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Discover The Hidden Value Of Maintenance
with VDM Inside
Mark HaarmanManaging Partner MainnovationAberdeen, June 1st 2011
Contents
1.Understanding
Value OfMaintenance
2.MeasuringWith KPIs
& Benchmarks
4.In Control With
Cognos|VDM Inside
3.Improving With
Process & Maximo Best Practices
Maintenance Dilemma
• The Board considers Maintenance as being highly important
• But treats it as a cost center or necessary evil
• Maintenance is not able to convince the Board of real value
• Maintenance and Board do not speak same language
• Risk of bad decision making in maintenance & asset management
Value Driven Maintenance
• VDM is developed by Mainnovation in close cooperation with leading maintenance organizations from different industries:
• Oil & Chemical
• Food & Drink
• Paper & Pulp
• Pharma
• Offshore & Marine
• Rail & Ports
• VDM makes the economic added value of maintenance quantifiable and supports the priority setting
• VDM facilitates the development of the Most Valuable Maintenance Organization (MVMO)
• It makes maximum use of proven best practices and is fully embedded in Maximo and Cognos
Definition of Value
Present Value =(PV)
r = Opportunity Cost of Capital (discount rate or hurdle rate)
Net Present Value = C0 +(NPV)
C0 = Cash flow at year 0
The sum of all free future cash flows, discounted to today
Value =
∑Ct
(1+rt)tNet Present Value = C0 +(NPV)
C0 = Cash flow at year 0
∑Ct
(1+rt)tNet Present Value = C0 +(NPV)
C0 = Cash flow at year 0
The sum of all free future cash flows, discounted to today
Value =
VDM Formula
FSHE,t x ( ∆CFAU,t + ∆CFCC,t + ∆CFRA,t + ∆CFSHE,t)∑ - -
(1+rt)tt = 0 -> n
Value Opportunity* =
Note: The VDM formula is a tool to prioritize between the different value drivers!
It determines the dominant value driver.
Value
Value
ValueValue
Safety, Health& Environment
ResourceAllocation
AssetUtilization
CostControl
Value Of Maintenance
Case-IFF
Value
Value
ValueValue
Safety, Health& Environment
ResourceAllocation
AssetUtilization
CostControl
• Leading company in flavors and fragrances
• European production centre in Netherlands
• Company data:
• Replacement asset value = € 105 M
• Technical availability = 87%
• EBITDA = € 40 M
• Maintenance costs = € 2.8 M
• SHE-factor = 1.0
• Value MRO inventory = € 1.1 M
€ 0
€ 12 M
€ 1 M
€ 50 M
Contents
1.Understanding
Value OfMaintenance
2.MeasuringWith KPIs
& Benchmarks
4.In Control With
Cognos|VDM Inside
3.Improving With
Process & Maximo Best Practices
Value Drivers
Value
Value
ValueValue
Safety, Health& Environment
ResourceAllocation
AssetUtilization
CostControl
Maintenance Competences Model
Safety, Health& Environmentmanagement
AssetUtilization
CostControl
Maintenancebudgeting
Equipmentperformance
planning
Lossanalysis
Costanalysis
Lossregistration
Costregistration
MRO supply chain management Skill & tool management
Service supply chain management Equipment knowledge management
Reliability engineeringReliability engineering
Planning & preparationPlanning & preparation
Maintenance executionMaintenance execution
Reliability engineeringReliability engineering
Planning & preparationPlanning & preparation
Maintenance executionMaintenance execution
Measure Performance With VDM Control Panel
Benchmark Performance
12
“Apples with Oranges”
Industry Averages
Case - DSM
• Leading company in life sciences and high performance materials
• Over 100 plants worldwide
• 2003: VDM Audit showed that dominant value driver = Cost Control
• VDM Control Panel with 14 KPIs
• Internal and external benchmarking
• Standard work processes and EAM (Maximo/SAP) based on identified best practices
• 2007: 25% cost reduction (= 35M EUR per annum) without jeopardizing SHE and Asset Utilization
• Some plants are now shifting focus to Asset Utilization!
Contents
1.Understanding
Value OfMaintenance
2.MeasuringWith KPIs
& Benchmarks
4.In Control With
Cognos|VDM Inside
3.Improving With
Process & Maximo Best Practices
Know Where To Improve
16
Safety, Health& Environmentmanagement
AssetUtilization
CostControl
Maintenancebudgeting
Equipmentperformance
planning
Lossanalysis
Costanalysis
Lossregistration
Costregistration
MRO supply chain management Skill & tool management
Service supply chain management Equipment knowledge management
Reliability engineeringReliability engineering
Planning & preparationPlanning & preparation
Maintenance executionMaintenance execution
Reliability engineeringReliability engineering
Planning & preparationPlanning & preparation
Maintenance executionMaintenance execution
Improve With Proven Best Practices
RCM
Gatekeeping
Operator Maintenance
OEE
Asset Based Budgeting
Condition Monitoring
Risk Based Inspections
TPMCost Driver
Analyis
Be Carefull With ‘Throwing’ Best Practices
Safety, Health& Environmentmanagement
AssetUtilization
CostControl
Maintenancebudgeting
Equipmentperformance
planning
Lossanalysis
Costanalysis
Lossregistration
Costregistration
MRO supply chain management Skill & tool management
Service supply chain management Equipment knowledge management
Reliability engineeringReliability engineering
Planning & preparationPlanning & preparation
Maintenance executionMaintenance execution
Reliability engineeringReliability engineering
Planning & preparationPlanning & preparation
Maintenance executionMaintenance execution
Translate Strategy Into Work Processes
19
1.1Plan
equipmentperformance
1.2Monitor
equipmentperformance
1.3Analyze
performancelosses
2.1Manage
PM strategy
2.3Manage PM
schedules andtask lists
2.2Identify
critical spares
2.4Evaluate
PMstrategy
3.1Collect
maintenancerelated SHE-legislation
3.2Translate SHE-legislation inPM strategy
3.3Measure
SHE factor andperformance
4.1Budget
maintenancecosts
4.2Monitor
maintenancecosts
4.6Claim
damages
4.3Analyze
maintenancecosts
4.5Claim
warranties
5.2Prepare
work orders
5.4Schedule
work orders
5.3Manage
work permits
5.5Issue
work orders
5.1Receive
notifications
5.6Manageproject
6.1Execute
maintenance
6.2Register
work orderresults
7.7Create
purchaserequests
7.8Review
proposals
7.10Send
purchaseorders
7.11Match
invoices
7.12Manage
suppliers
7.9Manageframe
agreement
7.2Monitor
inventoryvalue
7.1Receive andstock spares
7.5Manage
catalogue
7.6Transport
spares
7.4Count
inventory
7.3Issue spares
8.1Develop
outsourcingstrategy
8.2Supervisecontractor
9.1Manage
Skill profiles
9.2Managepersonal
certificates
9.3Manage
workforcecapacity
9.4Register
10.1Manage
equipmentdata
10.3Manage
drawings andmanuals
10.4Collect real
time condition data
10.2Manage
equipmentpermits
9.5Calibrate
tools
4.4Issue
investmentrequest
Align Maximo And Organization
! ! ! ! ! !
Case - Volvo Cars
• Volvo manufactures cars in 5 plants
• Famous maintenance organization (TPM)
with focus on up time
• In 2005 need for more balanced
maintenance strategy > VDM
• Multi site implementation of standard VDM processes and KPIs supported by
Maximo
• In 2009 maintenance budget was reduced
with 50% !
Contents
1.Understanding
Value OfMaintenance
2.MeasuringWith KPIs
& Benchmarks
4.In Control With
Cognos|VDM Inside
3.Improving With
Process & Maximo Best Practices
Know Where You Are!
23
VDM Leads To Continuous Improvement
Case - Port of Antwerp
• Second largest port of Europe
• 600 maintenance employees
• Need for cost transparency and standardization
• Implementation of VDM processes and Maximo
• VDM Control Panel developed in Cognos
• More than 100 KPIs and drill downs with data from Maximo
Summary IBM Cognos | VDM Inside
• Standard product Mainnovation
• Preconfigured maintenance dashboard with over 100 (K)PIs and drill downs
• Data retrieval from IBM Maximo
• Based on standard IBM Maximo functionality
• Built in IBM Cognos technology
• Flexibility to customize (K)PIs and drill downs
• Contains Asset Based Budgeting Module
Discover The Hidden Value Of Maintenance
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