Spinning a yarn30 April 2014

Maintenance outsourcing is steeped in myths around cost, convenience and levels of commitment. Max Gosney meets two innovative manufacturers to discover the home truths

Maintenance outsourcing and old wives' tales seem to go hand in hand. It's a just a cost-saving exercise, a way of offloading all your problems onto a third party that could never do the job as well as you do. But best not look annoyed or the wind might change and your face will be stuck like that.

"People think once you've outsourced, you can put your feet up and the provider will solve all your problems," muses Wayne Thornton, head of performance improvement at Weetabix. "But, it's a different beast to manage a service provider. You have to be really clear about your expectations and proactive in monitoring delivery."

A measure of success
Weetabix steers performance via monthly service review meetings with its chosen service providers. Each third party is measured against clear metrics, briefed on upcoming maintenance demand and given feedback on the performance of individual contractors, explains Thornton.

"We have a relationship. We don't just throw people into the projects. We make sure they know our processes and systems. Could contractors tell you our strategy? They would know the relevant parts."

It's a revelation that will have the old school reaching for their outsourcing guidebook. Intimacy and engagement rankle with the traditional view of a cold and clinical business agreement. Yet a little trust can go a long way. When production demand peaks, Weetabix counts on extra engineers well-versed in the nuances of its Burton Latimer and Corby factories. But when the peak resides, the sites are not counting the cost of those same engineers standing idle.

"When we looked at our maintenance demands, we had peaks where we needed engineers, but down days where the demand wasn't there. The surplus cost goes against your product," says Thornton. "I don't want to employ an extra engineer from Tuesday to Saturday just because we might need them every Monday."

These maintenance reserves operate in tandem with the Weetabix first team – a hardcore of 90 in-house engineers. Thornton says: "Like most businesses considering outsourcing, we looked at what was core. We're in the business of producing cereals and we want to retain in-house expertise of any factory asset that makes our cereal products."

Weetabix's own engineers keep the mill rolls and other key production machinery purring. They're reinforced when necessary by the reservists whose bread and butter task is to take care of all other plant. "We outsource for buildings maintenance, fabrication and if we need extra cover during busy production periods. It's a flexible way of topping up to deal with manufacturing peaks."

Marrying two different maintenance philosophies has not been without its difficulties, warns Thornton. "There was suspicion at first," he says of the mood among the in-house team. "They wanted to know how the agreement was going to work and how much we were paying these contractors. There was a feeling that this was just the thin edge of the wedge."

Some deep and meaningful dialogue with management helped put the relationship back on track, explains Thornton. "We explained the business rationale for outsourcing and that we wanted to retain their expertise on core assets. People saw how we were able to switch the service on and off, and their concerns soon eased."

Milliken: a tale of two maintenance ideologies
Another site benefiting from a dual maintenance strategy is Milliken – Best Household and General Products Plant winner at the Best Factory Awards 2013. Innovation is something of a survival instinct for a Bury-based textiles manufacturer, which goes toe-to-toe with the sweatshops of Bangalore. "If it's a full-time role to maintain plant, then we do it in house," says David Bradley, plant manager, of the Wellington site's maintenance mantra. "But, otherwise, if it's not our specialism and it's more cost effective for us to pay a third party, then we do so."

As with Weetabix, the factory proves pragmatism can be a route to profit. Certain kit is regarded as sacrosanct, explains Bradley. "We have a room full of over 100 looms weaving the material for our airbag products. They are fundamental to our success." The looms go through a daily workout so gruelling it would have Mo Farah begging for a breather. "The looms are like buying a Rolls-Royce and running it non-stop at 200mph all day, every day. Every part has to be maintained daily and spares must be easily available. If a machine fails, we need to fix it fast."

Hence, Bradley wants the security of knowing specialist staff can be lineside 24/7. But with Lancashire last awash with available loom engineers back in the late 1800s, the site has had to develop a detailed skills development plan to cater for its specialist kit. Bradley says: "It's a very niche skill and when we've tried to get people in we've found it very hard."

The plant develops the requisite skills through a mix of on-the-job tuition and external accredited training courses. Bradley says: "You often find the best technician is not the best trainer. They have a wealth of knowledge, but lack the interpersonal skills to complement that. You have to think carefully about who you use as mentors."

You can have your cake and eat it
The level of tender loving care is in stark contrast with Milliken's more clinical policy on less critical pieces of factory kit. "We have several compressors on site which need to be checked up on every month. But we don't make compressors, it's not our core business and we don't have that expertise in-house so we pay a maintenance contract." For Bradley, combining outsourcing and insourcing is not a contradiction, but common sense. "I would advise anybody who's buying a piece of equipment like a compressor to look at servicing packages. You're not the expert in energy efficiency and you don't manufacture that product, so hand it over to someone who is."

An enduring commitment to growing your own, supplemented by convenience-driven contractor hire. To varying degrees, Milliken and Weetabix show that, when it comes to outsourcing, you can have your cake and eat it too. Just ensure your management-style matches the magnitude of your chosen outsourcing agreement, concludes Dave Peart, consultant at maintenance improvement specialist, Sora Group. "If you're bringing in a contractor to work with your own people, it's about hearts and minds. If you want to contract out something like air handling units, then it's different. The impact of an air handling unit going down in most plants is negligible. If somebody is having an impact on the quality of your product, then they need to be part of your team."

Debunking 3 maintenance myths
1 It's all about the money: Cost is often king for manufacturers mulling over outsourcing. However, prioritising improvement could be a more profitable long-term policy, according to outsourcing specialists. "The focus is shifting from business being able to procure on a lowest-cost basis to the delivery of added value," says Guy Bruce, managing director – industrial at facilities management provider Interserve.
"In particular, there is a focus on developing effective partnerships and transparency between the supplier and the vendor during the procurement process," he adds.
It also pays to take a more considered view of the total costs of outsourcing. A key advantage of appointing a third party is being able to transfer fixed maintenance costs – ie, headcount – into a flexible variable cost. Yet, a succession of maintenance contracts can quickly add up, says Sora Group's Dave Peart, who has developed a virtual technician calculation to help do the maths.
"If your technician costs £25,000 a year and you have 10, that's a fixed cost of £250,000. If you have contracts with several companies and they come and do maintenance for you, you take that total cost of the contract and divide it by £25,000. That tells you how many technicians you could have had. "

2 Outsource and then forget about it: You hired a maintenance outsource provider, not a mind reader. Contractors need clear instruction on which tasks to prioritise, safe working systems and key KPIs.
"The big mistake that people make is getting a contractor in and divorcing themselves of control of the contractor," remarks Peart.
The stakes only rise when the contract involves work on business-critical plant, he adds. "If you are taking contractors on and they're going anywhere near your plant, they need to go through your recruitment procedures. If you skill-test applicants, then skill-test the contractor as well."

3 An all or nothing choice:?Monogamy doesn't always make for a happy maintenance marriage. Mixing outsourcing and in-house maintenance activity can often deliver the most cost-effective solution. Advocates suggest you start out by separating core, business-critical kit from the more peripheral plant.
You could bring in a contractor to supplement your frontline maintenance team, or just turn to outsourcing as a more cost-effective and convenient solution for running generic items such as compressors or forklift trucks.

How we make outsourcing work: the AkzoNobel story
WM quizzes Dave Hooper, engineering manager at AkzoNobel's Slough and Stowmarket sites

What does outsourcing offer AkzoNobel that you couldn't achieve through doing in-house?
"It has allowed flexibility through the ability to flex numbers in resource as and when required. Key personnel have been retained from within our organisation to add balance and depth in expertise to the team as a whole. The ability to maintain numbers during absence and holiday without incurring extra cost (overtime) is also a major advantage from the contract approach."

How do you integrate contractors with your in-house team?
"The team is split 50/50 between staff and contract engineers across both day and shift teams. Performance is monitored daily, weekly and monthly to ensure we are on top of our key metrics for the department. All works are allocated via a weekly plan, with individuals allocated their tasks for the week. This is monitored at an end-of-day review with the maintenance manager, and the plan adjusted according to attained rates and plant availability."

What are the big maintenance challenges at your site?
"Age of asset and lack of major investment as the Slough plant is scheduled to close at end of 2014. This coupled with the constant pressure on costs and performance."

What have been the main benefits of outsourcing to your site?
"We have been able to fix our contract cost for three years, we have driven planned maintenance completion rates up to 90% as an average for the year, plant overall plant efficiency has risen by 5% over last three years and stores stock outs are down to zero."

What advice would you give to firms which have never outsourced before, but are considering entering an agreement?
"Be clear on what you are trying to achieve through your maintenance organisation and have clearly-defined measures to enable tracking of performance and identification of improvement opportunities."

Max Gosney

Related Companies
Akzo Nobel Ltd
Milliken Industrials Ltd
Weetabix Ltd

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