Volume at all Costs
How do we maximise profits in the new ‘Lower for Longer’ business environment and the return to the ‘Volume at all costs’ operating model?
Lower for longer refers to the current market expectation that commodity prices will remain at levels lower than they have been for decades. As resource prices start to improve such as the recent small gains in iron ore and coal prices, operators are returning to the Volume at all costs operating model that led to inefficiencies and minimal innovation investment that occurred during the ‘supercycle’.
So what factors support the new business environment and operating philosophy?
Undoubtedly there will be numerous factors that relate to cost minimisation and increased availability of assets but volume at all costs infers a business’s focus on constant production. The 2 factors considered here that have the ability to affect constant production are;
Scheduled stoppages – for instance regulatory, compliance activities
Unscheduled stoppages – such as breakdowns.
Based on those factors there are three activities that can minimise the downtime associated with both factors and support the constant production requirement. They are:
Effective planning and scheduling
Effective Planning and Scheduling
Without proper planning and scheduling, work quality, equipment/asset uptime, and maintenance productivity will not be at levels to support required operating profiles. The reasons for this are:
Excessive non-productive time incurred both during and between job tasks.
Without effective planning, planners can also become non effective due to the number of technicians that are assigned to them.
Overall maintenance costs also increase due to the acquisition and storage of unnecessary spare parts, and
Energy consumption also increases due to poorly maintained equipment.
As can be seen, effective maintenance planning and scheduling is a cornerstone processes that can assist with attaining excellence in operations and subsequently be able to support constant production. The benefits of good maintenance planning and scheduling are numerous, and include:
Increased productivity of tradespeople
Reduced equipment downtime
Lower spare parts holdings
Less Maintenance rework
The figure shown highlights the effect effective Planning and Scheduling can have on a company’s Maintenance Maturity Continuum.
Effective Spares Strategies
Effective spare parts management drives efficiency and creates savings for companies, whether they’re regularly dealing with large, high-value assets, a range of smaller machines and systems or a mix of both. The 3 major benefits of effective spare strategies are:
Improved equipment uptime: Extended downtime simply due to the lack of a specific part – or even an array of different ones – is generally avoidable with a strong spare parts management strategy and system. While there will be the occasional exception, in general asset uptime will improve considerably.
Increased service level of inventory: The increased service level is most closely tied to the concept of right parts, right place, right time, and right quality. Businesses that implement the software and systems that drive efficiency in the spare parts planning space typically see an improvement in inventory service levels following a good implementation.
Decreased investment in inventory: An effective spare parts management and planning system allows businesses to reduce their inventory – freeing up capital – while still maintaining high levels of service and accessibility.
Operating in a constant production environment requires the optimum number of resources that are trained to the right competency level. Alternatively it means having the right service agreements in place that enable the level of service to be maintained to support operational requirements.
Internal or external resourcing will depend on the individual companies’ requirements however having the right number of resources with the right competencies available at the right time means downtime associated with both scheduled and unscheduled stoppages is minimised.