HomeLearnCase StudiesCase Study: Increasing Profitability by $12MM Through a Risk-Based Reliability Improvement Project

Case Study: Increasing Profitability by $12MM Through a Risk-Based Reliability Improvement Project

Posted On:August 16, 2018 Updated On:September 28, 2023
Case Studies

Learn how we helped a U.S. lubricant manufacturing and packaging facility increase their asset utilization and profitability.

The Challenge

A U.S. Lubricant Manufacturing and Packaging facility blends and packages various engine oils, process oils, and industrial lubricants to be distributed worldwide. In order to meet output goals, the facility identified the need to optimize its Preventive Maintenance (PM) program and identify reliability gaps preventing it from achieving desired output.

In 2016, the facility faced a combination of complications, leading to inefficient operations. The facility’s largest problem was low asset utilization, due to excessive planned and unplanned downtime, as well as production slowdowns. This low asset utilization caused lower profitability, as the facility was not able to operate at full capacity. While dealing with low asset utilization, the facility also had relatively high personnel turnover rates within the maintenance and operations teams. Because of the high turnover, the average experience level of personnel was decreasing, potentially leading to additional inefficiencies.

The low capacity utilization, combined with a high product demand, created an increasing reliance on a third-party to supplement packaging of its product. This resulted in increased packaging costs, further reducing profitability.

Pinnacle's Solution

To address these challenges, Pinnacle facilitated a comprehensive risk-based reliability improvement process, using Reliability-Centered Maintenance (RCM) as the core-driver. RCM, with its emphasis on functionality and effect of failure, provided the foundation to build a proactive maintenance program that would ensure the equipment’s reliability and availability were able to meet performance objectives. RCM’s systematic approach also allowed a broader vision of opportunities to be evaluated, beyond what would typically be addressed by RCM.

For this reliability-based improvement process, Operations and Maintenance processes, practices, and historical performance were comprehensively assessed. The objective was to develop an optimum maintenance and monitoring program for the operation of both of the packaging lines, and to additionally identify recommendations for improving process reliability gaps not directly related to maintenance. The scope of work included all significant mechanical, electrical, and instrumentation equipment on the lines, from the introduction of bulk lubricants and packaging materials, to the palletizing and warehousing of packaged retail product.

Pinnacle’s facilitation of this analysis included significant input from the client’s operations, maintenance, and engineering personnel to execute the following steps:

1. Development of Operational Objectives:

To begin the analysis, Pinnacle facilitators and subject matter experts (SMEs), along with the client’s Operations and Process Specialists (the Core Team), developed overall operational performance objectives for the packaging lines. These performance objectives helped to align maintenance strategies with operational objectives, and also served as criteria for evaluating the importance of each asset. All recommended tasks and other reliability-based improvement opportunities, developed to ensure assets and systems meet operating expectations, were aligned to meeting these objectives.

2. Identification of Function:

Pinnacle then worked closely with the client to identify all necessary functions for the lines. Functions are sub-systems that perform various process operations within the process area and address applicable production success criteria, giving full consideration to applicable safety concerns. These functions were generally aligned to each major packaging line machine, including input and output interfaces, as well as critical success criteria.

3. Identification of Functional Failures:

A functional failure occurs when an asset is unable to fulfill a function at an acceptable standard of performance. During this step, Pinnacle worked with the client to define all potential functional failures, (i.e.: how can each function fail).

4. Determination of Failure Modes and Effects:

After identifying functional failures, Pinnacle conducted a failure modes and effects analysis (FMEA), in which dominant failure modes leading to a loss of function were identified for each item determined to be “maintainable” by client personnel. The failure mode represented any condition that could cause a functional failure. Pinnacle captured these failure modes by conducting interviews with plant operating and technical personnel, particularly focused on failure history. As these failure modes were identified, Pinnacle then captured the failure effects, which described the consequences of failure, for each of the failure modes identified. In order to identify all major contributors to performance gaps, the FMEA also included non-equipment related failure modes, such as third-party packaging material quality, process slowdowns and upsets, staffing and training, and process control logic and troubleshooting. The Core Team then estimated the unmitigated probability and consequence for each failure mode to establish the unmitigated risk of failure (UMR). UMR criteria was used as a decision-making tool when determining whether a piece of equipment warranted proactive tasks, based on the level of risk associated with an unmitigated failure.

5. Identification of Equipment and Systems with Poor Reliability History

While conducting personnel interviews, the Core Team was able to identify the equipment and systems that had shown inherently poor reliability (i.e. routine proactive maintenance has had little or no effect on improving availability).

6. Development of Task Recommendations:

The next step in the analysis involved developing mitigation strategies and tasks focused on the most efficient way to reduce unacceptable UMR. Through this process, cost-effective, proactive maintenance and monitoring tasks were identified to prevent and/or mitigate the failure mode(s) deemed to be at an intolerable unmitigated level of risk. For two packaging lines, approximately 750 routine proactive tasks were identified, consisting of approximately 430 condition monitoring/surveillance tasks, 290 time-based maintenance tasks, and 32 failure-finding tasks (tests). Tasks were categorized by type, assigned to appropriate disciplines and designated at which interval they should be performed. Approximately 370 identified equipment failure modes did not warrant any proactive tasks, and were therefore designated as “Run-to-Failure.”

7. Identification of “Reliability Issues” and One-Time Improvement Opportunities:

As a final step, Pinnacle identified key, one-time recommendations addressing system gaps in reliability or safety, stemming from the comprehensive scope of the analysis. In all, approximately 90 one-time improvement recommendations were identified. These included tasks for categories such as training improvements; positive equipment identification; spare parts stocking; equipment obsolescence and upgrading; quality control and assurance; visual aids/visual workplace; troubleshooting tools; process control improvements; documentation and design.

At the close of the analysis, clients were provided the following deliverables:

Electronic database of an optimized reliability-based proactive maintenance program, including condition monitoring, predictive, time-based, and functional tests for all scoped assets.

Complete cost-benefit for recommendations.

Comprehensive set of one-time reliability improvement recommendations addressing improved reliability of assets and overall asset utilization.

Results

As a result of Pinnacle’s facilitation of the RCM-based reliability improvement project, the client received a complete and thoroughly documented proactive maintenance plan, as well as a list of recommendations to address gaps in performance and reliability. Each of the recommendations were verified by the client to be applicable and cost-effective—each recommended task addresses only the dominant failure modes identified for each piece of equipment and each task focuses on preventing the significant effects of equipment failure, mitigating or reducing the impact of the equipment failure, extending the mean time between failures, or identifying hidden failures.

Overall, the client received the following business benefits:

  • Reduced planned and unplanned downtime
  • Better utilization of assets
  • Optimized maintenance program, driven by risk
  • Identification of “bad actors”
  • Long-term cost savings through the reduction of planned downtime
  • Maximized uptime
  • Increased availability and speed of line
  • Higher production rate
  • Increased profitability based on reduction of third-party bottling and production

 

Pinnacle conducted a follow-up assessment of the improvement recommendations against the pre-project performance level of the lines. Due to essentially sold-out market conditions, it was estimated that the client will potentially realize an approximate 20 percent improvement in capacity utilization, resulting in a greater than 12 Million USD annual increase in profitability through corresponding reduction in more costly third-party packaging demands. This utilization will result from decreases in both planned and unplanned downtime. In addition, planned maintenance costs will be significantly reduced due to the optimization of proactive activities resultant from the RCM analysis. Although a significant step-change improvement will be realized in the first six to nine months, the expected time period required to fully achieve the potential ROI is expected to be 18-24 months.

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