Maintenance & repair contract, more popularly known as MARC and more generally termed as full maintenance contract (FMC), has caught the imagination of mines operators in India. I have been associated with MARC since last eight years and found it as a fine blend of technical and commercial ingredients. It creates a unique win-win situation for all stakeholders.
Apparently, it looks pretty simple when we consider maintenance in general terms. We tend to think what-is-great-about-maintenance. Technocrats feel it is a mundane job that maintenance people are doing for centuries. But when we mix a bit of risk factor in terms of money, the whole ball game changes. More so, when it involves the very equipment manufacturer or its supplier. It is a pre-sale commitment that is to be fulfilled. So, all the promises made during sales are to be proved on the ground when the equipment is actually deployed in operation. Naturally, equipment sales gets bundled with maintenance in the form of MARC. This makes service becoming part of the sales team with distinct voice.
While MARC was popular in the countries like Australia, it was in 2003 that first MARC in India for mining equipment was signed between TIL Ltd (now Tractors India Pvt Ltd) and TISCO (now Tata Steel) for its South East Block mines near Hazaribag in Jharkhand. This was followed by a contract between TIL and Hindustan Zinc in 2004. And now mines operators are opting for MARC with more value additions like, tyre management, lube management, etc. Interestingly, service providers are not hesitating to diversify from their core competency to satisfy the need of the customers. This is becoming more convenient for the mines operator to look for a single window as solution provider.
In this process of MARC, service becomes a big business. All the parts that are to be sold against purchase orders normally, are now to be fitted by the service provider against a fixed charge payable on per hour of operation. So, better the quality of service and spares, more reliable the equipment will be. But the cost of maintenance is likely to go high. Similarly, maintenance quality can be somewhat compromised to make some additional gains but the equipment performance gets compromised too.
This is the fine balance that makes MARC very interesting. However, in my experience, I have noticed that quality maintenance paid off in long run. Higher the reliability of an equipment, probability of frequent breakdown will be less. Thus parts consumption will get reduced and equipment availability will remain healthy.
But when maintenance is programmed for a larger part or entire life cycle of an equipment, standard maintenance concept simply does not work. It increases the risk of losing money for the service provider and loss of production for the equipment users. It turns out to be a loss-loss game for both! A good on-time preventive maintenance practices and applying predictive maintenance concepts give good result. A strong maintenance planning and scheduling system must be in place and also adhered to. Condition monitoring and contamination control should be part of the maintenance process. They help in predicting failures and thus prevent surprise failures and associated costs. Caterpillar, a highly process driven company, has introduced a unique process for equipment management known as ?Maintenance & Repair Process? which its dealers use extensively for MARC management.
Life cycle management of sub-assemblies of an equipment need special focus. Life expectancy of sub-assemblies must follow the pattern of pre-sale cost build up structure. Else, it could pose serious threat to the profitability of the entire project. Good maintenance practice can enhance the sub-assembly life. Similarly, close monitoring of its performance through predictive mode can reduce the cost of repair by using repair-before-failure concept. Equipment Health Card is an exceptionally good equipment performance governing system.
?If you cannot measure, you cannot manage? concept is applicable for any equipment in general. More so for the ones working in MARC environment. It is a common practice to measure equipment Availability, Mean Time Between Failures (MTBF) and Mean Time To Repair (MTTR). But there are a whole lot of other Key Performance Indicators (KPIs) which are equally essential to measure and monitor. For example, Service Accuracy is a ratio of number of PM carried out within the prescribed time limits and total number of actual PM done, expressed in terms of percentage. Ideally it should be 100 per cent and below 90 per cent is no good. While achieving it is not a big deal, practically we find it is much less when actually measured. Not doing maintenance on time does enormous harm to the equipment life and not sustainable in MARC.
Now, the question is what we do with the KPIs even if they are measured. Real challenge is the expertise to interpret the KPI values, their trend and to plan right action to be taken. Understanding these metrics, if the corrective measures are taken at the right time, the service provider has lot to gain, even monetarily.
I have personally experienced that a structured equipment management is suitable for entire spectrum of equipment, from Dumpers to Shovels. If applied on new equipment from day one, it gives amazing results consistently for long. For poorly managed equipment, it invigorates and improves performance like never before. But why MARC? What benefit does it give to equipment owner? From high level, MARC is a business of selling or buying equipment availability. However, there are lot of things that go behind it. Major decision making criteria in equipment selection are Owning Costs, Operating Costs and Life Cycle Management Costs. But the concern remains - Is this a reliable machine? Will service provider be able to bring in state of the art maintenance practice and manage the machines well with desired availability and reliability in long term? Is imposing penalty enough to recover the production loss? To fit the bill, the Service Provider must be technically competent and have a customer driven culture who not only focuses its own business interest but also understand the business process of its customer. Similarly, the customer must realise that the Service Provider is an outsider who has come to assist him in his business and all the required supports are extended. The relationship should grow to the level of partnership and work hand in hand. Through MARC the user ensures desired level of equipment available for production at any point of time. The equipment purchaser is no longer required to arrange resources with long term obligation and to invest on HR skill development. Service provider comes handy with ready set of skilled manpower.
Under the terms of the contract, either party mutually agrees to create facilities for on-site maintenance. Mostly, infrastructural facilities are provided by the equipment purchaser and furnishing maintenance workshop with tools and instruments, stores and parts inventory are managed by the service provider.
As I said initially that MARC is a win-win proposition, meticulous use of latest concepts of maintenance technology, sharing KPIs with the customers, jointly developing Continuous Improvement plan, providing targeted performance is how the equipment user is going to gain through. High availability with high reliability is what a customer is looking for. Frequent breakdowns can jeopardise user?s production plan. If a service provider is practising good maintenance, it is obvious that the availability as well as reliability will be higher. High scheduled maintenance and high reliability of equipment give customer an opportunity to plan his fleet and he gains handsomely from consistent production. With frozen MARC rate, it gives him the advantage of pre-determined cost for his products and hence the competitive edge.
Some of the Service Providers in India have matured well in MARC delivery striving to achieve global benchmarks. This reputation has resulted in customers and service providers from other countries visiting Indian MARC sites and acquiring knowledge on maintenance practices and MARC management. A few years back, Caterpillar dealer Hewitt Equipment Limited from Canada and Phu Thai from Vietnam visited TIPL?s South East Block MARC sites. Phu Thai brought its customer Vinacomin, a Vietnamese coal mining company along with for demonstrating Caterpillar?s best maintenance practices.
MARC, if managed properly, can turn out to be a very profitable business for both the contracted parties. With successful execution of MARC in India, mining customers are getting more and more inclined towards it and asking for MARC for the entire life cycle of the equipment in one go. The equipment sellers are not averse to it either. Risk appetite is increasing! So is the number of specialists who can extend their helping hands in designing perfect MARC deliverables. But here is a word of caution: it is not advisable to negotiate MARC at an abnormally high or low rate or with impracticable terms. Either party will definitely land in loser?s end.
The author is Head Product Support (Mining & Facilities), Tractors India Pvt Ltd. He has over30 years of industry experience in the field of after sales service of HEMM.