Manufacturing
Preventive and Predictive Maintenance

At major pharmaceutical manufacturer in New Jersey, the physical plant operations and facilities occupy 208 acre site with 100 buildings and more than 5,000 employees. Activities include production of many of the company's bulk pharmaceuticals and intermediates, as well as research and pilot plant operations. During calendar years 2001 and 2002, capital expenditures were anticipated to exceed $2 billion.

Based on an external benchmarking study conducted in early 2000, Site Management concluded that maintenance costs at the location were higher than other similar operations in the industry. As a first step in addressing this opportunity for improvement, Daniel Penn Associates was asked to conduct a pilot project focusing on a selected area of the maintenance function.

At the outset of this engagement, a number of specific project objectives were identified. These were focused on improving the productivity of the selected maintenance department to support increased capital installation activity. In addition, it was decided that the improvement effort be self-funding, meaning that all consulting fees and expenses were to be offset by short-term savings identified and implemented by the project team.

Project activities were guided by an Advisory Team made up of cross-functional team employees (both management and hourly) and DPA representatives. This team met weekly, functioning as both a source of improvement ideas and a "sounding board" for new initiatives.

Due to the influence of an unusually strong union at the site, a traditional approach to increasing work output through tighter supervisory control was not a viable option. As a result, strategic cost reduction efforts were focused on addressing time lost through system and process inefficiencies. We identified maintenance planning and scheduling as an opportunity, and as a result performance was dramatically improved throught:

		Upgrading utilization of Maximo, an existing computerized maintenance management system, through retraining and facilitation;
		Refining employee role descriptions and better defining accountabilities;
		Training and coaching maintenance planners and supervisors;
		Creating user-friendly planning tools; and
		Establishing meaningful communication with internal customers.

As a direct result, by the ninth month of our engagement, mechanics were able to devote up to 35% of their time to capital project work.

The creation of a process of identifying staffing imbalances resulted in the transfer of a number of mechanics to fill slots that were budgeted for new hires. This coupled with productivity gains associated with improved planing, resulted in over $3 million in annual savings being generated, a 375% return on client investment in year one of the project. This figure was well above DPA's fees and expenses for the project.

A set of performance metrics also was designed and an automated report was developed to provide management with meaningful measurements of maintenance productivity and performance.

The next phase of our work will consist of rolling out the new processes and tools to the balance of the site's maintenance function, bringing the company significantly closer to industry best practices.

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