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BASIM A L -NAJJAR†
School for Industrial Engineering, Växjö University, 351 95 Växjö, Sweden
M ATS -O LA H ANSSON
Information Technology Adviser, WM-Data Ellips AB, 35104 Växjö, Sweden
AND
When profit margins of a plant are decreasing, the need for reliable and efficient
maintenance policy becomes more important. Measuring maintenance performance is
important for companies to recognize whether their planned goals are achieved or not.
Also, such measurements can be utilized for benchmarking, which is one of the tools
for never-ending improvement. But, these objectives cannot be achieved without well-
documented data of the relevant variables. Better data coverage and quality is necessary for
following maintenance performance development and it would, in many cases, clarify the
ambiguity concerning the main problem in the context, namely that neither the production
nor maintenance department can show what effect maintenance has on profitability.
A more effective maintenance policy indirectly implies improvements in product
quality and manufacturing process effectiveness. Elongation of the production time, i.e.
reducing the downtime due to failures, planned replacements and repair, in addition to
the improvement in the total maintenance activities, are also some of the results that can
be expected when an efficient maintenance policy is used. Measuring and monitoring
maintenance performance measures is required partly for detecting, and eventually treating
as soon as possible, undesirable changes and partly to make benchmarking with the best in
the branch, which saves appreciable economic losses for companies.
In this paper, a model for how to identify the measurable variables, which are needed
to develop measures for monitoring maintenance performance behaviour systematically,
is developed. Five maintenance performance measures are proposed and applied. An
additional model for systematically analysing the trend of maintenance performance
measures, for an overall assessment of the company’s situation, is presented. Two case
studies in manufacturers of furniture are conducted to verify these models.
† Email: basim.al-najjar@ips.vxu.se
1. Introduction
In Dunn (1987), the cost of maintenance is estimated to be between 15 and 40 per cent
of the production costs. According to Al-Najjar (1997), maintenance performance can be
assessed by different measures. Each of these measures consists of two or more measurable
variables and reflects some of the real situation of maintenance. This is why it is not easy
to find one comprehensive measure for controlling maintenance performance.
Measuring maintenance performance is important for companies to know whether
the planned goals are achieved or not. Also, such measurements can be utilized for
benchmarking, which is one of the tools for never-ending improvement. But, these
objectives cannot be achieved without well-documented data of the relevant variables.
This is necessary for following maintenance performance development and it would, in
many cases, clarify the ambiguity concerning the main problem in the context that neither
the production nor maintenance department can show what effect maintenance has on
profitability (Löfsten, 1999).
Selection of the relevant variables that are required for developing maintenance
performance measures is influenced by the objectives expected when using these measures.
When monitoring the performance of a maintenance policy, both technical and economic
measures should be considered to reflect the significance of the changes done in the
maintenance policy and manufacturing process. The technical measure, which consists of
variables such as product quality rate, machine availability and performance efficiency such
as overall equipment effectiveness (OEE) reflects only machine effectiveness (Al-Najjar,
1996). Maintenance performance measures should not be used only as an information
source for management control and decision making. They should be considered as a pow-
erful tool for motivating and driving actions that are consistent with the advocated strategy.
In Australia, De Jong (1997) conducted a survey focused on maintenance practices of
small and medium sized enterprises. It was found that the main measure of maintenance
performance used in the responding companies is the ratio of the total cost of maintenance
to the estimated equipment replacement value. Eccles (1995) proposed that customer-
oriented measures such as response time, service commitments and customer satisfaction
should serve as lead indicators of business success. The economic measures are necessary
to express, for example, a company’s different cost factors, cost-effectiveness, losses,
profitability, benefits and their development during operation and according to the improve-
ments introduced within the enterprise. According to the European Benchmarking Study
on Maintenance group (EBSOM, 1993), there is a growing interest in judging maintenance
activities through the measurment of achieved maintenance results by specific variables.
2. the applied maintenance policy is better or worse than that being used in other
companies (within the same branch or other branches);
3. there were reasons behind why special arrangements and investments in mainte-
nance were being enacted at other companies and not at ours.
The study performed by the EBSOM (1993) group showed that several difficulties exist
when trying to measure maintenance performance. These difficulties concern
1. identification of activities that should be included by maintenance: for example
repair, cleaning, greasing and adjusting;
2. distinguishing production assets from buildings and installations;
3. operator’s activities that can be considered to be a part of maintenance;
4. distinguishing spare parts and the material being consumed when performing
maintenance actions;
5. difficulties when judging and calculating availability.
Dwight (1995) identified the following shortcomings of the performance measures that
are currently used in industry:
competitor (or another company in a different branch) which makes use of approximately
the same machinery. This may ultimately lead to the adoption of a more cost-effective
maintenance policy or to performing the required changes within the one currently
available. The implementation of a new maintenance policy or performance of the
required changes should lead to an exceptional improvement in the effectiveness of the
manufacturing process, in particular in the production cost of quality products.
Many parameters that can be utilized in monitoring maintenance performance of a
particular equipment, such as downtime, availability, reliability, performance efficiency,
product quality rate, overall equipment effectiveness (OEE), maintenance-related costs,
income losses, total maintenance cost, delivery delay penalties, number and cost of
accidents, spare parts, tied-up capital, planned stoppages, failures, cost of manufacturing a
quality product, etc. (Al-Najjar, 1996). Before benchmarking it is necessary to collect data
on the relevant variables, which is needed for estimating maintenance measures.
The aim of maintenance benchmarking is to select and improve the most cost-effective
policy through comparison of its concept, objectives, tools, methods and benefits, etc with
the ‘best in class’ company. This is why it is always beneficial to explore the within-
branch competitors’ economic situations to be used for benchmarking. But, the information
required from the ‘best in class’ to be able to perform such a comparison is not always
easy to find. Also, it is difficult for the ‘best in class’ company to choose which company
to compare itself with if it does not implement the total quality maintenance concept
(TQMain). Implementation of TQMain opens the possibilities for further improvements
and provides opportunities to improve quality, the cost of manufacturing quality products
and the annual profit continuously ‘without’ the need to get additional information
concerning competitors (Al-Najjar, 1996, 1997). It allows a company to take the lead rather
than just stay competitive.
The economic measures reflect the economical impact of maintenance performance on
the plant activities and they are required to describe maintenance costs, effectiveness, role
and importance, and to give a reasonable platform for judging a company’s economic situa-
tion from the standpoint of maintenance. The primary feature of using maintenance perfor-
mance measures is to monitor one of the crucial factors influencing a company’s economic
development, i.e. maintenance-related costs. Many variables can be considered for measur-
ing economic development, such as solidity, liquidity, profitability, turnover per employee,
rate of return on investment, total maintenance cost, operating cost and income reduction.
Technical measures are used to describe manufacturing process effectiveness develop-
ment technically. The most interesting variables for measuring effectiveness and accuracy
of maintenance are stoppage time, machine availability, number of planned replacements,
failures, product quality rate, OEE, Overall process effectiveness (OPE) (Al-Najjar, 1997).
Some of these measures include other measures such as OEE, which expresses availability,
product quality rate and performance efficiency.
A cost-effective maintenance policy is one which results in benefits that justify all the
costs incurred by driving it. Some aspects of the economic and technical effectiveness can
sometimes be assessed simultaneously in one measure: for example the total maintenance
cost divided by the number of the manufactured and accepted items (i.e. items of good
quality).
It is very important to clearly identify the goals behind use of each measure to avoid
confusion and to systemize the analysis of maintenance performance. In order to identify
BENCHMARKING OF MAINTENANCE PERFORMANCE 257
Step
Concept of Never-ending
1
improvement
Actions Analysis
8
9
F IG . 1. Ten-step model to identify the relevant variables needed to develop measures for monitoring maintenance
performance.
(A), performance efficiency (η), and quality rate (1 − q), where q is the proportion of
defectives produced, and η may be defined as the theoretical mean time for producing
one item to its actual time. The latter is a measure of the effect of small adjustments and
production speed reduction on the theoretical performance cycle time. Thus, OEE may be
expressed as OEE = Aη(1 − q).
The major reason for using OEE is to measure the technical effectiveness of a
manufacturing machine. The manufacturing process is often improved through finding
solutions to the problems causing losses. Applying these solutions is usually associated
with a new measure of OEE. Positive results lead to a new trial for reducing losses. But
reasons behind negative results cannot be traced via the OEE, a particular investigation
is usually required: i.e. failures lead to failure which causes investigation. Sometimes the
improvements in OEE become expensive, especially when it concerns highly automated
production lines, which may not be justified by the gained benefits.
A suitable scale for measuring equipment condition and accurate equipment operation
record is of great importance to achieve high equipment technical effectiveness. Better
understanding and a more accurate evaluation of the machine condition can be achieved
through collecting and analysing data concerning all the essential elements influencing
a manufacturing process, such as maintenance, operation/production, quality control,
environmental conditions (Al-Najjar, 1996, 1997).
Below, five measures are presented for detecting changes in maintenance performance:
specifically, losses in time and speed of production, product quality rate, machine
effectiveness and maintenance cost.
This is to achieve a measure of maintenance cost that can be used independent of the
machine operating time or running time (if they are different), because longer (or faster)
use of a manufacturing machine usually increases maintenance cost. Such a measure is
necessary when comparing machines of different production speed and operating/running
times.
This measure is used to display the technical and economic impact of a more efficient
maintenance policy on manufacturing process effectiveness. It reveals how better
maintenance efficiency, which is measured by the cost paid for maintaining the process
capability and effectiveness, may influence the quality rate. Maintenance cost is considered
to include
1. labour, including expenses for repair, adjustment, service such as machine and
surrounding cleaning, and greasing;
2. overhead cost for maintenance department, e.g. building, instrumentation, adminis-
tration;
3. spare parts expenses (including tied up capital expenses), e.g. rolling element
bearing, oil;
4. expenses of investments in more redundancies in equipment and personnel to avoid
longer waiting times;
5. production and quality losses arise due to failures, malfunctions and unavailability;
6. extra insurance premium according to failure-based accidents;
7. expenses (penalty) due to damage done to the environment (air, earth and water);
8. delivery delay expenses, due to failures and malfunctions;
9. loss of market share.
maintenance cost
(8)
operating cost
can be used to display, in conjunction with the measure in Section 5.2, how
increase/decrease in the operating cost influences maintenance cost, and how more efficient
maintenance may reduce operating cost.
The decision rule tree is divided into two parts. In part one, observe that
improvements/degradation in OPE, which is achieved due to improvements/malfunction
in production and quality respectively, may influence maintenance cost per unit time.
Increments (reductions) in the maintenance cost per unit time also arise due to increased
(reduced) production rate, production time or exposing machinery to harsh (better)
operating environment conditions. But operating cost often increases due to longer
production time and more consumption of raw material. Thus, a comparison of changes
in maintenance cost with those in OPE and MCROC is necessary to identify the basic
reasons behind maintenance cost behaviour. Trends of maintenance and operating costs (or
OPE) would reveal if there are interactions between changes in these measures.
If it is not possible to find interactions between operating cost (or OPE) and
maintenance cost, measurements of OPE and MIAMP should be analysed to highlight
whether MIAMP is increased or decreased and the reason behind that: whether it was
higher/lower maintenance cost or lower/higher quality rate, respectively. In many cases
improved OPE yields higher maintenance cost especially when it concerns automations and
continuous controlling production. Following the behaviour of maintenance performance
measures in this systematic way opens reliable opportunities for identifying the basic
causes behind changes.
In part two of the tree, IPEMC displays the effect of technical related changes such as
improvements in the process effectiveness on maintenance cost per unit time. For example,
more automated production may result in higher maintenance costs. It is a matter of
economic justification and the company should decide how high the maintenance cost per
BENCHMARKING OF MAINTENANCE PERFORMANCE 263
MIAMP
OPE MIAMP
unit time (or per quality product) should be for the process to be still considered as cost-
effective. It is always possible to improve the manufacturing process technically, but it is
not always the case that it is also cost-effective.
7. Case studies
Two Swedish companies are considered in this study. They are AB Recta and Swedwood
AB.
AB Recta has been certified according to ISO 9000 since 1992 and has about 180
full-time employees. It manufactures bookshelves and coffee (sofa) tables and its yearly
turnover is about 230 million SEK. About 99% of its production delivers to IKEA and the
rest to another customers, i.e. the market buys all AB Recta’s production. The department
for surface treating (with ultraviolet) is selected in AB Recta for further study. This
department works in shifts, about 111 hours per week. Surface treatment is accomplished
by using several operations, which are done by rolling, polishing, staining, drying and
exposing to ultraviolet rays. In order to increase the production, the machine speed was
increased from 17 to 24 m/min. This increment also means some increment in the rejected
products because material feed and product collection is done manually. According to the
personnel, the biggest problem is related to rolling and polishing operations. Maintenance
is mostly performed by the operator, except for large repairs and purchasing of spare parts,
which are handled by a repair team. Lack of information and documentation regarding
repair, waiting and stoppage times was noticed at AB Recta. Maintenance actions were
usually found to be about 90% based on break-down maintenance (BDM) and 10% on
preventive maintenance (PM) policy. The company struggles to reduce production cost,
increase product quality and improve the share of PM.
Swedwood AB is a part of Swedwood International AB, which is a daughter company
of IKEA. It manufactures different products, e.g. frontispieces to kitchens and bathrooms,
and about 95% of the production sales are to IKEA. Its annual turnover is about 135 million
SEK. The company has 173 employees and it has been certified according to ISO 9000
since 1993. In this company, the surface treatment department, which is the bottleneck
in the production line similar to that at AB Recta, is also selected for further analysis.
The production runs in three shifts from Sunday to Friday, i.e. about 111 hours weekly,
264 B . AL - NAJJAR ET AL.
excluding overtime. The most troublesome areas are the turn-over operation and sandpaper
change in the polisher. Manufacturing speed is about 8 m min−1 . The main problem
confronting the company is the maintenance cost. This is because BDM takes a long time
and demands more resources compared with PM. BDM represents about 90% of the total
maintenance effort; the rest is outsourced. As at AB Recta, there is a lack of relevant data
and documentation regarding maintenance. The repair team is also responsible for large
repairs and for the purchasing of spare parts. Outsourced maintenance including spare
parts costs about 4·4 million SEK annually.
• There was no register documenting the scrapping and reworking of bad quality
products. Therefore, it will not be possible to assess OPE accurately.
• Planned and unplanned stoppage times are mixed in both companies.
• No data are found concerning theoretical and practical cycle time and manufacturing
speed. Therefore, we used four assumed values to denote machine performance
efficiency (η), which are 0·4, 0·6, 0·8, and 1·0. This is in order to explore how this
variable may influence OPE at the two companies, as shown in Fig. 3.
• Availability: the companies measure availability in different ways. Reworking time of
the rejected items, i.e. those which were rejected due to lack of quality, is included into
Recta’s stoppage time, but not at Swedwood. At the latter company, the rejected items
were included in product quality rate.
• Losses at AB Recta were calculated to be about 2643 SEK per one hour stoppage
of production. This cost includes man-hours, expenses for invested capital, insurance,
delivery delay expenses, interest rate losses and bad quality cost.
• Losses at Swedwood AB, which included parts of maintenance cost, were calculated
to be about 3300 SEK per one hour production stoppage.
• There were no special investments in the maintenance in these two departments during
the period of study.
• Operating and maintenance costs are related to the surface treating departments at the
two companies.
• The cost factors included in maintenance cost were repair (man-hours), spare parts,
overhead cost, production losses and operator costs during stoppages.
• Operating cost includes man-hours, invested capital expenses, insurance, penalties
according to delivery delay and affecting the environment and the cost of bad quality
products, but material cost is excluded.
• The products from (and the manufacturing process at) the two companies’ departments
are comparable.
BENCHMARKING OF MAINTENANCE PERFORMANCE 265
(b)
Variable Recta AB Swedwood AB
Number of rejected items due to
technical-based stoppages (n f )+
number of rejected items due to
common causes (n c )+ number
of rejected items due to special
causes (n s ) 6550 11 747
Total processed items (n) 443 209 311 747
Quality rate
(q) = 1 − (n f + n c + n s )/n 0·985 0·9623
OPE = A ∗ q ∗ η 0·7919 ∗ 0, 985 ∗ ηRecta 0·8831 ∗ 0·9623 ∗ ηSwedwood
= 0·780ηRecta = 0·850ηSwedwood
7.2 Analysis
The companies suffer from serious lack of efficient maintenance. Maintenance perfor-
mance measures are calculated, analysed and judged according to the seven steps of the
model shown in Fig. 1 and the decision rule tree shown in Fig. 2. Tables 1(a) and (b)
display the variables needed to assess availability and OPE respectively. Maintenance
performance measures’ values are assessed based on the data gathered from the surface
treating departments at the two companies.
From Table 1(b) we notice that the number of rejected items experienced at Swedwood
is approximately twice the number experienced at AB Recta although the total number
of manufactured items at the latter is much more than that at the former company. This
describes why the quality rate at AB Recta is greater than that at Swedwood AB. But, due
to the lower availability at AB Recta, its OPE is less than that at Swedwood AB given that
their performance efficiencies η are equal.
From Table 2(b), it can be seen that AB Recta pays more in maintenance for each
manufactured and accepted item (and for each unit in OPE) than Swedwood AB does.
This measure can be used to compare these two companies as long as the products from
(and the manufacturing process at) the two companies are comparable. Operation in AB
Recta costs more in maintenance than is the case in Swedwood.
266 B . AL - NAJJAR ET AL.
0,9
0,8
0,7
0,6
OPE
F IG . 3. OPE at AB Recta and Swedwood AB with respect to the four assumed values of performance efficiency.
(a)
Maintenance performance measure AB Recta Swedwood AB
Maintenance cost during 6 weeks, Table 3 1066 654.60 342 101.01 SEK
Accepted products 436 659 300 000 items
OPE 0·780ηRecta 0·850ηSweedwood
Operating cost 13 464 984 6156 637 SEK
which yields
(b)
Maintenance AB Recta Comparison Swedwood AB
performance
measure
MIAMP 2.4428 SEK (MIAMP)Recta > 1.1403 SEK
(MIAMP)Swedwood
IPEMC 0.731×ηRecta × 10−6 (IPEMC)Recta < 2.484×ηSwedwood × 10−6
1/SEK (IPEMC)Swedwood 1/SEK
for equal η
MCROC 0.0792 (MCROC)Recta > 0.0557
(MCROC)Swedwood
Maintenance 177 775.77 (Maintenance 57 016.84 SEK/week
cost/week SEK/week cost/w.)Recta >
(Maintenance
cost/w.)Swedwood
Availability
0,8
0,6 Recta
0,4 Swedwood
0,2
0
9 10 11 12 13 14 15 16
Week
what a maintenance cost means, such as operating and running time (if these variables
are different) and production speed (rate of production), otherwise the results may be
misleading. For example, faster production and longer production time yields faster
deterioration of the machines, which means more maintenance and costs. But it is not
necessarily unjustified economically. This is why when maintenance cost increases it is
usually interpreted negatively. On the other hand, the increase will be accepted if it means
more quality production, i.e. no increase in the maintenance cost per quality product,
and this is what is reflected by the performance measures such as maintenance cost
per quality product. This is important to take into consideration because maintenance
performance measures should be used carefully when two companies are compared due
to the differences in the problems and norms (Karlöf, 1997).
Figure 4 shows availability for both companies. Because the measurements were few,
it was not easy to display a trend describing the behaviour of availability. Note that in the
data acquired from AB Recta, the reworking was included, which was not the case in the
data collected from Swedwood AB. This creates differences in availability calculation at
these companies.
possible to capture changes in the maintenance economic and technical effectiveness more
accurately, especially after investment (if any) in maintenance.
The cause of any increase in maintenance cost should be analysed and described. Part
1 of Fig. 2 is used to judge the case before using part 2 because it is easier to handle. First,
MCROC is analysed and judged because changes in maintenance cost per unit time can be
related to changes in production rate and production time.
From Table 3, it is obvious that operating cost increased from 6340 092 to 7124 892
SEK, while maintenance cost decreased from 631 118·30 to 435 536·30 SEK. The
production is increased due to the increase in availability, from 0·7832 to 0·8006, and
production speed, from 17 to 24 m min−1 . The performance efficiency is unknown and the
number of rejected products during the period of study is considered constant and equal to
1.5%. Notice that maintenance performance measures’ values at AB Recta are improved
although no changes were introduced at the company concerning production and quality
during the period of study.
Judging MIAMP is the last step in Fig. 2, part 1, which shows a reduction from
2·69 to 2·16. Such a reduction means smaller maintenance cost per accepted item. If the
observation time had been longer than six weeks, it might have been interpreted with high
certainty that it was the better maintenance performance which caused this reduction in
the maintenance cost per accepted product; otherwise it may be considered as a natural
variation in the process output. The value of IPEMC increased and this increase is due to
the increase in OPE and reduction in maintenance cost per unit time.
To summarize the situation, operating cost increased due to more production,
maintenance cost decreased, OPE and IPEMC increased when MIAMP decreased. This
means that when implementing an effective maintenance (here the period of study was too
short to be sure of this), higher availability and longer production time at a reduced cost
can be achieved.
Conclusions
The measures identified for monitoring maintenance performance are informative and
helpful to follow changes in maintenance performance and to decide which action is
necessary if any deviation from the predetermined specifications is detected. The models
developed can be used for benchmarking with other companies of comparable products
and it will be beneficial for internal monitoring, comparison and following the trend
(behaviour) of maintenance performance measures. With better data coverage and quality,
it would be possible to get statistical evidence instead of the achieved indications. Using
the decision rule tree, results can be improved continuously based on better knowledge and
experience, which is usually provided by training.
Using the five maintenance performance measures described in Section 5 means fewer
variables, measurements and less cost, and increased consistency. Monitoring maintenance
cost per unit time (and per unit quality product) in conjunction with operating cost and OPE
would lead to an identification of maintenance profits and motivate increasing maintenance
cost, which is more or less impossible when monitoring maintenance costs separately.
Other reasons behind changes in the maintenance cost can be detected at an early stage
in order to be eliminated.
Recommendations
Based on the results achieved by this study, the following recommendations are suggested
for the companies:
1. It is important to establish a relevant data acquisition and analysis system, which
makes the assessment and monitoring of the behaviour of maintenance performance
measures easier. By means of a reliable data acquisition and analysis system it
would be easier to detect and eliminate deviations in maintenance performance,
operating and quality costs and technical effectiveness, and to motivate the required
investments.
2. The variables needed for calculating maintenance performance measures should be
identified and defined clearly in the data acquisition system to make the use of these
measures reliable for internal and external benchmarking.
270 B . AL - NAJJAR ET AL.
Acknowledgements
The authors are grateful to the staff at AB Recta and Swedwood AB for the help received
during gathering data, which is partly used for this paper and partly for a previous MSc
project report.
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