Tag: Advanced Accounting Notes

Maintenance activities are related with repair, replacement and service of components or some identifiable group of components in a manufacturing plant so that it may continue to operate at a specified ‘availability’ for a specified period.

Thus, maintenance management is associated with the direction and organisation of various resources so as to control the availability and performance of the industrial unit to some specified level.

Thus, maintenance management may be treated as a restorative function of production management which is entrusted with the task of keeping equipment/machines and plant services ever available in proper operating condition.

The minimization of machine breakdowns and down time has been the main objective of maintenance but the strategies adopted by maintenance management to achieve this aim have undergone great changes in the past.

Maintenance has been considered just to repair the faulty equipment and put them back in order in minimum possible time.

Objectives

• To improve reliability, availability and maintainability.
• To minimize the total maintenance cost which may consist of cost of repairs, cost of preventive maintenance and inventory costs associated with spare parts/materials required for maintenance.
• Minimizing the loss of productive time because of equipment failure to maximize the availability of plant, equipment and machinery for productive utilization through planned maintenance.
• To improve the quality of products and to improve the productivity of the plant.
• To extend the useful life of the plant, machinery and other facilities by minimizing their wear and tear.
• To maximize efficiency and economy in production through optimum utilization of available facilities.
• To ensure safety of personnel through regular inspection and maintenance of facilities such as boilers, compressors and material handling equipment etc.
• Minimizing the loss due to production stoppages.
• Efficient use of maintenance equipment’s and personnel.
• To ensure operational readiness of all equipment’s needed for emergency purposes at all times such as fire-fighting equipment.

Compliance with Regulations

Maintenance tasks should be conducted in a manner that complies with regulations at all levels, including at the local, state and federal levels. It might seem like a cheaper solution to assign one employee to a piece of equipment, even though the law states that two employees should be assigned to that equipment for safety reasons. In this instance, the law will take precedence. The maintenance manager should stay up-to-date with all relevant regulations to avoid having a brush with the law.

Scheduling Work and Allocating Resources

Scheduling is all about allocating the resources of time and labor to the most productive uses. A manager needs to have an intimate understanding of how the company works for her to schedule correctly, as this will help her decide the priority levels of different activities. Consider a situation in a warehouse dedicated to paper supply where the delivery truck and the forklift each need maintenance.

Cost Control and Budgeting

This is probably the most important objective of maintenance management. It isn’t entirely under the control of the maintenance manager, however. Typically, the maintenance manager works with a fixed budget that’s set by the company. They need to find the most judicious way to allocate this budget to the various parts of the maintenance department’s costs and find a way to make everything work.

Schedule repair jobs

During operations, LRUs that need repair are released to the repair shop and need to be repaired within the agreed planned lead time. This naturally leads to due-dates for repair jobs. The repair job scheduling function is to schedule the repair jobs subject to the resource constraints which are a consequence of the capacity dimensioning decision. Within these constraints, specific resources are assigned to specific repair jobs for specific periods in time so as to minimize the repair job tardiness. Additionally, the repair shop may batch repair jobs to use resources more efficiently by reducing set-up time and costs associated with using certain resources.

Maintenance planning can be defined as an end-to-end process that identifies and addresses any possible issues ahead of time. This involves identifying the parts and tools necessary for jobs and making sure they’re available and laid out in the appropriate areas, having a planner write out instructions on how to complete a job, and even determining and gathering the necessary parts and/or tools before a job is assigned. Maintenance planning also includes tasks related to parts like:

• Handling reserve parts
• Ordering nonstock parts
• Staging parts
• Illustrating parts
• Managing breakdowns and vendor lists
• Quality assurance (QA) and quality control (QC)

Maintenance planning should define the “what,” “why” and “how.” This means specifying what work needs to be done with what materials, tools and equipment; why a particular action was chosen (why a valve is being replaced instead of a seat); and how the work should be completed.

Maintenance scheduling refers to the timing of planned work, when the work should be done and who should perform it. It offers details of “when” and “who.” Scheduling is meant to:

• Schedule the maximum amount of work with the available resources
• Schedule according to the highest priority work orders
• Schedule the maximum number of preventive maintenance jobs when necessary
• Minimize the use of contract and outside resources by effectively using internal labor

When implemented together, maintenance planning and scheduling should have a significant benefit in multiple areas of your organization. These can include:

• Help with budgeting by controlling resources associated with maintenance
• A reduction in equipment downtime
• A reduction in spare parts
• Improved workflow
• Improved efficiency by minimizing the movement of resources between areas

Principles

• Job plans are needed for scheduling: Job plans should include the number of technicians required, the minimum skill level, work hours per skill level and information on job duration. Maintenance needs this information to schedule work, and job plans provide it in an efficient way. Does the job require welding? How many welders are needed? How many assistants does the engineer require? Asking questions like these during the creation of job plans helps determine scheduling requirements.
• Schedules and job priorities are important: The weekly schedule and the priorities that help determine this schedule are essential to improving productivity. Weekly scheduling frees up crew supervisors to focus on the current week without worrying about the backlog. Maintenance and operations use the weekly schedule for coordinating their tasks in advance, so it’s critical to properly determine the priority levels of new work orders to see if they should become part of the daily or weekly schedule.

Prioritizing advanced scheduling helps make sure sufficient workloads are assigned, which increases productivity and ensures critical work orders are completed first.

• Schedule based on the projected highest skills available: This principle states that a scheduler should develop a one-week schedule for each crew based on the available technician hours, the highest skill levels available, job priorities and details from the job plans. Schedulers should select a week’s worth of work from the plant backlog by using information on priority and job plan details. They should then use a forecast of the maximum capabilities of the technician crew for the coming week. After several weeks have passed, technicians should have a better idea about the amount of work they’re responsible for in a given week and become more productive.
• Schedule for every available work hour: Bringing the previous principles together, this guideline details how much work to schedule. The scheduler should assign work plans for the technicians to complete a task during the following week for 100 percent of the forecasted hours. So, if a crew has 800 labor hours available, the scheduler would give them 800 hours’ worth of work. Scheduling for 100 percent of the forecasted work hours prevents over- and under-scheduling.
• Daily work is handled by the crew leader: The crew leader or supervisor should develop a daily schedule based on the one-week schedule, current job progress and any new high-priority jobs that may arise. The supervisor should assign daily work to technicians based on skill level and work order requirements. In addition to the current days’ workload, the supervisor should handle emergencies and reschedule assignments as needed. Daily scheduling is almost always fluid thanks to the progress of the work being performed. This makes it difficult to schedule precise job times very far in advance. Inaccuracy of individual time estimates and reactive maintenance are the two biggest factors contributing to this issue.
• Measure performance with schedule compliance: Scheduling success is measured by the adherence to the one-week schedule and its effectiveness. Wrench time is the ultimate measure of workforce efficiency and planning and scheduling effectiveness. Planning work before assigning it reduces unnecessary delays, while scheduled work reduces delays between jobs.

Implement Maintenance Planning and Scheduling

Phase 1: Setup: This phase encompasses all the steps needed to ensure your organization is onboard with implementing maintenance planning and scheduling. You should have made your case to leadership by exposing the issue of low productivity, explaining how planning and scheduling can help solve that issue, calculating the value of productivity improvement, and presenting the results in the form of return on investment (ROI).

Phase 2: Define and analyze the situation: Phase two involves your team looking at your current situation and identifying problems currently faced in maintenance execution. During this phase, you should have representation from all levels of the maintenance process technicians, key managers or supervisors, and even representatives from procurement, finance and the warehouse. This workshop-like environment should outline the current maintenance planning and scheduling process.

Phase 3: Develop and prepare for delivery: Phase three involves planners and supervisors working to establish supporting documentation and process maps as well as defining in detail new processes, roles and responsibilities. You should also make any necessary changes to your computerized maintenance management system (CMMS) and develop training and coaching programs. Conducting a single overview training session followed by a role-specific training program is the most efficient way to go about training. This will prevent people from having to attend training sessions that don’t pertain to them.

Phase 4: Implement: Once everything is in place, it’s time to roll out the new maintenance planning and scheduling processes. The goal here is to embed the new standards and procedures into the daily routines of all those involved until they become the new normal. It’s generally accepted to allow for a three-month coaching period, where individuals are assessed and receive help to close any gaps in performance. If you operate a shift system, six months should be sufficient. Remember, planners should only work on the processes, not in the processes.

Phase 5: Review: This is sometimes called the “close-out” phase. Here, you want to ensure the new maintenance planning and scheduling process won’t disintegrate when the training and one-on-one time is over.

 Celebrate successes and make sure people are aware of how their hard work is paying off.

Review what is going well and what could be better, and document these for the next meeting with the planning department.

Develop sustainable procedures.

Phase 6: Sustain: This phase is considered “evergreen,” as processes and procedures should always be improving. Be sure you have:

• All performance metrics in place and review them in meetings, verifying that they are meeting long-term trends.
• Clearly defined procedures or job plans for each technician performing certain tasks.
• Ensure new technicians are properly trained on these job plans.
• Standardized, up-to-date and easily accessibly documentation in place.
• A set time for conducting process reviews to assess what is working and what isn’t. This is also the time to go over how processes can be improved.

Equipment reliability

The term equipment reliability and maintenance (ERM) encompasses not only equipment, such as machines, tools, and fixtures, but also the technical, operational, and management activities, ranging from equipment specifications to daily operation and maintenance, required to sustain the performance of manufacturing equipment throughout its useful life.

Reliability is a special attribute that describes the dependability of a component. This means that the component consistently performs a desired function under certain conditions for a certain period of time in order to meet business goals and customer needs. Theoretically, reliability can be described as:

Reliability = 1 – Probability of Failure

ERM affects drastically the three key elements of competitiveness quality, cost, and product lead time. Well-maintained machines hold tolerances better, help to reduce scrap and rework, and raise part consistency and quality. By increasing uptime and yields of good parts, ERM can reduce capital requirements, thereby cutting total production costs. It also can shorten lead times by reducing downtime and the need for retooling.

The replacement and displacement of conventional electro-mechanical factory equipment by mechatronic equipment have given rise to a very different set of reliability and maintenance requirements. The recent rush to embrace computer-integrated manufacturing (CIM) has further increased the use of relatively unknown and untested technology. The factory is becoming a web of interdependent subsystems, interconnected by computer controllers that communicate horizontally across peer processes and vertically to supervisory controllers above or slaves below. Much of the controller software was written with the assumption that all equipment works properly when, in fact, complicated and unpredictable failure modes, unanticipated by the system and equipment designers, are becoming increasingly apparent. It is seldom possible to predict how a system will fail when something somewhere in the plant breaks down. Because causal relationships are frequently hidden, repair is often time-consuming, expensive, and tedious. A better job of debugging these systems via simulation, analysis, and rapid development needs to be done.

Methods to Ensure Reliability of Equipment

Besides the engineering practices described above, there are three other essential components to equipment reliability: maintenance, inspection, and technology.

1) Maintenance

Maintenance can be divided into three categories, preventive, predictive, and corrective maintenance. Preventive measures are taken to eliminate unnecessary inspection and repair tasks. Predictive maintenance generally involves nondestructive inspection techniques to monitor the serviceability of the equipment. Corrective maintenance involves repairing or replacing components to restore equipment back to its operating conditions. Collectively, these tasks should be managed in a well developed reliability centered maintenance program.

2) Inspection

Nondestructive testing (NDT) techniques are used extensively throughout the lifecycle of equipment to locate and monitor damage mechanisms. Furthermore, inspection plays a major role in any equipment reliability program. Some common NDT methods used in the petroleum and chemicals industries include radiographic testing, ultrasonic testing, electromagnetic testing, and many more. When selecting an NDT method several considerations should be taken into account including the type of damage, where the damage is located (external or internal), and the size, shape, and orientation of the damage.

Additionally, there are two other types of inspection that provide information on the reliability and remaining life of equipment. These include risk-based inspection (RBI) and fitness-for-service (FFS) assessments. Put simply, the purpose of RBI is to identify and understand risk in order to reduce uncertainty about the condition of equipment. FFS assessments are performed to determine if a component is suitable for continued service.

Modern Scientific maintenance methods leverage advanced technologies, data analytics, and strategic approaches to enhance the reliability, efficiency, and cost-effectiveness of maintenance practices. These methods aim to move beyond traditional, time-based maintenance towards more proactive and data-driven strategies. Modern scientific maintenance methods leverage technology, data analytics, and strategic approaches to transform traditional maintenance practices. These methods enhance the proactive management of assets, reduce downtime, optimize resource utilization, and contribute to the overall efficiency and reliability of industrial processes. Implementing a combination of these methods based on specific organizational needs can lead to significant improvements in maintenance effectiveness and operational performance.

1. Predictive Maintenance:

Predictive maintenance utilizes data from sensors, machine learning algorithms, and historical performance data to predict when equipment is likely to fail. By analyzing real-time data, organizations can schedule maintenance activities just in time, reducing downtime and optimizing resource utilization.

Benefits:

• Minimized downtime.
• Reduced maintenance costs.
• Increased equipment reliability.

2. Condition-Based Maintenance:

Condition-based maintenance relies on real-time monitoring of equipment conditions using sensors and other measurement devices. Maintenance activities are triggered based on the actual state of the equipment, such as vibration levels, temperature, or fluid conditions.

Benefits:

• Targeted maintenance interventions.
• Increased asset lifespan.
• Improved resource efficiency.

3. Reliability-Centered Maintenance (RCM):

RCM is a systematic approach that identifies the most critical components of an asset and tailors maintenance strategies based on their importance to overall system reliability and performance. It involves analyzing failure modes and selecting the most effective maintenance tasks.

Benefits:

• Optimized maintenance efforts.
• Enhanced reliability.
• Improved cost-effectiveness.

4. Total Productive Maintenance (TPM):

TPM focuses on maximizing the efficiency and effectiveness of production processes by involving all employees in the maintenance and improvement of equipment and systems. It emphasizes a holistic approach to equipment management.

Benefits:

• Increased equipment effectiveness.
• Employee engagement in maintenance.
• Reduction in defects and breakdowns.

5. Root Cause Analysis (RCA):

Root cause analysis is a method used to identify the underlying causes of equipment failures or issues. It involves investigating incidents to determine the fundamental reasons for problems and implementing corrective actions to prevent their recurrence.

Benefits:

• Prevents recurring issues.
• Enhances problem-solving capabilities.
• Improves overall system reliability.

6. IoT-Based Maintenance:

The Internet of Things (IoT) is utilized to connect equipment and assets, enabling continuous monitoring and data collection. IoT sensors provide real-time insights into equipment performance, allowing for proactive maintenance based on actual usage patterns.

Benefits:

• Remote monitoring and diagnostics.
• Data-driven decision-making.
• Improved overall equipment effectiveness.

7. Augmented Reality (AR) Maintenance:

AR technologies overlay digital information onto the physical world, providing maintenance technicians with real-time guidance, visualizations, and instructions. This enhances troubleshooting, repairs, and training processes.

Benefits:

• Improved maintenance accuracy.
• Enhanced training and onboarding.
• Reduction in human errors.

8. Digital Twin Technology:

Digital twin technology creates virtual replicas of physical assets, allowing organizations to monitor and simulate their behavior. This enables predictive maintenance by analyzing the digital twin’s performance data.

Benefits:

• Simulation for predictive analysis.
• Early detection of potential issues.
• Improved decision-making.

9. Machine Learning in Maintenance:

Machine learning algorithms analyze large datasets to identify patterns and anomalies in equipment behavior. These algorithms can predict when maintenance is needed, optimize scheduling, and continually improve predictions over time.

Benefits:

• Enhanced predictive capabilities.
• Adaptability to changing conditions.
• Increased efficiency in decision-making.

10. Blockchain for Maintenance Management:

Blockchain technology is used to create transparent and secure maintenance records. It ensures the integrity of maintenance data, supports traceability, and facilitates the sharing of information across supply chains.

Benefits:

• Secure and transparent maintenance records.
• Enhanced traceability.
• Improved collaboration in supply chains.

Maintenance that is conducted in order to prevent failure. Usually this maintenance is planned some time in advance and has to be conducted within a registered time frame during which the asset is in non-operating condition

Preventative is used to maximise an assets useful lifetime and minimise cost. Its purpose is to avoid unscheduled or unplanned breakdowns, where reactive maintenance is used.

Preventive maintenance strategies can be further divided into usage and condition based maintenance. Under usage based maintenance, the total usage of a part is measured and maintenance is conducted when a certain threshold level has been reached. The usage of parts can be measured in many ways depending on the nature of the equipment. Time in the field is perhaps the most common mean to measure usage.

For vehicles (e.g., rolling stock), mileage is a common measure of usage. The number of on-off cycles is a measure of usage for equipment that is mainly loaded at the end or beginning of on-off cycles. For example, the number of landings is a measure of usage for the landing gear of an aircraft. Since the usage of equipment is usually scheduled, the moment that maintenance is performed can also be scheduled. If there is a large set-up cost associated with maintenance, it can be beneficial to interchange several parts simultaneously (Block replacement and/or overhaul). Otherwise, maintenance can be performed on a single component (Component replacement and/or overhaul).

Advantages:

Less risk factor: Because the equipment and your building are being regularly checked, they are at less risk to breaking down without notice. Therefore, creating a safer working environment for employees.

Follows a schedule: By following a schedule, you are able to keep to a budget while maintaining your building. Also, you will be able to keep track of all your equipment and pin point times when you will need to replace your equipment.

Longer equipment/building life: When equipment is being checked and maintained, it will be kept in its best shape, therefore extending its lifetime. With routine check-ups on building parts such as pipes, boilers, and roofing you’ll extend the life of your building as well.

Money saving: Over time, you will see that less money is being spend because you will not have to replace equipment as much, as well as dealing with last minute break downs. While there still may be some unplanned maintenance needed, the likely hood will go down when the building and equipment are regularly checked. Property wise, you’ll be able to catch roof leaks before they escalate and quickly repair them before mould and debris occur.

Less energy wasting: In general when equipment is not kept in the best conditions possible, it will drain more energy, hiking up your utilities bill. With properly maintained equipment, it will be saving you energy and money. While regularly kept lighting and cooling/heating systems will also help reduce the energy bill.

Less disruptions: With regular checks, you won’t be surprised when something goes wrong. It will be a quick fix because you will know what needs to be done. There will not be problems when it comes to closing down your property and disrupting your workers, if a large problem were to occur.

Disadvantages:

More money upfront: When initially starting a preventative maintenance plan, it will cost you more to regularly maintain equipment and the building, than it would be if you waited for things to simply break down.

Over maintenance: Because there is a regular plan, sometimes items may not need to be checked as often as planned. If this is the case, you can change your maintenance plan to checking the specific equipment or areas less often, while still maintaining a schedule.

More workers: Preventative maintenance require more workers because regular checks are a must. When compared to reactive maintenance, you simply need to call someone in for a onetime fix. Instead this method requires workers to always be on site and perform daily works.

Planned maintenance

Planned maintenance means that the organization is prepared for a breakdown and even expects it to happen. The equipment runs until it breaks, which initiates a run to failure (RTF) trigger. While RTF triggers can be unplanned, breakdown-maintenance plans use RTF as a way of lowering the cost of maintenance.

This kind of plan needs to be rigorously documented and controlled. Employees should be clear on exactly which parts will break down and which parts will be maintained normally via preventive maintenance. Without these checks, a breakdown maintenance plan can be exploited or run awry.

Unplanned breakdown maintenance

Unplanned breakdown maintenance, on the other hand, occurs when a piece of equipment fails or breaks unexpectedly also called an unplanned downtime event. While some facilities may not utilize a planned maintenance plan, nearly every facility needs resources in place for unplanned maintenance. After all, every piece of equipment will break or fault at some point in its life.

Condition-Based Maintenance

Condition-based maintenance is sometimes considered to be a more advanced alternative to preventive maintenance. Rather than being inspected according to a schedule, machines and systems are carefully observed for changes that could indicate upcoming failure.

With condition-based maintenance, technicians observe the system running and identify variables that could affect functioning, like temperature, vibration speed, power, the presence or absence of moisture, and more.

Corrective Maintenance

Corrective maintenance is initiated when a problem is discovered while working on another work order. With corrective maintenance issues are caught ‘just in time’.

For example, during a scheduled maintenance check or while fixing another issue, a maintenance technician notices that a pipe in a HVAC system is not working as it should. Corrective maintenance is then scheduled for a future date where the problem is repaired or replaced.

Pros

Failed equipment can lead to disastrous consequences, but a clearly-documented maintenance plan can actually have a few significant benefits for an organization.

• Minimizes maintenance cost by cutting out unnecessary preventive maintenance
• Lowers cost of replacing disposable items frequently (light bulbs, tools, fuses)
• Downtime for repairs is consolidated
• Low staffing needs
• Simple and easy to understand when maintenance is required

Cons

The downsides of breakdown-maintenance are especially important to weigh given the nature of the maintenance plan. For example, breakdown-maintenance should never be used with safety equipment because a single lapse can cost one or multiple employees their health or their lives.

• Form of waste in a manufacturing environment
• Safety issues can occur with unplanned failures
• Can be costly depending on parts that fail
• Requires careful planning and execution
• Can be difficult to pinpoint source of issues

Spares Planning and control

Spare Parts Management purpose is to provide “the right parts, in the right quantity, to the right place, at the right time, with the right level of quality, and at the least total cost to the organization”.

Effective management of maintenance spare parts is a critical contributor to equipment operating performance and to the cost of the maintenance investment.

The scope of Spare Parts Management therefore includes all functions from the supplier through to the point of use. identification and coding, criticality classification, procurement, quality inspection, stocking policies, links to work planning (kitting, staging), supplier management and internal performance.

For managing parts inventory more effectively:

Identify all spare parts: Make sure that all parts required for maintaining the asset are properly identified. If, for example, a part is required for a major overhaul, there may be several items that are purchased for a one-time use. Once the machinery overhaul is completed, there may be unused parts which have future use and should be inventoried. Other equipment in the plant may be able to use the same parts. So, rather than maintenance storing these parts without any correlation with the asset, the items should be added to the inventory control system and placed into parts inventory on the EAMS/CMMS.

Classify all spare parts: Classify the spare parts as per criticality. This classification will support the process to define an effective safety stock:have the right parts, at the right time, with the lowest possible cost at the minimum inventory value.

Utilize and Manage the Bill of Materials (BOM): Having accurate BOMs will support the scheduled preventive maintenance (PM) that is needed on a given piece of equipment. This process will allow the generation of a work order with the scheduled date of the PM.

BOMs will make ordering parts and placing work orders simpler. Additionally, make sure that your BOMs are kept up to date, considering the asset status and modifications.

Use the work order: All spare parts that have been used have to be linked to a work order. For PM, work orders requested in advance can be pulled and staged for pickup or delivered to the requesting department. This will reduce the maintenance department’s wait time at the parts warehouse for their work order to be fulfilled. Work orders need to be created for all parts issuance so that inventory remains accurate.

In case of emergency, it would be possible to understand the historical information related to breakdowns to improve the parts in stock, when this is reasonable.

Limited access to the parts warehouse inventory: Limiting access to the parts warehouse inventory is mandatory to maintain inventory accuracy. Adopt a policy that parts inventories are “off limits” and only parts department employees have access, utilizing badge access to entry and exit points. Allowing everyone to have access can quickly make parts inventories inaccurate.

Optimize the warehouse: Centralize and consolidate parts – Having all your parts centralized (in one or satellite warehouses) and consolidated can make security easier but also makes this potentially large asset easier to control and maintain inventory accuracy.

Use an Inventory control system: By utilizing your ERP’s warehouse functionality or a warehouse management system (WMS) to manage your parts inventory will ensure accuracy and ease of managing your parts warehouse. This should be linked to the EAMS/CMMS.

Using barcodes and scanning functionality in conjunction with the system will improve the efficiency of the management processes in the parts warehouse and inventory accuracy.

Define a stock location for every part: Ensure that stock locations are created at the lowest detail, typically a bin and slot location for each SKU, allowed by your systems.

Implement cycle counting for inventory control: Cycle Counting is a Periodic inventory system audit-practice in which different portions of an inventory are counted or physically checked on a continuous schedule, related with inventory ABC classification. The usual class breakpoints applied are:

A = 10% of line items, gives 65% of turnover

B = 20% of line items, gives 25% of turnover

C = 70% of line items, gives 10% of turnover

Each portion is counted at a definite, preset frequency to ensure counting of each item at least once in an accounting period.

Some variation about these figures is usual, but significant differences can indicate problems with stock holding policy.

Standardize Spare Parts: Standardizing for spare parts management, usually means agreeing that a certain type/model of equipment will be used and with that the spare parts required for each installation will be the same. This is different to industry-wide standardization. This can contribute to improve the MTTR, the negotiations with the Spare Parts Suppliers and the stocks.

Develop Spare Parts Management Processes: Make sure that your Spare Parts Management Processes are developed as per best practices to ensure sustainability and a base for training.

Decide based on accurate data: Use quality data for decision making: develop your reports and KPI´s considering the Spare Parts Management Processes, to support the improvement and base for Spare parts maintenance budget.

Benefits of spare parts management:

• Allows you to keep spare inventory levels low, reducing carrying and storage costs but providing access to spare parts when needed.
• Better service to your customers. The longer your operations are up and running, the better you’re able to deliver the services and support your customers demand.
• Enhanced part visibility so your supply chain can show where the need is and where the parts are headed.
• Improved equipment uptime as you limit how long equipment is down and don’t have to wait to generate revenue or find a funding source to repair a part when it breaks.
• Quicker repairs and replacements for defective parts, plus assistance with larger failures.

Waste management places an important role in managing operations. Wastes can be categorized into obsolete, surplus and scrap items.

• Obsolete items: These are those materials and equipments which are not damaged and which have economic worth but which are no longer useful for the Company’s operation owing to many reason such as, changes in product line, process, materials, and so on.
• Surplus items: These are those materials and equipments which have no immediate use but have accumulated due to faulty planning, forecasting and purchasing. However, they have a usage value in future.
• Scrap: It is defined as process wastage, such as, turnings, borings, sprues and flashes. They may have an end-use within the plant having commercial values. Hence, should be disposed of periodically.

Disposal of Scrap surplus and Obsolete materials

Disposal of scrap when handled in an imaginative manner can result in handsome returns to the organization. An effective disposal requires a compact disposal organization reporting to the materials manager, continuous market survey on the prices of various categories of scrap generated in the plant and constant touch with the industries which generate similar scrap and with the end-users.

Disposal action follows when the scrap cannot be utilized within the organization. In practice, it has been found that it is profitable to dispose the scrap directly to end-users rather than to middlemen who normally form a cartel of their own which leads to lower returns. Before disposal action it is essential that the scrap is segregated according to metal, size, etc. when the scrap is mixed, the return is even lower than the lowest element in the mixture. This is because the buyer of scrap will have to segregate it at an extra cost. A cursory analysis of scrap prices will reveal that sheet and plate cuttings will fetch fewer amounts per a tonne compared to that of turnings and borings. Also when costly scrap such as copper, aluminum and tungsten are involved, it is imperative that they are segregated as returns are huge and price levels are different. Since scrap is generated process-wise, it comes out in a segregated condition and there should be no difficulty in sorting.

Auction and Tender methods are frequently used for disposal of scrap. Parties in both the cases are normally required to inspect the scrap in the scrap yard and deposit earnest money. Very often the company insists on a basic price depending upon the category of scrap. The disposal section works, in this aspect, in close coordination with the finance department. In many cases the disposal section may try to enter into a long-term contact with end-users such as steel plants.

Many companies have found to their displeasure scrapped components appearing in the market and competing with their parts as ‘original equipment’. This is the price which organizations pay for not dismantling and disfiguring the scrap before disposal. Automobile spare parts and bearings especially are prone to such dangers. For this purpose some organizations go to the extent of requesting vehicle users to demolish filters and plugs before scrapping them. This is very important aspect.

In view of the paucity of raw materials and shortage of credit, it is necessary that optimum usage of materials is made and funds tied up in obsolete surplus and scrap items minimized. This is only possible when top management shows commitment and support. The employees of the organizations are naturally the best people to suggest improvements in materials, processes and new end users for scrap. It is they who can minimize the accumulation of scrap through coordination.

Therefore, top management should work out formal reward systems to promote employee participation in this matter. A few organizations have suggestion box schemes which pay rich dividends to the organization. Employees, too get rewards and recognition in the process.

Following are the reasons for the generation and accumulation of obsolete, surplus and scrap items:

• Changes in product design: This may lead to some items getting invalid so far as the final product is concerned. Hence, the entire stock of such items as surplus obsolete.
• Rationalization: Sometimes raw materials are renationalized so as to minimize variety and simplify procurement. The rationalization process renders some items as surplus or obsolete.
• Cannibalization: When a machine breakdown occurs, sometimes it is rectified using parts of an identical machine which is not functioning due to various reasons. This process of ‘cannibalization’ is not uncommon in many project-based industries. When continued unchecked, this results in obsolete and scrap items.
• Faulty planning and forecasting: The marketing department may have projected a sales forecast which might be on the higher side. Any material planning has to be based on sales forecasts and this could result in surplus items. Wrong indenting by the user departments also leads to accumulation.
• Faulty purchase practices: Sub-optimizing decisions like buying in bulk to take care of discounts and transportation economy without taking into account factors such as, shelf life, storage space requirements and technological changes once again lead to the accumulation of surplus and obsolete stocks.
• Other causes: Many items are held as insurable spares for many years without any consumption. Faulty store-keeping methods, without adequate preservation, lead to spoilage. Inferior materials handling, improper codification and poor manufacturing methods also result in obsolete, surplus and scrap items. Poor maintenance of machine tools may result in excessive tools wear and greater process scrap.

Production planning is the planning of production and manufacturing modules in a company or industry. It utilizes the resource allocation of activities of employees, materials and production capacity, in order to serve different customers.

Different types of production methods, such as single item manufacturing, batch production, mass production, continuous production etc. have their own type of production planning. Production planning can be combined with production control into production planning and control, or it can be combined with enterprise resource planning.

Production planning is the future of production. It can help in efficient manufacturing or setting up of a production site by facilitating required needs. A production plan is made periodically for a specific time period, called the planning horizon. It can comprise the following activities:

• Determination of the required product mix and factory load to satisfy customer’s needs.
• Matching the required level of production to the existing resources.
• Scheduling and choosing the actual work to be started in the manufacturing facility”
• Setting up and delivering production orders to production facilities.

Types of planning

Different types of production planning can be applied:

• Advanced planning and scheduling
• Capacity planning
• Master production schedule
• Material requirements planning
• MRP II
• Scheduling
• Workflow

Tips to improve production planning

Forecasting demand

Before production planning, the first action to take is forecasting demands for your products. While this may not be accurate to the last digit, getting rough estimates rolling is important to allocate resources. Forecasting can be done based on factors like historical order data and market trends/demands. Drawing out proper forecasts helps planning the type and quantity of materials to be produced and also the planning of raw material procurement.

Control inventory

Both, inventory shortage and inventory surplus are undesirable states. You can’t proceed with production when there’s a shortage and you waste space and money when there’s a surplus. Efficiently controlling inventory involves reordering when current inventory dips below a certain level, calculating the lead times to order items with long lead times earlier, and factoring in storage conditions. A well-controlled raw material inventory helps run a smooth production line and outputs finished goods inventory on time.

Plan for everything and everyone

Often, when making production plans, some machine or some person is unaccounted for. The problem here is that that machine may go down or the worker may be on leave, or worse, working on something else. Hence, plan for every machine, raw material, workstation, warehouse, and employee.

Monitor

Once the production plan is final and work orders are handed out, the manufacturing process begins. At this point, things may go wrong, machines pause, or items may get misplaced. Constantly monitoring the factory floor with supervisors or with IoT devices ensures that all the pieces are moving as planned.

Adapt

Despite your best planning, things go wrong on the factory floor. Anything can happen from suppliers making late deliveries to workers falling sick to machines failing. It’s important to be flexible and adapt to these changes quickly so that the planned quantities can be delivered on time. Ideally, you should also plan for any such risks beforehand.

KPIs for production planning

A few key performance indicators to track in production planning are:

• Production cost: This is essentially the monetary cost involved in producing the item. Costs include raw materials, electricity, fuel, worker salaries, rent, etc.
• Capacity utilization rate: It’s the percentage of actual manufacturing output against the total possible manufacturing output. If many machines and workers are sitting idle, your capacity utilization is low. Ideally, you want it high but never full.
• Projected versus actual hours: When planning, you may allocate a certain number of hours for completion of the production plan. But, it may take longer due to delays from workers or unexpected tasks. This KPI gives you a picture of how much time it was supposed to take and how much it did.
• Employee utilization (productivity): You want workers to be working properly during the punch in and punch out. Nobody wants to be a machine by working to the dot but working 4 hours out of 8 is also not reasonable.
• Takt time: Takt time is a lean manufacturing concept. It is the time taken to produce a single unit of item.

Acceptance sampling is a statistical measure used in quality control. It allows a company to determine the quality of a batch of products by selecting a specified number for testing. The quality of this designated sample will be viewed as the quality level for the entire group of products.

A company cannot test every one of its products. There may simply be too high a volume or number of them to inspect at a reasonable cost or within a reasonable time frame. Or effective testing might result in the destruction of the product or making it unfit for sale in some way.

Acceptance sampling solves these problems by testing a representative sample of the product for defects. The process involves first, determining the size of a product lot to be tested, then the number of products to be sampled, and finally the number of defects acceptable within the sample batch.

Products are chosen at random for sampling. The procedure usually occurs at the manufacturing site the plant or factory and just before the products are to be transported. This process allows a company to measure the quality of a batch with a specified degree of statistical certainty without having to test every single unit. Based on the results how many of the predetermined number of samples pass or fail the testing the company decides whether to accept or reject the entire lot.

The statistical reliability of a sample is generally measured by a t-statistic, a type of inferential statistic used to determine if there is a significant difference between two groups that share common features.

Acceptance sampling uses statistical sampling to determine whether to accept or reject a production lot of material. It has been a common quality control technique used in industry. It is usually done as products leaves the factory, or in some cases even within the factory. Most often a producer supplies a consumer a number of items and a decision to accept or reject the items is made by determining the number of defective items in a sample from the lot. The lot is accepted if the number of defects falls below where the acceptance number or otherwise the lot is rejected.

In general, acceptance sampling is employed when one or several of the following hold:

• Testing is destructive;
• The cost of 100% inspection is very high; and
• 100% inspection takes too long.

A wide variety of acceptance sampling plans are available. For example, multiple sampling plans use more than two samples to reach a conclusion. A shorter examination period and smaller sample sizes are features of this type of plan. Although the samples are taken at random, the sampling procedure is still reliable.

Acceptance sampling for attributes

A single sampling plan for attributes is a statistical method by which the lot is accepted or rejected on the basis of one sample. Suppose that we have a lot of size M; a random sample of size  N<M is selected from the lot; and an acceptance number B is determined. If it is found the number of nonconforming is less than or equal to B, the lot is accepted; and if the number of nonconforming is greater than B, the lot is not accepted. The design of a single sampling plan requires the selection of the sample size N and the acceptance number B.

MIL-STD-105 was a United States defense standard that provided procedures and tables for sampling by attributes (pass or fail characteristic). MIL-STD-105E was cancelled in 1995 but is available in related documents such as ANSI/ASQ Z1.4, “Sampling Procedures and Tables for Inspection by Attributes”. Several levels of inspection are provided and can be indexed to several AQLs. The sample size is specified and the basis for acceptance or rejection (number of defects) is provided. MIL-STD-1916 is currently the preferred method of sampling for all Department of Defense (DoD) contracts.

O.C. curves quantifies manufacturer’s (producer’s) risk and consumer’s (purchaser’s) risk. This is a graph of the percentage defective in a lot versus the probability that the sampling plan will accept a lot.

An O.C. Curve drawn for sampling plan of n = 300 and C = 10 at Fig. 60.1 indicates the following:

AQL = 0.02 or 2%

Manufacturer’s risk = 0.05

Consumer’s risk = 0.10

LTPD = 0.05 or more defectives.

All practical sampling plans have an operating characteristics curve, briefly called O.C. curve.

Following points need emphasis regarding O.C. curves:

(i) There is some chance that good lots will be rejected.

(ii) There is some chance that bad lots will be rejected.

(iii) These risks can be calculated by the theory of probability and depends on the number of samples inspected, the acceptance number, and the percent defectives in the lot offered for sample inspection. Given the amount of risks which can be tolerated, a sampling plan can be devised to meet these requirements.

(iv) The larger the sample used for inspection, the nearer the O.C. curve approaches the ideal. However beyond a certain point, the added cost in inspecting a large number of parts far exceeds the benefit derived.

In any acceptance sampling plan, three parameters are specified. The first parameter is number of articles N in the lot from which sample is to be drawn. The second parameter is the number of articles n in the random sample drawn from the lot, and the third is the acceptance number C.

This acceptance number C is the maximum allowable number of defective articles in the sample. If more than C defectives are found in a sample the lot is liable to be rejected. Since the lot size has little affect on the probability of acceptance, therefore lot size is generally ignored in deriving a sampling plan.

O.C. curve of an acceptance sampling plan (i.e. for a particular combination of n and C) shows how well the sampling plan discriminates between good and bad lots. In order to exam­ine the suitability of an acceptance sam­pling plan, it is necessary to compare their performance over a range of pos­sible quality levels of the product.

The graph of this performance is known as operating characteristic curve. Fig. 60.2 below shows an ideal O.C. curve where it is desired to accept all lots having 3% or less defectives, and to reject all lots having more than 3% defectives.

In this curve, all lots with less than 3% defectives have a probability of accep­tance of 100%, while all lots with more than 3% defectives have a probability of acceptance as 0%. However, such a plan does not exist in reality.

Zones of O.C. Curve:

O.C. curve can be divided into following 3 zones:

(a) Acceptance Zone:

In this zone all the batches are accepted, therefore, the O.C. curve should be so selected that its acceptance zone accepts what is considered to be satisfactory lot.

(b) Rejection Zone:

In this zone, all the batches are rejected. Hence the O.C. curve selected should be such that it rejects what is considered to be an unsatisfactory lot.

(c) Zone of Indecision:

This is the zone where there is no purity that whether any particular batch or lot will be accepted or rejected. This problem can be solved either by adopting 100% inspection or by taking larger sample, but these will increase the inspection costs.

A batch or lot in this zone is worse than acceptable lot, and better than those what is considered as unaccept­able. Thus its quality is border-line, and practically does not matter much whether a lot is finally accepted or rejected from this zone.

Credit: https://www.businessmanagementideas.com/production-management/operating-characteristic-o-c-curves/6960