Risk Cost Performance
What do you want: low cost, low risk, high performance?
If you focus on only one of those, you will certainly be disappointed. For instance, a focus on low cost will increase risks and diminish performance.
How does that happen? To achieve low cost, you can stop or defer most forms of discretionary spending. That includes: overtime, contractors, training, and consulting. In purchases a focus on cost alone will usually result in lower quality, longer lead times, and increased risk that what you buy isn’t what you really wanted.
When markets are uncertain the focus usually shifts to cost. After all, savings to straight to the bottom line and keep shareholders / owners happy. But it also ignores how performance and risk may be compromised, but those are not a worry that most accounts have. They blindly trust that operations will continue as normal regardless of belt tightening measures. Without overtime some repairs take longer and that can delay production runs, risking missed deliveries. Cutting back on contractors puts more onus on your own maintainers and chances are, they are already understaffed. Less work gets done, machines sit idle for longer, production is delayed …
The above diagram, depicts what can happen. Look at the intersections of any two and then look at the intersection of all three.
The green text describes characteristics of organizations that focus on only two of the three. For example, if you want low cost and low risk, you end up with lower performance. Your engineering will be pretty standard, unlikely to include much, if any, innovation and the low cost focus in maintenance will lead to a reactive environment that ultimately, increases costs, defeating your initial intent.
The red text describes characteristics of organizations that achieve a balance: they have optimized spending, likely achieving lowest cost per unit of output, their engineering considers life cycle support and uses innovations cautiously. Their maintenance will be largely proactive and lower cost than all the alternatives.
By doing some basics well, you can actually achieve that balance. Want to learn more? Talk to us.
