the works in the waiting list and analyses the backlogs if any, before firming up the week’s schedule. This exercise is done to ensure that he

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selects the most optimum work of that week’s worth by combining both fresh and backlog works.

The scheduler also needs to forecast the minimum and maximum capabilities of the present crew members and thus allocate them accordingly for the day or week or monthly work allocations. In this process they will also get to know whether work force from outside is warranted or not. Fixing up priorities also gives an indication whether simultaneous attack of the maintenance work is required and if so how many wrench hours the department has to borrow either from outside or within by booking overtime work.

Scheduling and preparing a plan is to ensure that the crew will perform all the works available and those assigned in the total system. This may require proactive approach and hence supervisors should safeguard the work progress in a systematic way.

Certain equipment and machineries require multiple tasks to be done simultaneously, within the lead time available for completion. In such cases, the thinking and processing will change and thus, will require a process of precedence of activities and thereby determining a critical path.

This type of work is often taken up as a project to complete the work where lead time and slack time are calculated and accordingly work is progressed. Here, both proactive and reactive approach is required by the supervisor and the crew members. One such example of this planning and scheduling multiple activities of maintenance with different lead times of work and working simultaneously has been covered under the case study in section 10.11.

Principle 4

A week’s schedule will assign work for all the available work hour. Principle 4 tries to bring all the previous three principle together in order to achieve 100% of the total wrench time available in the department. All the works on hand are first prioritised and rated as per the emergency, urgency, periodical, day to day work, some special variety of work, and so on.

A week’s schedule that is prepared and work assigned will cover the total available wrench hours of the department and caters to all types of priorities mentioned above. The tasks being accomplished will consume the total available hours. Accomplishing this will reflect upon the effectiveness and thus, the efficiency of the entire department.

For practicing the above type of 100% scheduling, there must be enough work load, in other words, it is possible if more and more equipments or machineries come under the gamut of maintenance.

The scheduler also prepares and assigns work plans for the following week. This helps the crew to plan their work in a systematic way by not duplicating the activities. But however, the crew will give preference in completing the higher priority work by utilising whatever skills available, than working on lower priority work. Over assigning

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and under assigning of work is common in industries. It is better that scheduler avoids such cases as these may cause unique problems.

Principle 5

The crew supervisor matches personnel skills and tasks. Any schedule evolved by the scheduler must be issued with all authorisations at least few days earlier to the commencement of the work. This is because; the work order released must be studied by the supervisor and crew members. Also, they have to draw the required materials, tools, and other requirements to start the work as scheduled.

In case the scheduler is not given enough time to evolve the schedule as the work coming is of utmost priority, then a meeting is conducted. This meeting involves the presence of the scheduler with the maintenance chief and the crew men to adjust the emergency work, without disturbing the ongoing works.

It is the job of the scheduler and the crew supervisor to assign the tasks after matching the personnel skills that are available for use. This will help the supervisor in handling the current day’s work and any other problems that may arise due to emergency. The crew supervisor needs to ensure that each technician receives assignments totalling to a full day’s work.

It is the job of the crew supervisor to balance the variances between the planned and actual times, if any, in the day’s work. Of course such variations are expected to prop up in such activities. If there is a wide variation, then crew supervisor should consult the scheduler before adjustments are made. Although individual jobs show a wide variance between planned and actual times, it gets relatively balanced by the week end.

Principle 6

Wrench time is the primary measure of Planning efficiency and effective Scheduling.

The concept of wrench time is used for measuring the effectiveness of both the planning and the performance of the crew men with respect to the planned hours for each task. In other words, the wrench time is the measure of workforce efficiency and effectiveness of planning and scheduling.

Since this wrench time measurement for each of the maintenance task is important, it is essential that schedules have good compliance by the crew and thus, achieve the results as planned. It is the job of the crew supervisor to track this compliance.

In order to ensure compliance of wrench time continuously, it is advisable for the crew supervisor to keep records of all the measures and tasks date wise.

Planning individual jobs will reduce the time delays such as waiting for parts and tools. As compared to planning, scheduling tries to reduce the delays and hence, adhering to and complying with both becomes priority to all concerned with the job.

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When the task is being accomplished, the work sampling of the actual wrench time in between maintenance activities will show the present status and the completion time.

4. Explain briefly the five levels of data developed in UMS

Ans. Five levels of data in UMS

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The figure 10.1 illustrated below tells us how the data collected from all the standardisation processes are organised at five levels in the building block fashion.

Figure 11.1: Five Levels of Data in UMS

We shall now discuss the above mentioned five levels of organising the collected data.

Basic motions

UMS data, which is organised at five levels, as explained above, is the predetermined time system for basic motions. Analysing and classifying the data into basic motions, establishing a relationship between the motions and the time taken to perform the operations is a universal practice. Two widely used practices are:

· ‘Predetermined Time Systems’, which details the methods and time measurement

· ‘Operation Sequence Technique’, where work measures are made on basic motions such as reach, grasp, move, position and release operations in a process.

Data on each of these motions are recorded to establish the actual time taken for each of these. This data is then used for standardisation purposes.

Basic operations

Basic motions are grouped together as individual operations. For each process, the planner can fix up the suitable craft and skills. While standardising the process, the variables like weight of the part, distance that moves in that process and how to clamp the part during operation are tabulated and issued as standards. This data is to be followed by both the production as well as the maintenance department. Use of certain processes and its standards is also a universally adopted practice.

Craft operations

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Some operations and their operating times are unique to a particular craft. For instance, we cannot start comparing processes and standards used for welding operation with say carpentry, as both are two different entities. All the data and the time taken for the craft operations in production or maintenance processes like manual handling of items, body motions, machine settings, tools and fixture setting, welding joints and the arc striking time, are all pooled and standardised. This data and process is then issued for practice.

Similar craft data for other skilled operations such as painting, carpentry, electrical, pipefitting, can also be made available to the maintenance crew

Bench marks

By incorporating the use of UMS, the maintenance supervisor can typically apply the above discussed set standards to their work. Bench marking the best standards for each of the crafts are selected and applied in their work practices to improve the overall effectiveness.

Spread sheets

Planners need to establish planning times for large number of jobs using sample data of the benchmark jobs by using spread sheets. They help to publicise the data along with a step-by-step process. Spread sheets help us to quickly find the appropriate data and information to select the right bench mark for comparison. Certain allowances for job preparation time, area, travel time, job site time and rest and minor unavoidable delays could be applied to these bench marked times to UMS time, before allotting the job to the crew members.

For example: Benchmarking a task can be easily done in areas of work performed on electrical lighting, diesel generators, in mechanical fields like belt drives, gear boxes and material handling equipment like clutches and brakes. This has been made possible as most of the companies follow standard methods of operation and maintenance activities, which can be taken for benchmarking in your organisation for comparison of work.

5. Explain briefly the importance of ‘Depreciation’ and its disposition while calculating the capital expenditure of the equipment to be replaced. What are the depreciation methods that are normally used in an organisation?

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Ans. Capital Expenditure and Depreciation

This section of our unit deals with the capital expenditure and depreciation factors. Let us look into these terms and understand how the calculations on these are performed. Total expenditure spent on purchasing the new asset is called the capital expenditure and is included in the balance sheet of the company under capital assets. Once the commissioning of the equipment is over and the production from that asset has started, the depreciation in the accounts will be shown, as per the norms stipulated. Here we will discuss as to how to calculate the profit and loss from the new equipment, its depreciation and its accounting.

Calculation of depreciation

Depreciation is an accounting process where the cost of the asset is spread the cost over a period of its useful economic life. An annual depreciation charge is included as an expense in the Profit and Loss account. Additionally, the value of the asset in the balance sheet is proportionately reduced by each year’s charge.

For example, if an asset is purchased for Rs.100000, kept in use for 10 years, and then sold for Rs.10000, it has the business cost of Rs.90000. Depreciation apply the accruals in the depreciation account to the extent of Rs.90000 within the income that asset has generated over those ten years.

The two most commonly used methods are straight line method and reducing balance method.

Straight line method

· A fixed percentage on cost each year.

· Equal monetary amount each year.

Reducing balance method

· Reducing a fixed percentage on net book value each year.

· Deducting a reducing monetary amount each year.

Let us consider the following example:

A machine is purchased for Rs.300000. It is expected that this machine will be used for 10 years, at the end of which it will be sold for Rs.15000. Calculate the depreciation to be charged for each of the first 3 years of the machine’s life, using: (i) The straight line method (ii) The reducing balance method at 20% pa

Solution:

i) Straight line method

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Under the straight line method, the net cost is simply divided by the expected life., that is, (Rs.300000 – Rs.15000) / 10 = Rs. 2850)

So, the annual charge for every year of the machine’s life of 10 years is Rs.2850. [Note: for plant and machinery, the normal life expectation is around 10 to 12 years. Hence the depreciation is calculated over 10 or 12 years time period in the balance sheet]

ii) Reducing balance method (the charge for depreciation reduces per year)

Year 1 Rs.300000 x 20%= Rs. 60000

Year 2 (Rs.300000 – Rs.60000) x 20% = Rs.48000

Year 3 (Rs.300000 – Rs.60000 – Rs.48000) x 20% = Rs.38400 and so on, until book value becomes zero.

Calculation of profit or loss

The depreciation charged per year is based on estimated useful life. On disposal, even though depreciated fully, there is some residual value of the equipment, which will be known when the equipment is disposed. This residual value has to be shown in the book of accounts.

Let us consider the following example to understand how the calculation is carried out.

An asset is purchased on 1 January 2007 for Rs.400000, and is depreciated using the reducing balance method at 20% pa. The asset is sold on 1 April 2010 for Rs.230000. Calculate the profit or loss arising on this disposal.

Solution:

Original cost = 400000

Depreciation y/e 31.03.2007 (20%) = 80000

Net book value at 31.03.2007 = 320000

Depreciation y/e 31.03.2008 (20%) = 64000

Net book value at 31.03.2008 = 256000

Depreciation y/e 31.03.2009 (20%) = 51200

Net book value at 31.03.2010 = 204800

Thus, there is a profit on disposal of price, that is,

[Sale price of Rs. 230000 – 204800 (book value) = Rs. 25200]

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Accounting for depreciation and disposals

In the above example, the disposal occurred after three years of use. Accounting can be done even in the middle of the accounting year. In such cases, proportional depreciation for that period elapsed during the year may be considered while calculating the loss or profit. Certain times full year depreciation is also allowed.

6. What are the ranges that we can normally expect for each of the OCE factors?

Explain how an improvement in 10 % of wrench time will offer 25% improvement

in utilisation of the crew and hence the OCE.

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Range of OCE factors

Given below in table 14.2 is a brief summarisation of the ranges of the OCE factors.

Table 14.2: Range of OCE factors

OCE Elements Range      Lower Medium Higher1) Craft Utilisation 30% 50 % 70 %2) Craft Performance > 80 % 90 % 95 %3) Craft service level > 90% 95 % 98%Total OCE factor 22 % 43% 65 %