Can Outsourcing Preventative Maintenance Save You Money?

Joe Phillips | 29 March 2023

At most companies today, management is looking for every possible competitive advantage. As a result, companies have realized that previously used maintenance methods are no longer sufficient to compete in today’s world markets. Even though greater attention has been paid to proactive maintenance, few companies have successfully implemented it. Management’s demand for greater reliability has elevated maintenance from an unwanted expense to an integral, recognized profession.

Once perceived as a “practitioner” or manufacturing issue, maintenance and reliability engineering is now considered a business issue of urgent priority. The global maintenance, repair, and operations market’s estimated value in 2020 was $616.01 billion. It is projected to register a value of $701.3 billion by 2026, growing at a CAGR of about 2.19%. (Mordor Intelligence, 2020)

Despite the high value and need, it’s not uncommon for maintenance to be trimmed from a company’s budget and priority. Outsourcing is one way to keep maintenance costs down but still protect your operation. In this post, we look at how.

Avoiding System Downtime & Knowledge Loss

In this post pandemic era, the top challenges encountered by maintenance teams have to do with hiring, onboarding and retaining people. It accounts for 48% of faced challenges according to Plant Engineering findings in 2020. By outsourcing preventative maintenance functions this will allow companies to carry a smaller maintenance team that can focus on the day to day issues that arise. And, they can have a preventative maintenance provider come in on regularly scheduled intervals to do the preventative maintenance of the system and deliver a detailed report of services that features any encountered issues that may need repairs or replacement before the components breakdown and cause system downtime.

Allocating the right level or resources can be challenging but ignoring equipment maintenance can be even more costly. Production losses due to equipment downtime usually equal or exceed maintenance cost and 60% of maintenance is unplanned, regularly scheduled and documented preventative maintenance programs can greatly reduce unexpected breakdowns. A Forbes article on Feb 22, 2022, titled “Unplanned Downtime Costs More Than You Think” noted that, “Overall, unplanned downtime costs industrial manufacturers as much as $50 billion a year.”

As of late, the warehousing and manufacturing industries have and continue to face challenges finding sufficient labor but downsizing, especially in the maintenance function, isn’t new.  Over the last decade competitive pressures and manufacturing approaches like TQM (Total Quality Management), TPM (Total Productive Maintenance), outsourcing and reengineering have given management the ability to trim maintenance staff. The trend shows no sign of abating. 

Due to downsizing of maintenance along with the lack of internal leadership, many operations will continue to lose their core competencies to perform maintenance.  At the same time, maintenance will be even more important in the next millennium due to technology advances. 

Outsourcing Preventative Maintenance

In most companies today, management is looking for every possible competitive advantage. These companies are looking to outsource non-core activities and concentrate on what is central to the company. Upper management often doesn’t view maintenance and associated activities as ‘core.’ The idea is to spend less time in managing these elements. 

Companies like outsourcing and they particularly like outsourcing maintenance. Management has traditionally viewed maintenance as overhead, and outsourcing is seen as a way to transfer overhead out of an organization. Why? It’s an easy and quick way to see immediate savings realized: personnel, benefits and long-term employment obligations are instantly eliminated.  

Outsourcing is a fact of life in plant and facilities maintenance operations.  A March 2021 Industrial Maintenance Report survey conducted by Plant Engineering revealed that 88% percent of facilities outsource some or all maintenance operations; the average facility outsources 23% of their maintenance operations. Leading causes for outsourcing are an existing agreement with a manufacturer or supplier, lack of skills among current staff and lack of time or staff resources to dedicate to maintenance.

Preventive Maintenance

Preventative maintenance is the practice of performing manufacturer’s recommended maintenance functions like cleaning, lubrication, adjustments, and minor repairs on a regularly scheduled timeframe.  These scheduled activities allow the technicians to routinely monitor the equipment and to identify parts that are not preforming well and may need to be replaced and this can be accomplished during scheduled downtime. This approach is estimated to have a 12% to 18% cost savings over reactive maintenance and increases the equipment life cycle. According to a 2017 survey by Plant Engineering, organizations that used preventive maintenance saw a 69% decrease in equipment downtime and 66% reduced the probability of failure and extended the operational lifetime of the assets.

Building a Plan that Fits

Unfortunately, there isn’t one right answer when it comes to building a maintenance strategy. However, building a comprehensive maintenance plan for your automated equipment is critical to achieve the maximum uptime of your system.

Bastian Solutions can help you build a maintenance model that fits your business needs or provide preventative maintenance and 24/7 emergency support services utilizing our 6,000 plus skilled technicians across our Toyota and Raymond dealer partners. 

Author: Joe Phillips