How much do you know about the Netherlands Value Driven Maintenance（VDM）

Lenter Chang

How much do you know about the Netherlands Value Driven Maintenance（VDM）

Lenter Chang

Lean Production has been introduced into more and more enterprises， discrete or flow. They take Lean Production tools or Lean Thinking to create value or to eliminate waste more or less. Most of the equipment departments which is the foundation of manufacturing enterprises try to eliminate waste and rise equipment utilization as much as possible. However， the equipment management as the basis of enterprise has not changed. It supplies the insurance for production and does not create value directly. This decides the existence of the question which is hard to answer by equipment managers： if the input for equipment management was reduced 1%， how much loss was caused for the enterprise？ This question is really a concern for the enterprise managers. None of the enterprise manager would like to put more money without more profit. But VDM， Value Driven Maintenance， supplies the answer for the question.

VDM is a philosophy and practice for maintenance proposed by the equipment management consultancy lead by Mark Haarman. It emphasizes the way to measure maintenance activities with the theory of value， that is to say，the value created by maintenance organization should be measured by the future cash flow. The enterprise will get more future cash flow with additional 1% input for maintenance. On the contrary， the enterprise expects to get the same future cash flow or the valuable deduction with less input for maintenance. The VDM represents that the maintenance organization can create value from the four aspects： Asset Utilization， Cost Control， Health & Safety & Environment， and Resource Allocation， which are called as Value Driver. The figure follows.

The Asset Utilization and Cost Control are the most fundamental value. The core of equipment management is the point to raise asset utilization and reduce maintenance cost. Meanwhile， it should take in account the health，environment protection， and safe production. Rational resource allocation is also the maintenance value.

The VDM formula is derived from the PV formula in economics and can be used to calculate the value of maintenance. The VDM formula is：

PVm=Σ｛ FHSE,t×（CFAU,t+CFCC,t+CFRA,t

+CFHSE,t）/（1+r）t｝

Where：

P Vm= p r e s e n t v a l u e p o t e n t i a l o f maintenance

FHSE,t= HSE-factor in year t

CFAU,t= future free cash flow in year t form Asset Utilization

CFCC,t= future free cash flow in year t form Cost Control

CFRA,t= future free cash flow in year t form Resource Allocation

CFHSE,t= future free cash flow in year t form Health， Safety & Environment

r= discount rate

The VDM theory improves the equipment management through two phases， Value Driver Analysis and the design of Most Valuable Maintenance Organization， which includes eight steps in all. In the phase of Value Driver Analysis，performance will be measured by setting key indicators； the benchmark will be set through the comparison with industrial enterprises； and the major value driver through calculating four value drivers. In the phase of the design of Most Valuable Maintenance Organization， based on the result of the first phase， determine the core competence，surrounding which to design the most valuable maintenance organization so as to optimize process，human resource allocation and information support and measure the improvements under monitoring. The figure as follows：

What should be mentioned is the realization of the improvement process of core competence of most improved value relies on the best practice model that currently and widely accepted. For example， the TnPM will improve asset utilization； the RCM （Reliability Centered Maintenance） will improve reliability.

VDM has been implemented in more 100 plants around the world， including paper-making industry， cement， automobile manufacturing and other industries and achieved obvious effects.

From the above introduction， we can see VDM is essentially a system improvement process developed under value creation. It is still based on best practice of equipment management. Nevertheless， it quantifies the value of equipment management with economic theory in order to provide guarantee for the lean of equipment management， the value and waste of lean management will reflect directly in macroscopic way - cash flow. It corrects the defects that to improve because of the improvement， realizes the purpose that to improve because of the goal，the limited energy will be focused on the most valuable issues. VDM is the powerful weapon for the lean and scientization of equipment management.

（Provided by International Cooperation & Exchange Center of the China Association of Plant Engineering）