Enterprise-wide reliability strategies can save global companies more than $50 billion a year in costs, increase capacity by more than 5 percent
ORLANDO, Fla.—Taking on what may be industry’s greatest cause of excessive operational cost and unrealized profit, Emerson Process Management is changing the game for industrial producers like oil and gas, chemical, refining, and power. For these 24/7 operations, which routinely suffer 5 to 7 percent unplanned downtime losses due to poor maintenance practices, the company’s new global reliability management consulting practice is guiding leaders on how to better manage maintenance costs, improve reliability, and increase profitability.
With more than 25 years of leadership in developing reliability-enhancing technologies and services, Emerson is elevating the reliability cost challenge to the boardrooms of its customers with an economic-based management consulting practice aimed at saving companies millions in wasted expense and lost revenue.
“C-suite executives are seeing the need to better manage physical assets for improved profitability,” says Steve Sonnenberg, president of Emerson Process Management, a global business of Emerson (NYSE: EMR). “With the right strategy, the typical $1 billion plant can save $12 million or more annually in maintenance costs – not including the corresponding operational and production benefits from reduced downtime. Extend that across a corporation’s network of facilities and soon reliability becomes the number one strategic lever for a safer, more profitable enterprise.”
By reducing scheduled and unscheduled downtime, companies can reduce their maintenance spend by 50 percent or more, according to Solomon Associates, a leading benchmarking company in the process industries that tracks companies’ performance based on reliability and maintenance metrics. Optimized reliability practices – such as increased condition monitoring and analysis-based maintenance activities – drive down costs and also improve sales, quality, health and safety, and environmental compliance. These are all key factors affecting operational risk and shareholder value.
Corbion, a global food and biochemical company with plants in many countries, implemented standardized best practices of reliability over several years and reduced its global maintenance expense by one third while simultaneously dramatically increasing availability. These actions enabled the company to capture millions of euros in increased profits and sustained increases in capacity and production.
To expand its portfolio of reliability-focused services, Emerson recently acquired Management Resources Group, Inc. (MRG), a leading management consulting firm with 28 years of experience improving reliability in industrial manufacturing. This strategic investment complements Emerson’s existing lifecycle services offering as well as the company’s leadership in “pervasive sensing,” which provides manufacturers more operational insight through greater sensor-based coverage of their plants and assets. Through its consultants, Emerson can advise global customers on enterprise-wide reliability management programs that connect the millions of data points collected in a plant, providing actionable information to trigger maintenance activities before equipment fails.
“If a company is not a top-quartile performer, it is losing millions in revenue and spending millions of dollars on unnecessary maintenance costs,” says Robert DiStefano, MRG’s founder and former CEO. “Every dollar not spent on maintenance goes directly to the bottom line. Our approach helps companies dramatically reduce downtime and enhance safety and compliance, increasing the stature and reputation of a company and ultimately providing better value for shareholders.”
A recent Solomon RAM study found companies reach the top-performing quartile when they have less than 3 percent unplanned downtime and maintenance costs less than 2 percent of plant replacement value (PRV). For example, a $1 billion top-performing plant spends $12 to $20 million per year on maintenance expense. By contrast, poor performers spend two to four times more per year.
Emerson, based in St. Louis, Missouri (USA), is a global leader in bringing technology and engineering together to provide innovative solutions for customers in industrial, commercial, and consumer markets around the world. The company is comprised of five business segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Commercial & Residential Solutions. Sales in fiscal 2013 were $24.7 billion. For more information, visit www.Emerson.com.