Fix Reactive Maintenance with Better Planning ft. Doc Palmer

Ed Ballina I’m Ed Ballina.

Alvaro Cuba Hello guys, Alvaro Cuba here.

Ed Ballina And we’re here to welcome you to another podcast of Manufacturing Meetup. This is the show where we kick back, we talk about what really happens on the shop floor, and we get to learn from you, you get to learn from us, and it’s a lot of fun. So welcome to MMU.

Alvaro Cuba Yes, what’s about your…

Ed Ballina Oh the hat. So some of you may know that we’re moving into a new building, new to us anyway. And I wanted to put up a flagpole with the American flag. So I found a company that makes the flags in America. They’re made in the United States. They’re beautiful, heavy cloth embroidered. They’re not inexpensive, but they are worth every penny. And I got the hat for free. So I figured, hey, show my colors because 250 is coming up, baby. 250 year anniversary of this country.

Alvaro Cuba That’s true. And look at mine. This is my trekking and hiking hat. I used this when I was in the Camino de Santiago and I’m planning a second one. So I’m ready. Ready to go.

Ed Ballina My amigo, you’re making me very jealous. It’s in my bucket list and I haven’t set one foot on that Camino yet. We’ll have to go. So today we’re excited to bring you an episode with Doc Palmer. He is the author of the planning book, and you can see where you can get it later. McGraw-Hill bestseller. He’s on his fourth edition. And to talk to him, it is literally going through the Bible of planning. So much experience. He can quote what works and what doesn’t work off the top of his head, and he’s done it in a bunch of countries. He’s focused on practical applications. That’s one thing I really liked about it. He talks about the theory, but he dives into practice. And it may be a little bit longer than our previous podcast, but please hang because the time is well worth it.

Alvaro Cuba Yes. And you guys, a lot of plant managers talk about how busy they are on firefighting to plan. Doc brings a fresh perspective saying you need to plan to break the firefight. And he’s going to tell us how to do that. And he has, as Ed was saying, great examples. But first, hit the subscribe button so you don’t miss the conversation. With that, let’s get started. Welcome, Doc. Great having you in the show.

Doc Palmer Thank you.

Ed Ballina We usually break this up into a couple of segments. And in the first segment, with your experience, we’d like to get a sense for what is the real cost of not planning, right? I mean, you’ve got a plant that’s struggling, they’re firefighting perhaps. What does it actually cost for them to stay reactive?

Doc Palmer I’ve got an actual dollar figure I’ll share with you, but the problem is things break. And when things break, we’re not making product. And maintenance is maintaining. It’s not fixing things when they break really fast. It’s keeping them from breaking. But our problem is things do break. And we’ve staffed ourselves to the point where we just keep up with the breakdowns. When things are not breaking, management says, well, we have 10 electricians. Two of them are about to retire. Maybe we can get by with eight electricians. You never know until you try. And then, so our staffing slowly goes down as things are not breaking. But then you get to the point where you’re not keeping up and we start fixing things. And the degree that operators yell, management suddenly says, well, operators are yelling quite a bit. Now they don’t say it that way, but maybe we should hire a few more electricians. We staff right at the point where when things are not breaking, we don’t replace staff from attrition. And when things are breaking like crazy, then we replace people just to the point where we can keep up and the operators don’t scream at us too loud. But we’re doing a lot of reactive maintenance.

Ed Ballina Thank you.

Doc Palmer And the maintenance manager’s question is how can we do more proactive maintenance to keep things from breaking when we have our hands full of reactive maintenance? Because you have to fix the things when they break. You have to get the horse back in the barn. How do you find the time to find the rotten boards in the barn? How do you find the time to fix the gate? How do you find the time to fix the lock before it’s too late? Well, when they do these industry wrench time studies, they find around the world and across industries, we’re only typically at about 35% wrench time where we’re actually moving a job ahead and turning a wrench. The other time we’re working, we’re getting parts, we’re walking to the job, we’re getting tools, we’re getting instructions, we’re giving people a break. But the time we’re actually at a job working on the equipment, it’s only 35%. Well, the planning and scheduling kicks you up to 55%. Doesn’t sound like a lot. It means to get ahead, you need to work half days. But the 55 divided by 35 is 1.57. So just say you get a 50% pop. So if you’re completing only 100 work orders a month, that translates to you could be completing 150 work orders a month. And by definition, the extra work is proactive, because you’ve got the reactive work orders covered. So the dollars for that are, let’s say you had 100 maintenance people. And you got a 50% pop. And say 2,000 hours a year. That’s 100,000 hours extra a year. Now times $50 an hour for a mechanic. That’s $5 million a year in salaries you’re getting for free.

Ed Ballina That’s incredible.

Doc Palmer The industry rule of doing proactive maintenance: every extra dollar you spend on proactive maintenance saves you $10 on your bottom line because you’re keeping things from breaking, which helps you make a product. So the $5 million a year times 10, that’s $50 million a year. If you had a hundred maintenance people, that’s what you’re losing. You’re a profitable company at 35% wrench time. You could make an extra $50 million. Hey, say you only get half of that pop. Well, that’s $25 million a year. Actually, you’re saving a half million dollars per year per maintenance employee doing the planning and scheduling. That sounds like pie in the sky.

Ed Ballina And for a small investment in planners, for example, planners are worth their weight in gold. Then maybe you add some parts people to it. And now that wrench time really starts going up.

Alvaro Cuba And it adds up very quickly. Doc, the figures are production and people, but then every time you are reactive, imagine quality problems, safety problems, production, service problems. And that’s not even in those numbers.

Doc Palmer Well, when you get the pop in work order completion rate, you run into a new problem. You run out of work orders. That’s a good problem. Then the operators can tell you about little things. You can do all the little things you should be doing anyway.

Alvaro Cuba And not only that on the numbers, but also on the relationships. Doc, what happens when you are in the reactive mode? Operators start complaining, then starts the fight with maintenance and finger pointing and all that. So tell us a little bit more about that, how that impacts the entire plant.

Doc Palmer Well, operators, they appreciate us coming out there in the middle of the night and fixing something. But deep in their hearts, they know that’s not right. They would rather never have to call the maintenance department. And then management has to keep maintenance people doing the little things so operations never has problems. We get an award for firefighting. We don’t get an award for “nothing breaks.”

Alvaro Cuba That’s what you, Ed, said. Repeat about the hero syndrome.

Ed Ballina The Hero Syndrome.

Doc Palmer I went back to one plant that I had worked with and I talked to this operator and he said, it just seems like things are better here. He couldn’t put his finger on it. Then the maintenance manager came out of their office and said, Doc, I’ll tell you what my private KPI is. I said, what is it? I get fewer phone calls after midnight.

Ed Ballina I’m sleeping better.

Alvaro Cuba Well, guys, you have seen the tremendous cost of firefighting and the reactive mode. So let’s move to what matters.

Ed Ballina So, planning, what is planning and what isn’t planning? And it seems like sometimes when you go into an organization and say, hey, I’m going to improve the planning, all of a sudden they look at you like, is big brother going to be watching me? It’s got some bad connotations. So explain planner and scheduler and why do people react so negatively to them?

Doc Palmer I do want to take the opportunity to wave my book. This is McGraw-Hill’s bestselling reliability book for the last 20 years.

Ed Ballina I saw that. That’s in four editions. That’s impressive.

Alvaro Cuba Fourth edition.

Doc Palmer When we were trying to get planning and scheduling working at our power plant in Florida, there wasn’t anything written on it. There weren’t any books written on it, there weren’t any magazine articles, so we just had to struggle for ourselves. But it turns out that the reason planning and scheduling systems fail and people just get rid of them is planner and scheduler are both bad words. They totally steer you down the wrong way. The word planner makes it sound like you’re going to tell people how to do their job. We have mechanics, electricians, and instrument techs. They don’t want somebody telling them how to do their job. And how is somebody going to do that? I mean, on the spot, if a mechanic sees this problem here, the plan is not going to cover that. And it turns out that the word “planner” is a bad word.

A better word is craft historian. What we want to do is use planners to run a Deming cycle. Dr. Deming from the 1950s, plan, do, check, act, continuous improvement. We have to apply that to maintenance. Plans are not perfect. They’re a head start. They’re like triage in a hospital. The patient comes in, they’re crippled over hurting and the triage person says, well, I think this is the problem and this is the doctor you need. And that’s what we do. We think the problem’s with this device and you’ll need one gasket and a short ladder. Then we turn it over to the professional doctor, the professional mechanic. And the mechanic out there says, well, really need two gaskets and a longer ladder. We also need to fix this. And then we update the job plan so next time we work on that patient, we need two gaskets and a longer ladder and we need to take care of this. It’s just like a hospital. The first thing they do is take your chart. What happened last time? Yeah, you got the same problem. And so a better word would be craft historian. I would tell planners: I went to a class. I found out my real job is not to tell you how to do your job. My real job is just to translate from the operator, this pump’s making a funny noise, I think we need to change the impeller.

Alvaro Cuba Better, yes.

Doc Palmer And just save information, the stuff you would save in your locker for next time you work. You’re just trying to make a better job plan. That’s what the planner does. It’s a craft historian.

Ed Ballina That’s pretty cool.

Alvaro Cuba Well, congratulations on the planning handbook. It’s really something. And I can see that people are using it in the fourth edition. In there, you talk about Parkinson’s Law. What, tell us a little bit about it.

Doc Palmer Parkinson’s Law. Cyril Parkinson wrote an article in the 1950s in an economics magazine. He had studied the British Navy over the years and as the world dominance by Britain got smaller and smaller and their Navy got smaller and smaller, their admin staff got bigger and bigger. So he worked it around to something totally different with Parkinson’s Law. The amount of work assigned expands to fill the amount of time available. And Parkinson’s Law is everywhere. When you’re on a diet, they say use a smaller plate because whatever size plate you get, you’re going to load it up.

Ed Ballina Yes.

Doc Palmer If we only assign eight hours worth of work for a 10-hour shift, it’s going to take 10 hours. Everybody’s busy. Everybody’s doing something.

Ed Ballina People will expand. I remember at one point in time we had a site shutdown, so we had some idle time and the operators were like, hey, let us come in and paint. I said, yes, because the last time I had you guys come in and paint, I wound up with paint everywhere. Half of the time was in the break room and I couldn’t find you. So no, I am not letting you paint. You make a mess and it costs me more money. There’s a little bit of that give and take.

Doc Palmer Well, the problem, the way Parkinson’s Law affects the scheduling is, there’s another contemporary, Dr. Drucker from the 50s. Management by objective. He says 90% of the time, that’s nine out of 10 times, we don’t understand the objective of our activity. And Covey updated that in the 80s to begin with the end in mind.

But most people errantly think the purpose of scheduling is to complete the schedule. Now they don’t say that, but they set targets in terms of schedule compliance, not work order completion rates. If we have, and this is very common in industry, we set a target of 95% schedule compliance. That just makes us underload the schedule so we can have good schedule compliance, which wasn’t our purpose anyways. And if you underload the schedule, you’ll stay at 35% wrench time because you’re not defeating Parkinson’s Law.

Ed Ballina And somebody will be beating you over the head for low productivity.

Doc Palmer Everybody’s busy. But we want schedule compliance between 40 and 90%. If you’re below 40, you’re not trying. If you’re over 90, you’re lying. You’re just not fully loading the schedule. And it’s not apparent a lot of times. Maybe your estimates will be inflated. Maybe you’ve got 10 people on your crew, but you tell the scheduler, well, just give me enough work for eight people. Or you just say, we’re going to load the schedule 80% to leave room for reactive work. And then you stay at 35% wrench time. But you look good because you had 95% schedule compliance.

Ed Ballina It’s schedule compliance. And that was the question I was going to ask next, like what’s a sweet spot? What’s fake? But it really makes me think of PM completion rates, which we discussed in a few episodes. We used to go in and say hey, 95% PM completion rate, if you’re not at that, bad dog, you are not doing a good job, right?

Doc Palmer Wait, wait, wait, wait, wait.

Ed Ballina Yeah, no, no. I’m using the example of PM completion rate because frankly, if you have 95% PM completion rate and your line is running at 50 or 55, like I see out there, something isn’t right. And you start driving some inappropriate behavior where people start pencil whipping PMs because when the big guy comes in, he wants to see 95 and if it’s not at 95, it’s going to be a problem. So all of this is kind of related, with having unrealistic expectations to some degree. But you’ve given us some good targets to think about from a schedule completion standpoint.

Alvaro Cuba Yeah, the 40 to 90 as you said. But Doc, what’s wrong with using plan versus actual?

Doc Palmer That’s the most common planner metric or KPI that we grade people with because it seems obvious. Well, how do we grade the planners? Was the plan complete or not? Well, okay, we’ll measure the accuracy of their estimates. But there are good KPIs, there are waste of time KPIs, and there are actually some counterproductive KPIs, and this is one of them. If you’re grading the planner on the accuracy of their estimates, they’ll be forced to over-time jobs. They can get a better score if they give people too much time. So let’s say they give people 10 hours for what a job should take eight hours. The craft takes eight hours. Parkinson’s Law, because we haven’t assigned enough work. All these 10-hour jobs take 10 hours when they’re really 8-hour jobs, and the planner gets a great score. Now, if you’re grading the planner on plan versus actual, you’ll probably stay at 35% wrench time because you overloaded all the estimates and you’re not really loading 100%.

Alvaro Cuba So if that is bad, what do you use?

Ed Ballina What’s the number?

Doc Palmer If you’re grading the craftsperson, and you give them eight hours for a job, this particular craftsperson thinks, that’s going to take me 10 hours to do that job right. But if they want it done in eight hours, I’ll do it in eight hours because I’ll get a better score. But they’ll do that by taking shortcuts or compromising quality. So if you’re grading planners, you’re compromising your productivity. And if you’re grading your craftsperson, you compromise your quality.

Ed Ballina Right. So can you walk us through some of your real world examples?

Alvaro Cuba Just one second, Ed. You shouldn’t grade them with that metric. What do you suggest?

Doc Palmer Not that one.

There are two metrics if I had to grade planners. One is every time they plan a job, they have to use the living plan module of the computer. In SAP, it’s a task list. In Maximo, it’s a job plan module. And in Avantis, I think it’s a standard work order. Every one of the CMMSs has a job plan module.

Most companies just use that for PM because they repeat. We want every single time we plan a job, to do it in the living plan module so we can save all that feedback and run the Deming cycle. I don’t care if the planner gave you a 100-step job plan. If they did not use the job plan module, they don’t get credit for a planned job. If they give me a three-step job plan but they use the plan module, they get credit for a planned job.

Don’t you care about quality? Well, the quality is when you pick the planners. We just want to make sure they’re running a Deming cycle, which is evidenced by their using the job plan module. The other KPI is a metric of planner maturity. Are they staying ahead of the unplanned backlog? They have to, in their hearts, believe they can’t be perfect. The industry question is, how detailed should a job plan be? As detailed as possible, subject to the constraint that you’ve got to plan all the work. If you’re planning three jobs perfectly but you’re not getting to the other seven jobs, we’re going to work seven unplanned jobs. When we run out of work orders, we’re going to start doing unplanned work, which is not even as good as a starter job. We want every job to have a plan and they use the job plan module. So those are the two metrics.

Alvaro Cuba And Doc, would you suggest linking that also to other metrics like uptime, to motivate them not only to do their job, but to see the end result?

Doc Palmer I like profit sharing. But the problem is, okay, you want your kids to get good grades. We want to make a profit, right? But if you reward them for good grades and punish them for bad grades, they’ll just cheat. And then they’ll be dumb as a dog on the porch and they won’t get a job and they’ll live in your basement, even though they got good grades. So that’s schedule compliance. It’s a “why” type metric.

What you want to do, if you want your kids to get good grades and not live in your basement, you’ve got to make them go to bed on time. And you’ve got to make them do homework every night, which has nothing to do with grades.

Ed Ballina Taking care of the basics, right? You build that foundation and they will rise up and deliver the outcome you want.

Doc Palmer What we want to do is press the planners to get all the work planned. It’s okay if it’s not perfect. Use the job plan module. We want to fully load the schedule and it’s okay to break the schedule. Then we’ll do more proactive work. We’ll do better quality work because we’re using better and better job plans and we’ll make more money. But if you set targets on making money, then everybody cheats.

Ed Ballina You’ve got to show it on the bottom line. So can you give us a couple of specific examples of real world turnarounds? It was just fascinating to find the number of places around the world where you’ve done this.

Doc Palmer I’ll give you four quick ones. In Dallas, the water system, they fully loaded the schedules and schedule compliance was 25%. Well, under 40, you’re not trying; over 90, you’re lying. So the maintenance director went out there to the maintenance area and said, hey, what are you fellas doing with the schedule I give you? Oh, that list? We put it over here on top of the filing cabinet. No guys, look, read my lips. I want you to use that schedule a little bit more. And so then schedule compliance went to 50%, which doesn’t sound like a lot. But for their 50-person workforce, they went from seven work orders per person per week to 10.

Ed Ballina That’s big.

Alvaro Cuba It doubled.

Doc Palmer Which is a 40% pop. So their 50-person workforce got 20 people for free. The proactive work worth 10 times its value. They got the equivalent monetary value as if they had 200 people’s salaries in profit. And then a company in Hawaii, they were at 95% schedule compliance but they had a lot of reactive work. That’s mutually exclusive. Just looking at their time estimates, all their estimates were bloated. If a job was going to take longer than an hour, they just gave the person four hours. If a job was going to take longer than half a day, they just gave the person eight hours. So they thought they were fully loading the schedules, but they really weren’t because their estimates were bloated. And they were at 35% wrench time. Not a bad company, but they’re leaving a lot of money on the table.

Then an LNG company in Brunei, we went from completing 130 work orders a week to over 200 work orders a week. So we got 70 work orders a week, 300 work orders a month of free proactive maintenance to keep things from breaking so you can make more money. And in three months, we ran out of work orders. It’s really common because we just don’t have the muscles to generate that work. But then you can devote your people to doing more predictive maintenance, doing more things with sensors that you just can’t get around to.

Ed Ballina Not when you’re fighting fire all the time.

Doc Palmer Doing projects on your own. Operators telling you about little stuff.

Alvaro Cuba And then you see the magic. Then they start being creative and with all they know, they start coming with great improvements and it is exciting for everyone.

Ed Ballina It’s exciting.

Doc Palmer And then the last example, in South America, a mining company had 2,000 mechanics. How do you get trained people in a lot of these places? We got a 30% pop, so we got 600 mechanics for free, fully skilled, just as trained as everybody else. So how do you do that? The planning is good, and plans are not perfect. Fully load schedules. It’s okay to break the schedule. It’s okay if the plan’s not perfect.

Ed Ballina It leads to some amazing improvements. Shifting gears to segment three. So we’ve talked about the cost and what we can do to improve planning, but now how to sell it, right? And what are the things that are getting in the way? Because so far, everything that you’ve said makes a ton of sense. Like we should be seeing this not as the exception, but as the rule. But we know that’s not really the case. The industry has some benchmarks around scheduling compliance that we’ve talked about a little bit, that you don’t agree with. And you’ve said that the conventional wisdom of 95% is not right, it’s wrong. So a little bit more on that one.

Doc Palmer I think 95% schedule compliance might be world class. But in 1993, there were only three companies in the world that were world class. I mean, a world class storeroom probably doesn’t carry very many bearings because you’re so good at lubrication. Okay, so you tell your storeroom, I want you to get rid of your bearings because we’re going to be world class. It just doesn’t work.

Ed Ballina The cart’s trying to pull the horse, right?

Doc Palmer I think you could get to 95% schedule compliance. But if you’re above 40, your supervisor’s not ignoring the schedule. And below 90, I know your supervisor’s not cheating. Your scheduler is fully loading the schedule. There’s still room in there for money. Are you bad at lubrication? That’s why things break. Are your supervisors clogged up in the office where they can’t make field decisions? Are your spare parts not where they should be? Do you have a problem with your storeroom? Do your operators break things because they’re not trained? Are the maintenance people not trained? Those are the areas to focus on to get up into the 90% schedule compliance range. You can’t be world class at planning and scheduling without everything else being world class. I see where the benchmark of 95% comes from. But for the 99% of plants in the world, we want to shoot between 40 and 90% for schedule compliance to make sure we’re getting the pop in work order completion rate. And then we need to work on the other stuff. Planning is not the silver bullet.

Alvaro Cuba And in the four examples that you put it, just by working on those, in every case you bumped 30 or 40% up with those results. It’s massive.

Doc Palmer To sell it, the plant manager’s got to get it. And if they’re being held by corporate, did you produce so many cartons of product last month? Well, that’s really short term if you’re not careful. It should be, did you properly lubricate everything and let the number of products dictate where you ought to look.

Alvaro Cuba We’re looking for the long term. You mentioned leadership. What’s a good ROI that you can use to sell it to them?

Doc Palmer First of all, they have to understand what maintenance is. If they think maintenance is fixing things really quick, you’re just lost anyways. So once you understand that maintenance is keeping things from breaking to begin with, then the proper maintenance manager question is how can we do more proactive maintenance to keep things from breaking when we have our hands full of reactive maintenance?

And then you can deal with the fully loaded schedule. The purpose of scheduling is to help us complete more work than we would normally complete. Do you see the movie The Princess Bride? That one word that guy keeps saying the whole movie, “inconceivable.” At the very end of the movie, his friend pulls him aside and says, I don’t think you know what that word means.

We don’t know what schedule means. We think it means to make a calendar or to complete the schedule. We’ve got to educate ourselves past that. The purpose of scheduling is to help us complete more work than we would normally complete. And our enemy is Parkinson’s Law. We have to fully load schedules and then it’s okay to break the schedules. We have adult supervisors. And the purpose of planning is not to tell our senior journeyman certified craftspersons how to do their job. It’s to run a Deming cycle. We really want to run planning as a continuous improvement cycle and use planners to give head starts. Because mechanics will kill a planning program. You messed up the plan here, you messed up the plan there, you’re a terrible planner.

Ed Ballina I do the job.

Doc Palmer Nobody wants to be a planner because there’s not a leader that understands that hey, the planners aren’t telling you how to do your job.

Ed Ballina Yeah, it has to be a team effort. In some places, my most effective planners were folks that were mechanics and were highly respected and then moved into a planning role as a promotion or career expansion. But in some places where we brought planners in from the outside, that took a little bit of massaging. They had to have the right personality. There’s a plan where leaders, and we’ve talked about this a few times, I’ll say unethical leaders cut maintenance to make their numbers look good for 18 months and they hope they skate out the door before the bills come due and your equipment starts falling around your ear.

Doc Palmer You could say it’s unethical. I really don’t know if they’re doing it intentionally. Maybe they don’t understand why you have to lubricate things every month. Why can’t you do it once a year?

Ed Ballina Respectfully, if you’re a plant manager and you don’t understand why your bearings need to be lubed once a year, I will tell you why you’re not working for me. I’ll just put that out there. By unethical, I mean people that are only looking at how they can make a short-term splash to make their careers look good and get promoted to the next job before they hand somebody a pile sandwich of $3 million of deferred maintenance. I’ve seen this happen way too often to think that it’s a rare event.

Doc Palmer Yeah, well, if you’ve not replaced your maintenance staff over the years, the planning and scheduling is like, it’s hard to believe you get 50% more. If you had 20 mechanics, you can suddenly have 30 mechanics.

Alvaro Cuba Last one for you, Doc. If you had to give our audience three takeaways on the discussion, what would they be?

Doc Palmer Plans aren’t perfect, schedules aren’t perfect. You’re at 35% wrench time.

Alvaro Cuba Great. Well, a lot of wisdom there, guys. So listen to that. We just want to thank Doc. And Doc, one last one. Can you show your handbook again?

Ed Ballina Thank you.

Alvaro Cuba Look at that. Go and check it out. A lot of value.

Ed Ballina Hey, well, diving in.

Doc Palmer And my website too, Palmer Planning.

Ed Ballina Don’t let the 800 pages scare you.

Doc Palmer If you need a door stop.

Ed Ballina It’s like a working manual. Phenomenal. Getting all your perspective and your reference to some things that people may not remember anymore, but are so applicable today. Deming, right? The PDCA cycle.

Alvaro Cuba Drucker, the handbook.

Ed Ballina Yeah, there were so many great books that came out in the 80s. And a lot of that is very much applicable today. So fantastic. Thank you so much, Doc.

Alvaro Cuba Thanks so much.

Doc Palmer Thank you. Thank you for having me.

Alvaro Cuba Well, friends, that wraps up today’s episode. Thank you very much for joining us on the Manufacturing Meetup. If you enjoy it, please follow or subscribe. And if you are watching us on YouTube, please leave us a comment or review in iTunes and please share this podcast with your friends so we can grow the meetup.

Ed Ballina If you want to keep the conversation going, email us at mmu@augury.com. You know the deal. We’ll also have links to Doc’s work in the show notes for this episode. See you next time.

Alvaro Cuba See you.