Email Jim at email@example.com
Listen to this column in your favorite format
iTunes or MP3
If you have read my thoughts on maintenance storerooms over the years, you will accuse me of having been all over the place, and you will be correct. At one time, I adopted the attitude that everyone should do what they were best at doing, and in the case of paper mills, this was making paper, so they should outsource storerooms. I still think this is good for small consumables and specialized repairs (such as roll repairs and recovering). However, for other items, such as pump assemblies, screens, motors and so forth, keep your own--but take care of them. This philosophy certainly applies for existing papermills (but read to the end).
What I want to emphasize further this week is at a higher level. This is the net asset value in your storeroom. Last week we talked about unscheduled downtime and, simply, it is a fool's game to have unscheduled downtime in your budget.
This week, we get a bit more complicated. We are going to stick with our base assumption--your machine's contribution is $20,000 per hour. You will use this with any magical formula you accountants use to calculate savings.
Maintenance Month Platinum Sponsor:
RMR Mechanical: We perform as planned! Visit us at www.rmrmechanical.com!
What we want to know from the technical side is this: the cost of the parts that caused downtime in your mill in the last two or three years--the cost of parts you did not have on site. The downtime could have been scheduled or unscheduled downtime--makes no difference. For instance, if during scheduled downtime you discovered you were missing a spare part, which then caused you to order it or reschedule downtime in the future, you need to know this. Then, applying proper savings calculations, determine if that part should be in your maintenance storeroom. In fact, I can save you the effort--unless it costs upward of significant five figures, you should have it in the storeroom. Nevertheless, you need to do the calculation.
Arbitrary caps on storeroom asset value can cost money. I certainly understand top level management doing this; it is easy. Yet it is costing them money on the profitability side, because the true cost of this practice is hidden in the details.
Investment owners are the worst at this. They think they can buff up the balance sheet here. In reality they are degrading the P&L. Strategic owners, especially the very large companies with a large fleet of mills in the same grades, do a better job.
Listen to the latest industry news on Pulp & Paper Radio International. Just go to iPulpRadio.com!
In other businesses, consolidated spares are organized in a superior way. In North America, the wheat harvest season starts in Brownsville, Texas, in early May. It is completed in late October in Calgary, Alberta. Contract harvesting companies, who have been doing this for generations, combine the same fields every year as they slowly creep north. The equipment manufacturers, such as CaseIH, AGCO, and John Deere, got smart years ago. They have fully equipped repair shops, with stocks of likely spare parts, following these harvesting companies--and of course they can get other spares overnight, via FedEx, from warehouses they maintain in Memphis. Unfortunately, this does not work in our industry, for we have a myriad of manufacturers on one machine. Maybe it is time to change the way we buy our equipment? Perhaps buying from a selection rather than just one supplier is costing us money?
We would like to hear from you. Please take our quiz this week here.
For safety this week, every time we open a machine to do maintenance we create the opportunity for a safety incident.
Be safe and we will talk next week.
Nip Impressions has been honored for Editorial Excellence by winning a 2016 Tabbie Award!
You can own your Nip Impressions Library by ordering "Raising EBITDA ... the lessons of Nip Impressions."
Other interesting stories: