EPM Turns Data into DollarsBy Steve Uible and George Wacaser
Article Date: 07-01-2009
Copyright(C) 2009 Associated Equipment Distributors. All Rights Reserved.
Develop a more sophisticated planned maintenance system that slashes customer repair costs and drives revenue into your dealership.
When the stars and planets are aligned in your favor your chances of success are fabulous. And when they are not aligned it feels that whatever we do isn’t enough and failure is just around the corner. But right now, we as dealers need some alignment in our favor and we believe Enhanced Planned Maintenance (EPM) is just what many dealers need, and the time has never been better.
Enhanced Planned Maintenance offerings are perhaps today’s greatest opportunity for equipment dealerships to not only survive these uncertain economic times, but also to grow your business and strengthen your customer relationships. With today’s information-based technologies, along with the changes in construction equipment and maintenance products, the PM culture needs a makeover.
First of all, let’s get away from the old PM terminology. We all remember when PM meant Preventive Maintenance or Planned Maintenance. But today’s machines need so much more, and the tools available to us are so good, PMs just don’t tell us enough. We talk to many dealers and customers who still think that doing a PM is an oil change and it’s done on a rainy day when they can’t work the machine. We need to abolish that image and concentrate on EPMs.
The article in CED last month on telematics was exactly on point. If you missed it, we suggest you go back and read it. (“How to Make Money with Telematics,” is also available at www.cedmag.com). There is a gold mine out there, and a few dealers are taking advantage of it. Other dealers want to, but don’t know where to start; and others simply don’t know what it is. This series of articles will help you move your dealership to excel in EPMs.
Historically, some construction and mining equipment customers have been leaders in PM management and what it can mean to productivity and repair costs. However, the vast majority of contractors and dealers have only scratched the surface while looking for ways to improve maintenance practices. The increase in environmental regulations, widespread use of telematics, and new PM products together justify a complete new look at Enhanced Preventive Maintenance programs offered by dealers.
EPM programs come in various forms under numerous names but all focus on improving machine reliability and uptime, while lowering total operating costs. A good way to identify the opportunity for an EPM is for the dealer principal to ask one question of his product support personnel: “What percentage of dealer repair work orders could be significantly delayed or eliminated if the equipment in question was properly maintained?” While the answers vary widely, 50 percent is the most common response. Extending the mean hours to repair for components, then, may allow the dealer to lower the total operating costs – or, better yet, to “fix” the hourly operational costs and eliminate the repair surprises that all customers dread.
For a dealership to benefit from an EPM program, customers must see the benefit, too.
Today’s construction customers are faced with the same repair and maintenance challenges as the automotive and truck customers just a few years ago. The availability of qualified technicians to work on the current and future technologically advanced equipment continues to diminish. If they can be hired at all, the costs continue to escalate – not only the direct labor costs but also the training and diagnostic equipment costs. Add to this the customers’ desire to focus on their competitive advantage and not on equipment repair and maintenance, and it opens the EPM door wide open for the dealership.
Work “Green” to Your Advantage
The true catalyst for EPM opportunities is the air quality mandates affecting all off-road engines.
The technologies that have been born out of necessity from EPA regulations are working their way into all equipment and all systems on equipment. Information from controllers in more and more equipment makes collecting and distributing CAN data from the machine possible. In the past, dealers had to rely on outdated communication links through the customer to obtain machine information. Telematics now puts the daily machine information at the dealer’s fingertip. No longer do we need to call the customer who calls the job personnel who may or may not relay hours, location and many other operational details back through the same chain to the dealer.
Other changes tied to protecting the environment are fuels, lube oils and coolants. These are all tied to emission requirements but have a significant effect on PM requirements, too. Fuel at 15 ppm sulfur allows a re-evaluation of engine change intervals based on the reduction of contaminants and acid degrading the oil. Newer hydraulic oils are zinc-free and many are also hydro-cracked, HN, which significantly increases their useful life over AW hydraulic oils. Coolant change intervals have increased dramatically due to new formulations, which also give long-term protection against liner cavitation while controlling the additional heat from Interim Tier 4 engines.
Oil analysis is increasingly required by manufacturers to ensure that the equipment is being properly maintained during standard and extended warranty. The analysis results have always been a balance of (1.) Getting a good sample from the customer, which verifies system integrity, and (2.) Using the sample results to adjust change intervals to optimize services and reduce operation costs. For many customers, the dealership is the expert on oil analysis, and they rely on them for recommendations to improve maintenance practices.
The Operators Manual has always been the guide to PMs and the intervals listed are very conservative estimates based on average working conditions in an average environment by average operators, and so on. They are seldom the best interval for any one machine.
EPM opportunities have changed dramatically based on the factors already identified. Managing the additional information available within the dealership and within their business systems will soon start to differentiate dealers who can actually use the information to partner with their customers on lowering operating costs from those dealers who still do PMs just the way they’ve always done in the past.
Dealers who learn how to use the available information will have the ability to advance their EPM offerings to include Condition-Based Maintenance. CBM is the active evaluation of telemetrics data, oil analysis and machine inspections to alter the PM “averages” printed in the operator’s manual to specific PM requirements for a single machine.
Once the appropriate PM intervals are determined, the dealer now has the ability to shorten intervals where feasible to maximize component life or extend intervals and lower maintenance costs. Customer resistance to EPM programs may be based on past experiences and not on what the dealer can do today. Changing engine oil at 250 hours because, “That’s the way my dad did it,” for example, is not the way to contain costs.
Looking down the road, what could be our competitive advantage when we marry telemetric data to oil analysis data and inspection data using back office software to open a work order on the service manager’s desk? One work order might give the location, hours and parts needed to complete a condition-based EPM. Another might refer to a high copper oil analysis reading in the hydraulic system along with elevated temperatures and pressure from telemetrics and a technician note from the previous EPM that a hammer is being used to demolish a boat dock.
Once EPM processes are in place, a dealership will be in the best position to control maintenance and repair costs for the customer. Done correctly, the total ownership cost to the customer can be reduced by maximizing EPMs and eliminating the 50 percent of repairs that no longer happen. In addition, the dealer now manages the machine as if it were his own and is in position to provide all of a machine’s needs.
The final step in customer support is accurately predicting the total EPM costs or EPM Plus Extended Warranty and offering the entire package at a fixed price. The customer has a cost per hour associated with repair and maintenance that can be added to fuel and operator costs, thus providing the customer with a complete and predictable operating cost.
Dealers need not wait for the stars and planets to align in order to realize a consistent product support revenue stream – instead, take hold of technology tools that are readily available and begin using information to your advantage, and the advantage of your customers, with a well developed Enhanced Maintenance Program.
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