Opex reduction by routine AMC

Industry:
Construction Equipment Manufacturing

About the Customer:
This prominent joint venture in the construction equipment industry began as a division of a major Indian industrial corporation in the early 1960s. In collaboration with a renowned Japanese construction machinery company in 1984, the venture expanded its capabilities and became a leader in the Indian market for construction equipment, with advanced manufacturing facilities located in Dharwad and Kharagpur. Known for producing a range of high-quality equipment used in infrastructure and industrial projects, the company relies on efficient production processes supported by extensive crane systems at its facilities.

The Backdrop:
The Kharagpur plant is a major production site, operating over 220 cranes sourced from various suppliers. Of these, approximately 160 cranes were manufactured by Sparkline, including 120 cranes installed directly at the plant from 2007 to 2018 and another set transferred from another facility and modified to fit the Kharagpur site’s specifications. Sparkline also replaced some outdated hoists with new ones, ensuring optimal performance. In 2011-12, a health assessment conducted by an internal specialist led to Sparkline performing modifications on 30 cranes based on their condition and requirements.

Due to Sparkline’s history of reliable support and familiarity with the facility’s operations, the company awarded Sparkline its first Annual Maintenance Contract (AMC) in FY19, covering 183 cranes. The AMC, renewed annually, included not only Sparkline-manufactured cranes but also several others from another vendor. Over three consecutive fiscal years, Sparkline has consistently delivered maintenance services, demonstrating reliability and reducing operational challenges for the client.

The Challenge:
Maintaining crane systems in a large-scale manufacturing facility can present challenges, including managing the high costs of spare parts, ensuring consistent service quality, and avoiding prolonged downtimes. Initially, the facility faced difficulties in securing adequate support for cranes from certain vendors, particularly when it came to availability of spares. This posed a significant operational hurdle, as delays in service could impact production efficiency. Additionally, the client sought to reduce overall operational expenditure (OPEX) on crane maintenance by controlling the rising costs associated with frequent spare part consumption and unexpected downtimes.

The Expectations:
The client expected a solution that would ensure consistent, high-quality maintenance across their crane population, aiming to reduce spare part consumption and streamline maintenance processes. They sought an experienced service provider that could offer on-site support and adapt to the facility’s demanding 24/7 operations. Specifically, the goal was to see a reduction in maintenance-related costs without compromising on equipment reliability or safety.

The Solution:
Sparkline implemented a structured and cost-effective AMC strategy to address the client’s maintenance needs, which included:

  1. Dedicated On-Site Support: Sparkline assigned a team of 12 engineers stationed at the Kharagpur plant, working in three shifts to provide 24/7 support. This team was capable of performing routine inspections, preventive maintenance, and troubleshooting for the majority of the facility’s cranes, ensuring minimal downtime.
  2. Strategic Maintenance Plan: For the cranes manufactured by Sparkline, the company provided comprehensive maintenance services, covering all potential issues. For cranes from other suppliers, Sparkline offered maintenance support, excluding only the availability of specialized spares. By focusing on preventive maintenance, Sparkline helped extend the life of each crane, avoiding the need for frequent repairs and replacements.
  3. Progressive Reduction in Spare Part Consumption: Through routine monitoring and preventive maintenance under the AMC, Sparkline effectively managed the consumption of spare parts, leading to a substantial reduction in overall expenses. The company’s expertise in engineering solutions and commitment to minimizing breakdowns helped the client achieve operational efficiency.
  4. Year-over-Year Cost Savings: The AMC demonstrated remarkable cost-effectiveness, with spare part expenses dropping from ₹50 lakh in FY18 to ₹20.6 lakh in FY21. This reduction, achieved through Sparkline’s consistent service and proactive approach, represented a 60% decrease in spare part costs over four years.

A Statement of Overall Benefit:
Sparkline’s AMC approach provided the client with a reliable, efficient, and cost-effective maintenance solution. With Sparkline’s team on-site and a structured maintenance plan in place, the client enjoyed continuous operation, minimized downtime, and significant cost savings on spare parts. This partnership highlighted Sparkline’s commitment to delivering tailored solutions that address both immediate operational needs and long-term cost reduction.

Benefits:

  • Significant Reduction in Spare Part Costs: The AMC led to a 60% reduction in spare part expenses, from ₹50 lakh in FY18 to ₹20.6 lakh in FY21, underscoring Sparkline’s ability to streamline maintenance processes and manage resources effectively.
  • Dedicated 24/7 On-Site Support: With a team of 12 engineers stationed at the facility, Sparkline ensured round-the-clock support, effectively minimizing potential downtime and enhancing operational efficiency.
  • Improved Crane Reliability and Performance: Through preventive maintenance and expert engineering, Sparkline optimized crane functionality, ensuring that each unit met production demands without frequent interruptions.
  • Long-Term Partnership and Trust: Sparkline’s continuous engagement with the client established a foundation of trust, as they demonstrated adaptability to changing needs and a deep understanding of the client’s operational requirements.
  • Proactive Maintenance Strategy: By prioritizing preventive maintenance over reactive repairs, Sparkline helped the client avoid costly breakdowns and ensured seamless production operations.

This ongoing partnership has not only delivered immediate cost savings but also created a foundation for sustainable, efficient operations in the future.