Maintenance Engineering & Asset Management

Module M03
MAINTENANCE STRATEGY

SHORT/IN UNIT ASSESSMENT

Name: Hernn Quiroz

Company: Ternium Siderar

I.

Key Performance Indicators

I.

Key Performance Indicators..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1

A. THE MAYOR CHALLENGES FOR MAINTENANCE IN STEEL INDUSTRY .......................................................... 1

B. KPIS USED IN TERNIUM SIDERAR STEEL FACTORY ................................................................................... 2
1. Effectiveness Measures .................................................................................................................. 2
2. Efficiency Measures ....................................................................................................................... 2
3. Safety Measures ............................................................................................................................. 2
4. Consideration................................................................................................................................. 2
C. CONCLUSIONS ........................................................................................................................................... 3
D. APPENDIX 1: TERNIUM SIDERAR MAINTENANCE KPIS............................................................................ 4
1. Direct Maintenance Cost ............................................................................................................... 4
2. Diary Plant Downtime ................................................................................................................... 4
3. Pareto Downtime (6 month)........................................................................................................... 5
4. Efficacy-N Job Completed/Month ................................................................................................. 5
5. Workshop Backlog ......................................................................................................................... 6
6. Turnover of spare parts.................................................................................................................. 6
7. Frequency Index (FI), Gravity Index (GI)...................................................................................... 7
8. FI Benchmark................................................................................................................................. 7
E. APPENDIX 2 .............................................................................................................................................. 8
1. Figure 4.4 Efficiency & Effectiveness ......................................................................................... 8
2. Figure 1.5: Total Cost of Maintenance .......................................................................................... 8
F. REFERENCES ............................................................................................................................................. 9

A. The Mayor Challenges for Maintenance in Steel Industry

Nowadays, the COST is the key driver for Maintenance in the Steel
Industry.
To begin with the recent history of the Steel Industry, before the 90th
decade, the Steel was considered as a nation strategic asset for military
matters. After 1990, the privatisation process took place along the world.
For the actual century more than 90% of Steel factories are controlled by
private companies. This phenomenon produced an atomized steel market.
According to the Word Steel Association, the mayor producer has less than
10% of the market sharei. Because of the atomized market, the steel
Industry is a very competitive business in which there arent big players
that can control the price. In this context the most efficient companies will
buy the less efficient. It is a natural market process.
What is more, The global steel industry has not escaped the current
economic downturn and this will be reflected in the figures you see for the
last quarter of 2008ii. The industry has responded rapidly with production
cuts, to ensure supply matches demand. 2009 will be a difficult year in
terms of profitability. There will be restructuring in the industry and this
will be hard on those involvediii.

Production Evolution for 2008 Word Crude Steel Statistics (106 Tons)

Source: Word Steel Association

As maintenance is one department into the company, not a company of

maintenanceiv, the mayor challenge for maintenance in the steel industry
is to maintain functions of equipments for a required time with maximum
safety and minimal environmental impact for the life cycle cost at the less
cost as possible.

B. KPIs used in Ternium Siderar Steel Factory

In order to check that the challenges are being met by the maintenance
strategy, Ternium Siderar has the following KPIs (See appendix 1):

1. Effectiveness Measures
-

Direct Maintenance Cost - Cost vs Budget (long term control)

Diary Plant Downtime (short term control)

Six Month Pareto Downtime (long term control)

2. Efficiency Measures
-

N Job Completed / Month or day (long / short term control)

Workshop Backlog (short term control)

Turnover of spare parts (long term control)

3. Safety Measures
-

Frequency Index (FI), Gravity Index (GI) (long term control)

Frequency Index Benchmark (long term control)

4. Consideration
In Ternium Siderar we have a diary planning meeting between
maintenance and production in which we analyse the diary plant
downtime. Apart from this, in the workshop, the maintenance

department reviews the N Job completed/day and the backlog. The

rest of KPIs are being monthly analysed between maintenance and
production department.
Each KPIs has standard, targets and it is automatically obtain from
the systems. (SAP, QNX).
Everybody into Ternium Siderar could access to maintenance KPIs
(Free Public Access).
In this assignment, It has been presented the most representative
Ternium Siderar Maintenance KPIs. These are only the 25% of the
total SITE.

C. Conclusions
In my opinion Ternium Siderar has developed a very good KPIs in the
Maintenance Site in order to keep indicators on target.
If I compare the Ternium Siderar KPIs with the Efficiency &
Effectiveness diagram (see Appendix 2.1), we have developed very
well KPIs to measure Effectiveness and we have opportunity to
improve in Efficiency.
According with the Industrial Steel context, I consider that the next
step for Ternium Siderar is to begin to measure the Hidden Cost in
direct form, for example the Cost/Downtime. We have automatically
registered

every

downtime.

In

addition

to

this,

we

have

the

opportunity cost per unit process and the cost for the scrap that every
downtime produced. We have everything in our systems, but we only
display the visible part of the iceberg (see Appendix 2.2). Ternium
Siderar must show the part of the iceberg behind of the water line in
order to maintain the leadership in the steel industry.

D. Appendix 1: Ternium Siderar Maintenance KPIs

1. Direct Maintenance Cost

MAINTENANCE DIRECT COST

Year

Month
Real

BUDGET

Dif.

Real

BUDGET

Dif.

Services
Materials

Labour
Contracts
Others

2. Diary Plant Downtime

Maintenance Downtime

Total Month

DOWNTIME (Hours Frequency)

Cool Mill

Downtime Last Month

Frequency
Frequency Month IGO

Frequency Last Month

Total Month IGO
Frequency Month SAP

Downtime
Total Last Month

3. Pareto Downtime (6 month)

Hours

PARETO DOWNTIME (6 Months)

SAP Equipment Number

4. Efficacy-N Job Completed/Month

5. Workshop Backlog

Work Orders

Workshop Backlog

Months

6. Turnover of spare parts

7. Frequency Index (FI), Gravity Index (GI)

8. FI Benchmark

E. Appendix 2
1. Figure 4.4 Efficiency & Effectivenessv

2. Figure 1.5: Total Cost of Maintenancevi

F. References

Top Steel Producers 2008, Word Steel Association, link:

http://www.worldsteel.org/?action=storypages&id=330
ii

Crude Steel Statistics 2008, Word Steel Association link:

http://www.worldsteel.org/?action=stats&type=steel&period=latest&month=13&year=2
008
iii

Ian Cristmas (2009), Director Generals column, Word Steel Newsletters 32, Word

Steel Association. Link: http://www.worldsteel.org/?action=storypages&id=332

iv

Tom Lenahan (2009), Complexity of relationships between maintenance, operations,

and business function in a company, page 6, Residential Classes-MSc Maintenance

Engineering & Asset Management-Manchester University
v

Paul Wheelhouse (2009), Section 4.1, Figure 4.4, M01 Maintenance Strategy, MSc

Maintenance Engineering & Asset Management-Manchester University

vi

Paul Wheelhouse (2009), Section 1.1, Figure 1.5, M01 Maintenance Strategy, MSc

Maintenance Engineering & Asset Management-Manchester University