Case 8: Maintenance Strategy for 2200 Machines Spread Nation-wide
Team, Sales, Process, Control, Operations, Maintenance
A global paint company
The company placed Point-of-sale machines in 400 stores and the machines were not well-maintained, it took up to 2 months to fix a problem, making the machine idle for 2 months and not generating income for both the company and the store where the machines were posted.
- There were 11 technicians located in head-quarter in Jakarta.
- The 400 machines were located all over Indonesia.
- Annual cost of maintenance was about USD400,000.
- Interview with everyone involved in the supply-side and demand –side of this service.
- Sampling document check on the schedule of the technicians.
- The technician trips were planned inefficiently: Jakarta to Bali to Jakarta, then Jakarta to Semarang to Jakarta, then Jakarta to Surabaya to Jakarta. The excuse was that the more efficient schedule could not be made because the visits required store’s approval.
- The cost of 1 trip of 1 technician equaled 1 month salary of 1 technician and there were hundreds of air-trips in a year.
- Do not host the technicians in HQ in Jakarta, and instead place them in major cities in Indonesia.
- Increase the number of technicians to 24, but make sure that they are all local-hires so that no more air-trip is needed, and it will reduce travel time, and reduce service lead time significantly.
- Company implemented the process.
- Service lead-time was reduced significantly from 2 months to average 2 days.
- With 24 people already located in the major cities, and no more air-trip, the maintenance cost fell from 100% to only 22% (78% reduction in costs).
- With 24 people already located all over Indonesia, POS machine expansion from 400 to 800 happened very smoothly and service level was maintained.
- When the machine placements were further expanded to 2200 units (more than 5 times its original number), additional 12 people were added and the total costs of maintenance were still below half of its original number, and the service lead-time was still below 3 days.
Case 15: Sky-High Maintenance Costs
Maintenance, Purchasing, Control, GA
A Global Manufacturing Company
The cost for factory maintenance is very high even for small building-related maintenance such as painting a section of office wall.
The purchasing of maintenance is done by GA Officer
Interview, field survey, document review, research on maintenance costs for similar works
- The costs for work at the factory can be as high as 8-times normal market costs for similar work.
- There is only 1 vendor for maintenance and it has never been reviewed in any way for years.
- Many maintenance works are done without written quotation; quotations come after the work is completed.
- Develop at least 2 more vendors that have been vetted.
- Have all three of the vendors to survey the work with agreed fixed-price consultation costs so that all three are willing to come to survey for the work.
- The factory manager needs to approve every maintenance work
- For every work that is done without proper process after the new system is established must be reviewed by the competing vendor that will be paid for a fixed-rate consulting work.
- The suggestions are implemented and the factory maintenance costs went down very significantly.
- The GA Officer resigned afterward.