Outsourcing Production Equipment Maintenance – Dispelling
the Myths
Stephen C. Welch, Advanced Technology Services, Inc., Peoria, Illinois
As manufacturing companies seek to cut costs and improve productivity, the idea of outsourcing
selected functions has become an acceptable, even a chosen method of driving efficiency into an
organization. This is especially true for those activities that do not fit the individual companyprescribed definition of a “core competency.” Historically, these functions have included
information technology, accounts receivable, human resources, custodial services, facility
landscaping, and various other activities that are not generally considered to be essential to
product quality and customer satisfaction. As the definition of non-core competency expands to
include activities that, although extremely important, are not drivers of why customers buy your
product, the list of potential functions to outsource has expanded to include a variety of activities
previously not considered. Accepting the idea that production equipment maintenance is viable
for outsourcing has come grudgingly and with some obvious concerns, and a wide variety of
myths. These concerns are very real, but they are generally founded on perception rather than on
reality. I would like to explore the most common of these myths and provide a perspective that
may help management make a more informed decision about outsourcing equipment
maintenance.
Myth #1
Production equipment maintenance is too important to outsource. It must be performed
internally.
Reality:
The idea that production equipment maintenance is important is absolutely true. If critical
machines are down and unable to make product, it is pretty clear that the business is going to
suffer. But the very idea that good maintenance is essential to plant success is the reason it must
be considered for outsourcing. Current strategic thinking no longer associates “important” with
“doing it internally.” All activities deemed important cannot be accomplished internally. The
internal resources are insufficient in today’s streamlined organizations. Activities as important as
maintenance need ongoing investment and focus so that best practices will drive continuous
improvement. As companies make choices about core competencies, the activities that will
receive the necessary focus and investment, production equipment does not usually rise to the
top of the chart. Therefore, if maintenance is not going to receive the internal focus necessary to
establish and sustain maintenance best practices, and it is recognized as being extremely
important, then outsourcing must be a consideration.
Myth #2
Outsourcing maintenance would be an admission of internal failure.
Reality:
Traditionally, U.S. companies would look to outsource a function when it was being performed
poorly or the processes in that function were out of control. Outsourcing has historically been a
“reactive” response to unacceptable performance. However, in today’s marketplace, there is a
totally new paradigm regarding outsourcing, one that focuses on using outsourcing as a
“proactive” measure that allows best practices to be accomplished in both core and none-core
functions in a plant. It is a valuable tool that management can use to increase manufacturing
productivity and efficiency.
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In describing the new paradigm for outsourcing, the CEO of one of America’s largest corporations
has said, “Not too many years ago, to outsource was to admit mistake, error, incompetence. Now,
outsourcing is viewed as intelligent, as a recognition of the new dynamics of business.”
It is interesting to watch the reaction of maintenance people to outsourcing. After the initial shock
and fear of the unknown that comes with outsourcing, maintenance people ask why management
did not do it earlier. They do not feel abandoned by their employer nor do they feel betrayed.
Maintenance people generally enjoy working for a maintenance company far more than working
for a manufacturing company. The maintenance company understands and works to resolve their
issues, as well as gives them career paths other than maintenance supervision. Strange as it
seems, if the culture of a company is to do what is best for the employees, outsourcing can be the
very tool that management uses to best convey that message.
Myth #3
Control of maintenance will be lost if it is outsourced.
Reality:
Before dismissing this myth, it is important to define the term “control.” Does control mean
dictating what maintenance does every day and how they should do it? Does it mean having
maintenance do the “miscellaneous” things that nobody else wants to do? Does it mean making
sure that critical down machines have top priority? Does it mean that the right things are being
done and the desired results are being achieved? Ultimately control can be defined in terms of
activities and results. It is absolutely true in outsourcing that some control of maintenance
activities is lost, however, control of maintenance results will be significantly improved. Let me
explain.
Regarding the loss of control of maintenance activities, one of the six key components of effective
maintenance that must be incorporated into any successful maintenance strategy is something
called organizational alignment. Organizational alignment means that the goals and objectives of
maintenance must be squarely aligned with the goals and objectives of production and the plant
in general. This element must be present whether maintenance is done internally or outsourced.
Therefore, even if maintenance is contracted, the maintenance strategies and tactics of the
contractor must be established and carried out with the objectives of production squarely in focus.
The contractor must prioritize work in a way that ensures optimal productivity of the plant.
Maintenance contractors cannot be mavericks, doing their own thing. If they do, they will not be
able to retain their contract.
Regarding the control of maintenance results, most internal maintenance organizations have little
or nothing in the way of maintenance data or information on which to make strategic and tactical
decisions. There is little “control” of maintenance results. Sometimes you get the desired results
and sometimes you don’t. However, the results cannot be driven proactively. Maintenance
contractors must be able to present performance metrics and maintenance data to justify their
contract and to demonstrate that continuous improvement is being achieved. If results are not
being achieved, plans certainly must be in place to correct the current situation. Additionally by
virtue of the data and metrics that contractors provide, fact-based decisions can be made
regarding root-cause problems, machines that require excessive maintenance dollars, when to
upgrade or replace an asset, etc. When outsourced to competent contractors, there is a
significant gain in overall control of maintenance.
Myth #4
If outsourced maintenance is unsuccessful, all the internal experience and expertise that
existed will be gone. It will be difficult to re-establish an internal maintenance organization.
Reality:
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When assuming responsibility for maintenance in a plant, most outsource contractors will utilize
the existing maintenance workforce in the execution of their duties. The reason for this is threefold. First, although the contractor probably has broad expertise in a variety of manufacturing
processes, the expertise on the specific equipment located in that plant resides with the current
workforce. Secondly, hiring the current workforce tends to ease some of overall uneasiness that
is still associated with outsourcing. If mass layoffs are not associated with the outsourcing
decision, acceptance of the decision is obviously enhanced, Thirdly, hiring the current workforce
is strong reenforcement that the outsourcing decision was not based on the failure of the people,
but because the maintenance organizations lacked systems and processes required to be
successful in maintenance.
Because the existing workforce is utilized, their expertise and experience is maintained.
Additionally, the maintenance contractor, because of its broad access to maintenance
technologies and best practices, will actually enhance the capabilities of the current workers.
Most contractors have required training programs for their employees that expand not only the
technical capabilities of the staff, but also expand the other skills required to successfully
implement maintenance in a contractor environment. These include computer skills,
communication skills, customer satisfaction skills, etc. When production becomes the “customer”
in a contract situation, the overall capabilities of the maintenance workers must be enhanced.
Finally, if the outsource contract does not work out for any reason, the workers who, while
working with the contractor have had their skills broadened, are available to return to their original
employer. The employees have gained from the experience by acquiring new skills and the plant
gains because they now have better equipped people and better maintenance processes with
which to sustain a successful maintenance program.
Myth #5
Maintenance can be improved faster and better by using internal resources.
Reality:
There is no question that maintenance can be improved by utilizing internal resources.
Maintenance best practices are not well-hidden secrets that are inaccessible to people other than
outside contractors. However, achieving maintenance excellence is a complex and difficult
objective. Most maintenance organizations believe that they can solve their maintenance issues
by hiring more or better people, whether it is better technical staff, or maintenance supervision.
However, making significant improvements in maintenance requires focus on the entire
maintenance process, and the various challenges associated with key elements of maintenance.
The challenges of maintenance are generally categorized into six elements. These include:
 People
 Leadership
 Spare Parts
 Tools and Technology
 Processes
 Costs
If you think about addressing all of the challenges inherent in each of these areas, it is a scary
thought. Most companies do not have internal resources with the broad knowledge of
maintenance best practices that are necessary to make the needed improvements. The other
difficult issue is that a plant cannot address only one or two of the challenges and let the other
ones go because they are so intertwined with each other. For example, if you solve the people
challenge and have poor leadership, maintenance will not be successful. If you have great people
and leadership, but your parts and inventory challenges are not addressed, maintenance will fail.
Therefore, if maintenance is going to be improved, either internally or through outsourcing, all of
the challenges must be addressed and they must be addressed in a relatively simultaneous
timeframe.
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Most manufacturing plants cannot address these challenges well enough or fast enough using
only internal resources. By virtue of the fact that most companies have deemed maintenance not
to be core, gaining access to required people and financial resources would be difficult at best.
The surest way to address these challenges is to gain access to experts who already have the
broad knowledge of maintenance best practices. They can address the challenges in all areas of
maintenance quickly and in a cost-effective manner.
Myth #6
Outsourcing maintenance will significantly increase my costs.
Reality:
The exact opposite is the truth. Outsourcing may slightly increase maintenance spending in the
short-term as contractors make the required changes necessary to initiate maintenance
improvement. However, maintenance contractors must be able to demonstrate the longer-term
payback that will be associated with the short-term investment.
The reality is that good maintenance will always reduce a plant’s total cost to produce. Effective
maintenance always:
 Reduces machine downtime
 Reduces unplanned downtime
 Increases the useful life of manufacturing assets
 Reduces that requirement for redundant assets
 Improves employee and customer satisfaction
 Reduces scrap and waste
 Positively impacts safety and lost time
The cost savings associated with these issues will far exceed the small initial maintenance cost
increases associated with outsourcing. Unfortunately, maintenance organizations are too often
measured by how much they spend instead of their effectiveness in achieving cost savings for the
plant, like stepping over dimes to pick up pennies.
The other good news is that as effective maintenance is implemented, raw maintenance costs will
decrease. It is a well-established fact that proactive maintenance is much less expensive than
reactive maintenance. The question is, are plants willing to make a small initial investment in
maintenance in order to access all of the cost savings associated with effective maintenance?
Investigate the possibilities
People, including plant management, struggle with important decisions due to fear of the
unknown. Their experience and imagination conjure up images of the myriad of problems that
may occur if they make the decision. It is important, especially in the case of outsourcing that the
unknown comes into focus. The unknown cannot be crystallized and informed decisions cannot
be made unless exploration and investigation takes place…
For additional information on successful maintenance outsourcing, contact Advanced Technology
Services at www.advancedtech.com .
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