Lean Maintenance. Joel Levitt
Franklin says: Time is money.
Lean Maintenance is mistaken for a whole host of other efforts. In this section we will distinguish Lean Maintenance from some of the other programs that are occasionally called Lean. We will also show how some efforts in the past were really predecessors to Lean Maintenance.
But first we will discuss a program that is Lean. Kaizen is part of Lean. Kaizen is a Japanese word denoting a philosophy of continual improvement. There are two types of Kaizen that apply to Lean Maintenance; Flow Kaizen-value stream improvement, Point Kaizen-Waste elimination. Kaizen events are short term Lean efforts, where teams blitz a shop and make many improvements at the same time. The event is generally organized around a subject. A good source of information on Kaizen is the Lean Manufacturing Pocket Handbook mentioned in the bibliography.
Beware of phantom savings
What would be a good waste reduction project? If we want to be lean, we want to reduce the waste, what would constitute a good project? A good project reduces waste that is obvious. The project should save money directly. Now, there’s a huge problem here, with projects that save time (labor). If we are saving (just) labor hours, we grapple with something called phantom savings.
Phantom savings drives accountants nuts; in fact it drives everyone who thinks deeply about it nuts, because phantom savings is not traceable to the companies’ financial books. For instance, let’s say we save 10 minutes in a meeting by better meeting etiquette or by more discipline during the meeting, and there are five people in the meeting, we pick up 50 minutes a day. Where does that savings show up on the books?
The only place that such a savings could conceivably show up is if somebody is fired. So that labor savings becomes a phantom savings, unless the time that’s saved can be used on something else that will reduce costs of operation. So you have to just be careful when you’re doing these kinds of things. A lot of people might say “Oh, we saved so many hours.” And then an accountant might say, “Great, by the way, who is leaving?” They saved half a maintenance welder. So which half of him is going to go? Remember, we already promised that no one goes as a result of the efficiencies from Lean Maintenance projects.
When we’re deciding on which projects to do first, we should pick projects with bookable savings. Either we want to have our output (production) go up or our input (materials, energy, labor or overhead) go down, in a measurable way.
If you use contractors for labor you have a great opportunity. Saving contractor hours is a bookable savings (because you can send them home without severance pay). If the plant went from six contractors to five contractors, that’s savings that is somewhere on the books.
There are real cost savings and there are phantom savings. Real cost savings flow to the accounting system and appear on the books. Phantom savings appear on reports and can never be tracked to the accounting books.
Some examples of Real savings (Note that not all real savings appear on the maintenance budget. Some are below the so-called water line and accrue to other departments)
Reductions in payroll (personnel)
Non-replacement of personnel lost through attrition because we don’t need them anymore
Reduction of overtime
Reduction of billing from contractors
Reductions of material used
Reductions of inventory on shelf
Reduced expenditures for tools and equipment
Reduced equipment rental bills
Reduced demurrage (rental of tanks, rail cars, ships)
Reduction of regulatory fines
Closing a satellite operation with consequent reduction of overhead
Reduction of energy usage (large enough to be recognized)
Reduced raw material usage
Reduced number of production machines due to increased uptime
Reduced operator personnel resulting from fewer machines
Phantom savings
Reductions in labor without realizing any savings
Small reductions in energy usage (unmeasured and unproven)
Small reduction in production machine usage
Reduced hours of compressor usage due to leaks being fixed (unless you can prove electricity savings)
Increased uptime or availability when the product is not sold out
For example let’s consider a PM that takes 3 hours a month and does not use materials. We decide the PM is too frequent and we reduce the frequency from monthly to quarterly. And let’s agree there was no increase in breakdowns or adverse events. Calculations show we “saved” 24 hours a year. Where did the savings go? We say that the time is now available for other valuable maintenance activity. This time is phantom savings.
If we sent home a contractor 3 days a year as a result of this PM frequency improvement, the phantom savings would be realized (translated into real savings). If we could decrease overtime the savings would also be realized. Or if the PM used a $25 belt each month and we dropped the usage from 12 to 4 a year, we could show real savings of $200.
Getting phantom savings are good, but we act as if the real and phantom savings are the same. They are not the same, and should be presented separately. Hard numbers people (accountants) are extremely suspicious of phantom savings. In the real world they never realize those savings. Consider the way your audience listens to talk about savings. There will be significant skepticism. By stressing (a smaller amount of) real, as opposed to (a large amount of) phantom, savings you will be answering the biggest question (which is sometimes not even asked explicitly). Phantom savings are nice to have but not as nice as money in the bank.
People argue that saving time will enable the team member to concentrate on something else during the time saved. This argument may be true. But they also might turn it into a happiness moment, an idea put forward by the Gilbreths (discussed later in this chapter) at the beginning of the 20th century. Lillian and Frank Gilbreth said that, by teaching everyone the one best way to do the job they could get their work done and have time for a happiness moment. It didn’t take long for happiness moments to go the way of the dodo bird (to extinction).
Sometimes Lean can look Fat
On a bigger scale, if you read trade magazines you will find articles about savings from adoption of this or that productivity improvement program (new software, a new gadget, or a new way to look at maintenance). The savings are always impressive. Like all phantom savings, rarely if ever are those savings distinguishable when we take a before and after snapshot of the organization’s books. If the savings are not visible, the vendors are touting phantom savings.
This statement is not to say that phantom savings are not important, they are. Phantom savings can really be used for important work. It’s just that the Return on Investment will show up as a result of only the impacts on the costs, either above or below the water line, and not from the theoretical savings activity. Phantom savings can also accumulate, and when there is enough they can be converted or will naturally convert themselves into real savings. Phantom savings can also be a guide or a pointer to real savings.
The situation of phantom savings could very well be worse than just no impact on the books. Consider the impact of a major effort toward planning and scheduling the maintenance effort. Conservative estimates show productivity could improve by 25%.
Most places don’t implement Planning and scheduling and then lay off 25% of their people. Most places have excessive identified work (in their backlog), and use the gain in productivity to accelerate the speed with which they work their way through the back-logged jobs. This strategy results in backlog reduction and timelier customer service. Without a lay-off or reduction in overtime there are no savings in maintenance costs. Eventually, the firm might