4 Signs Your Maintenance Spend is too High (and Your ROI is too Low)

The golden rule of a good investment is getting more back than you put in. If you spend $1, you expect to make $1.01 at the very least — often, many multiples of your original investment. The problem is, tracking the return on investment (ROI) on some investments is difficult. Dollars spent on a concept can’t always be attributed to X, Y, and Z tangible items. It’s why we use benchmarks and metrics to project and predict ROI on intangible investments, and to make sure the returns are worth the money spent.

Consider your investment in your maintenance program. It doesn’t matter if it’s $10,000 or $10 million — whatever it is, your ROI needs to be more. To understand ROI, you need to look at the effectiveness of your maintenance program. If you invest $10,000 for maintenance, for example, is your investment offsetting $10,000 in lost costs via downtime, failure, or inefficiency? If not, it’s time to start looking at how you’re spending that money.

Getting better ROI from your maintenance spend isn’t about slashing your budget and trying to maintain current levels. Instead, look for signs that your spend either isn’t effective or may not be required. Here are four signs of inefficiency in your maintenance budget.

  1. Maintenance spend has increased but reliability has not. If you spent $3 million on maintenance last year and $5 million this year, but your reliability metrics stayed relatively the same, ask yourself what that money is going toward. It’s either covering inefficiencies that have developed or it’s wasted within the broader maintenance approach.
  2. Metrics like downtime, MTBF (mean time between failures), and availability don’t correlate to cost. As you dive into your maintenance budget, look at specific metrics. If your MTBF metric isn’t getting better (or is getting worse), for example, look at the funds allocated to routine service. If your downtime metrics are the same or worse, look at staffing costs. Match up these metrics with spend to understand where you’re over- and under-funding your efforts.
  3. Too much of your maintenance spend is static (inventory). One of the biggest sources of bloat in maintenance budgets is static inventory. Do you need to stock 10 units of a part you replace once every 18 months? Probably not. Make sure your purchasing is tight and well-supervised, and that you’re not spending on parts when you could be investing in service.
  4. You’re not tracking ROI on maintenance investments. It’s easy to say “our budget is high because we started X new program.” But if you’re not tracking the investment and ROI on that program, you have no way of knowing how it affects your larger maintenance spend. Generalizing inflated costs is a far cry from justifying them.

Accounting for the many facets of a maintenance and repair budget can be difficult — especially as programs become more diverse and complex. Taking the time to assess ROI is invaluable in validating your maintenance spend or pinpointing justifiable cutbacks. You might just find that better investments in strategic initiatives result in lower overall spend and greater ROI.

Are you getting everything you expect our of your maintenance and reliability program? If not, it’s time to examine your spend and your investments, and make low-cost decisions with high ROI potential. You can always count on the professionals at Global Electronic Services. Contact us for all your industrial electronic, servo motor, AC and DC motor, hydraulic, and pneumatic needs — and don’t forget to like and follow us on Facebook!
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