Final POm

Maintenance and
Reliability in
Ali Tariq
Hina Khan
Mohammad Walidad
Namesh Nazar
Nida Farooq
Saad Farooq
Maintenance and Reliability in Siemens
TABLE OF CONTENTS
ACKNOWLEGDEMENT...............................................................................................................4
(Shamzuddin Ahmed, 2004)..................................................................................................28

Ensuring reliability is a major challenge for companies as it is difficult to identify the reason of
failure and take measures to correct it. There are two tactics organized around reliability..........32
EXECUTIVE SUMMARY
One of the biggest challenges faced by production facilities is
maintaining the production process and ensuring reliability of processes and
products. The challenge is even greater in developing countries where
effective maintenance is not a part of work culture.
We intend to explain how Siemens is coping up with this challenge.
Some of the techniques used by Siemens are
• It tries ensure reliability at each and every stage of production and
ensures that losses are minimized, thus achieving maximum efficiency.
• The company uses a set of reliability tool known as Siemens
Reliability Solutions.
• Specifically, the company focuses on improving equipment
availability and reliability by using the following techniques;
o Reduces equipment failure rates,
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o Improves plant uptime, and
o Increase production output.
For effective maintenance, Siemens use a set of tools developed by Siemens
Industrial Solutions
• It provides the right approach for effective maintenance and high
profitability to be used by all production facilities.
Using this procedure, the company is required to analyze seven
categories which cover all the aspects of relevant maintenance. These
seven categories are:
• Contractor Management
• Maintenance Management
• Spare Parts Management
• Workshops and Repairs
• Planning and Scheduling
• Maintenance Process Optimization
• Organizational Structure
By using this structured approach, which provides a comprehensive
analysis and enables the evaluation of current maintenance situations,
Siemens has identified various cost cutting opportunities which will
ultimately increase the productivity and profitability of the company.
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ACKNOWLEGDEMENT
We are thankful to our course instructor Ms. Bushra Akbar for providing
us an opportunity to learn and understand various concepts regarding
production and operations through this report.
We are also grateful to various people who helped us in the completion
of this report especially Mr. Mansur Iqbal; Director Corporate Quality and
Process Excellence management Department, Siemens. We are also grateful
to Mr. Faisal Farooq who gave us a great insight of the processes and
procedures used at Siemens Pakistan.
Apart from the above mentioned people, we are really appreciative for
the cooperation of the group members who made the successful completion
of this report possible.
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OBJECTIVES OF THE RESEARCH
This report has been prepared as part of the course, Production
Operations and Management. For this purpose, we chose Siemens, Pakistan.
The focus of our report is maintenance and reliability and how the company
ensures reliability in their production processes.
Since maintenance during production and operations is one of the
main concerns of manufacturing units, the objectives of our research were as
follows
 To find out the methods used by Siemens to ensure maintenance and
reliability in their processes.
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 To discover how Siemens deals with some of the issues related with
maintenance and reliability.
 To find out how one of the best companies in Pakistan, put effort to
maintain their standards and where it stands in the Pakistani Industry
and in the International Arena.
RESEARCH METHODLOGY
For the completion of our above mentioned objectives, we have
conducted 3 in-depth interviews with the employees of Siemens Pakistan at
different levels of the management. Apart from that we have used secondary
sources which are published by Siemens. These sources are mentioned in
the bibliography.
LITERATURE REVIEW
According to Santiago Sotuyo Blanco, IME, CMRP, Ellmann, Sueiro &
Associates, maintenance in any business today means: ‘Ensuring company’s
competitiveness by means of assuring planned availability and reliability of
the desired function, complying with all requirements of company’s quality
system, and with all safety and environmental regulations, at the least
overall cost or at maximum overall benefits.
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In general, maintenance means to ensure the proper functioning of
equipment(s) in an operation or manufacturing chain. Also, it can be applied
to the finished product itself, how well it is maintained will lead to an
increase in useful life of the product.
MAINTENANCE, QUALITY AND RELIABILITY
The quality of a particular firm’s supply chain or operations
management is largely dependent on the reliability and sound running of its
machines, work staff and assembly lines. In order to ensure an excellent
reliability factor, maintenance plays a pivotal role. So how does the firm
ensures maintenance of its operations?
Majority of the firms today, are moving towards the creation of
maintenance department that would have the responsibilities to check and
improvise the functioning of the machines and equipments. Employee
working in this department a.k.a. Maintenance Man has a tough task to
ensure the up keeping and proper functioning of the production process.
Hence, this has given rise to the recruitment of professional and qualified
personnel such as engineers and IT personnel who are specialized in their
respective fields.
One drawback of maintenance is that it has greatly increased the
operating expenses of a firm. Thousand of dollars are being spent by large
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companies on maintenance expense. For instance General Motors, General
Electric and other well reputed MNCs. If we see it from a positive angle, it is
worth spending this much amount of money owing to the set up or the
infrastructure cost of the business that runs into billion of dollars. Likewise,
production in thousands of units should be made sure that nothing goes
wrong with the manufacturing process. Henceforth, the significance of
maintenance is of Strategic Importance because of the increase in revenue it
brings that outstrips or outweighs the maintenance costs.
IMPORTANCE
As stated in the previous section, the overall contribution of
maintenance to the business is clearly reflected in the net income.
Maintenance has become of great importance, such that management takes
it into account whenever involved in any strategic planning activity. It has
become a pillar of firm’s business practices owing to the quality of the
products it produces via the reliability factor.
On one hand it increases the company’s operating costs; on the other
hand it reduces the losses (products that are not producing up to the mark
are scrapped) and running costs owing to the increase in efficiency of the
machines. Well maintained machines not only increase the productivity but
also increase useful life and its re-sale value.
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Hence taking all the points into consideration, maintenance is
somewhat having an impact on the firm’s decision into investing in heavy
machineries and likewise the effect on the statement of financial position.
Manufacturing and production plants operate physical assets that
deteriorate with usage and time, thus, maintenance actions are required to
restore the assets back to their original predetermined operational
conditions.
TYPES OF MAINTENANCE
Currently there are two types of maintenance employed by
organizations:
Corrective Maintenance
This type of maintenance can be more generally related to repair
works that is carried out when there is a breakdown or some kind of problem
with the equipment. This could be quite hefty in a sense that a machine
breakdown in the middle of the production process will incur heavy losses;
not only the repair costs but also the costs related to incomplete production
of goods.
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Preventive Maintenance
Corrective action measure is of a more traditional and orthodox
manner pursued by businesses. However the paradigm is shifting towards
the use if preventive action plans whereby necessary steps are already taken
in order to ensure smooth running of machines. These steps include the
timely and regular inspection of specialized Maintenance Men to the
production sites. The necessary costs are also taken into account in order to
avoid any breakdown in the middle of the production process.
Since unexpected breakdown outages normally incur a high penalty
cost, maintenance is required to reduce the overall probability of such
outages. This type of maintenance is called preventive maintenance (PM).
Generally, PM includes actions such as inspection, cleaning, lubrication,
alignment and adjustment and/or replacement. It is undesirable to have
unexpected breakdown outages but, on the other hand, maintenance incurs
a cost. It is left to the asset managers to define a maintenance policy such
that the expected total cost of system failure and maintenance cost will be
minimized. There are numerous models and methodologies developed to
determine effective maintenance schedules.
Chaudhuri and Sahu were some of the pioneers who introduced the
concept of imperfect maintenance. The concept of imperfect maintenance
considers that maintenance will, effectively, restore the system being
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maintained to a condition somewhere between “as good as new” to the age
of the system before maintenance. They calculated the total cost of both
maintenance and replacement, and found that the optimal policy was that,
when the cumulative maintenance cost exceeds the replacement cost of the
system, replacement is carried out. Usher et al.′s work was closely related to
the work by Jayabalan and Chaudhuri, which presented a straightforward
model for determining a cost optimal maintenance and replacement
schedule for a new system that deteriorates. However, they only considered
a single-component system.
Wang conducted a survey on various maintenance policies of
deteriorating systems and stated that maintenance policies had become
more and more general and complicated, which made implementation in
practice very difficult. Wang’s research pointed out that, for a
multicomponent system, minimizing cost did not necessarily imply
maximizing system reliability and achieving the best operating performance;
an optimal maintenance policy needs to consider both cost and reliability
simultaneously.
Previous research suggests that “PM is a more comprehensive action
than repair, perhaps corresponding to the replacement of several key
components in the machine.” This assumption of PM being perfect
maintenance mixed up maintenance and replacement. The assumption of a
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single machine mixed up components and system, leading to randomizing
failure characteristics.
The model utilizes the concept of imperfect maintenance and the concept of
inflation. For each maintenance planning period, the model plans which of
the three possible actions, maintaining the component, replacing the
component or doing nothing, for each component should be taken, such that
the net prevention value of the asset life cycle is minimized.
Several critical aspects in decision making not addressed in previous
researches are considered. They include:
1. Time step increment subjected to utilization rate of the system.
2. Considered downtime for maintenance and lead time for spare parts
3. Considered cost and reliability simultaneously
4. Maximizing profit instead of minimizing cost
Much future work is required, especially in the case of estimating the
maintenance improvement factor (α). Furthermore, future work should
incorporate decisions such as purchasing a new system at certain stages,
which may achieve a lower life-cycle cost. However, such decisions are only
made at the senior management level. In order to enable them to make an
informed decision, one must take into consideration managerial, strategic,
tactical and operational problems.
COST OF QUALITY (COQ) AND MAINTENANCE
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The primary value of a COQ approach is that it enables organizations
to identify opportunities for improvement and to measure that improvement
over time. The COQ is a financial measurement that expresses vital
information in the language of management. Financial consequences get
management’s attention to quality problems, and they demonstrate where
managers should provide resources to correct quality problems and make
improvements. A COQ analysis enables top management to see the bottom-
line impact of quality-related costs in the organisation. A COQ analysis that
includes maintenance-related costs demonstrates how those costs impact on
an organisation’s profitability. (Larry Weinsteina, 2009)
Total quality management and cost of quality
Quality costs represent the difference between the actual cost of a
product or service and what the reduced cost would be if there were no
possibilities of substandard service, product failure or defects in their
manufacture (Campanella, 1999). Organisations that use the COQ approach
strive to increase profitability by reducing the operating costs incurred from
poor-quality processes and products (Feigenbaum, 1956; Juran, 1951).
Masser (1957) divides quality costs into the categories of prevention,
appraisal and failure. (assets, 2007)
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• Prevention costs are those costs incurred to keep nonconforming
products and services from occurring, and thereafter reaching, the
customer.
• Appraisal costs are those costs associated with efforts to ensure
compliance with requirements, generally by measuring and analysing
data to detect non-conformance.
• Failure costs occur when products or services do not conform to
requirements or customer/user needs. Failure costs can be either
internal or external.
o Internal failure costs occur before the product is shipped or
delivered, or before a service is provided, to the customer.
o External failure costs occur after the product is shipped or
delivered, or while or after a service is provided, to the
customer.
Maintenance function and costs
Maintenance is defined as ‘the activities intended to preserve or
promptly restore the safety, performance, reliability, and availability of plant
structures, systems and components to ensure superior performance of their
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intended function when required’ (Weinstein, 1996, p. 1061). Maintenance
costs include preventive, inspection-based and unscheduled or emergency
maintenance activities.
• Preventive maintenance is a proactive approach that requires an
organisation to schedule regular maintenance work in order to reduce
repair and lower maintenance costs.
• Inspection-based maintenance is a proactive approach that
requires an organisation to observe equipment to determine whether
it is operating properly.
• Emergency maintenance activities are performed when
production equipment exhibits signs of failure, or after failure has
occurred
ATTRIBUTES OF MAINTENANCE
Apart from having a specialization degree, maintenance personnel
should have the possession of the following attributes in order to avoid any
hassle in work place.
• Attitude - Maintenance Men always have to be ready to do the job and
solve the problems in the best possible manner.
• Skills - They should have the knowledge and the training necessary to
do this job.
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• Teamwork - Maintenance personnel should the required skills to work
with peers, customers, and suppliers.
• Communication - They should listen to people carefully and responding
them promptly.
• Information - They must be updated on a timely basis on what is going

around the organization. (Nicholas)
EFFECTIVE MAINTENANCE
Here are some of the concepts which lay the foundation for effective
maintenance and reliability.
Exercise and practice leadership as well as management
Starting at the nominal “top” of any organization, its “management”
group or individual, I find that many problems could be solved easily and
most effectively if attention is paid to the functions that those in top
positions of organizations should be performing for example directing goals
and providing leadership. One of the key ways of exercising leadership is to
learn to listen. Listen to those in positions above (who must serve all below),
co-equal persons along side you and employees in positions below yours
(those you serve).
Look first at “programmatic” rather than “technical” solutions to
reliability problems
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Among the many studies performed under USNRC sponsorship was one
concerning “programmatic root cause analysis.” A model was developed
addressing the essential precepts of the causes of human errors in
preventive and repair (often called “corrective”) maintenance.
The model provided a set of four (4) “diagnostic query diagrams” titled as
follows:
• The Training Query
• The Procedures/Documentation Query
• The Quality Control (QC) Query
• The Management Query
Look for indicators of small, seemingly insignificant but repetitious
reliability problems and act on the findings
Another feature of the report on programmatic root causes of
equipment failure was the description of an easily implemented analysis
method for determining where to apply limited resources to solve many
problems of equipment maintenance and reliability. The method was given
the title “Cluster Analysis.”
Cluster Analysis consists of the following steps:
• Sort the Data
• Identify clusters
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• Determine which clusters are relevant
• Group the clusters into categories
• Determine the consequences of relevant clusters
• Determine technicians involved, when necessary
Improving Manufacturing Capacity, Throughput, and Profitability
throough effective Maintenance
The manufacturing industry faces many problems that face many
chronic problems like rejects, waste, production delays. The effective
capacity is lost due to these problems that result in requiring more
investment to cover the costs.
The challenge for the manufacturing plant is to recognize that
maintained is a strategic tools like six sigma, Just in time inventory system,
etc. to improve the quality of production. Maintenance can play a major role
in reducing quality defects, increasing production capacity and throughput,
and improving overall plant productivity and profitability, not as an “also
ran”, but as a primary contributor.
But for maintenance to make that contribution, it must be recognized
as an integral part of the plant production strategy -- an integral component
of the overall plan by which the plant provides its product to the customer at
the quality he wants at the price he wants to pay.
A recent study shows that maintenance can help reduce costs and time in
the following components:
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1. Equipment downtime reduction
20.1%
2. Reduced materials costs
19.4%
3. Maintenance productivity improvement
28.2%
4. Inventory reduction 17.8%
Other benefits from reduced spare part obsolescence, reduced
maintenance overtime, and improved quality, Return On Net Assets and
profitability were increased accordingly.
Maintenance Excellence: An Evolution Through Stable Domains of
Performance
DuPont developed systems dynamics model based upon a study that showd
that manufacturing performance was strongly correlated to maintenance
behavior, from “Reactive” to “World Class”.The system is based on a four
step process:
• Reactive maintenance
• Planned maintenance
• Improved precision
• World class manufacturing
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THREE STEPS TO WORLD CLASS MAINTENANCE
The term world class maintenance is perhaps not as definitive classic
terminology World. (Blann)
Class Manufacturing. After all, maintenance is usually recognized as a
cost, not a contributor; a necessary evil, not an ally in meeting production
objectives.
The three step approach for the maintenance improvement is:
Getting Your Act Together
Getting the Internal Systems in Place as the Foundation for
Improvement. Establish Good Management Practices and Information
Systems
Getting Beyond the Boundaries
Creating the Vision, Sharing the Mission, Creating the Partnership
Between Maintenance and Production, Making Maintenance an Integral Part
of the Overall Plant Strategy.
Fixing the Process, Not Just the Problems
Establishing the “Zero Breakdown Mentality” Through TPM and RCM;
Eliminating the Process “Disconnects” Through Process Improvement PM
Optimization.
Maintenance improvement stars with good management practices and
processes. It requires the implementations of appropriate planning methods,
organizational structures, and measurement and control techniques so as to
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optimally manage and control the maintenance process in terms of its
direction, its quality, its quantity, its standards of performance, and its
economy and efficiency. (Blanco, 2010)
At the most fundamental level, there is often a lack of a clear and
consistent understanding of the strategic role that maintenance plays in
overall plant and business unit performance (through reliability and
availability, quality, and lower unit costs).
The ability of a company to achieve 'world class' status depends on
how well it can get the various functions to work together to accomplish its
business objectives. Maintenance must be recognized as an integral part of
the plant production strategy by which the product is delivered to the
customer at the quality he wants, at the price he's willing to pay. It’s
relatively easy to encourage maintenance improvement within maintenance
organizational lines. In determining the nature and scope of work, the
Maintenance Department shall be responsible for assisting Production to
reach decisions by applying technically qualified advice and knowledge, but
in the end, an asset’s performance, costs, and overall utilization is a
Production responsibility
Maintenance is as much a strategic tool as JIT, CIM, Six Sigma, Lean
Manufacturing, or any of the other "world class" methods and techniques
available to management for improving a company's competitive edge,
playing a major role in reducing quality defects, increasing production
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capacity and throughput, and improving overall plant productivity and
profitability.
MAINTENANCE POLICY
An organisation’s maintenance policy prescribes how the
organisation allocates resources forscheduled and unscheduled maintenance
activities. Organisations taking a total productive maintenance (TPM)
approach consider maintenance planning to be part of the overall business
strategy. With TPM, maintenance activities are part of the production process
rather than an interruption of that process. In a TPM environment, equipment
failure is synonymous with product failure. The extent to which the
maintenance policy affects the production environment varies by
organization.
Parallels of maintenance to quality
The management concepts of just-in-time and lean manufacturing
focuses on the elimination of waste and non-value-added activities in all
processes. Maintenance is essential to the successful implementation of
these concepts. TPM helps to ensure that equipment is operational and
available when needed (Evans & Lindsay, 2005).
TQC and TQM share similar objectives:
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• TQC strives for zero defects; TQM strives for zero breakdowns.
• TQC assesses the non-conformance of products based on the
prevention of defects, reworks, claims and product liability.TPM
assesses non-conformance based on abrupt breakdowns,
malfunctions, repairs and accidents.
The pressures of production, coupled with the need to be efficient
and make on-time deliveries, often render it difficult for an organisation to
take a proactive approach to maintenance activities. An organisation can
take a proactive approach to its manufacturing- and service-related
activities, or it can simply react to problems. Similarly the organisation can
take a proactive or reactive approach to maintenance activities. In either
case, there are trade-offs.
Total Productive Maintenance
Total Productive Maintenance is a powerful tool that literally
changes the culture on the shop floor. It fully engages the entire organization
(especially maintenance and production) in eliminating every possible thing
that gets in the way of overall equipment effectiveness. TPM is a process to
improve machine reliability and efficiency by involving all employees in the
care, purchase and improvement of equipment.
Reliability-Centered Maintenance
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Reliability-Centered Maintenance (RCM) is a systematic, highly
structured, disciplined approach to maximize safety and function of
equipment assets. RCM uses a rigorous framework for identifying all the
potential ways an asset can fail to perform its intended function and/or the
consequences of that failure.
All in all, the role of maintenance personnel is crucial in order to ensure
the timely and punctual process of operations without any hassles. A well
organized maintenance plan and set up has a definite positive contribution
towards growth of organization. To have an effective maintenance strategy,
companies can rely on systems like COQ.
A COQ/COM system, once implemented, provides us with an invaluable
foundation for our efforts to improve the effectiveness of the maintenance
function. The system generates information we can utilise to establish
credible goals for reducing our quality costs. We can evaluate and improve
our organisation’s maintenance policy using sound data and analysis.
Top management support is critical to the successful implementation of a
maintenance programme. By involvement of management in the practice of
maintenance management, the culture of the organisation is sensitised to
the importance of supporting an effective maintenance programme (Madu,
2000). The COQ/COM approach provides us with a common language for
communication between top management and the maintenance function to
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draw attention to where management should provide resources to correct
quality problems and make improvements. Any firm wanting to improve its
competitiveness and ensure its long-term survival must look inward and,
through self-assessment, identify areas of incompetence, malfunction, loss,
and misallocation of resources (Miyake & Enkawa, 1999).
INTRODUCTION
Maintenance and ensuring reliability is the core functions in any
production company. In production facilities, the importance of maintenance
and reliability is increased multifold and that is why we chose an engineering
firm to see how they ensure reliability in their high-tech product like
transformers, motors, switchgears etc. We visited Siemens Engineering, a
company which focuses on offering innovative and tailored solution in a
number of sectors, to see what factors affect their maintenance decisions
when it comes to maintaining their equipments so as to achieve maximum
output and how they ensure reliability in their production and services.
Siemens is a global powerhouse in electrical and electronic engineering
which has 405,000 working and manufactured products, designs and
installed complex systems. The company is an integrated technology
company with a clear focus on the three Sectors Industry, Energy and
Healthcare. Siemens enjoys a leading position in Pakistan in the areas of
Power Generation, Power Transmission and Distribution, Automation and
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Control, Industrial and Infrastructure Solutions, Medical Solutions,
Transportation and Information Technology Solutions. The diverse portfolio of
the company makes it the best choice among various engineering firms
present in Pakistan. (www)
OVERVIEW OF MAINTENANCE AND RELIABILITY
The word maintenance refers to all such activities related with and
performed to conserve the original or actual condition of any thing for as
long as possible. Specifically related with engineering, it means actions
necessary for restoring an equipment or system in an operable condition to
achieve maximum output throughout the life of the equipment. (reliability ,
2010). On the other hand, reliability refers to the probability that an
equipment or system will function properly for a specified time under certain
conditions.
STRATEGIC IMPORTANCE OF MAINTENANCE AND
RELIABILITY
Failure has far reaching effects on a firms operations, reputation,
profitability, customers, product, employees and ultimately on profits.
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However these failures can be minimized if appropriate maintenance and
reliability strategies are used by the company.
The objective of maintenance and reliability is to maintain the
capability of the system while controlling cost so forms work onto minimize
costs by improving reliability through proper maintenance. Maintenance is
not used in production facilities as an important part of the production
process because it is considered more as an expense. For maintenance to
make its appropriate contribution to profits, productivity and quality, it must
be considered as an integral part of the production strategy.
MAINTENANCE & RELIABILITY STRATEGY
A good maintenance and reliability strategy requires the involvement
of employees and usage of appropriate procedures. A graphical
representation of this statement is given below. It shows how maintenance
and reliability should be done and this is exactly how it is practiced at
Siemens.
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(Shamzuddin Ahmed, 2004)
Management Commitment
As it is evident, companies first need to specify their commitment
towards giving the best quality products to their customers. The
management of Siemens is highly committed towards giving the best quality
products to its customers. Since it is a huge corporation with a diverse
portfolio, lag in quality in one product, can have devastating effects on the
company. Once the management specifies the goals, the employees should
also know about it i.e. employee participation is the key here. Only if
employees know what are the objectives of top management are, they will
give their best to meet those objectives.
Employee Participation
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Here employee participation means high morale and motivation, more
empowerment, learning by working in teams and healthy competition. At
Siemens, employee involvement is ensured through their 3I program which
is impulse, ideas and initiative. Employees are encouraged to give ideas
regarding improving the existing products, and are also encouraged to give
innovative ideas regarding the development of new products or processes.
These ideas are then evaluated by various teams and their feasibility is
presented to top management. Once the idea is approved, the individual
who gave the idea is asked to take initiative and lead. Successful ideas are
rewarded monetarily and through implementing them in the systems of
Siemens.
Supplier Commitment
Suppliers play a very important role in ensuring reliability and
minimizing maintenance costs. If suppliers are efficient and they know the
quality standards of the company, they work accordingly. Also, the company
must ensure that their suppliers are working in accordance to their
requirements. At Siemens, most raw materials are imported and it is tested
for quality in the company’s material testing labs. Some of the material
which is purchased form the local market is usually not up to the
international standards and it is difficult for the company to ensure reliability
of such material. To overcome this issue, Siemens issue tenders in the local
market and the supplier which offers the best quality (as per the standards
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of Siemens) is selected. Here it is important to mention that Siemens keep a
record of its supplier’s performance and encourage them to do so1. These
charts measure the variance between qualities of the material provided by
individual suppliers and the company tries to ensure that this variance is low
so that maintenance costs are minimized. The suppliers are also encouraged
to maintain such charts so that they are aware of the quality of their output.
This activity is not only limited to suppliers but throughout the supply chain.
This is to ensure that best quality product is delivered to the customers and
international quality standards are met at all stages. Within the company,
operation charts are used to ensure efficiency which ultimately reduces
maintenance and reliability costs.
Research Efforts
With ever changing technology, the need for research and
development is greater than ever. Companies which plan to excel need to
invest greatly in research and development. This is to ensure maximum
efficiency at each stage and thus minimizing maintenance costs. At Siemens,
they have an R&D department which tests and retests very new product or
process which can increase efficiency and ensure best quality product for the
customers.
Maintenance and Reliability Procedures
Management commitment, employee’s involvement, supplier
involvement, research and development are all linked with maintenance and
1
Attached in the appendix
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reliability procedures. This stage involves a series of steps which are taken to
ensure that best processes are used. It involves regular cleaning and
maintenance of production equipments. Creating a work environment where
employees are encouraged to make mistakes and learn from them so that it
is never repeated. It also involves computerized data handling and
documentation and application of various best practices like Kaizen’s 5S
principles. 5S refers to five disciples introduced by Japanese or commonly
referred to as sort, set in place, shine, standardize and sustain
approach.
(5S Lean Orderliness and Visuality, 2010)
It provides a set of strategies, techniques and systems which provide a
standard approach and is equally applicable in factory, retail outlets and
offices. This program supports and assists sustainable strategy which is
effectively delivers quick wins, higher productivity, improving quality and
efficiency. This approach is a set of best practices which are used for the
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better organization of the firm’s processes and to motivate employees also.
At Siemens, this approach is used for smooth functioning of its operations.
Here shine refers to improving upon the processes and then standardizing
them.
Outcomes
As per the objective of maintenance and reliability, a good approach

will reduce the number of breakdowns during production, minimize time and
human resource loss, improve capacity, empowers employees, ensure
reliability of the output and the processes. In all a good maintenance and
reliability strategy can result in continuous improvement which is the aim of
every corporation. By using this approach, Siemens has gain an edge over its
competitors.
CHALLENGES FACED BY SIEMENS
Being the market leader, Siemens need to have an effective
maintenance strategy and need to ensure reliability in all aspect of its
production, processes and people. However this has posed great challenge
to the company. This section discusses how maintenance and reliability is
posing a challenge to the company and how Siemens is successfully coping
up with these challenges.
ENSURING RELIABILTY – A CHALLENGE
Ensuring reliability is a major challenge for companies as it is difficult to
identify the reason of failure and take measures to correct it. There are
two tactics organized around reliability
• Improving Individual Component
• Providing Redundancy
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Improving individual Components
Systems are composed of a series of individual, interrelated
components, each performing a specific task. Since they are highly
interdependent, breakdown of one component leads to the breakdown of the
entire system. Thus it is extremely important to ensure reliability by
improving individual components. Companies focus on reliability by ensuring
that each component is highly reliable and the collective reliability of the
product or process is very high. Component reliability is often a design or
specification issue for which engineering personnel may be responsible. At
Siemens, engineering design department is responsible for the design of
components manufactured by the company. For components which are
imported or are purchased from local vendors are tested in company’s
material testing lab. Simultaneously, there is in-process inspection i.e.
inspection at all stages of production from material testing to final dispatch
testing. There are rigorous testing procedures which are used by the
corporation and the testing standards vary with customers requirements.
There are some standard tests which are conducted for every product before
it is dispatched. Customers, who request for additional testing, are also
entertained at an additional charge.
Providing Redundancy
To increase reliability of systems, redundancy is added. In simple terms, it refers to the
use of components in parallel to raise reliabilities. Redundancy is provided to ensure that if one
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component fails, the system has another alternative. This is done to minimize the loss when
failure occurs in case there is breakdown of any component, this technique ensures that the
whole system does not collapse and loss is minimized.
MAINTENAINING PRODUCTION, PROCESSES & PEOPLE – A
BIGGER CHALLENGE
Theoretically, there are two types of maintenance: preventive
maintenance and breakdown maintenance. Preventive maintenance involves
performing routine inspections and servicing and keeping the production
facility in good condition so as to avoid breakdowns. These activities are
designed to build a system that works in such a way that failure/breakdown
rate is minimized. It is not only related with the proper functioning of the
machine but also involves the designing technical and human systems that
will ensure that the production process is not halted by any failure. On the
other hand, breakdown maintenance refers to the remedial maintenance
that occurs when equipment fails and must be repaired on an emergency or
priority basis. Both these types of maintenance are inversely proportional i.e.
if preventive maintenance is effectively done, that reduces the need for
breakdown maintenance. (Jay Heizer) The companies use two tactics for
effective maintenance;
• Implementing or Improving Preventive Maintenance
• Increasing Repair Capabilities or Speed.
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Preventive (Proactive) Management
The objective of preventive maintenance is already discussed earlier,
however, it is important to mention that one of the objectives is to minimize
infant mortality rate. It refers to the failure arte early in the life of a
product or process. Although it is one of way on minimizing cost but it a
challenge because a lot of costs are involved in this process. Maintaining a
tradeoff between maintenance costs and the benefits resulting from that is a
challenge for corporations.
Long Term Benefits of Preventive Maintenance
Preventive Management results in saving as it increases the service life
of the equipments. There are numerous other benefits namely improved
system reliability, decreased replacement cost, decreased system downtime
and better spares inventory management. (Preventive Maintenance, 2007)
Preventive Maintenance Costs
The process is also incurring costs for the company as it requires
trained workforce and a lot of time. Major cost is in terms of the time lost in
effectively maintaining the equipments. Production facilities usually decide
the optimum level of preventive maintenance after evaluating the cost in
terms of time as shown in the graph below.
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(Preventive Maintenance, 2007)
Increasing Repair Capabilities
Although companies rely on preventive maintenance, they also focus
on increasing repair capabilities. By improving or increasing the repair
capacity, production facilities can have faster and more effective operations.
An effective repair facility should have the following features;
• Well-trained personnel,
• Adequate Resources,
• Ability to establish a repair plan and priorities,
• Ability and authority to do material planning, and
• Ability to identify the cause of breakdown.
It is not possible for the company to have all the repair facility in
house, therefore they also rely on vendors. Selecting the right vendor, who
meets the company’s standards, is a big challenge for corporations.
Reliance on total Productive Maintenance
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Total Productive Maintenance (TPM) combines total quality
management with the strategic view of maintenance from process and
equipment design to preventive maintenance. The goal is to increase
production and at the same time increase employee satisfaction with the
production process. The objectives of TPM are;
• Avoid wastage in a quickly changing economic environment.
• Producing goods without reducing product quality.
• Reduce cost.
• Produce a low batch quantity at the earliest possible time.
• Goods send to the customers must be non defective.
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The diagram gives a thorough explanation of the Total Productive
Maintenance Approach.
SIEMENS – OVERCOMING CHALLENGE
ENSURING RELIABILTY
Siemens try to ensure reliability at each and every stage of production
and ensures that loss in minimized and maximum efficiency is achieved. The
company uses a set of reliability tool known as Siemens Reliability Solutions.
It uses various monitoring and analysis techniques to detect the source of
failure and correcting these faults. The company focuses not just on
correction but also takes corrective and preventive actions i.e. in case a fault
arises; the company not only tries to rectify it but also tries to ensure that
this fault does not occur in any of the products or processes. Specifically, the
company focuses on improving equipment availability and reliability by using
the following techniques;
• Reduces equipment failure rates,
• Improves plant uptime, and
• Increase production output.
Reduce equipment failure rates
The company uses the most advanced monitoring techniques to detect
failures especially in critical plant components as the company intends to
prevent and minimize the losses due to equipment failure. Siemens has
recently developed a failure detection monitor and it intends to sell it in the
Page 38
industry to improve the overall efficiency of the production industry. The
monitoring toolset includes the following:
• Vibration analysis
• Infrared thermograph
• Ultrasonic measurement
• Oil analysis (tetrology)
• Electrical testing including motor circuit analysis, insulation
measurement and trending, power quality monitoring, partial
discharge measurement and others
• Equipment performance monitoring
• Visual inspections including technical endoscopy
Implement a proactive strategy
This program enables Siemens to minimize or avoid equipment failures
and unplanned downtime. It ranges from the application of appropriate
condition monitoring technologies and failure analysis through to
implementing specific measures to actually eliminate the cause of failure
(that is, technical modifications) (Asset performance Management Solutions ,
2010). Following are a part of implementing a proactive strategy:
• Homogeneous data processing
• Simple and transparent ordering processes
• Reduced administrative expenses by dealing with one provider only
Page 39
Overall Benefit
By using Siemens Reliability Solutions, the company enjoys a reduction
in cost and it also acts as a promotional package as the competitors of
Siemens have yet failed to develop any such solution. This also adds to the
company’s goodwill as the company claims “Our specialists can
implement these for you as you are our valuable customers”.
EFFECTIVE MAINTENANCE
Since Siemens is a capital intensive productive facility, it is extremely
important to ensure plant availability and continuity of the production
process. The production equipment must be kept in good working condition
and therefore effective maintenance is required, however, maintenance
costs are a significant factor which needs to be considered. Siemens
Maintenance Services provides solutions return improved performance and
increased availability from assets. They use both proactive and corrective
maintenance services throughout the entire life cycle of their equipment.
The company uses a combination of maintenance measures to ensure the
availability of and increased repair capacity of their equipment. They try to
optimize the plant’s maintenance management and maximize their
profitability.
Page 40
A procedure developed by the Industrial Services from Siemens
provides the right approach for effective maintenance and high profitability
to be used by all production facilities. This procedure was developed by the
corporate headquarter in Germany and it is mandatory for Siemens all
around the world to use this procedure for effective maintenance. Here
process and cost transparency are key requirements for evaluating the
efficiency of the maintenance process as it is used in identifying the potential
for improvement in the processes.
Using this procedure, the company is required to analyze seven
categories which cover all the aspects of relevant maintenance. These seven
categories are;
• Contractor Management
• Maintenance Management
• Spare Parts Management
• Workshops and Repairs
• Planning and Scheduling
• Maintenance Process Optimization
• Organizational Structure
This is a structured approach which provides a comprehensive analysis
and enables the evaluation of current maintenance situations. It also helps in
Page 41
establishing a benchmark which is used to compare the company with its
competitors.
The analysis which takes place in these seven sub processes is
evaluated and a rating is assigned to each one of them. Then there is a
target/ optimal level of maintenance which the management wants to
achieve. The goal is to minimize the divergence between the current rating
of these processes and target rating of processes. The diagram below shows
the current rating and the target which the company wants to achieve in the
long run.
(Maintenance Business Review)
Page 42
The red are shows the current rating of the processes and the green
area is area is what the management wants to achieve. This is a spider
diagram which highlights the following success factors.
• Management commitment to improving processes, effective
maintenance strategies and improvement to costs and quality.
• Development and Implementation of strategies and tools fro efficient
material and spare parts supply.
• Flexibility and efficiency of the organization at the same time focusing
on timely processing of work orders.
• Inclusion and utilization of preferred suppliers.
• Planning and scheduling of work orders providing efficient control and
utilization of resources.
• Derivation of maintenance using process analysis, and life cycle
management.
• Evaluation of make or buy decision by thorough evaluation of
workshop processes.
Though it might look that the company is lagging behind to a great
extent, however, it is fact that Siemens has a better and more effective
maintenance procedure than any other company in the industry and
secondly, the management always sets very high targets so that workforce is
motivated enough to achieve excellence in all processes.
Page 43
Using this procedure, Siemens intend to achieve not only success but
excellence in all its products and processes. The diagram below shows the
management’s objective regarding effective maintenance strategy.
Starting from the minimum performance level – innocence, the company
wishes to achieve the highest level of performance – excellence in all its
processes.
Benefits of using Maintenance Services
Using this procedure, the company is enjoying the following benefits;
• Industry wide benching marking,
• Improved process transparency which provides better understanding of
maintenance systems and procedures,
Page 44
• Identification of improvement and cost reduction potential,
• Foundation for the development and optimization of a maintenance
strategy based on a specific business processes and goals of the
company.
• Development and implementation of efficiency concepts.
Using this procedure, Siemens identified saving potentials in various
maintenance categories. The chart below is an evidence of the success of
this procedure. As shown in the chart, using this procedure will increase the
saving potential in spare parts, organizational structure, sub contractor
management, workshops and repair and major shutdowns which will
ultimately contribute to the profitability of the company.
Page 45
RECOMMENDATIONS
After reviewing the policies and processes used at Siemens, we have come
up with some recommendations which will help the company and the
industry as a whole in further cutting costs and maximizing efficiency. These
recommendations are as follows:
• To ensure reliability, the company must take a proactive approach i.e.
taking appropriate measure before the breakdown of any machine or
process.
• The company can take up proactive approach by relying on one,
reliable supplier for important machinery and processes. The supplier
will then become a prt of the Siemens family and will provide right
solution at the right time.
• Also, the company must reduce administrative costs by relying on
simple and transparent ordering processes.
• As we have seen in the spider diagram earlier, there is a huge gap
between current performance and target performance. Though
Siemens is the market leader and uses the most efficient processes to
ensure reliability and effective maintenance, this gap highlights that
there is still a huge untapped potential which the company can utilize
to maintain its edge as a market leader.
Page 46
• There are several ways in which this gap can be minimized and they
are as follows;
o Increased management commitment to improve the processes
and maintenance strategies.
o Thorough evaluation of processes used in workshops and repair
shops to ensure that the repaired machine gives its optimal
performance.
o The company should focus more on employee participation and
management commitment. Though Siemens already have
various programs like 3I to increase employee participation,
some more concrete measures must be taken.
CONCLUSION
Siemens, the pioneer in energy efficiency, industrial productivity,
personalized healthcare and intelligent infrastructure solutions, needs to
have an effective maintenance strategy and need to ensure reliability at
each level of its production and processes in order to achieve excellence,
and innovation and sustain its competitive advantage. Being the market
leader in Pakistan and the second largest energy solution provider globally,
Siemens is undoubtedly likely to achieve excellence soon. Thanks to its
effective maintenance and reliability assurance strategies.
Page 47
BIBLIOGRAPHY
assets, m. S. (2007). Allen S. B. Tam. Journal of Advanced Manufacturing technology , 399-405.
Blanco, S. S. (2010). baker/SKF. Retrieved April 10, 2010, from SKF: www.reliabilityweb.com
Blann, D. R. (n.d.). Reliabilty as a Strategic Initiative.
Larry Weinsteina_, R. J. (2009). Costs of quality and maintenance: Improvement approaches.
Total Quality Management , 497 –507.
Nicholas, J. (n.d.). Human error in Maintenance and Reliabilty.
Asset performance Management Solutions . (2010, April 29). Retrieved May 8, 2010, from
Siemens Industry USA: www.siemens.com
Jay Heizer, B. R. Operations Management . In B. R. Jay Heizer, Operations Management (p.
800).
Preventive Maintenance. (2007). Retrieved May 8, 2010, from
http://www.weibull.com/SystemRelWeb/preventive_maintenance.htm
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Maintenance and

(Shamzuddin Ahmed, 2004)..................................................................................................28

One of the biggest challenges faced by production facilities is

maintaining the production process and ensuring reliability of processes and

products. The challenge is even greater in developing countries where

effective maintenance is not a part of work culture.

We intend to explain how Siemens is coping up with this challenge.

Some of the techniques used by Siemens are

• It tries ensure reliability at each and every stage of production and

ensures that losses are minimized, thus achieving maximum efficiency.

• The company uses a set of reliability tool known as Siemens

• Specifically, the company focuses on improving equipment

availability and reliability by using the following techniques;

o Reduces equipment failure rates,

o Improves plant uptime, and

o Increase production output.

For effective maintenance, Siemens use a set of tools developed by Siemens

• It provides the right approach for effective maintenance and high

profitability to be used by all production facilities.

Using this procedure, the company is required to analyze seven

categories which cover all the aspects of relevant maintenance. These

seven categories are:

• Spare Parts Management

• Workshops and Repairs

• Planning and Scheduling

• Maintenance Process Optimization

By using this structured approach, which provides a comprehensive

analysis and enables the evaluation of current maintenance situations,

Siemens has identified various cost cutting opportunities which will

ultimately increase the productivity and profitability of the company.

us an opportunity to learn and understand various concepts regarding

production and operations through this report.

We are also grateful to various people who helped us in the completion

Process Excellence management Department, Siemens. We are also grateful

procedures used at Siemens Pakistan.

of this report possible.

OBJECTIVES OF THE RESEARCH

This report has been prepared as part of the course, Production

Operations and Management. For this purpose, we chose Siemens, Pakistan.

ensures reliability in their production processes.

Since maintenance during production and operations is one of the

main concerns of manufacturing units, the objectives of our research were as

 To find out the methods used by Siemens to ensure maintenance and

reliability in their processes.

maintenance and reliability.

maintain their standards and where it stands in the Pakistani Industry

and in the International Arena.

For the completion of our above mentioned objectives, we have

conducted 3 in-depth interviews with the employees of Siemens Pakistan at

sources which are published by Siemens. These sources are mentioned in

According to Santiago Sotuyo Blanco, IME, CMRP, Ellmann, Sueiro &

Associates, maintenance in any business today means: ‘Ensuring company’s

competitiveness by means of assuring planned availability and reliability of

the desired function, complying with all requirements of company’s quality

overall cost or at maximum overall benefits.

In general, maintenance means to ensure the proper functioning of

equipment(s) in an operation or manufacturing chain. Also, it can be applied

to the finished product itself, how well it is maintained will lead to an

increase in useful life of the product.

MAINTENANCE, QUALITY AND RELIABILITY

The quality of a particular firm’s supply chain or operations

management is largely dependent on the reliability and sound running of its

machines, work staff and assembly lines. In order to ensure an excellent