Return on capital is a common measure of industrial performance. But too many plant operators miss an equally important measure: return on reliability. After all, as homeowners know, it reduces headaches and makes good fiscal sense to prevent equipment from breaking rather than fixing it after it breaks.
“Many industrial facilities are not securing a full return on reliability,” said Will Goetz, vice president of Business Development and Marketing for Emerson Process Management. “By putting in place a three-pronged approach that brings together intelligent devices, plant processes, and people, plants can realize millions of dollars in bottom-line savings.”
But making the shift from reactive repair mode to proactive maintenance mode can be a challenge. The good news is, with the right combination of technology, processes and people in place, you can greatly boost your operation’s return on reliability and thus its bottom line.
And we’re not speaking of a small amount of funds. Emerson estimates annual global losses of $50 billion due to inadequate maintenance and reliability practices. With the right strategy, the typical $1 billion plant can save $12 million or more each year in maintenance costs. And that number doesn’t include the operational and production benefits realized from reducing downtime.
Companies fail to wrest all the return-on-reliability dollars they deserve for three major reasons:
- They don’t have a reliability strategy in place. Like setting a goal, a well-designed strategy guides the company to continually optimize its capital and reliability performance by moving to a proactive, reliability-first operation.
- They lack the technologies and training required to move to a proactive, reliability-first operation.
- They’re reluctant to change corporate culture to reflect this new way of doing business.
The good news is these shortcomings can be easily addressed. Everyone else might be missing a sizable opportunity to improve the bottom line and increase shareholder value for a relatively low-cost investment. You might not even know you the following strategic levers available to you, but, combined, they offer a great way to see greater “return on reliability” (ROR).
Internet of Things
A recent study by investment banking advisory service firm Peter J. Solomon found companies reach Top Quartile Performance when they see less than 3 percent unplanned downtime and when maintenance costs are less than 2 percent of plant replacement value. A $1 billion top-performing plant spends $12 to $20 million per year on maintenance expenses. But poor performers spend two to four times more annually.The Industrial Internet of Things offers a unique way to establish new benchmarks for your organization to ensure its Top Quartile Performance.
These IoT reports provide important diagnostic information about the condition of important aspects like plant machinery, including warnings about impending issues. If those issues are addressed immediately, downtime can be substantially reduced. In a modern plant environment, a range of equipment is also able to automatically report on conditions that may require maintenance, or they may warn of a pending failure, again ensuring as little downtime as possible.
But the volume of data returning from monitoring and automation equipment is useless without the right processes and people behind it. Plant operations in the energy and refinery sector typically suffer 5 to 7 percent in unplanned downtime, which can be directly traced to poor maintenance practices. The Internet of Things (IoT) helps to make maintenance proactive.
It’s powered by reliable, smart devices, like monitoring and automation control technologies, connected over a network. These devices continually monitor the state of your assets and report back in real time. Fixing a machine before it breaks maximizes uptime.
“Often, a plant will use the monitoring information to report on asset performance after the fact, rather than to gather data in real time and then act on maintenance and repairs as indicated,” Goetz said.
Though we’re all likely guilty of keeping a list of needed repairs at home, then slowly working down the list, that reactive mindset has no place in the modern plant. Maintenance teams need to shift their mindset from reacting to breakages to repairing them before they become bigger issues that result in longer downtimes and more expensive repairs.
A reliability consulting service can help guide the move to ROR fulfillment by creating a strategy that gets your plant’s people, processes and equipment in alignment. By choosing a service that also offers intelligent devices and consulting capabilities regarding the Industrial Internet of Things, your consultants will help you choose the right devices to get the maximum return on reliability from your plan.
For additional articles related to Emerson’s VP of Business Development and Marketing Will Goetz, visit the Emerson Process Experts blog.