of overtime
Reduction of billing from contractors
Reductions of material used
Reductions of inventory on shelf
Reduced expenditures for tools and equipment
Reduced equipment rental bills
Reduced demurrage (rental of tanks, rail cars, ships)
Reduction of regulatory fines
Closing a satellite operation with consequent reduction of overhead
Reduction of energy usage (large enough to be recognized)
Reduced raw material usage
Reduced number of production machines due to increased uptime
Reduced operator personnel resulting from fewer machines
Phantom savings
Reductions in labor without realizing any savings
Small reductions in energy usage (unmeasured and unproven)
Small reduction in production machine usage
Reduced hours of compressor usage due to leaks being fixed (unless you can prove electricity savings)
Increased uptime or availability when the product is not sold out
For example let’s consider a PM that takes 3 hours a month and does not use materials. We decide the PM is too frequent and we reduce the frequency from monthly to quarterly. And let’s agree there was no increase in breakdowns or adverse events. Calculations show we “saved” 24 hours a year. Where did the savings go? We say that the time is now available for other valuable maintenance activity. This time is phantom savings.
If we sent home a contractor 3 days a year as a result of this PM frequency improvement, the phantom savings would be realized (translated into real savings). If we could decrease overtime the savings would also be realized. Or if the PM used a $25 belt each month and we dropped the usage from 12 to 4 a year, we could show real savings of $200.
Getting phantom savings are good, but we act as if the real and phantom savings are the same. They are not the same, and should be presented separately. Hard numbers people (accountants) are extremely suspicious of phantom savings. In the real world they never realize those savings. Consider the way your audience listens to talk about savings. There will be significant skepticism. By stressing (a smaller amount of) real, as opposed to (a large amount of) phantom, savings you will be answering the biggest question (which is sometimes not even asked explicitly). Phantom savings are nice to have but not as nice as money in the bank.
People argue that saving time will enable the team member to concentrate on something else during the time saved. This argument may be true. But they also might turn it into a happiness moment, an idea put forward by the Gilbreths (discussed later in this chapter) at the beginning of the 20th century. Lillian and Frank Gilbreth said that, by teaching everyone the one best way to do the job they could get their work done and have time for a happiness moment. It didn’t take long for happiness moments to go the way of the dodo bird (to extinction).
Sometimes Lean can look Fat
On a bigger scale, if you read trade magazines you will find articles about savings from adoption of this or that productivity improvement program (new software, a new gadget, or a new way to look at maintenance). The savings are always impressive. Like all phantom savings, rarely if ever are those savings distinguishable when we take a before and after snapshot of the organization’s books. If the savings are not visible, the vendors are touting phantom savings.
This statement is not to say that phantom savings are not important, they are. Phantom savings can really be used for important work. It’s just that the Return on Investment will show up as a result of only the impacts on the costs, either above or below the water line, and not from the theoretical savings activity. Phantom savings can also accumulate, and when there is enough they can be converted or will naturally convert themselves into real savings. Phantom savings can also be a guide or a pointer to real savings.
The situation of phantom savings could very well be worse than just no impact on the books. Consider the impact of a major effort toward planning and scheduling the maintenance effort. Conservative estimates show productivity could improve by 25%.
Most places don’t implement Planning and scheduling and then lay off 25% of their people. Most places have excessive identified work (in their backlog), and use the gain in productivity to accelerate the speed with which they work their way through the back-logged jobs. This strategy results in backlog reduction and timelier customer service. Without a lay-off or reduction in overtime there are no savings in maintenance costs. Eventually, the firm might be able to reduce overtime, contractors, or even headcount through attrition (converting phantom savings to real savings).
Each job takes a shorter time (on the time clock) when materials, tools, permissions, and drawings are available when the job starts. More jobs run smoothly. Then something strange happens. Those additional jobs will consume materials. The up-tick in material usage will be real (not phantom) because more jobs will be run per week. The improving productivity might adversely impact the maintenance materials budget (by using it up faster).
In addition to running through the backlogged jobs, usually there are additional jobs that didn’t make it to backlog originally, because no one had confidence that the job would ever get done (this position seems particularly true for infrastructure jobs). Some of these jobs get captured and added to backlog. Eventually, when the backlog is reduced to a manageable level, the whole plant will run better. Fewer corrective jobs will break down waiting for maintenance to get there. Years later there might be an opportunity to allow the maintenance crew to drop in size naturally as people retire and leave.
Is Lean a Religious Issue?
On a flight to the west coast from Philadelphia, I had the great opportunity to sit next to a Minister of a large church. We got to talking and I realized that he knew quite a bit about maintenance. As a head of a church, with a building and a school he had faced many maintenance problems over the years. He surprised me when he said that fundamental issues of maintenance and religion were related.
He said that when children are born, or people pass away, or couples get married, there is no problem getting people into church to pray. The problem he said is the decades between these events. It is hard to get people to come into church when nothing of importance is going on. But that time is important, it is time spent building up the spiritual muscle to withstand whatever life has in store for you.
The minister went on to say that, when they had a leaking roof and minor floods after a string of spring storms, he had no problem getting money and congregational attention to fix the roof. But he had no luck getting (less) money in the previous 2 years to fix the roof so it wouldn’t leak in the first place.
Many of our companies are just like that. They wait until after a crisis to consider maintenance seriously. One of the battles of the maintenance war is with human nature. We put off paying for maintenance because we either don’t believe there will be a problem or we don’t really even want to think about the inevitable decline of the assets we are using. We consider this approach Lean. It isn’t in the long run.
Competition determines success
