Benefit From Equipment Standardization

It’s time to re-evaluate the ‘or equal’ standard in your plant.

By Al Poling, RAM Analytics

The traditional approach to maintenance, repair, and operations (MRO) purchases in plants is ineffective. Buying equipment and/or repair items based on the lowest price can have unintended consequences. The value of lost production and related collateral costs will far exceed any purchase-price savings the first time lower-priced equipment fails. A safety or environmental penalty will also far exceed any purchase-price savings. Instead, organizations must purchase equipment that has been vetted and demonstrated a proven track record of reliability. In short, “or equal” is no longer a sound MRO strategy.

Note that the traditional “or equal” standard has resulted in countless failures and costly consequences. Even lower-priced items such as hand tools can have severe consequences. For example, if a technician suffers a laceration or broken bone when an “or equal” inferior wrench fails, a root-cause analysis will reveal the culprit to be an inferior tool that met the “or equal” standard but failed to protect the worker.

Equipment reliability has become a competitive advantage in the global marketplace. But those focused on reliability recognize that not all equipment is equally reliable. The select few who have achieved failure-free operation are able to ship their products anywhere in the world and compete with local producers. They can do this because their throughput is maximized by way of failure-free operation, and they operate in steady-state uninterrupted conditions where the highest quality can be achieved.

Standardization of equipment has the added potential to improve purchase price, reduce working capital, and minimize operating expense. Purchase-price discounts can be significant when vendors recognize that you are only going to purchase their product. Working capital is reduced by decreasing multitudes of different manufacturer parts kept in the MRO storeroom to support the same types of equipment. Operating expense is reduced when the number of equipment failures falls precipitously, operations are no longer running from failure to failure, and lost or off-spec products losses are minimized. With standardization, spare parts, repair procedures, and equipment and repair training become much less onerous.

Just a few years ago, manufacturers included reliability into their corporate vision or mission statements. For many, it was mere window dressing. They didn’t truly embrace or invest in reliability. Now, though, reliable operation is a business imperative. There’s no way to effectively compensate for unreliable or less-reliable design and operation. The question is, why do many still follow the failed policies and practices of the past?

The answer is simple: MRO buyers have historically been evaluated on purchase-price savings. Often, procurement goals and objectives are in conflict with manufacturing and business goals and objectives. The incompatibility of departmental goals and objectives can no longer be ignored.

Capital projects represent another area of incompatibility where engineers and designers are focused on keeping project estimates and costs low, often at the expense of reliability. Project engineering has historically been evaluated on budget and schedule, not on the quality of the end product. More progressive manufacturers are now requiring the project- engineering organization to remain engaged and be accountable until the new unit operates at design rates for a minimum of 30 days. As a result, there has been wholesale shift in equipment design and selection behaviors.

BUSINESS CASE

The current mean time between failure (MTBF) of common process equipment averages 10 years for centrifugal pumps, 45 years for electric motors, and 50 years for heat exchangers. Equipment-selection criteria should include the demonstrated ability to meet or exceed these benchmarks. New equipment manufacturers can still be introduced in your plant, but only through a well-defined and rigorous vetting process.

Collateral benefits derived through equipment standardization include:

• discount pricing based on volume purchases

• reduced working capital through fewer spares and more vendor-owned inventory

• reduced storage-facility costs through lower levels of inventory and vendor storage

• streamlined equipment-specification process by eliminating “or equals”

• streamlined equipment-procurement costs with the elimination of competitive bids

• fewer, less-onerous equipment-repair procedures

• less-onerous equipment training for operations and maintenance technicians

• expanded equipment interchangeability.

There are many specific examples of direct and indirect benefits associated with equipment standardization. Among them, higher levels of reliability lead to increased capacity without the need for costly capital investment. They also lead to lower maintenance costs through the reduction and elimination of catastrophic equipment failures. Repairs, in turn, are less complicated due to having fewer equipment manufacturers and, therefore, fewer repair procedures. Maintenance planning benefits from being able to maintain a smaller library of repair plans than in the past. Safety and environmental performance are improved through fewer equipment failures. Moreover, standardization of equipment and material- master records increase resource efficiencies.

GETTING STARTED

Equipment-standardization categories should be based on the results of an analysis of purchase data that reveals the quantity and value of equipment purchased over a three- to five-year period. By focusing the standardization effort on the most common and the costliest equipment, the return on investment can be more quickly realized. Types of plant-equipment systems, components, and other items suitable for standardization include:

Mechanical equipment
• centrifugal pumps
• positive-displacement pumps
• compressors
• centrifuges
• agitators
• valves, i.e., ball, butterfly, gate
• mechanical seals.

Electrical equipment
• variable-frequency drives
• motors
• breakers
• lighting and lighting fixtures
• motor controls, i.e., relays, contacts
• actuators
• uninterrupted power supplies (UPS).

Instrumentation
• annunciators
• control valves
• flow meters
• gauges
• level indicators
• pressure switches
• programmable controllers.

Control systems
Advanced control systems are extremely sophisticated and costly. By standardizing these systems, plants can obtain improved pricing, including the possibility of funding assistance from the control-system manufacturer, which can help with project justification through savings derived by use of their respective product offerings. Additionally, standardization simplifies the learning curve of the engineers and technicians who program and troubleshoot control systems and the operators who use them.

Pressure equipment
• dryers
• safety valves
• rupture discs
• hoses
• pipe and fittings
• heat exchangers
• reactors.

Engineered equipment
Engineered equipment may be a standardization candidate if process units are the same or similar to the extent that, effectively, the same engineered equipment can be used across multiple units or sites. This is especially true if the metallurgy is exotic and, accordingly, very costly.

Miscellaneous equipment
• consumables, i.e., filters, lubricants, gloves, safety glasses, and other items that require regular replacement
• steam traps
• column packing
• and much more.

ORGANIZATIONAL DETAILS

To be successful, a formal standardization organization must be defined. The positions and their respective roles include:

Project sponsors (executives/site manager)
• charter the standardization project and provide funding
• engage third party facilitator (need an unbiased third party to garner multi-site agreement)
• commit quality resources (do not use low-energy or weak performers unless you want to fail)
• set clear expectations and visibly communicate support
• provide oversight through regular project reviews
• sign-off on project-team findings and recommendations
• remove barriers (policies, procedures, resistant or disruptive personnel)
• champion the process through proactive behaviors
• celebrate and reward success.

Project team
• composed of quality resources who have had their workloads appropriately adjusted
• reflects clearly defined roles and responsibilities
• gathers and analyzes data
• prioritizes opportunities
• develops project plan and manages project schedule
• reviews and garners approval of project sponsors
• identifies, reports, and eliminates barriers to success
• charters equipment-category teams
• develops and implements formal standardization processes.

Equipment category teams
• composed of recognized subject-matter experts
• include equipment buyers/purchasing agents
• reflect clearly defined roles and responsibilities
• review, analyze, and confirm standardization opportunities
• interface with equipment manufacturers
• garner input from end-user community
• confirm results and/or pilot equipment under consideration for standardization
• make specific recommendations
• establish formal equipment standards.

THE PROCESS

When it comes to the process itself, standardization steps are fairly straightforward:

1. Define the project scope.
2. Identify project team, including team leader.
3. Communicate project to all stakeholders.
4. Define the equipment-standardization process, including focus on equipment reliability.
5. Analyze the gap between the current process and the new one.
6. Develop a transition plan to move to the new improved process.
7. Identify metrics to measure performance (cost savings/avoidance) and rate of transition.
8. Pilot and analyze the process.
9. Implement the full process.
10. Identify and effectively address all barriers to success.
11. Monitor, measure, and report results.
12. Review and update the standardization process as needed, e.g., change in technology.

The benefits of standardization are many:

• Experience higher equipment reliability resulting in increased capacity without the need for costly capital investment.

• Enjoy lower maintenance costs through the reduction and elimination of catastrophic equipment failures.

• Garner the benefit of lower purchase prices through volume purchases.

• Reduce working-capital costs through reduced MRO inventory.

• Lower operating expense by avoiding equipment failures that consume operations- technician’s time.

• Further lower working capital by reducing the number of capital spares.

• Make repairs less complicated by having fewer equipment manufacturers and therefore fewer repair procedures.

• Reduce the number of operating procedures again, by reducing the number of different equipment manufacturers.

• Maintain a smaller library of repair plans.

• Reduce the training requirements of several organizations, including purchasing, engineering, operations, and maintenance.

• Improve safety and environmental performance through fewer equipment failures.

• Garner resource efficiencies through standardization and standardize equipment and material master records.

IMPERATIVES

Although equipment standardization can provide significant direct and indirect benefits for a plant, such projects should not be entered into lightly. Critical success factors include absolute commitment from the top down with active, or, better yet, proactive management engagement, i.e., ensuring leadership involvement at each level in the process.

To be sure, there will be cultural hurdles that must be overcome. Don’t expect everyone who’s involved to embrace the changes. Some personnel will have preferred equipment manufacturers. Some will have preferred vendors that reward their loyalty with token gifts and meals. Some will view standardization as a loss of power and fight covertly to undermine the process.

Recognize those issues and allow employees to provide input that’s positive (what works better), as well as negative (what has already been tried and failed). Manage cultural-change issues as an inherent part of the standardization project and process. EP

Al Poling has spent four decades working in the reliability and maintenance arena with various process industries. A Certified Maintenance and Reliability Professional (CMRP), he is a past technical director of the Society for Maintenance and Reliability Professionals (smrp.org). Contact him directly at al.poling@ramanalytics.net.