Q. What is a reasonable ratio of plant maintenance expense to plant sales output?
A: This is more complicated than you think. Several organizations have conducted studies on this topic, and the values I offer are blended values. Using this as an accurate metric will depend upon the type of operation and what you make.
If yours is a continuous or semi continuous process, where large quantities of product are produced (e.g., chemicals, vegetables or food products) a reasonable range is 1.6-5.4 percent. If you want best practice status, you would have a ratio of 3.4 percent or better. If your industry manufactures individual machines, components or parts (e.g., die casting, machine shop) the ratio range is different, 0.6-2.0 percent, with a best practice ratio of around 1.0 percent. In the past several years, with the increased use of automation, electronic controls and robotics, these percentages have actually increased slightly. Even though the OPE (overall production efficiency) has increased, the maintenance costs have increased because more equipment is replacing more of the human element.
Let's talk about what you manufacture and how it affects your metric. If you process food and use the total maintenance cost per plant sales output, this may not be a fair assessment of your performance. If the cost of your product is affected by severe drought and the sales price of your product increases, you look like a hero because the ratio of what you need to maintain your plant and equipment has decreased. If you are manufacturing equipment and building supplies, and those are the same materials you need to maintain your equipment and facilities, this is a great metric for you. You are comparing the affect of economic factors that affect your products to the same economic factors that affect the materials you would need to maintain the equipment that produces those products.
There is a myriad of different benchmarking metrics that can be used to measure your performance. And I applaud you for pursuing this. But a word of caution: Think through which one(s) will really reflect your true performance.
