Headache remedy: Why outsourced maintenance is a service worth considering right now
Frank O Smith, senior contributing editor (fosmith@thewritinggroup.com) -- Manufacturing Business Technology, 3/18/2009 2:04:00 PM
|
Service Heat Treating is a Tier 2 supplier for golden-name manufacturers like Caterpillar, John Deere, and Oshkosh Trucks. Based in Milwaukee, Service HT offers a critical service: heat treating metal components to impart the proper metallurgical properties, using specialized furnaces.
It’s a tough market, says Glenn Kormanik, VP and general manager—and one made even tougher in a down economy.
“Our customers pull up to our doors and want to know when we can commit to delivery of an order. If we say two days, they’ll unload,” he says. “If our equipment is down, and we can’t commit to the schedule they need, they’ll pull away and take their business elsewhere. If our equipment is running, we’re making money. If not, we’re losing money.”
Ensuring that its equipment operates at peak performance is strategic to the business, which makes maintenance strategic to the business as well. Service HT realized more than a year ago that its in-house maintenance capability wasn’t strong enough to ensure survival, let alone handle continued growth.
|
| Service Heat Treating, a Milwaukee-based Tier 2 supplier, is experiencing higher equipment uptime and a lot less headaches by outsourcing its equipment maintenance processes to Advanced Technology Services Inc. |
“Our equipment wasn’t working efficiently. Nor was our uptime where it needed to be, and our top line was declining,” Kormanik says. “We didn’t have the luxury of time to bolster internal capabilities. Being a small business, I’m responsible for a lot of things—maintenance being only one of them.”
That’s why Service HT turned instead to Advanced Technology Services Inc. (ATS) for outsourcing of its maintenance operation.
ATS‘ roots are with Caterpillar as an internal maintenance group before being spun off in 1985, and becoming a wholly private company in 1996. Today ATS has more than 2,500 employees serving customers in North America, Mexico, the U.K., Puerto Rico, and China.
“[Our customers] are mostly large multinationals with multiple plants,” says Jeff Owens, ATS president. “We’re focused on making factories run better. Maintenance is all we do.”
Owens says in the U.S. alone, maintenance is a $100+ billion business annually—most of it performed in-house. “But we’ve seen significant interest in outsourced maintenance,” he says. “ATS has doubled in size in the last four years.”
Owens believes outsourced maintenance is a model whose time has come; and is a business that is relatively recession-proof—especially where companies are looking to reduce costs while ensuring greater plant performance.
“A challenging economy doesn’t lessen interest; it accelerates interest,” he says. “In good times, people make bad decisions, but in bad times, they make good decisions. They realize that they’re not as lean as they should be. A down economy often serves as a compelling case to make changes.”
Kormanik concurs, saying the change to outsourced maintenance as handled by ATS has resulted in high levels of quality and service.
“I couldn’t spend enough time to ensure that repairs were being done properly,” he says. “Reality in our business is if you can’t turn the parts for the customer, you lose the business. But if we have equipment available, we can take any and all jobs that come our way, and can make inroads on competitors in getting business we were shut out of before.
“We’re spending 10 to 20 percent less on parts,” Kormanik continues. ”And it takes ATS about 60 percent less time to do repairs because of its know-how.”
More important, reactive maintenance has decreased from above 70 percent to about 35 percent.
“We’re a lot more confident about equipment performance,” Kormanik says, adding that the onsite ATS service team has drawn upon the knowledge base resident in the Service HT organization to readily solve difficult problems.
“They’re able to rely on employee resources companywide to solve problems—problems that we’d still be scratching our heads over,” Kormanik asserts, adding that even though outsourced maintenance is costly, it provides a great business value. “They’re able to provide resources that are substantially better—and better focused—than what you may have in-house," he concludes.
