Section 1

Introductions and Background

Section 2
Begin with the End in Mind Create Your Personal Vision

Section 3
The Reliability Maturity Continuum

Strategic Asset Management Inc.

Reliability Stable Domains Reliability Centered Maintenance
R E L I A B I L I T Y %

Total Productive Maintenance Predictive Maintenance

Planned Maintenance

Reactive Maintenance

MAINTENANCE EXPENSE $$

A Roadmap to Lasting Success . . . the Operational Reliability Maturity Continuum

Stage

Class

Low Performing
Fires determine priorities Breakdowns frequent Maintenance equates to repair No work orders, plans, controls Stores service levels low Poor operator/maintenance relationships Poor customer service levels

Competent
Most work planned, scheduled Preventive maintenance implemented Trades competent at most repairs Computerized work order system Stores service levels fair Operators prep for repairs Expedited orders infrequent

High Performing
All work prioritized PM hours and W.O.s exceed repairs Maint. Mgmt. System utilized, integrated with Purchasing, Stores JIT Stores; 2x minimum turns Operators inspect, create WOs Turnarounds well planned, executed Condition-monitoring intervals based on risk analysis Predictive techniques minimize repair, out-ofservice cost and time Proactive techniques employed (e.g., high quality filtration) PDM data integrated with CMMS Work teams flexible, self-directed Continuous improvement process embraced, understood, working Programs rationalized, integrated Reward/Recognition support best results Skills predominate over functions All staff systems competent

Stage 1 Daily Maintenance

Stage 2 Proactive Maintenance

Condition-monitoring equipment purchased, installed Little analysis performed on data No preventive action taken No analysis done to identify candidate equipment Benefit tracking anecdotal Training emphasis disconnected from real work practices Quality Program ineffective in changing work behaviors Team implementation creates chaos Anarchy replaces hierarchy

Condition-monitoring equipment installed, readings taken regularly Information analyzed, work orders created Candidate equipment has high value to production Rational cost/benefit analysis

Stage 3 Organizational Excellence

Natural Work Teams perform most daily maintenance effectively Operators perform TPM activities Some program integration (e.g., Quality, PSM, EPA, ISO, RCare) Crafts flexibility high priority MX philosophy adopted (e.g., TPM)

Stage 4 Engineered Reliability

RCM implementation creates confusion, increased downtime Functional divisions prevent successful pooling of talent Pedantic rigor creates paralysis through analysis Vendor reduction lower service levels

Failure analysis routine activity Concurrent engineering employed to ensure High-value production processes assessed via RCM lifecycle, maintainability techniques Reporting systems tie reliability to financial results Maintenance routines changed to increase value through OUE impact Complete equipment histories are used to trend Reliability becomes focus not maintenance and predict failures Vendors participate in reliability Clear organizational alignment Operational reliability is cross-functional responsibility. Reliability built into purchasing, production, engineering Activity-based management implemented Market impact of reliability valued Monitoring, process control, and information systems integrated. Automated, self-correcting process/equipment Life expectancy analysis, lifecycle extension reengineering done Automated, demand-driven plant production balancing implemented

Stage 5 Operational Excellence

Executive and plant management fail to align and implement goals Market pressures make short-term decisions predominate Union recalcitrance makes high performance organization impossible

Planned Maintenance is the Foundation of Asset Management Excellence

Operational Excellence Customer Reliability Marketing RCM Overall Unit Effectiveness Reliability Focus Equipment Simplification/ Standardization
Equipment Acquisition Reliability Analysis

Stage 5

Concurrent Engineering Life Cycle Cost Analysis

Stage 4

Craft Flexibility

Maintenance/ Operations Integration

External versus Internal Benchmarking

TPM Operator Performed Maintenance Proactive Maintenance

Stage 3

Condition Monitoring/ Failure Prediction PdM / CMMS Integration

Failure Mode Analysis Craft Skills Enhancement

Equipment History Computerized Maintenance Management System Materials Management

Stage 2

Preventive Maintenance Work Initiation/ Prioritizaiton

Work Management Processes Work Management Processes

Planning & Scheduling

Work Execution/Review

Stage 1

Typical Measures and Values of Vary with Each Stage of Attainment of Reliability Maturity
Return on Invested Capital > 14% Failure Analysis 80% Rework <10% OUE>80% Maint Budget /RAV 2%

STAGE 5 STAGE 4

First Pass Quality 99+%

Maint Hrly/ to Hrly/ Supervisor 15:1

Operator Performed Maintenance 20-40% 20-

Average Number of Trades 2-4

Maint Budget/ RAV < 2.5

STAGE 3

Estimating Accuracy 80% +/- 10% +/Overtime 5-10% Maintenance Budget/RAV 3-4% Work Order Ready Backlog 4-6 Weeks

PM/PdM Schedule Compliance 90-95% 90Maintenance Budget/RAV 2.5-3% 2.5RAV Maintained by Craftsman $4-6MM $4-

Failure Analysis 30-50% 30Preventive/Predictive Time 40% Work Order Planning 70%-80% 70%Inventory Turns 1-2

STAGE 2 STAGE 1

Wrench Time 4-5 Hours

Preventive Maintenance 30-40% of Work Hours 30-

Operational Reliability Maturity Continuum Self Assessment

Stage

Class

Low Performing

Competent

High Performing

Stage 1 Daily Maintenance

Stage 2 Proactive Maintenance

Stage 3 Organizational Excellence

Stage 4 Engineered Reliability

Stage 5 Operational Excellence

Section 4
What is Asset Management?

Background
Industry is faced with unprecedented challenges. Commodity markets have been unable to raise prices for years, and all producers continue to lower fixed costs through technology and reengineering. Offshore competitors often have lower cost of capital, lower wages, newer plants and lower materials costs.

An Asset Management Strategy to maximize the value from physical assets will help heavy industry compete in this new environment

The Fundamental Question is This: Do Excellent Results Happen by Chance?

If consistently good results are not from chance, what are the key success factors?

Functional Excellence Model Operations owns production, maintenance owns equipment Maintenance excellence means efficient service (e.g. repairs) to production. A customer service model dominated by operations. Most work is inside planning time horizon Repair efficiency is the best measure of maintenance performance. No time to do it right, but hope there is time to do it over Production runs at any cost. Dont turn equipment over to maintenance as scheduled. Goals are set by functional managers, resulting in contradictory and self-defeating reward/recognition practices. Most measure are lagging indicators, demonstrating past results Purchasing excellence means having the lowest cost of items available Pressure is on individuals to do better. No gauges or tools of better exist

Asset Management Excellence Model Operations owns equipment and is responsible for equipment health Maintenance is a partnership with operations to identify and work ways to improve equipment health Breakdowns represent an unacceptable management system failure, and require failure analysis of equipment and process Production insists on and participates in assuring prevention and improvement activities Goals are developed top-down in a cascaded fashion. Functions share lagging indicator goals (e.g. monthly production), and have unique leading indictor goals that support activities (e.g. % of PMs performed to schedule) Purchasing and inventory managements highest goal is parts service level and MTBF is purchased parts Each piece of equipment has an operating performance specification, and gets the attention necessary for it

Asset Management Provides the Linkage Between An Organizations Objectives & the Activities to Achieve Them
Business Objectives ROI/Profitability Growth Objectives Investment Plans Changing Conditions Markets

Facility Objectives
Current Operations Assets & Condition Operating Costs Organization Culture & Skills Existing Systems

Processing Unit Objectives Operating Cost Objectives

System Specifications

Sub-system Specifications

Reliability, Cost and Maintenance Strategies

What Is the Elements of the Asset Management Plan?

Asset Classification Measurement & Audit Process Develop Training Programs: - Criticality - RCFA - Tap Root
El ement s of T ot al A sset Management M odel

Asset Class Data Model

Level of Maintenance Model

Priority System Model

Maintenance Strategy Evaluation Model Cost & Criticality System Model

The Essential Part of Asset Management is Implementation at the Unit or Production Level
Business Objectives ROI/Profitability Growth Objectives Investment Plans Changing Conditions Markets

Unit Asset Management Plan

Facility Objectives Production Unit Objectives Operating Cost Objectives System Specifications

Current Operations Assets & Condition Operating Costs Organization Culture & Skills Existing Systems

Sub-system Specifications

Reliability, Cost and Maintenance Strategies

Total Asset Management R Process Flow

Prepare Units Prepare Units Asset Mgmt Asset Mgmt Model Model

Prepare / /Update Prepare Update Annual Annual Business Business Plan Plan

Prepare/ Update Prepare/ Update Annual Annual Unit Objectives Unit Objectives

Continuously Continuously Manage Manage Work Work

Revise Revise Production Production Targets Targets

Prepare Units Asset Management Model

Asset Asset Criticality Criticality Model Model Levels of Levels of Maintenance Maintenance Model Model

Establish Asset Establish Asset Hierarchy Hierarchy

Classify Process Classify Process & Asset Criticality & Asset Criticality

Evaluate Evaluate Priority Priority Equipment Equipment Condition Condition

Apply Apply Maintenance Maintenance Strategy (Triage) Strategy (Triage)

Equipment Equipment Hierarchy Hierarchy

Asset Criticality & Asset Criticality & Probability Classification Probability Classification (Process & Equipment) (Process & Equipment)

Equipment Equipment Condition Condition

Reliability Problem Reliability Problem Solving Matrix Solving Matrix

Continuously Manage Work

Maintenance Maintenance Activities Activities Capital Capital Plan Plan

CMMS CMMS Schedule Schedule

Operate Unit Operate Unit & Perform & Perform Scheduled Scheduled Maintenance Maintenance & Reliability & Reliability Tasks Tasks

Measure Measure Results Results (System (System To Target To Target Plan) Plan)

Evaluate Evaluate Results, Results, Identify Gaps Identify Gaps & Problem & Problem Solve Solve

Outage Outage Schedule Schedule

Perform Perform MOC/MOR MOC/MOR Enhance Worker Enhance Worker Skills Skills

Revise Production Targets

Plant Plant Conditions Conditions Requiring Requiring MOC/MOR MOC/MOR

Run Run Reliability Reliability Model Model

Run Run Linear Linear Program Program

Revised Revised Monthly Monthly Target Target

Functional Excellence Model Operations owns production, maintenance owns equipment Maintenance excellence means efficient service (e.g. repairs) to production. A customer service model dominated by operations. Most work is inside planning time horizon Repair efficiency is the best measure of maintenance performance. No time to do it right, but hope there is time to do it over Production runs at any cost. Dont have time to turn equipment over to maintenance as scheduled. Goals are set by functional managers, resulting in contradictory and self-defeating reward/recognition practices. Most measure are lagging indicators, demonstrating past results Purchasing excellence means having the lowest cost of items available Pressure is on individuals to do better. No gauges or tools of better exist

Asset Management Excellence Model Operations owns equipment and is responsible for equipment health Maintenance is a partnership with operations to identify and work ways to improve equipment health Breakdowns represent an unacceptable management system failure, and require failure analysis of equipment and process Production insists on and participates in assuring prevention and improvement activities Goals are developed top-down in a cascaded fashion. Functions share lagging indicator goals (e.g. monthly production), and have unique leading indictor goals that support activities (e.g. % of PMs performed to schedule) Purchasing and inventory managements highest goal is parts service level and MTBF is purchased parts Each piece of equipment has an operating performance specification, and gets the attention necessary for it

Section 5
Developing the Strategic Plan

Asset Management Strategy is Documented in a Plan, with These Characteristics

Documents a shared vision of future state. Creates shared ownership. Identifies current situation. Identifies desired outcomes quantitative/qualitative. Outlines business case.

n ic Pla trateg
et r Ass nt fo e agem Man

Outlines series of initiatives/projects over several years with approximate costs. Identifies structure, accountability, and responsibility. Contains specific targets in lead and lag indicators.

The only lasting value of a Strategic Plan for Asset Management is if it guides the The only lasting value of a Strategic Plan for Asset Management is if it guides the change process successfully--leading to new behaviors by all. change process successfully--leading to new behaviors by all.

What Are the Critical Success Factors in Plan Development?

Critical success factors include:

People

Measures
Cascaded and aligned annual goals Lead and lag indicators Practical, useful, simple Change over time Clear benefits, with tracking and accountability

Process
Sponsorship and visibility at highest level Structure Accountability Integration with annual plan

Wide participation in development

Ownership by all functions and management Understanding by each function of roles and contributions Crafts and operators understand and are measured on contribution

An additional success factor is to follow a proven model for growth-An additional success factor is to follow a proven model for growth-The Operational Reliability Maturity Continuum The Operational Reliability Maturity Continuum

Some Approaches Tend to Work--and Others Tend Toward Failure!

Management must lead the planning effort..that way it will be understood, owned, Management must lead the planning effort..that way it will be understood, owned, and have the best chances of implementation. and have the best chances of implementation.

A Management Steering Committee Participates in Plan Development in These Ways...

Learn what the leaders are doing...

Pick the best strategies... Create the Plan...

Identify the Value of Change...

ic trateg S Plan
Lead the Change... And Remember..Time Waits for No Man...

The Strategic Plan Might Look Like This

Asset Management Plan

1. Summary
Activities Findings Opportunities Costs Proposal

4.

Initiatives
A. Work Process Improvement B. Maintenance System Implementation C. PM/PdM D. Skills Development

5. 6. 7. 8.

Business Case Plan and Resources Required Structure, Accountability, Measures Next Steps

2. 3.

Current Assessment Future Operations Vision for Our Plant

Results of the Strategic Plan--We Identify Where We Are on the Reliability Maturity Continuum
Low 1 Comp High

A Stage I Competent Plant

We Set Out a Long-Range Plan of Action

1998
1. Daily Maintenance 2. Proactive Maintenance 3. Organizational Excellence 4. Reliability Engineering 5. Operational Excellence

1999

2000

2001

2002

XXXX XXX X XX XX XX XXXXXX

With a Five-Year Asset Management Plan

Section 6
Developing the Business Case

One of the Critical Steps in the Plan is the Business Case-Identifying Costs and Benefits Available Through Improvement
Labor Priorities Overtime Wrench Time Capital Projects Work Order Process
Structure Management Levels Role/Resp. Definition Skills Adequacy Span of Control Vision Contractors Use Quality Performance Administration Costs Stores Service Levels Obsolete/Slow Ordering Policy Usage Analysis Order Lead Time Equipment Standards

Capacity Downtime Scheduled Unscheduled PMs/PdMs Revenue Loss Excess WIP/FG

Outages Planning/Prep Duration Expense Excess Rebuilds

The Plan Identifies the Opportunities We Intend to Capture

Opportunities (in $ millions)

1. Labor 2. Contractors 3. Parts & Supplies 4. Product Unit 1 5. Product Unit 2 $ 2.00 2.00 0.75 9.00 16.50 $ 30.25M $30 million in benefits over 36 months

...As Well as the Costs and Bottom-Line Results

1998 1999 2000 Total

Total Benefits
Costs ($M) 1. Equipment Upgrades 2. Consulting Services 3. Training 4. Restructuring 5. CMMS/PdM

$ 6.3M

$ 9.85M

$ 14.1M

$ 30.25M

.6 1.2 .3 .4 .3

2.5 .3 .3 -.6

.8 .3 .3 -.3

3.9 1.8 .9 .4 1.2

Total Costs
Total Net Benefits Annual Return

$ 2.8M $ 3.5M
2.2:1

$ 3.7M $ 6.15M
2.7:1

$ 1.7M $ 12.4M
8.3:1

$ 8.2M $ 21.95M
3.7:1

We Spread the Financial Gains into Achievable Goals for Each Year
1998 1999 2000 Total

Cost Reduction ($M) Labor Contractors MRO

$ 0.75 $ 1.00 ($ 0.25) $ 1.50M $ 1.00 $ 0.50 $ 0.75 $ 2.25M $ 0.25 $ 0.50 $ 0.25 $ 1.00M $ 2.00 $ 2.00 $ 0.75 $ 4.75M

Cost Reduction Additional Product Unit 1

KLBS Profits ($ 0.20)

9,000 $ 1.8M

14,000 $ 2.8M

22,000 $ 4.4M

45,000 $ 9.0M

Unit 2
KLBS Cap Profits ($ 0.60)
Total Benefits

5,000 $ 3.0M $ 6.3M

8,000 $ 4.8M $ 9.85M

14,500 $ 8.7M $ 14.1M

27,500 $ 16.5M $ 30.25M

And Outline Annual Plans and Projects to Achieve our Financial Goals
1998
Planned Benefits Maintenance Management Process ($0.25M) $0.2M Costs

Equipment Management

$4.8M

(0.6+0.3+0.3) = 1.2M

Contractors

$1.0M

$0.10M

Work Management

$0.75M

$0.4M

Mobilization/Communications/Training

$0.0M Total $6.3M

(0.3 + 0.4 + 0.2) = $0.9M $2.8M

For Greatest Credibility, You Employ a Structured and Auditable Approach to Identify Benefits
Benefits Category Benefits Subcategory Benefits Source Benefits Benchmark Typical Analysis Probe Improvement Methods

Efficiency LABOR Effectiveness Workload Redn Mgt Structure Rationalization MATERIALS/ ENERGY Prevention Vendor Stocking

Hands-on-tools time Operator Performed Maint. Rework/Scrap Reduction PM/PdM Effects Reduction in Crew Size Supervisor Ratio

5-6 Hours/Day 20% of Routine Maint. Rework <10%, Scrap<3% E Reduction by 50-75% Decrease .25 FTE/W.O. 12-15:1

DILO, Permits, Parts WO Proc. Brownpaper DILO--W.O. Review W.O. Review -- %PPM DILO--W.O. Review Org. Chart Review

Reeng. W.O. Process OPM Program Job Planning, Skills Impl. PM/PdM Proc. Safety Stds, Planning R/R Defn, Training

Decrease MRO Inv. Value Decreased Usage Reduced Carrying Cost

Two Turns / Year 10-30% Reduction 10-30% Reduction

MRO Utilization Rvw W.O. Review -- %PPM Preventable Mx Review Utilization Review Billing/Activity Review Admin. Process Rvw Planning/Mgt Rvw

Analysis, Restocking Impl. PM/PdM Impl. Vendor Stocking Value-Added Analysis New Admin. Process Planning/Mgt Process PM/PdM Bad Actor Analysis Dec. Unpl. Stoppages Process, Mgt Practices Improve Planning Predictive Maintenance Reliability Engineering

CONTRACTOR Routine Maint USAGE Projects Imp. Throughput CAPACITY Reduced Waste Reduced Time Outage & T/A

Improved Mgt/Utilization Better Planning&Execution

5-15% Reduction 10-40% Reduction

Incr.. Avail, Rate, Quality Decr Raw Materials Increased Availability

70%-90%, Ind. Specific 1-5%, Ind. Specific Process Dependent 10-50% over 3-5 years

70%-90%, Ind.. Specific Ops Report Review Fishbone Analysis Planning/Mgt Review Ind.. Benchmark Rvw

Exercise: Calculate the Benefits Available for Your Plant

Benefits Category Benefits Subcategory Benefits Source Est. Current Value Improved Value Calculation Benefit Value $

Efficiency LABOR Effectiveness Workload Redn Mgt Structure Rationalization MATERIALS/ ENERGY Prevention Vendor Stocking

Hands-on-tools time Operator Performed Mx Rework/Scrap Reduction PM/PdM Effects Supervisor Ratio

Addl Hrs* #Crafts*$/Hr % Work*Maint Labor Cost Ann Repair $ * % RW * %Redn Ann Repair Costs * %

Decrease MRO Inv. Value Decreased Usage Reduced Carrying Cost Ann Parts Cost * % Redn

CONTRACTOR Routine Maint USAGE Projects Imp. Throughput CAPACITY Reduced Waste Reduced Time Outage & T/A

Improved Mgt/Utilization Better Planning&Execution Ann. Contr Labor $ * % Redn

Incr. Avail, Rate, Quality Decr. Raw Materials Increased Availability

# Addl Units * Unit Margin # Scrap * Unit Value * % # Days Redn * Unit Prod. Value / Day

Section 7
Performing the Plant Assessment

The Strategic Plan is Only the First Step in the Journey, However

1. Strategic Plan for Asset Management

2. Plant Assessment

3. Implementation of Change

The Assessment is The First Phase of a Two Phased Program to Improve Operational Reliability

Phase I
Assessment

Phase II
Results Delivery

January 8 5 Weeks

February 11

11 months

Objectives
Build an As Is model of relevant processes and procedures Determine performance improvement opportunities Develop a Business Case to support implementation of improvements Design an integrated implementation approach/plan Build organizational commitment to address opportunities

Objectives
Jointly implement plan Jointly deliver results Transfer change acceleration skills

The Assessment Covers These Areas, With the Goal of Touching as Many People as Possible

Focus Interviews Maintenance Systems Surveys and Probes

Financial Analysis Business Process Reviews / Brownpapers

People Touched

200 160
CMMS Capability

OPERATIONAL OPERATIONAL RELIABILITY RELIABILITY

Organizational Assessment

Executive Updates Communication and Mobilization

Project Design and Business Case

Interviews and Surveys Help Surface Peoples Perceptions of Issues

Feel
0% Communication Sys. & Proc. Cooperation Serv. Del. Process Sales & Mktg. Strategy Org. Structure Better-Trnd. People Sup./Mgmt. Skills R & Rs Mgmt. Control Sys Environment Other Not used Not used Not used 1% 0% 0% 0%
Executive Workshops

Need
Financial Analysis

Do
Corporate Services Assessment Value Chain and ABC Co. Processes Analysis

20%

40%

60%

80% 80%

100%
Focus Interviews

58% 48% 44% 44% 43% 41% 40% 36% 32% 28% 18%
Refining Assessment Market-Focus Assessment

Project Project Approach Approach and and Business Business Case Case

Organization Mapping

Current Initiatives Review

Culture/Change Assessment

Information Assessment

What

How

Focus Interviews Maintenance Survey

Analysis Activities

Path Forward Business Case

What is the existing level of consensus in the organization around the future; will a significant consensus building effort need to be launched? What is the sense of urgency in the organization; what degree of mobilization is necessary? Does the organization understand the scope, scale and difficulty of change; will a massive management effort be required? What are the major barriers to success for the path forward; what must be done to overcome these barriers? Does the organization feel confident in the future; does accountability still need to be built?

Interviews Give an Opportunity for Many People to Express Their Opinion about the Plant
Feeling better about the company compared to what I did 6 months ago. Made some real improvements like SIP, flex spending on insurance, improvement of colleagues and management attitudes. Still need to work on team effort. The last two years maintenance has been hard to come bycant put in emergency work orders.2 years ago, anyone could put in an emergency ordernow that is not the case. We have not had good direction even though we have attempted changes, but never with commitment. Built expectation at lower level, but have not met them .

What Are the Most Critical Issues Facing the Plant Today?
Work order planning and scheduling not working well. Too many changes that dont accomplish anything Problem with balance of craft assignment to 12 hour shifts. Trouble keeping adequate coverage with department techs Communication at all levels Training - Need more formal training; politics gets in the way of training. We try to do in-house training but do not get cooperation Maintain a union free environment

What Three Things Could the Plant Do to Most Significantly Improve Maintenance Effectiveness?
Improve communication Institute accountability for the equipment and job performance (maintenance and operations) Consolidate control over all maintenance technicians

What Three Things Could Your Department Differently To Contribute to Improved Maintenance?
Do more root cause analysis to solve recurring problems Make the planning system more efficient Operators try to take care of equipment

Where Do You Consider the Greatest Opportunities for Cost Improvement in Maintaining Production Equipment?
Make people accountable Operator ownership of the equipment Good PM minimizes major breakdowns and lost productivity increase uptime Cleanliness of the equipment

We Highlight Issues Selected by the Organization as Significant Barriers to Improving Operational Reliability
Issue Was Chosen as #1-3 Issue Was Chosen as #1-3

Planning/Scheduling Prod./Maint. Interface Morale & Motivation Craft Skills Prev/Pred. Maint. Work Policies/Practices MPAC Implementation Parts & Supplies Staffing Levels Tools and Cap. Resources Safety

45% 45% 40% 30% 25% 25% 25% 20% 20% 20% 5% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
n = 20

0%

Source: Focus Interviews

In the Maintenance Survey We Determine Perceptions: Is The Initiation/Authorization Process Used Correctly?
Maintenance Avg.=3.2 Combined Avg.=3.2 Production Avg.=3.3

50% 40% 30% 20% 10% 0%

Never Half the Tim e Alw ays

50% 40% 30% 20% 10% 0%

Never Half the Tim e Alw ays

Maintenance
We create formal work orders for all work All work is entered into CMMS Our CMMS helps to identify the equipment & problem CMMS terminals are easily accessible for all staff W/Rs are reviewed/authorized within 24 hours

Production
Operations= Average= Average= Operations= 2.3 4.2 4.0 2.2

Maintenance= .9 higher than production

Do We Pay Attention to Reliability and Downtime ?

Maintenance Avg.=2.8 Combined Avg.=3.0 Production Avg.=3.3

50% 40% 30% 20% 10% 0%

Never Half the Tim e Alw ays

50% 40% 30% 20% 10% 0%

Never Half the Tim e Alw ays

Maintenance
Sources & causes of downtime are classified & reported We have formal failure analysis process MTBF records are kept & reported for major equipment All staff understand the capacity of each unit

Production
Production= Production= 3.7 .9 over Maintenance

Maintenance= 2.3 Maintenance= 2.4

We Ask About Improvement Opportunities, to Gauge Enthusiasm for Change

% Possible Improvement % Possible Improvement

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 10% 20% 30% 40% 50+ %

Equipment Reliability (downtime) Labor Productivity

Communications (Organizational Effectiveness)

Capacity Analysis (Preliminary) Identifies Potential Bottlenecks and Shortfalls From Potential Production (lbs/hr)
Permit Max Theor. Capacity Best Month 95-96 Avg. Rate Adj. Best Mo Gain/Loss Factor Equiv. Adj. Cap. 14,986 17,540 14,986 12,338 14,986* 12,905 13,572 12,316 10,822 13,855 -10.0% 13,855 21,842 11,648 9,948 21,842* +10.5% 24,026 13,218 13,924 12,585 11,063 14,158 -6.2% 12,671 12,450 13,763 11,791 10,285 13,265 -4.5% 14,087 27,238 58,422 26,065 20,612 26,065*

Performance
Theor-Best Mo. Theor.-Avg. Best Mo-Avg. Adj Best Mo-Avg.

Process 1

Process 2

Process 3

Process 4

Process 5

Process 6

2,554 5,202 2,648 2,648

1,256 2,750 1,494 3,033

10,194 11,894 1,700 11,894

1,339 2,861 1,522 3,095

1,972 3,478 1,506 2,980

32,357 37,810 5,453 5,453

While this analysis need discussion and refinement, it can serve to identify the plants opportunity for additional production.

Excess Capacity Demonstrates the Bottleneck Areas Targeted for Additional Analysis
40000 35000 30000 25000 20000 15000 10000 5000 0
Process 1 Process 2 Process 3 Process 4 Process 5 Process 6

Theoretical -Best Demonstrated Theoretical - Avg. Monthly

1997 Equipment Downtime Process 4

Annual Available Hours
100%

118,608 Hrs

DOWNTIME

5.09 %

No-Load

6037 Hrs.

Emergency Breakdowns .18% 213 hrs.

.93 % .69 % .74 %

Misc./Contr Hrs. Maintenance 240 Turnaround

1103 Hrs. 818 Hrs.

Repair / Mods

1.62 %
PMs

877 Hrs. 109,772 Hrs.

92.55%

KDAC Interface .47% 555 Hrs

Actual

Production

Establishing an Effective Measurement System Is Fundamental to Improving the Maintenance Management Process
Leading Indicators Work request quality Work approval effectiveness Priority system effectiveness Planned work ratio Job estimating accuracy Inventory accuracy Maintenance work conducted by operators ratio Craft to supervisor ratio Total backlog Preventive and predictive ratio Failure analysis Lagging Indicators Maintenance cost / replacement asset value ratio Wrench time Emergency work ratio Equipment availability Re-work Equipment history quality Material / equipment stock-outs Inventory turn-over

Maintenance Management Leading Indicators

Performance Indicators Inventory Accuracy Measurement
Percent of Items Actually Found During Physical Inventory

Best in Class1 99%

SAMI Experience2 90 - 95%

Your Plant 98.83%

Maintenance Work Conducted by Operators Ratio

W/O Count of Maintenance Work Done by Operators Total Maintenance W/O # Maintenance Hourly

>25%

15%

7.04%

Craft to Supervisor Ratio

# of Maintenance Supervisors Number of Calendar Weeks to Complete All Planned Maintenance Work Using Straight Time Maintenance Hours Worked on PM/PDM Work Total Completed Work Order Hours

15 : 1

10 - 15 : 1

11.1 : 1

Total Backlog

5 Weeks

5 Weeks

10.5 Weeks

Preventive and Predictive Maintenance Ratio

40%

30-35%

42.7% Not Performed on A routine Basis

Failure Analysis

Percent Work Orders Reviewed for Root Cause

60 - 70%

40 - 50%

1. International Benchmarking Clearinghouse and SAMI experience in continuous process industry 2. SAMI experience after re-engineering when a steady state achieved 3. Most measures not tracked. ABC Co. estimates based on first three weeks of A&D diagnostics and interviews

We Review Job Estimating Accuracy to Determine What Portion of Workorders are Inaccurately Estimated
30 4

28 49

1-20% 21-50% 51-150% >150%

Analysis of Open Work Orders and Request Identifies Age Distribution

1000

Number of work orders in the system at of 1/28/97

900 800 700 600 500 400 300 200 100 0

Safety& PM work represent over 83% of 1 month or greater aged backlog

1 Day Old 2 Days - 1 Week 1 Week - 1 Month 1 Month - 5 Months > 5 Months

Open W.O

W.O. Requests

Total Requests

Ability to service work in a timely manner is critical to reliability and faith in the Ability to service work in a timely manner is critical to reliability and faith in the maintenance process by operations maintenance process by operations

In Many Cases Work Orders Are Ineligible for Real Planning1

% of Work Order Hours Best-in-Class Maintenance

Code

Categories

Emergency Do Now Do Today Do by Tomorrow Schedule this Week Schedule as Manpower is Available Schedule During Shutdown

34.9

Less than 10%

38.8

PM

Preventive Maintenance

26.3

Shifting the balance from emergency and high priority work orders to Shifting the balance from emergency and high priority work orders to preventive/predictive maintenance will yield big gains in operational reliability preventive/predictive maintenance will yield big gains in operational reliability
1. Planned = Determine job content, develop work plan, estimate job, plan and order parts and materials, plan special equipment and tools, identify workers with unique skills, assign cost accounts, establish backlog Source: Analysis of work orders completed during 1996

Maintenance Technician Seeks a Machine That Production Will Allow Him to Service
Daytime 984-6294/ Evening 872-8349 DILO of a Mobile Technician

r lla k nd rpi r # O Fo ou ate e W el 0 P C er am ri v s ie ,00 city filt te e, d D S a 10 ap and e. gin dy C il ng en o O a n b ch lea n, & C ai tr

0 -0 11 3 I 00 t 7lif 9

Step
1 2

Time

Activity

Production Production
4

2 3

7:04 am 7:10 am 7:14 am 7:20 am 7:28 am 7:31 am 7:33 am 7:39 am 7:41 am 8:17 am

Mobile technician picks PM work order Is told that equipment is unavailable for PM Technician chooses another w/o This piece of equipment is also occupied Technician finds an unoccupied forklift, forklift is brought to shop Technician gets parts necessary for w/o from warehouse, using MPAC Technician begins engine tune Technician is asked to open tool crib for other workers Returns to PM W/O is completed

3
5

Maintenance
7 9

4 5

6 7
6

MRO/Spares MRO/Spares

9
10

How effectively was the technicians time used?

10

Over 11Hours worth of activity resulted in aahalf hour of Over Hours worth of activity resulted in half hour of wrench time and six idle trips to spares or production wrench time and six idle trips to spares or production

Poor Planning Continues to Hamper Our Maintenance Technician

DILO of a Mobile Technician

w er et il Po w e O Air g P o S tr ne e in el n, gi g id R ies -O er n an D ide ep e E Ch R we ng r, c.. S ha ilte et C F r, & i l te F

0 -0 90 s, 6 os , 23 b er ed 96

Step
1 2 3

Time

Activity

8:31 am 8:34 am 8:41 am

Mobile technician picks PM work order Locates sweeper, drives it to shop Washes sweeper. At this time, technicians partner alerts him that the same PM was attempted last week by the partner, but parts had not been available MPAC reveals that parts are still unavailable, while technician is at terminal, he is asked to open tool crib Break Technician returns to sweeper, closes engine, and returns it to 220 Technician locates another machine to be serviced

8:51 am

5 6 7

8:57 am 9:20 am 9:32 am

Responsibility for the w/o is being volleyed like a tennis ball!

Our Maintenance Technician Changes His Schedule to Fix Growing Problems

DILO of a Mobile Technician

n r w c e , t E de er, Bu Ch lts on loa te lity an, Be rs. or Fr ni S ti e s, te F U kid U Cl vel Fil .O. airs S ch am Le nd W ep I n te d a a R S ui e s s r y Fl os ces sa H ro es P ec N

52 e , 65 C a s 5 C 7 3 t 6 4 # d 1 8 i th k e c k

Step
1 2 3 4

Time

Activity

9:50 am 9:56 am 9:59 am

Mobile technician picks PM work order After searching, technician locates Bobcat at 110 Operator is finished with vehicle, technician drives it to shop, and begins Tune-Up

10:21 am Technician has discovered that lift bucket has a tear, and is therefore unusable. He enters office get W.O. that his partner had entered as a work request a week ago 10:24 am Technician cannot find planner, but secures wo, returns to execute maintenance 10:25 am Technician realizes that a brake light has been broken off, also. Rather than wait another week+ for an order, he gets brake light from spares, and replaces broken one 10:44 am Technicians partner shows him on MPAC that the same PM he had carried out earlier today had been closed 9 days ago. 10:45 am Technician begins welding bucket. His partner comments that the rip in the bucket has considerably worsened since last week, meaning at least an extra hour of work 10:57 am His efforts are interrupted by a request that he open the tool crib 11:01 am He returns to welding

5 6

Progress is really slow, like a turtle!

9 10

We Review Emergency Work Orders to Identify Those Which are Preventable/Avoidable

32%
Operator Crafts PM/PdM Engineer Mgmt Not Prev.

8% 9% 22%

23%

6%

* Percent of 112 work orders surveyed

We Review the Organization to Determine Its Fit with Overall Plant Goals
OPERATIONS MANAGER

SI: Superintendent
SI-Operations Area 1 SI-Operations Area 2 SI-Operation Area 3 Maintenance Facilitators 3

Facilitators 2

Production Facilitators 6
Production & Maintenance Colleagues 12

Planners 4

Production Colleagues

Maintenance Colleagues 20

During Results Delivery we will study whether organizational realignment is necessary to make it more effective

We Examine How Time is Spent, and How Much is Available for Value-Added Work
600 500 400 300 200 100 0
A- TBW B- Meetings C- Clean Up D- Sickness E- Tardy F- Travel G- Vacation H- Tool Crib ITraining J- Coordinator K- PdM Collection L- PdM Analysis M- Administration N- Production Assistance
A B C D E F G H I J K L M N O

O- Other

Hours Dedicated to Overhead Tasks

We Also Create a Project Structure That Emphasizes Involvement and Ownership

Executive Management Committee
Plant Leadership Committee

EVP Mfg.

Project Sponsor

Plant Manager

Project Owner

Project Manager

Overall Coordinator

STREAM LEADS
HR Mgr. Mx Mgr. Eng. Mgr. Ops Mgr. Ops/Mx Mgr.

Mob./C omm. Team

Work Mgmt.

Equip. Mgmt.

Contractor Mgmt.

Mx Mgmt. Process

TEAMS
Sub-Streams

In Most Cases We Find the First Project is to Bolster Planned Maintenance, our Stage I Goal
Integrated T/A Integrated T/A Planning & Planning & Execution Execution MRO Materials MRO Materials Management Management

Failure Analysis Failure Analysis

Preventive & Predictive Preventive & Predictive Maintenance Maintenance

Work Initiation Work Initiation

Prioritization Prioritization

Planning and Planning and Scheduling Scheduling

Work Execution Work Execution & History & History

Measures & Measures & Follow-up Follow-up

Emergency Work Emergency Work

Approval Approval

Contractor Contractor Management Management Backlog Backlog Management Management

In the Assessment We Develop a Detailed Annual Plan to Guide our Work and to Monitor our Progress
Activities and Tasks I. Complete Plant Assessment II. Implementation Project Management III. Daily Maintenance -Develop To-Be Process -Prepare Policies/Procedures -Pilot New Processes -Train & Implement Plant-Wide IV. Automation/Equipment Management -Purify Existing Database Files -Expand Use of Materials Module -Expand Use of Maintenance Module -Create Equipment Care Process (PM s) V. Autonomous Maintenance VI. Performance Management -Develop & Implem. Meast Systems -Align Reward/Recognition Systems VII. Develop Strategic Asset Mgt Plan J F M A M J J A S O N D

Quality Assurance Reviews

Exercise: Estimate Your Own KPIs

Performance Indicators Inventory Accuracy Measurement
Percent of Items Actually Found During Physical Inventory

Best in Class1 99%

SAMI Experience2 90 - 95%

Your Plant

Maintenance Work Conducted by Operators Ratio

W/O Count of Maintenance Work Done by Operators Total Maintenance W/O # Maintenance Hourly

>25%

15%

Craft to Supervisor Ratio

# of Maintenance Supervisors Number of Calendar Weeks to Complete All Planned Maintenance Work Using Straight Time Maintenance Hours Worked on PM/PDM Work Total Completed Work Order Hours

15 : 1

10 - 15 : 1

Total Backlog

5 Weeks

5 Weeks

Preventive and Predictive Maintenance Ratio

40%

30-35%

Failure Analysis

Percent Work Orders Reviewed for Root Cause

60 - 70%

40 - 50%

1. International Benchmarking Clearinghouse and SAMI experience in continuous process industry 2. SAMI experience after re-engineering when a steady state achieved 3. Most measures not tracked. ABC Co. estimates based on first three weeks of A&D diagnostics and interviews

Section 8
Implementing Your Plan

Section 9
Characteristics of Excellence

Section 10
Overcoming Our Barriers

Should You Consider Outside Help?

Guide you through the discovery process Help structure your thinking and your work, avoiding blind alleys Bring a wealth of experience in improving culture and practices Provide benchmarking data Teach new skills Identify models of excellence Help you stay focused Enable you to achieve your goals