The Big Maintenance Dilemma: In-House vs. Outsourcing | Automation.com

The Big Maintenance Dilemma: In-House vs. Outsourcing

October 102016
The Big Maintenance Dilemma: In-House vs. Outsourcing

Oh, the dilemma that is maintenance! Determining whether to use in-house staff to perform maintenance or to outsource to a contractor is a source of continual headaches for many a company. The insourcing vs. outsourcing maintenance debate is a strategic question the needs to be examined based on a number of criteria before making decisions.  In some organizations, the funding of in-house and outsourced maintenance can complicate the decision process since funds may be controlled by various different departments and budgets.  Basically, the decision-making process will come down to three approaches to maintenance management: in-house staffing, a hybrid of in-house and outsourcing and complete outsourcing. 

The Pro-Outsourcing Argument

Downtime

Determining the impact on downtime, using in-house or outsourced maintenance staff, should have one of the highest priorities since it directly impacts productivity and company profits.  Having in-house staff available, to deal with problems as soon as they occur, has a significant response time advantage. On the other hand, the right outsource partner may have experts on hand who can significantly lower the Mean Time To Repair (MTTR) even with travel time.

Staffing

The right outsourced contractor may be able to quickly provide flexibility in delivering the proper staffing level with the proper skills to alleviate maintenance problems.   Basically, the contractor’s investment in skilled personnel and tools is more efficient since it can be spread over a number of customers.   In addition, the contractor may be in a position to provide expertise that may be too expensive for you to maintain in-house staff.  This avoids the investment of developing in-house competencies that are not regularly needed in the day-to-day operations.

Tools & Technology

An outsourced contractor can provide staff that is well-trained in the use of current technology. This eliminates the need for the company investment to train in-house staff training and spending money to acquire specialized tools and technology for troubleshooting. 

Personnel Issues

Outsourcing means personnel grievances, disciplinary actions and issues become the responsibility of the contractor. Payroll, time keeping, labor relations, human resources, benefits, etc., are handled by the contractor freeing company management from the responsibility.  A contractor has more flexibility to adjust the numbers of employees faster than in-house staff, and hiring costs are absorbed by the contractor.

The In-House Maintenance Argument

Management Redundancy

Outsourcing does not mean management no longer has responsibilities. In fact, outsourcing requires dedicated management to oversee, coordinate and collaborate with the outsource organization.  Roles may be duplicated in a client and contractor organization, and this can, in turn, increase the overall cost of maintenance. If roles and responsibilities are not clearly defined and understood, inefficiencies within the maintenance organization can result in conflicting priorities and confusion.  Ultimately in-house management is responsible for results and to achieve this level of responsibility for the contractor requires a strong and well thought out contractual arrangement.

Loss of Control

Outsourcing the maintenance function may be cost-effective, but there are definite restrictions to working with contractors. This includes obstacles such as the client company’s inability to directly manage, set task priorities, and instruct the workforce.  The geographic location of the facility may mean that contracted personnel with specialized skills may be limited or unavailable.  This may require hiring in house talent unless an outside contractor has a strategy to be responsive to this need.

Staff Turnover

In-house employees tend to have more years of service at a facility than contractor employees and have a higher understanding of the business and its expectations. The outsourced workers may not possess as much allegiance to the company.  Therefore, the knowledge that the outsourced staff possesses regarding the site’s maintenance and equipment is more easily lost if they leave. 

IP Concerns

Brining in outside contractors for maintenance can potentially create intellectual property protection risks as well as cyber security risks.   Outside contractors should prove they have done in-depth background checks on employees that are working in your facilities.  It may be prudent to restrict these contracted personnel from access to or working on proprietary parts of the manufacturing operations.  There can be contractual guarantees in maintenance agreements, but if a breech occurs, “the horses are out the barn”, and it can be costly (i.e. legal fees) to compensate for damages.

Automation System Vendor Maintenance

If your primary automation vendor is proposing a service contract, they will certainly understand their own equipment needed to be used in order to service it.  If you are like most plants, you will have equipment from their competitors and the contractor will be less proficient at maintaining those controls and automation.   This poses a bit of an objectivity dilemma, since it is in the best interest of their service people to maintain mastery of their vendor’s equipment for their own careers.  Recommendations for replacements are far more likely to be made with the suggestion of replacing competitive equipment with their own products, for their own benefit rather than for your company’s.

Bottom Line

The analysis of service contracts takes effort to understand the lifecycle cost and impact on manufacturing operations.    

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