What are the maintenance costs associated with one unit of production?
The maintenance unit cost is a snapshot of the total maintenance cost required to manufacture a standard unit of production during a set period of time. Although the Society for Maintenance and Reliability Professionals (SMRP) has not yet set best-in-class targets, this metric is helpful when combined with others to prioritize maintenance programs.
The only cost-effective way to calculate this metric is to have an accurate measurement of both production capacity and maintenance costs, which must include labor and MRO costs for reactive, preventive, and predictive maintenance programs.
Many businesses that have this data find this metric an excellent lagging indicator to see how investment in maintenance impacts reliability of equipment.
A Simplified Example
To illustrate the calculation at a very basic level, let’s take a facility that had an annual maintenance cost of $2 million. If this facility produced 15 million pounds of product during that same period of time, its maintenance cost per unit of production would equal 13 cents per pound. Goals can then be set for subsequent years to reduce that cost per unit of production through CMMS implementation or improving reliability programs.
This metric works best when you apply it to a particular asset, set of assets, or entire organization that produces a measurable, consistent unit of production.
Shortfalls of Metric
If you choose to use this metric, you’ll want to take some precautions so that you obtain accurate, meaningful information. Here are some considerations you’ll want to keep in mind:
- Shorter measurement intervals must incorporate a weighted component of overall planned downtime to be accurate.
- If you plan to use this metric to compare your facility against the competition, you’ll want to be sure you’re using gross standard units so that measurement components are comparable.
- If you have production curtailments that are related to factors outside of maintenance or market demand, this metric will be inaccurate.
- Distributed costs such as infrastructure, building and grounds, and so forth must be taken into account.
- Different products will have unique unit maintenance costs and cannot necessary be compared directly even if units of measure are the same.
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