Asset Management: Why Cost Cutting Doesn't Work

Oct. 1, 2019
This article proposes five specific actions to try instead of slashing costs.

Scenario 1: You come into work on Monday and the plant manager calls a special budget meeting to discuss the quarterly results for the business. The meeting begins with a process problem at a sister plant that impacts the financials for your business unit by $5 million. Each plant has been given a certain amount cuts to make in the next 60 days to ensure we make the quarter. Your plant has been allocated $500,000. You need to submit a plan by Friday and begin weekly calls tracking compliance with your controller.

Scenario 2: Your maintenance costs are increasing 5% per year and your overall equipment effectiveness (OEE) on your bottleneck production center is stagnant at 56%. Unplanned downtime is 33% of the gap to target OEE and results in a lot of daily drama, long hours, heroics, and organizational finger-pointing. Your planned-maintenance compliance is 60% because of the level of emergency work, which pulls resources to restore flow. You know how to fix the situation (execute on planned work, improve coverage of your predictive maintenance and reliability engineering to drive problem-solving), but cost-control mandates from top management on overtime, contractor spend, and headcount have you mired in mediocrity. Just last week your requests to backfill a planner and add a reliability engineer were turned down.

Perhaps your plant has one or both of these situations (or others) dominating the culture. Most managers have a clear vision of where their organization needs to be and what systems need to be in place to get there. This vision remains part of the department’s plans, yet it’s never realized, given the very real obstacles and pressures that exist. This results in a feeling of powerlessness.

Read the rest of this article from our sister publication Plant Services.

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