Traditionally maintenance was thought of a cost center—an area that does not directly add to profit, but still costs money to operate. Not anymore. Today’s organizations have discovered maintenance has a direct effect on their profitability. Your Maintenance Department is a Profit Center
How? Modern maintenance technology has shown managers and accountants how maintenance generates revenue for the organization.
The objective of a cost center is to minimize costs. However, a profit center’s goal is to maximize profit. It’s a subtle but important shift in perception, and it’s changing the way organizations of all sizes think about their maintenance operations.
What Changed?
This change started with the rapid adoption of data-driven management, which simply means making management decisions backed by reliable data instead of assumptions or perceptions.
As technology has advanced, more detailed, relevant data is now available. And that data reveals some interesting things, including how the maintenance team makes major contributions to the organization’s financial viability.
These contributions include…
- Safer operations (because accidents cost money)
- Higher quality product (because rework costs money)
- Better production efficiency (because you can produce more output in less time)
- Reduced downtime (because equipment that isn’t working isn’t producing)
- Better asset use (because increased capacity means more production capability)
In other words, if your organization’s success depends on uptime, reliability, production capacity, or any other quantifiable measurement, your maintenance strategy contributes to much larger goals. For the full landscape of strategies, see a complete guide to maintenance types.
How Does Maintenance Contribute to the Bottom Line?
Every dollar saved by maintenance is a dollar that goes to the bottom line.
Think of maintenance in its simplest form—a production line producing widgets. If the production line goes down, no widgets are made. Which means there are no widgets to sell, and your organization isn’t making money. It’s your maintenance team’s job to fix the problem—and look for ways to prevent it from happening again.
Now expand that to your organization. Do you produce goods? Provide services? Rent space? Make deliveries? Every industry relies on maintenance in some form, from buildings to vehicles to production equipment. If you have assets of any kind, you need maintenance.
In the past, the maintenance profession was often undervalued and sometimes unappreciated. If that’s the case in your organization, it’s time to re-evaluate how maintenance influences your operation’s productivity and profitability.
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