Maintenance Reduction to Revenue Increase Comparison

A 10% REDUCTION IN MAINTENANCE COST IS EQUAL TO A 40% INCREASE IN COMPANY REVENUE

According to DuPont, “maintenance is the largest single controllable expenditure in a plant.” In many companies it often exceeds annual net profit.

  Before 10% Maintenance Cost Reduction 40% Sales Increase
$ Percent of Sales $ Percent of Sales $ Percent of Sales
Sales 100 100 100 100 140 100
Maintenance Costs 20 20 18 18 28 20
Material, Labor, G&A and O/H 75 75 75 75 105 75
Profit 5 5 7* 7 7* 7
Which is easier; growing sales volume by 40% or reducing maintenance costs by 10%? In addition, a 10% reduction in maintenance costs translates to a much higher return-on-net-assets (RONA) compared to increasing sales 40%, which will require more plant capacity and production labor.

 

*Note: Profit is the same in both scenarios

According to major industries throughout the world, it’s time to throw out your old ideas on machine maintenance. The cost-saving trend is toward a maintenance program that targets the root causes of machine wear and failure. Predictive and Preventive methods are out: Proactive Maintenance is in. Why? Because proactive maintenance methods are currently saving industries of all sizes thousands, even millions, of dollars on machine maintenance every year.

Maintenance Philosophy Maintenance Practive Human Body Metaphor
Proactive Maintenance Aggressive approach to eliminate the root cause of failure-surface degradation Cholesterol and blood pressure monitoring with diet control
Predictive Maintenance Monitors oil condition, trend analysis Detection of heart disease using EKG or ultrasonic
Preventive Maintenance Based on a schedule, not condition of oil or component By-pass or transplant surgery
Breakdown Maintenance Large maintenance budget Heart attack or stroke
Evergreen America, Inc., a Sustainable Engineering Company