Penny Wise, Pound Foolish
Published Newsday August 6, 2001

RICHARD JOSEPH
GENERAL MANAGER,
CARIBBEAN BUSINESS SERVICES LIMITED

One of the best attended breakfast seminars hosted by the Trinidad and Tobago Chamber of Industry and Commerce has been on “Fundamentals of a successful Maintenance Operation”. Though it was essentially a promotional venture by a firm of consultants, the rapt attention paid by the audience spoke of a need that many in our business community feel. What was also unusual is that the Government Minister who opened the proceeding remained and was an interested member of the audience.

Until quite recently, equipment maintenance was an issue that was not given much importance by companies whether in manufacturing, construction or building management. The philosophy of “don’t fix it if it isn’t broken” was taken to an extreme, and maintenance was a completely reactive activity, i.e. it was only carried out when equipment became inoperable.

The attitude that gave rise to this can be described as “penny wise and pound foolish”. Establishing a proper maintenance program requires an investment in skilled personnel, proper procedures, and an adequate supply of spare parts. All of this has incorrectly been seen as overhead expenditure without a direct impact on sales, but a direct impact on profitability. Essentially, owners bet that in the short term, if equipment did not breakdown, they would have saved the maintenance costs.

In reality, however, equipment that has not been properly maintained does break down eventually, frequently with costs that are much more extensive than the bare maintenance expenses.

Of course, equipment perversely chooses to break down when it is needed the most. Often, in these situations the part that is required is not in the inventory of either the owner, or the service representative in the country, therefore lengthening the time required to become operational again. Quantifiable effects of breakdowns due to inadequate maintenance are high operation costs, sub-optimum levels of productivity and not infrequently, loss of the particular piece of equipment. The less visible effects are waste of valuable management time, and loss of reputation due to unfulfilled or delayed fulfillment of contracts.

On a national level, the impact is lack of international competitiveness and waste of foreign exchange due to avoidable expenditure. There are four simple steps to an effective maintenance regime:

1. Prepare a list of all assets showing the date purchased and the model and serial number where appropriate.

2. Acquire manufacturers maintenance manuals for all equipment including subscriptions to any updating service offered.

3. Prepare maintenance schedules in accordance with manufacturers recommendations and production / operation requirements.

4. Implement a monitoring and reporting system which should be used to ensure that preventative maintenance is carried out properly.

According to management consultants, one of the easiest and quickest ways to impact on the clients’ profitability is to ensure that preventative maintenance systems are implemented.

Everyone agrees that it should be done, but resources are more readily directed in areas which have a much lesser impact in relation to money.

Even as technology has been successfully transferred to countries with low labour rates, enterprises in developed countries have been able to mention their competitiveness through efficiency and quality arising from superior management practices, including maintenance systems which improve machine reliability and product quality.

As our competitiveness becomes threatened by lower cost producers, we must ensure that Trinidad and Tobago’s management systems, including maintenance, are at the cutting edge: otherwise we will fall at the wayside.