Emerson Process Management created a new global reliability management consulting practice to provide guidance on managing maintenance costs. The company says the catalyst for the new service was the 5-7% of unplanned downtime losses due to poor maintenance practices experienced by industrial producers in oil & gas, chemical, refining and power.
“C-suite executives are seeing the need to better manage physical assets for improved profitability,” says Steve Sonnenberg, president of Emerson Process Management. “With the right strategy, the typical $1 billion plant can save $12 million or more annually in maintenance costs – not including the corresponding operational and production benefits from reduced downtime. Extend that across a corporation’s network of facilities and soon reliability becomes the number one strategic lever for a safer, more profitable enterprise.”
By reducing scheduled and unscheduled downtime, companies can reduce their maintenance spend by 50% or more, according to Solomon Associates, a leading benchmarking company in the process industries that tracks companies’ performance based on reliability and maintenance metrics. Optimized reliability practices – such as increased condition monitoring and analysis-based maintenance activities – drive down costs and also improve sales, quality, health and safety, and environmental compliance. These are all key factors affecting operational risk and shareholder value.
To expand its portfolio of reliability-focused services, Emerson recently acquired Management Resources Group, Inc. (MRG), a leading management consulting firm with 28 years of experience improving reliability in industrial manufacturing. This strategic investment complements Emerson’s existing lifecycle services offering as well as the company’s leadership in “pervasive sensing” which provides manufacturers more operational insight through greater sensor-based coverage of their plants and assets. Through its consultants, Emerson can advise global customers on enterprise-wide reliability management programs that connect the millions of data points collected in a plant, providing actionable information to trigger maintenance activities before equipment fails.
“If a company is not a top-quartile performer, it is losing millions in revenue and spending millions of dollars on unnecessary maintenance costs,” says Robert DiStefano, MRG’s founder and former CEO. “Every dollar not spent on maintenance goes directly to the bottom line. Our approach helps companies dramatically reduce downtime and enhance safety and compliance, increasing the stature and reputation of a company and ultimately providing better value for shareholders.”
A recent Solomon RAM study found companies reach the top-performing quartile when they have less than 3% unplanned downtime and maintenance costs less than 2% of plant replacement value (PRV). For example, a $1 billion top-performing plant spends $12 to $20 million per year on maintenance expense. By contrast, poor performers spend two to four times more per year.