Outsourced Maintenance at the Food Manufacturer
A food manufacturer operates three plants with 5,800 assets, including 11 ammonia refrigeration systems and 4 high-care packing lines. Maintenance has been outsourced to a single contractor for four years. The contract's only performance indicator is average response time to a breakdown call, with a bonus for response under 30 minutes. Over the past 18 months, unplanned downtime has risen from 6.2% to 9.8%, compressor failures have doubled, and the contractor's technicians have stopped doing the planned lubrication rounds because they are not on the KPI. The contractor is meeting its response-time target every month. The plant director argues that "the contract is being met, so the problem is the contractor's professionalism". Your engagement is to advise on the asset management system's monitoring and outsourcing controls.
1. Diagnose the problem using the ISO 55001 requirements for outsourcing and for monitoring and measurement. What is the plant director missing?
Read the worked answer
The plant director is treating a management system failure as an attitude problem.
Outsourcing controls. When a process is outsourced, the organisation remains accountable for it. The asset management system must define the controls applied to the outsourced process and the way the provider's performance is evaluated. Here the outsourced scope is effectively undefined in asset management terms: no requirement to deliver planned maintenance, no requirement to report asset condition, no requirement to feed the asset register, and no mechanism to change the maintenance regime as risk changes. The contractor is doing exactly what the contract asks.
Monitoring and measurement. The system's measures must be relevant to the objectives. There is one measure, and it is an input/activity measure (speed of response) rather than an outcome measure (asset performance, reliability, cost, compliance). It is also actively counterproductive: response time rewards reactive work and penalises preventive work, so lubrication rounds disappear. This is a predictable consequence of the KPI design, not evidence of unprofessionalism.
What the director is missing. First, that the incentives the organisation designed are working perfectly. Second, that the asset information needed to detect the deterioration early (condition trends, PM completion, failure history) was never demanded, so the rise from 6.2% to 9.8% was visible only as an outcome long after the cause. Third, that ammonia refrigeration is a safety-critical system where statutory inspection and competent-person requirements cannot be left to an unmeasured contractor. Fourth, that the organisation has not evaluated whether the outsourced arrangement still supports its objectives.
2. Recommend a revised performance measurement set and the governance changes needed to make it work.
Read the worked answer
Design principle. Measures should be balanced across the outcomes the system exists to deliver, and should include leading indicators, because lagging indicators tell you about failures you have already had.
Proposed indicator set (per plant, monthly).
- Asset performance: unplanned downtime %, and mean time between failures for the top ten critical asset classes.
- Leading indicators: planned maintenance completion against schedule (target ≥95%), lubrication round completion, statutory inspection completion (100%, no exceptions), overdue work orders.
- Condition and compliance: number of condition alerts raised and closed, ammonia system inspection findings, audit nonconformities.
- Cost and lifecycle: maintenance cost per asset class, ratio of planned to reactive spend, spares consumption on critical items.
- Data quality: completeness of work order close-out and asset register updates attributable to the contractor.
Governance changes. Replace the single response-time bonus with a composite scorecard weighted toward asset performance and compliance, with a penalty for missed statutory or preventive work; a response-time measure can remain, but as one of several and not the basis of the bonus. Require joint monthly performance reviews with the contractor against the scorecard, and route the results into the organisation's own management review so top management sees asset performance, not just contract compliance. Define the outsourced scope in asset management terms, including data reporting obligations, and put change control in place so that maintenance regimes can be revised when criticality or condition changes. Finally, retain an internal competent-person oversight for ammonia systems regardless of the contract.