By: Leon Best and Peter Lee
Over the years in Bluefield, we have seen and been involved in many improvement initiatives.
The early form of these were typically labelled “cost cutting” initiatives and had one simple goal: to reduce costs. As time went on, we noticed the focus of initiatives changed to “value adding”. Value adding initiatives had a broader scope with the intent that the project “added value” to the business.
This subtle change in focus makes sense to strive to improve the business overall. While cost savings are easy to quantify, we recognise the struggle people have trying to identify and then quantify the real value-add for the business.
A Typical “Value-Adding Initiatives” Scenario
A client was recently undertaking a site wide “value-adding initiatives” drive that saw all departments required to contribute. The maintenance team, recognising they were short on resources, brought us in to assist with identifying and valuing the initiatives.
Working with the team, we identified a list of initiatives ranging from reducing breakdowns by targeting specific failures, improving tool time productivity of tradespeople, to improving the efficiency and safety of a specific maintenance task.
Having identified the list of initiatives, the next step was to value them. It was here we were directed to work with the site initiatives coordinator, who provided some guidelines on valuing initiatives and capturing the “savings” in the site tracker. At that point, the site already had tens of millions of dollars identified in these value-adding initiatives.
The valuation methods used typically have two components: cost (or cost savings), plus the value of the productivity uplift. Much focus was placed on the productivity uplift for primary assets, as the “value” of addition production far outweighed cost saving that could be achieved.
The value of productivity uplift was typically calculated by applying a dollar value per additional hour of operation of the asset. This value was calculated by the operations teams for the primary assets.
The Missing Value
The system felt like it was gamified to focus on availability uplift of primary assets, with the aim to capture the most value for your respective department. This process saw many of the “high value” initiatives implemented; however, when it came time to collect, much of the “value” had not materialised.
(As an aside, a general manager we work with once observed that if all the recovery improvements his metallurgists had “implemented” were real, he’d have 110% recovery from his plant!)
Availability Improvements – Focus on the Bottleneck
The same phenomenon applies to availability improvements as well. On the site in question, we saw that priority was given to availability uplift initiatives. Although there was some availability improvement, this didn’t translate into more operating hours. Therefore, most of the “value” wasn’t realised.
The cause of this issue is considering assets in isolation, and assuming more time from this asset will result in more overall production. However, the process from start to finish is a network of interlinked processes where there can only be one bottleneck at a time. Improving throughput before or after the bottleneck won’t increase overall production.
To claim productivity uplift in anything but the bottleneck is thus a misrepresentation of “value” being added. Most of the value captured in the site value tracker unfortunately fell into this category.
When it comes to identifying “real” value from availability improvements, the first step is to check if the initiative will influence a bottleneck. If the answer is yes, the business can consider productivity uplifts in their measures. If not, they should consider cost savings and reliability improvements. Following this logic will provide tangible real value that can be quantified.
A Common Example of Availability Uplift
A typical example we encounter is a site seeking to improve the availability of their haul fleet, such as with a Bluefield Transformation. It’s common for these projects to result in an availability uplift of 5% - 8%. That’s a fantastic achievement by those maintenance teams, but will it result in a corresponding uplift in production?
On most sites, the processing plant will be the bottleneck, not the haul fleet, so even if the mine can increase their production, it’s likely that most of this will simply go into stockpiles. That doesn’t mean it’s not worthwhile to improve availability, it just means a site should assess the value in a different way. An availability increase could lead to one or more of the following:
- The ability to park up one or more trucks, reducing production costs
- A reduction in unplanned failures, which are typically more expensive and more hazardous to repair than planned and scheduled tasks. (Not to mention the production interruption caused by a truck breaking down on a haul road).
Correctly Valuing Labour Productivity Improvements
The next set of maintenance initiatives implemented focused on labour productivity. The valuation of the initiative was based on cost reductions due to a reduction in required maintenance labour hours.
While the initiative did improve efficiencies of the task, no cost savings were realised, as the overall maintenance head count did not reduce.
With a cost-neutral outcome, was value really added?
Not all maintenance initiatives need to add immediate cost savings to translate to value to the business. Improved process efficiencies free up time of tradespeople to focus on other value-adding work. This additional time could be spend focused on work quality (people feel less frustrated and rushed), equipment inspections or other utilise the time on value adding initiatives.
Don’t Overlook the Intangibles
When we fix the small bugbears that cause frustration every day for people, there is significant long-term value both in the culture and morale of the workforce. This results in better work quality outcomes for equipment, leading to more reliable assets. These subtle improvements are rarely correctly attributed back to the little projects that make the difference.
It should also be recognised that not all improvements can be easily quantified such as improvements in culture. That does not negate the importance of these initiatives, it just means open discussions and realistic expectations of the benefits to be received.
If you are looking for a quick and easy way to check for the quality of your maintenance work execution, consider trying our Defect Challenge. Get your free download here.
About the Authors
Leon Best, one of our Asset Management Specialists, has a career in asset management stretching back to the Royal Australian Navy in the early 1980’s. Read about his experiences here.
Peter Lee has over 15 years’ mining industry experience in project, maintenance and reliability engineering roles. He specialises in mobile equipment maintenance strategy, evaluation, selection and reliability improvement. Click here to read his article “Why Everyone should have an Asset Management Plan.”