Understanding the “Impact” Cost of Reliability and Maintenance – A Terry Wireman Blog

 

Understanding the “Impact” Cost of Reliability and Maintenance

 

In previous blogs, I have discussed the cost of inefficient maintenance practices and the impact they have on a company’s expenses. In this blog, the focus will change from maintenance costs to what I refer to as “The Impact Cost of Reliability and Maintenance”.

When considering the impact costs, consider this scenario: A production plant in a sold out condition. Everything that can possibly be manufactured is being sold to customer. If a production line or critical piece of equipment fails (unreliability) during the production run, the production is halted until the equipment is repaired and returned to service (reactive maintenance).

What did the production disruption cost the company? Was it the total lost sales dollars or was it only the profit that was lost? First consider the difference between lost sales revenue and lost profits. Profit is usually calculated by taking total income (sales) and subtracting total expenses (salaries, energy, etc.) and what is left are the profits. If the production disruption reduces the total income by lowering the possible sales volume, then lost sales would have to be a factor in calculating the impact of the production disruption. This reduces the numerator in the impact calculation.

At the same time, the expenses may also be increased during the production disruption. There may be overtime for the maintenance technicians making the repair and there could be product loss in quality or quantity (particularly in a continuous process operation). These increased expenses impact the denominator in the impact calculation.

While this may seem simplistic, very few organizations consider all of the parameters when considering the cost of lost production. Visualizing the problem becomes more clouded when a plant is not in a sold out condition. Now the impact on lost sales revenue becomes a matter of debate among managers (especially financial managers). Can the lost production be made up and still meet the customer delivery in a timely manner? If the answer is “Yes”, then the sales volume may not be impacted. However, the profit component of the calculation will still be impacted, since expenses will be increased to make up the production. This is true since the equipment will now have to be operated when it was scheduled to be shut down. So there will be increased labor costs (usually at an overtime rate) and increased energy costs. There is a possible increase in raw material costs, since the supply chain demand will fluctuate. So again, the true profits of a company will be impacted negatively.

There is yet another scenario: What if the company has an extra line or excess capacity? Can the production crew be moved over to the spare line and run the product without any impact on profit? Possibly, but this line of reasoning leads to a much larger problem: A poor financial standing with investors. Why? Simply stated – profits are only part of the picture.

A higher level indicator used to evaluate companies today is Return on Invested Capital (ROIC). This indicator is utilized in Industry Weeks Best Plants program ROIC is – in its simplest form – the profits a company generates versus the invested capital that is being used to generate the profit. A quick analysis of this calculation would show that a company that uses fewer assets to produce the same profits as a competitor would be viewed as a better investment by Wall Street. So back to our position at the start of this blog – Would assets that are more reliable (higher output) and have a lower cost to maintain (lower life cycle cost) be more valuable to a company? The answer would clearly be “Yes”. The impact cost in the form of fewer assets and increased profits (ROIC) would make the company a much more attractive investment for the financial community.

How much of an impact does your reliability/ maintenance organization have on your company’s assets that are utilized produce its product? This is the TRUE impact cost that companies must focus on to maintain a competitive edge.

 

Search All Categories:

Understanding the “Impact” Cost of Reliability and Maintenance – A Terry Wireman Blog 2017-07-21T20:02:17+00:00

Return on Investment – People or Technology?

 

Return on Investment – People or Technology?

 

When we are making an investment in any type of improvement program, there is usually a return on investment calculation that is provided to executive management to secure the funding for the project. The investment is usually straightforward to calculate – but what about the return?
What produces the return on the investment? Is it a direct reduction in cost? It could be, if for example, it was an investment is some technology that directly reduced energy costs. However, what about a new CMMS/EAM system? Is calculating the return on that investment as clear? You would only have to review surveys such as conducted by ReliabilityWeb to get your answer. The majority of companies feel they never realized the projected return on investment for their CMMS/EAM systems. Why is this the case?

It is because the CMMS/ EAM system requires changes in behaviors, both from the organization and employees if it is to produce a return on investment. For example, a typical part of the ROI on a CMMS/EAM system is increased labor productivity for the maintenance technicians. However, if the organization continues to be reactive, does not implement and execute a preventive maintenance program, does not implement good planning and scheduling processes, then nothing really changes. No savings is realized, since the organizational behavior did not change.

Just purchasing technology does not produce a return on investment. Unless organizational processes are developed and enforce and the people in the organization change their behaviors to conform to the new processes, we only have the investment – not the return.

So if we are going to have a return on investment for technology in maintenance and reliability, we need to focus on helping the people in the organization change their work processes to fully utilize the technology. If the technology is the investment, then the people provide us the return on that investment.

Search All Categories:

Return on Investment – People or Technology? 2017-06-13T18:03:47+00:00

Somewhere in Time – a Terry Wireman blog

Somewhere In Time

“The past is the future; the future is the past: it all gives me a headache.”—This quote is taken from a Star Trek Voyager episode.  Consider how Captain Janeway could apply this to reliability/ maintenance managers today.

Consider this: How many “new” processes and procedures actually have been created in the area of maintenance and reliability in the last few years? Are the latest “buzzwords” simply new names for processes and procedures that have existed for decades? Preventive Maintenance, Reliability Centered Maintenance, Life Cycle Costing, etc.—many of these types of processes can be traced to the 1960s—maybe earlier. Consequently, the practices and processes that many companies are now planning to implement in the future actually have existed in the past.

Even Computerized Maintenance Management Systems (CMMS), which provided the foundation for many current Enterprise Asset Management (EAM) systems, have been implemented since the mid-1970s. While those early systems may not have utilized all the technologies to enhance the “user-friendliness” inherent in today’s systems, but they still supported good maintenance business processes.

If we focus just on the CMMS/EAM aspect of the maintenance and reliability market, what do surveys tell us about the implementation and utilization of our current systems?

Most studies show that today’s CMMS/EAM systems are not being implemented properly; that they are not being utilized once they are implemented; and, that they are not delivering the returns they were projected to achieve. There are many common reasons why, including:

  • Lack of management support for and understanding of the CMMS/ EAM project
  • Lack of organizational business processes to properly utilize the CMMS/EAM system
  • Insufficient implementation resources
  • Insufficient personnel to utilize the system

We’ve been watching CMMS/EAM systems fail for these and related reasons for years. Why, then, would we let another implementation fail? Can’t we learn from the past?

Do companies believe their implementations are so unique that they can’t learn from the successes and failures of others? Would this type of shared information not help a company optimize its investment in a CMMS/ EAM system?

In industry publications and studies (especially at http://reliabilityweb.com/ )  , CMMS/EAM system implementation is an especially hot topic, and it has been covered from almost every possible angle. Yet, despite the overwhelming information available, why has the percentage of perceived successful implementations still hovered at 50% or less?

How much money are companies wasting by making the same mistakes time after time—year after year? Since expense dollars not spent become profit dollars, what we should ask ourselves is: “How much of our company’s profit are we wasting by repeating documented historical mistakes?”

With so many educational resources available today, there’s no excuse for repeating the same historical mistakes in the selection, implementation and utilization of CMMS/EAM systems. If nothing else, we could find ways to make new mistakes. (This also holds true for other types of maintenance and reliability processes)

So, where does your company stand in its current CMMS/EAM efforts? In the past or in the future? To paraphrase that television show, just thinking about the question could be enough to bring on a headache!  It is one headache that many reliability/ maintenance managers should be able to avoid.

Search All Categories:

Somewhere in Time – a Terry Wireman blog 2017-01-25T13:29:19+00:00

What is the Plan? – A Terry Wireman Blog Series

What is the Plan? – A Terry Wireman Blog Series

There has been a lot of buzz on the internet (particularly in the LinkedIn groups) about the number of maintenance / reliability initiatives available to companies today. There are multitudinous questions arising, such as how to know which initiatives to implement, support, or even ignore.  When considering the potential maintenance/ reliability initiatives we really need to stop and ask “Which ones are going to make an impact on the profitability of the company?”  These are the ones that should be given the priority.  Then, to prioritize the initiatives that are going to make the company more profitable, you should prioritize them by the amount of profit that is projected.  Some companies will focus on whether the improvement initiative is going to increase profitability by increasing sales/ revenue or by decreasing expenses.

While this seems to be rather basic, how many companies really prioritize their maintenance/ reliability improvement initiatives by a projected return on investment? In many cases, they decide by looking at their competitors.  You may hear statements like “Company A is doing this, we should too.”  Or “Our competition is implementing this, we should too.”  In other situations, the maintenance and reliability initiatives are decided upon by the “C” level person in the company reading a book about the latest management fad (whether it applies to maintenance and reliability or not) and wants to implement it.

Even in the maintenance/ reliability community, managers get enamored by a presentation on an improvement methodology in a presentation or an article and they want to solely focus on it. We cannot fall into the “Acronym of the Month” trap.  If the maintenance/ reliability organization wants to make process improvements, they have to have a process FIRST; then they can improve it.  Having a defined process will also allow them to understand the changes that need to be made and track the financial improvements.

At a recent conference, one of the keynote presentations was a CFO of a company, who appeared to have a “real-world” perspective on how companies should be run. One of his most profound statements was “In any business, it is all about the return”.

Do we make improvements in our companies for the sake of just doing something – or do we really calculate the return on investment and then use that to sell the improvement program to the rest of the organization? Perhaps if we had to put a return on investment “sticker” on each of the improvement initiatives that are being promoted throughout companies today, the choices would be easier to make, implement, and support into the future.

Search All Categories:

What is the Plan? – A Terry Wireman Blog Series 2017-01-25T13:29:35+00:00

Understanding the “Impact” Cost of Reliability and Maintenance

Understanding the “Impact” Cost of Reliability and Maintenance

In previous blogs, I have discussed the cost of inefficient maintenance practices and the impact they have on a company’s expenses. In this blog, the focus will change from maintenance costs to what I refer to as “The Impact Cost of Reliability and Maintenance”.

When considering the impact costs, consider this scenario: A production plant in a sold out condition. Everything that can possibly be manufactured is being sold to customer.  If a production line or critical piece of equipment fails (unreliability) during the production run, the production is halted until the equipment is repaired and returned to service (reactive maintenance).

What did the production disruption cost the company? Was it the total lost sales dollars or was it only the profit that was lost?  First consider the difference between lost sales revenue and lost profits.  Profit is usually calculated by taking total income (sales) and subtracting total expenses (salaries, energy, etc.) and what is left are the profits.  If the production disruption reduces the total income by lowering the possible sales volume, then lost sales would have to be a factor in calculating the impact of the production disruption.  This reduces the numerator in the impact calculation.

At the same time, the expenses may also be increased during the production disruption. There may be overtime for the maintenance technicians making the repair and there could be product loss in quality or quantity (particularly in a continuous process operation).  These increased expenses impact the denominator in the impact calculation.

While this may seem simplistic, very few organizations consider all of the parameters when considering the cost of lost production. Visualizing the problem becomes more clouded when a plant is not in a sold out condition.  Now the impact on lost sales revenue becomes a matter of debate among managers (especially financial managers).  Can the lost production be made up and still meet the customer delivery in a timely manner?  If the answer is “Yes”, then the sales volume may not be impacted.  However, the profit component of the calculation will still be impacted, since expenses will be increased to make up the production.  This is true since the equipment will now have to be operated when it was scheduled to be shut down.  So there will be increased labor costs (usually at an overtime rate) and increased energy costs.  There is a possible increase in raw material costs, since the supply chain demand will fluctuate.  So again, the true profits of a company will be impacted negatively.

There is yet another scenario: What if the company has an extra line or excess capacity? Can the production crew be moved over to the spare line and run the product without any impact on profit?  Possibly, but this line of reasoning leads to a much larger problem: A poor financial standing with investors. Why?  Simply stated – profits are only part of the picture.

A higher level indicator used to evaluate companies today is Return on Invested Capital (ROIC). This indicator is utilized in Industry Weeks Best Plants program ROIC is – in its simplest form – the profits a company generates versus the invested capital that is being used to generate the profit.  A quick analysis of this calculation would show that a company that uses fewer assets to produce the same profits as a competitor would be viewed as a better investment by Wall Street.  So back to our position at the start of this blog – Would assets that are more reliable (higher output) and have a lower cost to maintain (lower life cycle cost) be more valuable to a company?  The answer would clearly be “Yes”.  The impact cost in the form of fewer assets and increased profits (ROIC) would make the company a much more attractive investment for the financial community.

How much of an impact does your reliability/ maintenance organization have on your company’s assets that are utilized produce its product? This is the TRUE impact cost that companies must focus on to maintain a competitive edge.

Search All Categories:

Understanding the “Impact” Cost of Reliability and Maintenance 2017-01-25T13:29:36+00:00

Maintenance is not Asset Management – Or is it? (Part III)

Maintenance is not Asset Management – Or is it? (Part III)

The last blog (Part II) finished with the need to understand the relationship between maintenance and asset management.  To achieve a clear understanding, it would be necessary to the various phases of an asset’s life cycle.  The following diagram illustrates a common 8 part life cycle.

blog5

If we would begin by looking at the reason an asset is created/ procured, it would begin with:

  1. Investment Planning (Needs and Feasibility Assessments for Assets) This phase of an asset’s lifecycle begins with the discovery that there is

(1) a new product or service that can be produced and sold,

(2) a greater demand for an existing product or service, or

(3) another facility location required to meet customer needs.

The demand for new assets may also relate to meeting increased regulatory requirements for existing assets.

The investment planning will likely involve the following studies:

  1. Strategic Planning
  • The company direction is to diversify, expanding into new markets.
  • The company direction is to expand their share of an existing market.
  1. Customer Needs
  • The customer demands modifications or enhancements to existing products or services that requires new assets.
  1. Regulatory Requirements
  • There may be new regulatory requirements that require extensive modifications (new assets) to existing buildings, facilities, processes, equipment, etc.
  1. Project Definition (Design of Assets)

In this phase of an asset’s lifecycle, the scope of the asset(s) is defined. For the asset to meet the market/ customer demand (identified in Phase 1), it will need to meet certain requirements. There are reliability requirements (how long the equipment operates in between maintenance periods), maintainability requirements (how long it takes to restore the equipment to service), projected life and total cost of ownership (TCO) requirements that the assets will need to meet to support the business requirements identified in Phase 1.

It must be kept in mind that the asset at this phase of its lifecycle is still only a document, a drawing, or a blueprint. There have been no major costs (other than studies) done to this point. In fact, the majority of the textbooks written on lifecycle design and costing show that up to 90% of the lifecycle costs are specified (knowingly and unknowingly) by the design engineer. However, the same 90% of asset lifecycle costs are not incurred until the asset is in its operational and maintenance phases of the lifecycle.  In fact, the projected maintenance requirements (manpower, materials, etc.) are established at this time.  Eventually, these projections are to be turned over to the maintenance department for requesting additional manpower and adjusting spare parts levels when the new assets are commissioned.   Most companies (who do not listen to the design engineer) commonly overlook this fact and fail to achieve the profitability projections in the Phase 1 business study.  This is due to the increased maintenance requirements being neglected, which (once the asset is commissioned) results in a shift toward reactive maintenance and increasing the overall maintenance costs (labor and materials).

There are three calculations a design engineer will focus on during the design of an asset. They are:

  1. Reliability – A design specification that determines the period of time an asset will perform its intended function without failure. This is typically measured by the Mean Time Between Failure (MTBF) calculation.
  2. Maintainability – A design specification that determines the length of time it takes to restore an asset to its functional state once a failure has occurred. This is typically measured by Mean Time To Repair (MTTR) calculation.
  3. Cost-Benefit Analysis – A design study that shows the profits required from an asset versus the cost the asset will incur throughout its lifecycle. It may be measured by ROIC or ROA calculations.

How do the assets move from the drawing board to the plant floor? How do these calculations impact the asset during the rest of its life? How does a company maximize their return on investment in the asset?  This will be discussed in the final blog in this series.

Search All Categories:

Maintenance is not Asset Management – Or is it? (Part III) 2017-01-25T13:29:38+00:00

Maintenance is not Asset Management – Or is It? (Part II)

Maintenance is not Asset Management – Or is It? (Part II)

As my last blog finished, we were going to consider areas of asset management that are outside the control of the maintenance organization.  There are two articles that have just been published that will highlight one area – BUDGET.

In the USAToday, there were back-to-back articles (February 8 & 9, 2016) that highlight the lack of control that a maintenance organization has over its own budget.  The first article -“Park Service Maintenance Backlog Hits a Record High” deals with massive work backlog in the National Parks in the USA.  This article shows that the deferred maintenance budget for the Parks was around $12 Billion USD.  This article does a good job of explaining deferred maintenance when it said:

“Deferred maintenance is necessary work – performed on infrastructure, such as roads and bridges, visitor centers, trails and campgrounds – that has been delayed for more than one year. Aging facilities, increasing use of park facilities and scarce resources contribute to the growing backlog.”

They clearly defined backlog work as anything delayed for more than 1 year.  While this definition may not work for many companies, it works well for governmental agencies, since they budget by that time frame.

Is the $12 Billion backlog situation going to improve anytime soon?  Apparently not – since the article continued with:

“While Congress provided increases this year, the annual bill for maintenance in America’s national parks is still almost twice as much as is appropriated,” National Park Service Director Jonathan B. Jarvis said in a statement.”

Let’s see… a maintenance budget that is only 50% of what is required to properly maintain the National Park system’s assets.  This is a condition that should sound familiar to most maintenance/ asset managers in the world.  Someone in the Park Service has an approximation of what it will take to properly maintain the assets and then someone in Congress who has authority over the budget chooses to fund a study of the African fruit fly over properly maintaining the Park Service assets.  Doesn’t that sound a lot like the Plant Manager choosing to fund new construction in the plant rather than fund properly maintaining existing assets?  Or perhaps the CFO mandating a 15% cut in expenses across the company regardless how it impacts operational capabilities.  Maintenance/ Asset managers seem to face similar problems, whether they are in the public or private sectors.

The follow up article to “Park Service Maintenance Backlog Hits a Record High made this statement:

“Deferred maintenance has been a problem at National Park Service parks, historic sites and other areas for decades. The Government Accountability Office pointed out problems with the parks’ maintenance management system as early as 1984; found a maintenance backlog of almost $2 billion in fiscal 1987, about $4 billion in today’s dollars; reported on $6 billion in deferred maintenance in 1997, about $9 billion today; and then pointed out in 2003 that the agency, which was putting a new system in place to keep track of maintenance needs, had vastly underestimated the amount of upkeep needed.”

This sounds suspiciously like a MASTER DATA integrity problem.  There was a system (likely a CMMS/ EAM System) in place back in 1984 that apparently was not acceptable to the GAO (perhaps not fully integrated and having poor data integrity) and then almost 20 years later it is being replaced.  In the interim, the maintenance backlog grows from $2 Billion in 1987 to $12 Billon today.  Using a baseball analogy, we not only “took our eye off the ball”, we were “beaned” by it.  Wouldn’t it seem logical that any organization experiencing an exponentially growing maintenance/ asset management backlog would take action before they go out of business? Maybe changing out the CMMS/ EAM system is the answer; but it is not likely to solve the problem unless we understand why the previous system failed.

The purpose of this blog was not to pick on the US Government or any company, however, the commonality of maintenance/ asset management problems are undeniable.  If 80 to 90% of the life cycle cost of an asset is incurred after it is commissioned, wouldn’t companies (and governments) expect to have to properly budget for these expenses?

Perhaps a review of the asset life cycle would be in order to properly understand the relationship between asset management and maintenance management.  We will begin this topic with the next blog.

Terry Wireman

Search All Categories:

Maintenance is not Asset Management – Or is It? (Part II) 2017-01-25T13:29:38+00:00

Maintenance ≠ Asset Management – Or is It? – Terry Wireman

Maintenance ≠ Asset Management – Or is It? – Terry Wireman

Since the development of PAS-55 and even more since ISO-5500x, various departmental managers within organizations have competed for the title of “Asset Manager”.  The candidates for the title include the operations, engineering, finance, supply chain, and the maintenance departments.  Why is it that there appears to be no clear line of responsibility for asset management through many organizations?

It would be an interesting exercise to poll those who have the title “Asset Manager” or lead a department called “Asset Management”.  It may be surprising to find how many of these individuals have a technical (Maintenance and/or Engineering) background.  Why is this?  It is due to the fact that management (financial and technical) of an asset through it’s life cycle is a major part of asset management.  It is also a major part of the financial and technical analysis when acquiring new assets.  To understand how maintenance fits in this puzzle, one would need to have a clear definition of maintenance.

In their book “Maintenance, Replacement, and Reliability”, Dr.’s Jardine and Tsang highlight 3 different common roles of maintenance:

  1. To fix broken items – which is reactive tasks or repair actions or item replacements triggered by failures. They call this approach reactive, breakdown, or corrective maintenance.
  2. All activities aimed at keeping an item in, or restoring it to, the physical state considered necessary for the fulfilment of its production function. In this role, maintenance includes proactive tasks such as routine servicing and periodic inspections, preventive replacements and condition monitoring.
  3. This role includes the strategic dimension of maintenance. Maintenance, in this role, covers the decisions necessary to shape the future maintenance requirements of the organization.  They include more advanced functions such as equipment replacement decisions and design modifications to enhance equipment reliability and maintainability.

After quoting the Maintenance Engineering Society of Australia (MESA) and their definition of Capability, their text makes this observation:

“The scope of maintenance management, therefore, should cover every stage in the life cycle of technical systems (plant, machinery, equipment, and facilities): specification, acquisition, planning, operation, performance evaluation, improvement, and disposal. When perceived in this wider context, the maintenance function is also known as Physical Asset Management”.

Now I completely agree with their observations and would recommend this text as a reference that should be on the bookshelf of every maintenance manager.  However, I would like to offer an additional observation.  In my experience, the roles from 1 to 3 listed above can be used to determine the maturity of almost any organization and their approach to maintenance management.

Role 1 is a reactive maintenance organization that is only tasked with failure remedy.  Breakdown maintenance and firefighting is the rule of the day.  The organization does not value the contribution that maintenance can make to a smooth operational or production process.  If a maintenance manager is hired that tries to move the organization to more of a proactive role, it is an uphill battle, since the organization will feel that labor spent on preventive or predictive activities is wasted.  Spare part levels are extremely high, since they are trying to insure all breakdowns can be remedied quickly. Maintenance costs will continue to escalate and the overall capacity of the company decreases.  It will now be non-competitive with organization that has a more proactive approach to maintenance.

Role 2 is found in a mid-level performing organization.  Proactive maintenance is encouraged and respected.  Equipment breakdowns will occur, but are manageable.  A common benchmark is that 80+% of all maintenance activities are planned and scheduled.  This contributes to lower maintenance labor and materials costs.  The more condition monitoring that an organization adopts, the more proactive the maintenance activities become.

Role 3 is found in advanced organizations.  In these organizations, maintenance is a strategic discipline.  It is at this level an organization is capable of practicing true physical asset management.  The maintenance organization is a resource that is utilized when planning the life cycle of a company’s assets.  Data is transformed into organization knowledge, and this knowledge becomes asset management wisdom as the knowledge is applied to make the best asset decisions possible.  Many of these decisions are further enhanced by using many of the mathematical decision making algorithms that are highlighted in the previously mentioned textbook.

So back to the first comment in this blog – “Is maintenance the same as asset management?”  It can easily be seen that the answer completely depends on the organization’s definition of maintenance.  Even in role 3, there are aspects of asset management that are outside the responsibility of the maintenance organization.  We will consider some of these aspects in our next blog.

 

Terry Wireman

Search All Categories:

Maintenance ≠ Asset Management – Or is It? – Terry Wireman 2017-01-25T13:29:39+00:00

Where the Jobs are – The “New” Blue Collar – Terry Wireman Blog Series

Where the Jobs are – The “New” Blue Collar – Terry Wireman Blog Series

In the USAToday (9/30/2015) there was an article with the above title that focused on the millions of new, high-paying jobs that are being created in the next few years.  While on the surface, this seems to be good news; in reality it is not.  Why? It is because as the CEO of Chevron states in the article, the demand for the workers are there – but the supply of workers is lacking.

First, let’s talk about the jobs. There are several charts and graphs in the article that show the “middle skilled” jobs will be the largest growth area in the economy, especially when the Baby Boomers retire, since they currently hold roughly 20% of all of those jobs.

Additionally, the article discusses “re-shoring”, where companies are discovering that it is better to keep these jobs in the in the US that it was to send them off-shore.  The article stated that there may be fewer jobs, but they will be higher paying jobs.

So while this is very positive, the article goes on to highlight the lack of trained workers for these jobs.  The greatest quote was from the Co-Owner of the manufacturing plant – “Having people that have the right skillset … that wakes me up at 3 o’clock in the morning.”.  How often do plant managers wake up a night worrying about the maintenance and reliability personnel they have working third shift trying to mitigate a problem that occurred at the plant?

Another source said they spent 5% of the company’s payroll for training to insure that they have a pipeline of skilled workers to replace those who are retiring.  How many companies today spend NOTHING on technical skill training, expecting to be able to hire off the street when openings occur?  And then facing a stark realization that they can’t afford to hire off the street or that there are no skilled candidates available.

Of course, one of the highlights of the article was the interview with Mike Rowe.  He was quoted as saying ““What’s aspirational about ‘middle skill’? It’s going to take a generation to get people to really challenge the stereotypes.”.  Unfortunately, no disrespect to Mr. Rowe, we do not have a generation to change those attitudes.  In a decade all of the Baby Boomers will have retired and then it will be too late to train their replacements. Perhaps the educational system needs to work harder to understand the requirements for industrial workforces.  (See our previous blog “What if you Produced a Product No One Wanted”)

I hope you have an opportunity to read the referenced article.  Perhaps it is the wake-up call that companies today need when it comes to properly planning for the future of their technical workforce.

Terry Wireman

Search All Categories:

Where the Jobs are – The “New” Blue Collar – Terry Wireman Blog Series 2017-01-25T13:29:39+00:00

Is the “Best” really “Better”?

Is the “Best” really “Better”?

In his book “The Real Truth about Success”, author Garrison Wynn discusses the “Lies We Believe” on pages 3 – 10.  One of the Lies he discusses is:

“To Have Greater Influence, What You Have to Offer Must Be Bigger, Better, More Advanced, or Greatly Enhanced to Surpass the Competition.”

To illustrate his point, he uses the example of McDonalds.  Almost anyone you ask will NOT say McDonalds has the best hamburgers.  Almost everyone will have a hamburger chain that they prefer over McDonalds (perhaps “5 Guys and Fries”?).  Yet who sells the most hamburgers worldwide?   McDonalds has owned the top selling slot for years.  Mediocrity prevails here because McDonalds is convenient, familiar, and pervasive.  We have grown comfortable with it, so it wins our business.

He comments that “It is quite common for the second or third best product to be the top seller because people rarely seek out or choose the best.  Instead they choose what makes them comfortable, whether it is the best or not”.

The author then uses the example of the USAToday, which has a sixth grade reading level. He compares it to the New York Times, which has a reading level of 12th grade.  Which one sells the most copies?  2014 statistics show that the USAToday leads by a 2 to 1 margin.  He makes the comment “If you don’t understand the USAToday, you just might be too dumb to need news”. He finishes with this point “The sales numbers send a clear message: You’ll win greater buy in if your concept is uncomplicated.  If the goal is to get everyone on the same page, shouldn’t you at least make that page easier to read?”

So after a couple of interesting (and somewhat humorous) examples, how could we apply this to the Asset Management/ Maintenance/ and Reliability Communities?  How many times have professionals in the Asset Management/ Maintenance/ and Reliability organizations tried to get buy in for improving their disciplines in the company?  We talk about reliability calculations, including common terms such as MTBF and MTTR. We discuss increasing asset reliability, throughput, capacity and the like.  We might even get into an engineering discussion about one technique over another using terms like Bayesian probability or Weibull analysis. After all most “C” level executives understand these terms, don’t they?  We choose the New York Times approach when our “C” level audience really needs the USAToday.

(For the ultimate in abusing a presentation, see this YouTube video. )

Do we learn something about presentations from Wynn’s book?  Are we at times presenting improvement projects to an audience using unfamiliar terms and concepts?  Are there ways to present using terms they are more familiar with and use concepts that they will clearly understand?  What if we apply some of these ideas presenting asset management, maintenance, and reliability concepts in “C” level language, even if it means a little more effort on our part?  What if doing so made a 100% increase in our acceptance level in the organization?  Could you become the USAToday of your organization – becoming a better Communicator/ Presenter?  Or will our audience select the “Better” option over the “Best” option because of our ineffective communication/presentation?

Secondly, how could we apply the McDonalds example?  Remember the point Wynn made about people “choose what makes them comfortable, whether it is the best or not”.  How often have “C” level individuals made a choice to do something that was not necessarily the best simply because they understood it better than the other options?  This is not a negative towards the senior executive, but rather a reflection on our clarity of explanation about asset management, maintenance, or reliability concepts.  How often are we ill-prepared to succinctly explain our ideas/ projects, using terms that are “USAToday” level.  Remember Wynn’s quote “If the goal is to get everyone on the same page, shouldn’t you at least make that page easier to read?”  Would this help our audience choose the “Best” option over the “Better” option?

Perhaps some of the points made in Wynn’s book should be applied in our asset management, maintenance, and reliability organizations.  If they were perhaps our organizations would choose the “Best” over the “Better” when making decisions.

(Here’s a great 8 minute video)

Terry Wireman

Search All Categories:

Is the “Best” really “Better”? 2017-01-25T13:29:40+00:00
Load More Posts