Maintenance Process Improvement and
Labor Cost Reduction
Our client is a 175,000 barrels per day Eastern refinery built in the first half of the 20th century. The client frequently added new units to address changing business and environmental requirements. Few major capital changes or modification were made to existing units. The location is somewhat unique in that the FCCU was built in a separate area outside the fence lines of the main refinery area, creating the problem of having to cross a busy main street.
There are six operating units in the facility, which are: the Alky Unit, Crude and Utilities, the Ethylene Complex, FCCU, Reformer Unit, and Transfer and Shipping.
A strong union exists which has secured numerous unwritten and informal work agreements with the client. Local management believed they were not getting a fair amount of work for their investment in labor. At 30 percent to 40 percent, overtime was out of control.
MTG conducted an assessment and established a benefits case through improvement of daily scheduling and increased direct field management of resources by the first line foremen. The approach addressed loss on two fronts: work barrier identification/reduction and opportunity management. The resulting program was developed to address those issues and measure change through various KPIs.
The project was divided into three phases. The first phase was directed at developing and implementing the tools needed to better control the maintenance effort. These were developed by an in-house, cross-functional design team and included:
- A well defined and detailed maintenance management process flow
- Specific role and responsibility definition
- Daily scheduling and reporting tools
- The development of more meaningful area and refinery-wide KPIs
- An emergency maintenance incident reporting process
- Priority setting tools and definitions
The above built the foundation of the effort and provided management the opportunity to pursue improvement without having to emphasize existing poor work practices as a cause. It also provided the basis for the second phase involving extensive field coaching at various levels of the organization, but with major emphasis on the first-line foremen (most had been promoted from the ranks).
The third phase was a structured auditing process and scoring system, using both internal and external resources.
The client identified $3.2 million annualized savings from the effort, with approximately one-half of the savings resulting from overtime reductions. This greatly exceeded the initial savings projections of $2 million dollars, and represents a 6.4:1 ROI.
Additional intangible gains include a major reduction in unit work backlogs, a substantial reduction in unplanned emergency work, an overall reduction in all “Barriers to Work” categories, and the ability to assume capital work with routine resources.
This successful program was closely monitored by corporate management and led to additional assignments for MTG at two other refineries. The phase three auditing process and scoring system developed at this site has been rolled-out by the client at all their other refineries as a required corporate initiative.