Maintenance Reduction to Revenue Increase Comparison
A 10% REDUCTION IN MAINTENANCE COST IS EQUAL TO A 40% INCREASE IN COMPANY REVENUE
According to DuPont, “maintenance is the largest single controllable expenditure in a plant.” In many companies it often exceeds annual net profit.
| Before | 10% Maintenance Cost Reduction | 40% Sales Increase | ||||
|---|---|---|---|---|---|---|
| $ | Percent of Sales | $ | Percent of Sales | $ | Percent of Sales | |
| Sales | 100 | 100 | 100 | 100 | 140 | 100 |
| Maintenance Costs | 20 | 20 | 18 | 18 | 28 | 20 |
| Material, Labor, G&A and O/H | 75 | 75 | 75 | 75 | 105 | 75 |
| Profit | 5 | 5 | 7* | 7 | 7* | 7 |
| Which is easier; growing sales volume by 40% or reducing maintenance costs by 10%? In addition, a 10% reduction in maintenance costs translates to a much higher return-on-net-assets (RONA) compared to increasing sales 40%, which will require more plant capacity and production labor.
*Note: Profit is the same in both scenarios |
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According to major industries throughout the world, it’s time to throw out your old ideas on machine maintenance. The cost-saving trend is toward a maintenance program that targets the root causes of machine wear and failure. Predictive and Preventive methods are out: Proactive Maintenance is in. Why? Because proactive maintenance methods are currently saving industries of all sizes thousands, even millions, of dollars on machine maintenance every year.
| Maintenance Philosophy | Maintenance Practive | Human Body Metaphor |
|---|---|---|
| Proactive Maintenance | Aggressive approach to eliminate the root cause of failure-surface degradation | Cholesterol and blood pressure monitoring with diet control |
| Predictive Maintenance | Monitors oil condition, trend analysis | Detection of heart disease using EKG or ultrasonic |
| Preventive Maintenance | Based on a schedule, not condition of oil or component | By-pass or transplant surgery |
| Breakdown Maintenance | Large maintenance budget | Heart attack or stroke |
