Problem
+36% dramatic increase in annual spare part and maintenance costs across manufacturing network
Annual spare part inventories and maintenance overtime costs at six API, biologic and fill/finish manufacturing plants skyrocketed over 36% the past two years without clear justification. Our client was 10 months into a global operational cost improvement effort when these surprising maintenance findings where identified. Several years ago, our client’s maintenance organization had been centralized as part of a new matrix organization strategy. However, each plant continued to retain budgetary control and manage their maintenance operations independently without oversight.
Approach
Compare industry benchmarks to determine new metric targets, maintenance processes and recommend improvements
Our client’s executive supply chain and finance organizations retained WGA. Our initial scope was to benchmark the six client plants for industry maintenance cost and organizational design using our RCP standards. Upon reviewing the results of the benchmark comparison, our client’s supply chain organization expanded our benchmarking exercise to look at maintenance management processes and recommend improvements.
Solution
Established new maintenance metric targets, Maintenance CoE, centralized budgetary control, outsourced maintenance functions
WGA’s benchmark analysis of the client’s maintenance financial/inventory data and organizational structures prompted our client to develop new common maintenance metric targets for their plants. Our evaluation results of maintenance processes evolved into the formation of a Maintenance Center of Excellence function within the client’s organization. The Maintenance CoE took charge of designing and deploying common practices at their plants. Our client enacted WGA’s critical recommendations including organizational redesign and centralization of budgetary control of maintenance, the use of FMECAs to determine the criticality of spare parts and justification of inventory investments and the outsourcing of commodity maintenance functions.
Results
Exceeded maintenance cost reduction targets and improved maintenance capability
Direct project achievements 12 months after completion of our services:
◾Annual maintenance overtime decrease of (-41%)
◾Elimination of over $33M in excessive spare parts inventory across the network
◾Maintenance headcount reduction of 49 with no impact on service performance
◾Common Maintenance processes and training/certification practices in operation