Author: Ethan Wilke

Maintenance management professionals constantly face the critical question of whether to repair or replace an asset. This decision isn’t a simple routine task; each situation presents a unique case that requires careful consideration of the costs and benefits of each option. Making this decision without thorough analysis can lead to significant financial and operational risks.

In this article, we’ll explore what to consider when making repair vs. replace decisions, walk through a typical analysis, and discuss how a computerized maintenance management system (CMMS) can help you make an informed, data-driven decision.

Importance of Repair vs. Replace Decisions

At its core, the goal of a repair vs. replace decision is to minimize an asset’s total cost of ownership to your organization. Rushing into a decision without proper evaluation can be costly and have other long-term effects. Each option – repair or replace – comes with its own benefits and drawbacks, which makes the decision challenging.

Repairing equipment is often a short-term, cost-effective option. Repairs are typically less expensive than purchasing new equipment, can be completed more quickly than sourcing and installing new equipment, and when done correctly, may extend the life of the asset. However, if you don’t address the underlying causes of failure, ongoing repairs will inevitably increase maintenance costs, lower productivity, and cause costly unplanned downtime.

On the other hand, replacing problematic equipment can prove to be more beneficial in the long run. New equipment typically needs less maintenance in the early stages of life, offers new features that enhance productivity, and is more reliable, but requires a significant upfront investment.

Beyond the direct costs to repair or replace, one must also consider factors including:

• Estimated useful life
• Equipment age and condition
• Costs of lost production due to downtime for repairs or new equipment installation
• Budget constraints
• Warranty coverage
• Safety or health risks
• Historical and current performance
• Energy efficiency
• Availability of maintenance resources
• Time required for installation and training
• Costs of supporting spare parts and inventory

As you can see, balancing the costs and benefits of equipment repair versus replacement is a strategic choice requiring thorough analysis. By evaluating these factors, you can make informed asset management decisions.

Repair vs. Replace Cost Analysis

Let’s conduct a basic repair vs. replace cost analysis of a forklift that experiences a transmission failure. Assume the following:

• The forklift’s transmission fails in year 12 of an expected 15 year lifespan.
• A vendor quotes $4,000 for a transmission rebuild.
• A new forklift costs $35,000.
• According to straight-line depreciation, the forklift has a remaining value of $6,000.

In this scenario, the forklift’s current value is relatively low, and the cost to repair is a significant portion of that remaining value. Let’s explore the business case for both the repair and replace options. To summarize, the forklift is worth $6,000 and has an estimated 3 years of useful life remaining. A transmission rebuild is quoted at $4,000 and the forklift costs $35,000 to replace.

Estimating an Asset’s Current Value

Many sources encourage you to start your repair vs. replace analysis using depreciation, specifically straight-line depreciation, as a rule of thumb. Straight-line depreciation spreads the cost of an asset evenly over its estimated useful life.

Suppose the original forklift truck costed $30,000 and was expected to last 15 years. It depreciated in value by $2,000 every year ($30,000 ÷ 15 years = $2,000 per year). Based on this approach, the forklift’s current value is $6,000 ($30,000 original cost – (12 years × $2,000 of value lost per year) = $30,000 original cost – $24,000 depreciation = $6,000 remaining value).

While straight-line depreciation is a simple way to valuate assets, it’s primary purpose is for tax and financial reporting, as outlined by Internal Revenue Service (IRS) guidelines. These guidelines are meant to standardize how assets are depreciated for tax compliance purposes, but do not necessarily reflect actual equipment performance. As a result, accounting depreciation and the depreciation estimated by the maintenance team may not match.

Option 1: Repair the Forklift

Depending on the nature of a given repair, you must determine whether value will be added back to the asset in terms of performance and useful life. In this case, we must determine whether the repair will extend the forklift’s useful life.

For example, suppose you determine that rebuilding the transmission allows the forklift to fulfill its remaining 3 years of useful life. Your $4,000 in maintenance costs allows you to maintain the forklift’s operation, but does not add any new value or increase performance.

Alternatively, if you estimate that the transmission rebuild will enhance performance and extend the forklift’s useful life by an additional 3 years, the situation changes. The $4,000 repair allows the forklift to operate for another 6 years total (3 remaining useful years + 3 extended years) and you avoid the significant cost of replacement.

Applying a Rule of Thumb to Repair Decisions

A common rule of thumb in repair vs. replace decisions is the “50% rule.” This guideline suggests that if a repair costs more than 50% of the cost of replacement, it is more cost-effective to replace the asset. Some organizations use a different threshold, such as the United States Marine Corps, which uses a threshold of 65%. In our example, 50% of the cost of replacement is $17,500. The repair cost is only $4,000, suggesting that repair might be a good option.

Option 2: Replace the Forklift

Replacing the forklift requires an upfront capital investment of $35,000, which is more than 8 times as much as the repair. However, the new forklift is expected to last for 15 years, which is an additional 9 – 12 years compared to the repaired one. Newer equipment typically has lower maintenance costs in their first few years, leading to lower maintenance costs. Additionally, any new technology, improved design, and advanced capabilities may make the new lift more productive compared to the current one.

Further Considerations

It is important to recognize that the forklift may require other significant repairs (and as a result, downtime) as it approaches the end of its lifecycle. Future maintenance and operational costs will impact your total cost of ownership and should be factored into your repair vs. replace cost analysis.

For example, assume that the forklift’s annual maintenance cost under normal operation is $800, and costs are expected to increase by 10% each year. By the end of its 3 remaining years of useful life, you’ll incur another $2,648 in routine maintenance costs ($800 in the third-to-last year + $880 in the second-to-last year + $968 in the last year = $2,648), barring any additional major repairs. These standard repairs do not add new value to the forklift truck, and now the remaining total cost of maintenance over the 3 years is $6,648 ($4,000 + $2,648 = $6,648), compared to its current value of $6,000.

If the lifespan is extended to 6 years, the ongoing maintenance cost becomes $6,172 ($800 + $880 + $968 + $1,064 + $1,171 + $1,288 = $6,172), again barring any major repairs. Add this to the cost of the transmission rebuild, and you’re in for $10,172 ($4,000 + $6,172 = $10,172), which is about 30% of the cost to replace.

Comparing the Cost of Repair vs. Replacement

Let’s recap each scenario. Repair costs $6,648 ($4,000 repair + $2,648 ongoing maintenance costs) for an additional 3 years of service. Replacement costs $35,000, but is expected to last for 15 years with low early maintenance costs. So, is it better to repair or replace? Ultimately, the decision depends on your organization’s budget, operational priorities, and whether the long-term benefits of replacement outweigh the upfront cost. A CMMS can provide the historical maintenance data and asset performance insights needed to make this decision with confidence.

How a CMMS Helps with Repair vs. Replace Decisions

Gaining buy-in for your repair vs. replacement recommendation can be challenging without solid evidence to back you up. A CMMS provides you with the data you need to build a strong business case and justify your decision. Here’s how a CMMS can help:

• Asset Tracking: CMMS software stores critical data about your assets throughout their lifecycle, including original cost, age, condition, warranty status, service history, and performance metrics. This comprehensive data provides context for making repair vs. replace decisions.
• Historical Maintenance Data: A CMMS tracks your maintenance activities over time, allowing you to identify trends and evaluate whether assets are undergoing more frequent repairs and becoming more costly to maintain. This historical reference helps support whether to make ongoing repairs or invest in a replacement.
• Performance Reports: Maintenance management reports allow you to track key performance indicators (KPIs) and metrics such as Mean Time Between Failures (MTBF), Mean Time to Repair (MTTR), and Overall Equipment Effectiveness (OEE). These reports help evaluate how well an asset is performing and how it compares to similar assets.
• Spare Parts Management: By tracking inventory data – such as stock levels, usage history, and replenishment costs – a CMMS provides a more comprehensive picture of the total cost of maintaining your assets. This includes understanding the costs associated with managing an asset’s related spare parts and supplies, which may affect your decision to repair or replace.
• Work Requests: Work requests provide visibility into how an asset’s performance affects others within your facility. By analyzing these requests, you can gauge how often assets require attention, the types of issues users are experiencing, and their level of frustration. This information helps you better understand whether the asset is meeting operational expectations.

Make Data-Driven Repair vs. Replace Decisions with FTMaintenance Select

The decision to repair or replace an asset directly impacts your organization’s operational efficiency and financial performance. Making these decisions without a thorough analysis can lead to costly mistakes that strain your budget and jeopardize plant productivity. A CMMS solution, like FTMaintenance Select, provides you with critical maintenance data needed to make these decisions with confidence.

FTMaintenance Select is a centralized platform for managing all aspects of your maintenance operations including work orders, equipment and facility assets, spare parts and inventory, preventive maintenance, and more. Request a demo today to learn more.

Key Takeaways

• The high demand for plastic products requires organizations to invest in modern maintenance strategies and technologies.
• The plastics industry at large faces numerous maintenance management challenges that threaten production timelines and quotes, product quality, and overall profitability.
• CMMS software, like FTMaintenance Select, helps plastics manufacturers effectively manage assets, maintenance planning and scheduling, and more.

Plastic products play a critical role in our daily lives, ranging from simple household items like toothbrushes and combs, to cutting-edge technology like 3D printing. With an estimated global market value of $712 billion (USD), the high demand for plastic products highlights their importance across various consumer and industrial markets.

To keep pace with current demand and expected growth, plastics manufacturers must invest in effective maintenance strategies and technologies such as computerized maintenance management system (CMMS) software. In this article, we will explore maintenance management challenges in the plastics industry and how a CMMS helps ensure efficient maintenance operations.

Common Maintenance Management Challenges in Plastic Manufacturing

Maintenance management is a critical component of plastics manufacturing, ensuring that equipment remains productive and profitable. However, there are several maintenance challenges that characterize the plastics industry. The sections below discuss some of the most common.

Mold Maintenance

Maintaining injection molds is challenging due to their strict durability requirements and the precision of care needed to manage them effectively. These molds can be incredibly costly, often $80,000 or more, in addition to the cost of the injection molding machines themselves. Organizations must minimize mold wear and tear through targeted maintenance while working within the constraints of the production schedule and tool and die team.

Coordination with the Tool and Die Team

Coordination with the tool and die team adds another layer of complexity to maintenance in plastics manufacturing. The tool and die team is responsible for designing, building, and repairing the molds, and has specialized knowledge and skills critical for maintaining production quality. The overlap in responsibilities between the general maintenance team and tool and die team often leads to challenges in balancing competing priorities and coordinating access to maintenance resources.

Further, miscommunication between maintenance and the tool and die teams may influence the production team’s operations. If maintenance tasks are scheduled during critical production runs or repairs aren’t completed on time, there may be unnecessary downtime, higher maintenance costs, or quality issues.

Quality Control

Given the high volume of products produced in plastics manufacturing, even minor equipment issues can lead to significant quality control issues. The maintenance team plays a critical role in ensuring plastic products meet stringent requirements and customer expectations.

Equipment must be kept in good working condition to eliminate defects such as surface imperfections, warping, cracking, or other inaccuracies. This requires the maintenance team to implement process control measures that include regular calibrations, condition monitoring, and preventive maintenance, which is challenging with limited resources.

Maintaining consistent quality control also becomes difficult when investigating the origin of product defects. Conducting thorough root cause analysis (RCA) is essential, but can be complex, time-consuming, and must be balanced against other immediate needs.

Environmental Factors

Environmental conditions within the plastics manufacturing facility also pose significant maintenance challenges. The high temperatures and pressures from plastic molding and extrusion processes put considerable wear on equipment, increasing the risk of failure. Avoiding these outcomes requires tight control of asset lifecycles and maintenance practices to ensure optimal performance.

Depending on your geographic location, humidity may also play a role in equipment maintenance. Excessive moisture can be absorbed by plastic materials and result in defects. Moisture that sits on equipment surfaces can corrode molds and metal components, compromising their integrity. Maintenance teams must take measures to control the temperature and humidity levels in manufacturing spaces.

Additionally, equipment is vulnerable to damage from fine plastic particles created during production. These particulates can enter machinery, causing abrasions and damaging sensitive components. While machine operators typically handle routine cleanings, maintenance teams are responsible for disassembly and deep cleaning during scheduled downtime periods.

Communication Between Maintenance and Production

Just as in other manufacturing environments, the degree of communication between maintenance and production teams can present considerable challenges. Production teams expect equipment to run at peak performance and support smooth, continuous operation in order to meet production goals and deadlines. The maintenance team is often blamed if equipment fails or experiences unplanned downtime.

On the other hand, maintenance teams can struggle to gain access to equipment for repairs. Tight production schedules leave small windows open for maintenance, and any downtime can be seen as jeopardizing production quotas. This lack of access makes it difficult to perform necessary preventive maintenance, leading to the risk of more sever breakdowns and extended downtime.

How a CMMS Helps Plastics Manufacturers Overcome Common Maintenance Challenges

Overcoming the maintenance challenges of plastics manufacturing requires a robust maintenance strategy. Computerized maintenance management system (CMMS) software provides the tools needed to meet these challenges head-on and better manage your maintenance operations. Below are some ways that a CMMS benefits the plastics industry.

Comprehensive Asset Tracking

A CMMS provides robust asset management features essential for tracking molds and plastic manufacturing equipment. It allows you to keep detailed records on all maintenance assets, including their specification, condition, availability, usage, and maintenance history. Using this information, you can manage asset lifecycles more effectively and ensure each piece of equipment receives the attention it needs.

Improved Maintenance Planning and Scheduling

In industries with high production volumes like plastics manufacturing, time is money. The consequences of downtime make reactive maintenance strategies unsustainable. The maintenance planning and scheduling features of a CMMS empower you to be more proactive about maintenance management.

CMMS software allows you to create a master preventive maintenance plan for all of your production assets, ensuring that routine maintenance is performed on time. Tasks lists allow you to define exactly what needs to be done, what materials and supplies should be used, and approximately how long routine tasks should take, leading to more consistent, quality maintenance. Work orders can then be triggered using time-based or runtime-based intervals, ensuring maintenance occurs when needed.

Some CMMS systems take proactive maintenance a step further and connect with condition-monitoring sensors. This integration supports advanced maintenance strategies like condition-based maintenance (CbM), which triggers work orders based on real-time equipment conditions, and predictive maintenance (PdM) which forecasts when equipment is expected to fail. These strategies allow you to perform maintenance only when it is needed, unlike with time-based maintenance practices.

Better Communication and Collaboration

Successful maintenance management in the plastics industry relies on effective communication and collaboration between the maintenance, tool and die, and productions teams. A CMMS ensures that the general maintenance team and tool and die team have access to the same maintenance information about production equipment and can work together to prioritize repairs and coordinate resources.

CMMS solutions also include a work request portal that allows non-maintenance employees to submit service requests directly to the maintenance team. With this feature, the production team can submit requests, check request status, and be automatically notified when requests change status or are completed. This level of transparency makes everyone aware of when maintenance will occur and creates a more collaborative relationship between maintenance and production.

Enhanced Failure Analysis

Using a maintenance tracking system enables you to leverage historical maintenance data in order to diagnose why equipment failed. CMMS solutions automatically create a service history for each asset, providing you with a wealth of data that can be used to identify failure trends, track reliability following repairs, and generate maintenance management reports that reveal key insights about asset performance. This allows you to move beyond treating symptoms and address the root causes of breakdowns, thereby preventing the likelihood of the problem recurring.

Read Also: What is a Failure Code?, What is a Cause Code?, and What is a Remedy Code?

Stay In Production with FTMaintenance Select

The plastics manufacturing industry faces many maintenance management challenges that significantly impact production, product quality, and overall profitability. Given the importance of plastics in our lives, organizations that fail to tackle these challenges may find it difficult to maintain consistent production.

Now is the time to modernize your maintenance operations and invest in a computerized maintenance management system (CMMS) like FTMaintenance Select. FTMaintenance Select provides robust tools for managing assets, inventory, preventive maintenance, and work requests. Leveraging this platform, you can implement proactive maintenance strategies that will reduce downtime, ensure consistent production, and set you up for long-term success. Request a demo today to learn more.

Read More about FTMainenance Select benefits for the plastics industry