www.sbm.itb.ac.id/ajtm

The Asian Journal of Technology Management Vol. 3 No. 1 (2010) 1-4

Maintenance Management Performance – An Overview towards

Evaluating Malaysian Palm Oil Mill

Nazim Baluch1*, Che Sobry Bin Abdullah1, Shahimi bin Mohtar1

1
Universiti Utara Malaysia, Sintok Kedah, Malaysia

ABSTRACT

Deficient maintenance management can severely affect competitiveness of an organization by

reducing throughput, increasing inventory, and leading to poor performance. Performance
cannot be managed without measurement: it provides the required information to the
management for effective decision making; and is used by industries to assess progress
against set goals and objectives in a quantifiable way for effectiveness and efficiency. For the
palm oil mills to stay competitive, it is imperative that they elevate the maintenance
management role; from a cost center to the strategic partner in business. This paper
highlights how measuring maintenance performance helps us identify the factors causing poor
performance, and provides an opportunity to improve company’s profits.

Key words: key performance indicators, lean, total productive maintenance

Introduction vital information to the management for

decision making; it helps to identify
In manufacturing context, maintenance inefficiencies in the systems and provides an
management is the process of directing opportunity for improvement.
maintenance organization effectively by It is evident from the literature that
utilizing administrative, human, financial, and maintenance is still a low priority in the SMIs
material resources in an efficient and effective of Malaysia, 23 % - according to Shamsuddin
way through planning, scheduling, executing Masjuki et al., 2004. In today’s operating
and monitoring their own progress for environment, both management and the
continuous improvement. Maintenance operation of the oil palm estates and crude
management’s role is to provide support to palm oil mills need effective team work,
production, and by providing reliable fruitful synergy effect on each other, cross-
equipment and processes it helps organization functional responsibility and accountability,
to be competitive and contribute to sustainable inter personnel co-operation and relationship,
profitability; socially, economically and reduced bureaucracy and resources utilization
environmentally. It is no longer a cost center to achieve higher productivity and better
but a strategic business partner that plays a quality product. In order to stay competitive in
vital role that helps the organization to achieve the 21st century, it is imperative, for the palm
its goals. Maintenance management oil mills to recognize the importance of
performance can be evaluated using key maintenance management and elevate its role
performance indicators (KPIs): This provides to the strategic business level.

*Correspondence author. Email: [email protected]

1
 
 N. Baluch et al. / The Asian Journal of Technology Management Vol. 3 No. 1 (2010) 1-4

 
Maintenance Management and 2003). Measuring maintenance performance
Maintenance Strategies helps us identify the factors causing poor
performance, and provides an opportunity to
With increased global competition, improve company’s profits.
attention has been shifted from increasing Besides, performance measurement is
efficiency by means of economies of scale and also a way for the management to evaluate the
internal specialisation to meeting market condition of its systems and make a decision
conditions in terms of flexibility, delivery relating to maintenance policy adapted by the
performance and quality (Yamashina, 1995; company. Maintenance activity is an activity
Karuppuswamy et al., 2007). In today’s that has a significant contribution in operation
dynamic environment, a reliable production costs, approximately 30 percent of operation
system must be seen as a critical factor for costs, especially if the company is
competitiveness (Brah and Chong, 2004). Poor implementing automated production system
organisational competencies in managing the (Garg, A., and Deshmukh, S. G., 2006).
maintenance function effectively can severely Here are some of the key performance
affect competitiveness by reducing throughput, measuring tools being applied in the industry,
increasing inventory, and leading to poor due- depending on the strategies adopted. Strategic
date performance (Patterson et al., 1996, TPM implementation programs have revealed
Ashayeri, 2007). This has provided the a significant realisation of manufacturing
impetus to the leading organizations performance achievements leading to
worldwide to adopt effective and efficient improved core competitiveness of
maintenance strategies such as condition-based organisations (Ahuja and Khamba, 2008, a, b).
maintenance (CBM), reliability-centered
maintenance (RCM) and total productive TPM’s Key Performance Indicators
maintenance (TPM), over the traditional (Metrics) and Operational Availability (OA)
firefighting reactive maintenance approaches
(Sharma et al., 2005). The term “lean The first metric for TPM is MTBF (Mean
production” was introduced by Krafcik (1989) Time between Failures). This is measured by
and by Womack et al., (1990) in the book The machine, and for this metric, the larger number
Machine That Changed the World. the better it is. The second metric is Percent
Lean production can be considered an Reactive Maintenance (% Reactive). The
extended JIT that includes new intra- smaller the number the better it is. World class
organizational and inter-organizational aspects is 20% or less reactive and 80% preventive,
(Enkawa and Schvaneveldt, 2001; Holweg, improvement, or scheduled maintenance.
Matthias, 2007). Lean implementation is Mean Time to Repair (MTTR) is the third
therefore focused on getting the right things to metric. For this metric, the smaller the number
the right place at the right time in the right the better it is. As TPM progresses, repairs are
quantity to achieve perfect work flow, while less serious and are quicker. Tracking repair
minimizing waste and being flexible and able hours and showing an overall reduction is a
to change. Lean maintenance is a pre-requisite direct cost savings. The fourth metric is
for Lean manufacturing Overall Equipment Effectiveness (OEE).
This is measured by machine or by
Maintenance Performance and evaluation process. The higher the number the better it is.
World class is 85% or better. Direct financial
Performance measurement is a impact can be shown as machines run faster
management tool to measure the direction and with better quality more reliably. TPM seeks
speed of change done by the company. to improve the overall equipment effectiveness
Performance measurement plays an important (OEE), which is an important indicator, used
role for the improvement of a progress to measure TPM. An overall 85 percent of
(change) towards a better performing OEE is considered as world class and a
organization. Therefore, we need to formulate benchmark for others (Blanchard, 1997;
appropriate performance indicators. These McKone et al., 1999; Chand and Shirvani,
indicators must be directly linked with 2000). Operational Availability (OA) - is a
company’s strategic objectives (Gasperz, V. measure of the "real" average availability over

2 
 
 N. Baluch et al. / The Asian Journal of Technology Management Vol. 3 No. 1 (2010) 1-4

 
a period of time and includes all sources of losing her market share to Indonesia;
downtime, such as administrative downtime, Indonesia is now the largest producer of palm
logistic downtime, etc. It is the ratio of the oil in the world (MPOB, 2008). Malaysian
system uptime to total time. Mathematically, it Palm Oil Board’s National Seminars on Palm
is given by: OA= UPTIME / OPERATING Oil Milling, Refining Technology, Quality and
CYCLE; where the operating cycle is the Environment clearly emphasize the need to;
overall time period of operation being lower the costs of production, increase
investigated and uptime is the total time the productivity, and improve quality by adopting
system was functioning during the operating new environmentally friendly technologies.
cycle. (Note: The operational availability is a The trend in modern maintenance systems, to
function of time, t, or operating cycle.) integrate maintenance systems to enterprise
resource planning (ERP) and other business
Malaysian Palm Oil Industry and Palm Oil systems, offers an excellent opportunity to
Mills – Importance and Scope attain these goals (Basiron, Y. and Chan, K
W., 2004).
There are 434 palm oil mills operating in
Malaysia. The processes used are broadly Conclusion
similar and primarily involve: transportation of
the fresh fruit bunches (FFBs); sterilization; Performance measurement is used by
stripping; digestion and pressing; clarification; industries to assess progress against set goals
nut/fibre separation; nut conditioning and and objectives in a quantifiable way for
cracking; cracked mixture separation; and effectiveness and efficiency. For the palm oil
kernel drying. The Malaysian palm oil mills to stay competitive, it is imperative that
industry recorded an impressive performance they elevate the maintenance management
in 2008 where the export earnings of the oil role; from a cost center to the strategic partner
palm products rose to a record RM 65.2 in business. Performance cannot be managed
billion. Palm Oil currently contributes about 5- without measurement; it provides the required
6% of Malaysian GDP and provides information to the management for effective
employment for 1.4 million workers (direct decision making. Research results demonstrate
employment of 570,000). It triggers that companies using integrated balanced
downstream activities and brings in revenues performance systems perform better than those
for national development and stability, with who do not manage measurements (Kennerly
foreign exchange earnings amounting to an and Neely, 2003; Lingle and Schiemann,
average of US$ 11.5 billion annually. 1996).
However, over the years, Malaysia has been

References

Ahuja, I.P.S. and Khamba, J.S. (2008a). Total machining centers. Robotics and Computer-
productive maintenance – literature review and Integrated Manufacturing, Vol. 23 No. 6, pp.
Directions. International Journal of Quality & 614-23.
Reliability Management, Vol. 25 No. 7, pp.
709 56 Basiron, Y. and Chan, K W (2004). The role of
R&D strategies in food safety, GAP, DMP and
Ahuja, I.P.S. and Khamba, J.S. (2008b). An GDP in the Malaysian palm oil industry. Paper
evaluation of TPM initiatives in Indian presented at the EUREPGAP ASIA 2004
industry for enhanced manufacturing Conference, Kuala Lumpur, pp 17.
performance. International Journal of Quality
& Reliability Management, Vol. 25 No. 2, pp. Blanchard, B.S. (1997). An enhanced
147-72. approach for implementing total productive
maintenance in the manufacturing
Ashayeri, J. (2007). Development of environment. Journal of Quality in
computer-aided maintenance resources Maintenance Engineering, Vol. 3 No.2, pp.
planning (CAMRP): a case of multiple CNC 69-80.

3 
 
 N. Baluch et al. / The Asian Journal of Technology Management Vol. 3 No. 1 (2010) 1-4

 
Brah, S.A. and Chong, W.K. (2004). Krafcik, J.F. (1989). Triumph of the lean
Relationship between total productive production system. Sloan Management
maintenance and performance. International Review, Vol. 30 No. 1, pp. 41-52.
Journal of Production Research, Vol. 42 No.
12, pp. 2383-401 Lingle, J.H. and Schiemann, W.A. (1996).
From balanced scorecard to strategy gauge: is
Chand, G. and Shirvani, B. (2000). measurement worth it?. Management Review,
Implementation of TPM in cellular March, pp. 56-62.
manufacturing. Journal of Material
Processing Technology, Vol. 103, pp. 149-54. McKone, K.E., Roger, G.S., Kristy, O.C.
(1999). Total productive maintenance: a
Enkawa, T. and Schvaneveldt, S.J. (2001). contextual view. Journal of Operations
Just-in-time, lean production, and Management, Vol. 17 No.2, pp.123-44.
complementary paradigms. in Salvendy, G.
(Ed.), Handbook of Industrial Engineering, 3rd MPOB. (2008). Oil Palm Industry Economic
ed., Wiley, New York, NY, pp. 554-61. Journal (vol. 9 (1)/2009 – “Palm Oil: Nature’s
Gift to Malaysia and Malaysia’s Gift to the
Gasperz, V. (2003). Sistem Manajemen World”
Kinerja Terintegrasi: Balanced Scorecard
dengan Six Sigma untuk Organisasi Bisnis dan Patterson, J.W., Fredendall, D.L., Kennedy,
Pemerintah. Jakarta: PT Gramedia Pustaka W.J. and McGee, A. (1996). Adapting total
Utama. productive maintenance to Asten, Inc.
Production and Inventory Management
Garg, A. and Deshmukh, S.G. (2006). Journal, Vol. 37 No. 4, pp. 32-7.
Maintenance management: literature review
and directions. Journal of Quality in Shamsuddin Ahmed Masjuki Hj. Hassan and
Maintenance Engineering, Vol. 12 No. 3, pp. Zahari Taha. (2004). State of implementation
205-38. of TPM in SMIs Malaysia. Journal of Quality
in Maintenance Engineering Volume 10,
Holweg, Matthias (2007). "The genealogy of Number 2, 2004, pp. 93-106
lean production". Journal of Operations
Management 25 (2): 420–437. Sharma, R.K., Kumar, D., Kumar, P. (2005).
FLM to select suitable maintenance strategy in
Karuppuswamy, P., Sundararaj, G. and process industries using MISO model. Journal
Elangovan, D. (2007). Application of of Quality in Maintenance Engineering, Vol.
computerised maintenance management 11 No.4, pp.359-74.
system coupled with risk management
techniques for performance improvement of Womack, J.P., Jones, D.T. and Roos, D.
manufacturing systems. International Journal (1990). The Machine That Changed the
of Business Performance Management, Vol. 9 World, Rawson Associates, New York, NY.
No. 1, pp. 7-21.
Yamashina, H. (1995). Japanese
Kennerly, M. and Neely, A. (2003). Measuring manufacturing strategy and the role of total
performance in a changing business productive maintenance. Journal of Quality in
environment. International Journal of Maintenance Engineering, Vol. 1 No. 1, pp.
Operation & Production Management, Vol. 23 27-38.
No. 2, pp. 213-29.

4