Optimizing plant maintenance at Fonterra - real ROI by the numbers

Profile picture for user gonzodaddy By Den Howlett June 25, 2019
Summary:
Optimizing for plant maintenance at Fonterra is a multi-million dollar challenge. Here's what the company measured.

fonterra chuck norris
Chuck Norris - Fonterra

Once in a while, I hear a customer story that is packed full of data rather than the more common stories that talk to vaguely defined benefits. Such was the case at Neptune Software's annual customer event where Fonterra, the world's fifth largest dairy producer talked about optimizing plant maintenance operations. 

To give you an idea of scale, the Fonterra asset footprint is spread across 10,000 farms, plant maintenance consumes about $70 million in labor and a total of $225 million in R&M with an additional $150 million in capital investment to maintain the $15.6 billion asset base. 

Problem definition

Dan 'Chuck' Norris, general manager engineering talked about the journey Fonterra has been on and how that translates to measurable benefit. He said:

A typically immature organization starts in the 25-30% labor utilization region and by refining process, you can get to around 38%. That's about operating discipline. The best practice benchmark is about 55% utilization but I wanted ot get to around 45% since 55% wasn't a strategic imperative. If you want to jump from the 38% to 45% you really need to have a pretty good core process in place first or otherwise, you're putting lipstick on a pig. 

Check out how this works in Fonterra's world:

Norris moved on to discuss different methods of discovering ROI opportunities. In Fonterra's case, the company chose to shadow technicians, measuring across three metrics; tool time (productive), incidental but necessary activities and waste.

This helped us work out the frustrations, impediments, the good things and the bad things. What we ultimately want to achieve are improvements in the effective time the technician is adding value back to the asset (on which they're working,) while getting rid as much as possible of the wastes - the lean concept - but there are some things you're going to have to do in maintenance that are just pains in the arse such as managing your SAP system and permitting which you have to do when working in dangerous activities. So for example, 45 minutes of a day spent on data entry is a hell of an opportunity.

By the numbers

In the illustrated example, Norris discovered that following the pilot, savings of $3.08 million were achievable split up into $2,308 on rework, $3,193 on travel and $7,562 on SAP related admin tasks per technician per year. 

These are the kinds of number that get the executives excited and bought into a Neptune project. It's not what you want to talk to the maintenance department about because in a unionized environment they think it means reduced headcount. 

In order to assess real-world effectiveness of the solution, Fonterra deployed a control group that didn't use the solution and then measured against environments where the solution was in place. This helped demonstrate the value potential over time. The amount of uplift in getting more work done gave Fonterra an immediate justification and reason for moving forward with the Neptune/BlueWorx solution.

Change happens - when you let it

But there were some other things that emerged along the way in the area of changed behavior.

You've got an extremely educated and unionized workforce who are taught how to ask why and typically maintenance people are one of the more difficult cultures to lead. Yet we had people logging into the app on a Sunday night, on their own device at home in their own time to look at what they had lined up for the following workforce. That's unheard of in my world. That's a phenomenal amount of change so a really good outcome beyond the dollars and cents, which for most engineering departments is what they really want. They don't want another app to go around collecting master data and updating their SAP system, they want people invested in what they're doing, the quality of the work they're doing in the execution space. 

My take

A manager who travels for 25 hours to deliver a 20-minute presentation has got skin in the game. Seeing not just data but obvious enthusiasm for a solution that delivers value which is organically changing the business without intervention is something unexpected, yet welcome. 

More interestingly, Norris confessed to not being wholly conversant with Neptune but said that attending the event 'opened my eyes' to the potential for Planet 9.

As a side note, Norris mentioned that Fonterra is looking at protein and printed protein foodstuffs

We're not sitting around waiting for a Kodak moment when people move away from dairy...we're into the future of nutrition. 

That will be interesting to follow in the months and years ahead. 

Image credit - screenshot from video

Disclosure - Neptune Software is a premier partner at the time of writing and covered most of the author's travel costs to attend the customer event