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Framework for Railcar Maintenance Management Philosophies of Managing Railcar Maintenance Ken Henman May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 1 Factors Driving Maintenance Management Philosophy Goals Responsibilities of Possession Resources and Management Types of Maintenance May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 2 Goals Customer satisfaction Business goals Customer – Supplier relationship External and internal- formal and informal What’s critical to business operations and success Safety Control liabilities and loss May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 3 Customer Satisfaction Customer - Supplier Relationship External Customers, sales Formal Informal Service according to requirements Meeting unexpected needs Internal Customers, supply side Formal Informal May 22, 2008 Efficient operations meeting business goals Relationships nurtured within organization DTE Rail Services, Inc Maintenance Management Seminar 4 Business Goals What’s critical to business operations and success Budgetary May 22, 2008 Rollover with allowance + or-? Justified by condition based Cost cutting based Performance based Viewed as contributor to profitability Controllable leading to efficient capital planning Balanced by maintenance costs/replacement costs DTE Rail Services, Inc Maintenance Management Seminar 5 Business Goals Asset preservation Sustained asset value Sustained asset function Opportunity loss, mechanical cost to sales loss Reliability, maintenance viewed as a competitive advantage Improved reliability will reduce cost, but reduced cost will not improve reliability Value, does the equipment provide consistent service value and sustained asset value? May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 6 Safety Control of Liabilities and Loss Personal injury Property damage Workmen’s compensation record Accident/incident record Effect on customer – supplier relationship Avoidance or correction, proactive or reactive May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 7 Balance of Goals Balance of all with key performance indicators Measuring effectiveness - Reliability Customer satisfaction External and internal, formal and informal Business goals To budget Repair cost ratio, AAR to contractor What’s critical to business operations and success Sustained value and function Safety May 22, 2008 Control liabilities and loss DTE Rail Services, Inc Maintenance Management Seminar 8 Responsibilities of Possession- Ownership Total responsibility Maintenance cost Mechanical performance Sustained asset value, ROA Control of utilization Responsible for all maintenance decisionsincludes reliability, safety, sustained value and the net results May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 9 Responsibilities of Possession- Net Lease Total responsibility within lease parameters Maintenance cost Mechanical performance Lessee controls utilization Sustaining asset value is enforced at lease termination Must meet the requirements of lease language at lease termination Responsible for all maintenance decisionsincludes reliability, safety, sustained value and the net results May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 10 Responsibilities of Possession- Full Service Lease Responsibilities and control reduced Dependent on leasing company within lease parameters Lessee controls utilization not affected by mechanical issues Must meet the requirements of lease language at lease termination Limited responsibility and control of maintenance decisions, reliability, safety and the net results May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 11 Resources and Management Staff Experience Maintenance staff’s level of experience and capabilities May 22, 2008 Knowledge of performance issues Knowledge of industry initiatives Interpretation of data/information Ability to make proactive decisions Available time DTE Rail Services, Inc Maintenance Management Seminar 12 Resources and Management Outsourcing, third party resource Supplements scarce internal resources Data management systems Technical expertise Current with industry initiatives Consulting Trending analysis Interpretation and recommendations Familiar benchmarks, KPI’s Performance driven by customer satisfaction Specialized service with partnership for success May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 13 Resources and Management Data, past tense measure of reliability Repair History Performance History May 22, 2008 Quality of data Accessibility Manageability Interpretation and trending analysis Delivery performance Issues reported during loading and unloading In service bad order records DTE Rail Services, Inc Maintenance Management Seminar 14 Resources and Management Car Health Information, present tense resource Condition evaluation Visual inspection Technology Driven ATSI-EHMS-InteRRIS May 22, 2008 Periodic and measured to baseline Historical trending What is technology telling you about your car? Accessibility Manageability Interpretation and trending analysis DTE Rail Services, Inc Maintenance Management Seminar 15 Resources and Management Maintenance logistics Availability of equipment Availability of repair facility Schedule flexibility Capable and qualified Cost effective Scheduling efficiency May 22, 2008 Planned or unplanned out-of-service Cost control and improved reliability DTE Rail Services, Inc Maintenance Management Seminar 16 Types of Maintenance Corrective Maintenance- “Status Quo” Simple, requires no scheduled maintenance strategy or technical expertise Reactive, efficient repair of failures Maximizes component life Unplanned out-of-service with opportunity loss Short notice, with extended out-of-service Unknown and uncontrolled cost, hard to budget for Breakdown maintenance generally performed by railroads No root cause analysis Excessive loss due to poor reliability/utilization “Cost of Doing Nothing” May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 17 Types of Maintenance Periodic Maintenance- Time or Mileage Based Opportunity for condition evaluation, baseline / periodic Condition evaluation -opportunity to become proactive Initially generic and evolves to a focused scope Planned at regular intervals and scheduled easily Lacks evidence of need May have inefficient and unpredictable results, too earlytoo late Basic PM can be historically budgeted, but opportunity remains for variance Thorough PM tends to be expensive, tends to overmaintain Risk of unexpected failure remains May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 18 Types of Maintenance Preventative Maintenance Proactive philosophy evolved from periodic maintenance Result of condition evaluations and anticipating failure Can be time and/or mileage based Dependent on quality of car health information Dependent on trending analysis and anticipating Root cause determination reduces future exposure Planned out-of-service, can be scheduled within reason Focused on major components, flexible for other Provides remedy anticipating failure Reduces excessive out-of-service time Inefficient planning shortens component life cycle May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 19 Types of Maintenance Predictive Maintenance Proactive philosophy evolved from periodic maintenance Result of condition analysis, prediction of failure Dependent on quality of car health information Dependent on accurate interpretation and analysis Requires technical expertise Planned out-of-service, easily scheduled, within reason Focus on major components, flexible for other Cost efficient, provides remedy before failure Poor planning may not allow maximization of individual component life Dependable, but needs proven for acceptance May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 20 Developing a Maintenance Philosophy Assessment of all of the above factors Weight of each factor on desired results Combination and balance of all to meet goals May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 21 Summary Developing a maintenance philosophy Understand and set goals Understand responsibilities of possession Evaluate and manage resources Evaluate the information, past and present tense Develop an informed opinion and plan Select maintenance type or types Logistics, coordinate equipment to repair facility Measure effectiveness, adjust as needed Combination and balance of all to meet goals May 22, 2008 DTE Rail Services, Inc Maintenance Management Seminar 22