The Fonterra Dairy Cooperative manufacturing site located in Edgecumbe, New Zealand has achieved a World Class ranking for its Current Best Practices, (CBP), in Maintenance. The achievement occurred in October 2009 after a 12 year journey. The joint trade-union, management and operations partnership surpassed the IDCON Inc. CBP audit threshold of 75% with a score of 78%. Significant bottom line performance improvements along with an improved lifestyle have been the result. The site has demonstrated that improved reliability drives down costs.

1. Fonterra Edgecumbe’s Journey to World Class Maintenance
1996 – 2009
Figure 1: Bay Milk Products (Fonterra Edgecumbe ) Dairy Plant 1996
SUMMARY:
The Fonterra Dairy Cooperative manufacturing site located in Edgecumbe, New Zealand
has achieved a World Class ranking for its Current Best Practices, (CBP), in
Maintenance. The achievement occurred in October 2009 after a 12 year journey. The
joint trade-union, management and operations partnership surpassed the IDCON Inc.
CBP audit threshold of 75% with a score of 78%. Significant bottom line performance
improvements along with an improved lifestyle have been the result. The site has
demonstrated that improved reliability drives down costs.
BACKGROUND:
The journey to Maintenance Excellence was initiated in typical circumstances for many
organizations that have undertaken pursuit of world class initiatives over the years.
There has been, however, a unique group of people, leadership, desire, and sustained
effort that has resulted in success.
It is helpful to note, at the beginning of this article, that the source of many descriptive
phrases and adjectives are derived from Christer Idhammar and his staff at IDCON Inc,
an international maintenance best practices consulting firm based in Raleigh, North
Carolina USA. IDCON was contracted to support the Edgecumbe maintenance
excellence journey in 2003, and indirectly influenced the process from the beginning in
1996, as will be described.
The dairy site, then known as Bay Milk Products, Ltd, was an independent,
cooperatively-owned, dairy manufacturing facility on the Rangitaki River plains in
Edgecumbe, New Zealand. The site, at the dispensation of the New Zealand Dairy
Board, was responsible for 40% of the research activity within the New Zealand dairy

2. industry. There were a number of innovative research projects and highly skilled
technical experts employed at the site. The company employees were proud of the
“campus-like” atmosphere and its open-minded, innovative reputation along with the
outdoor-lifestyle afforded by the location. The plant was rebuilt from the ground up
following a destructive earthquake in 1987. The reconstructed plant featured the latest
in state-of-the-art dairy equipment. A new cogeneration electricity/steam plant was under
construction and scheduled for completion in 1997. Improved reliability of supply for
electricity and steam would be the outcome.
The maintenance practices at the Bay Milk Products site were typical of other New
Zealand dairy sites. Tradesmen and maintenance staff prided themselves on their ability
to respond rapidly to breakdowns and get the plant back on line. The pay system
rewarded trades staff for after hours “callouts” where they were paid a minimum of three
hours at double time for each appearance at site, which averaged two hours. 20% of
each trades person‟s income was derived from the wage-based, „callout‟ system. .
The mechanical and control systems, (electrical and instrumentation), technicians were
collectively represented by the Engineering, Printing and Manufacturing Union, (EPMU)
A slightly adversarial relationship existed between management and EPMU members.
The control systems and mechanical tradespersons were physically and socially split into
two separate workshops.
Planning and scheduling was primarily focused on the two-month Winter Shut and not on
daily/weekly work practices. Equipment was over-hauled based on actual and perceived
needs. Daily work for each discipline was allocated after morning meetings by separate
electrical and mechanical supervisors.
Operations management regarded maintenance as a “necessary evil,” and required
maintenance staff to respond quickly to their requirements. Operational managers in
each of the three business units regarded maintenance as a “service‟ organization to their
production units. They set priorities and requirements for maintenance work, but were
not held accountable for the resulting maintenance expenditure or budget performance.
Some operators were regarded disdainfully by tradespersons as “UFO‟s” for incorrectly
operating equipment and causing breakdowns, while some trades persons were regarded
as inept and incompetent by operations staff. There was a lack of partnership in the
approach to problem solving. Finger pointing and accusations were the rule of the day
following a major breakdown.
In 1995 there were 940 recorded „breakdown‟ events at the Bay Milk site. Breakdowns
were defined as equipment failures that stopped or forced a change in the production
process. Many of these breakdowns halted the flow of milk through the entire chain of
business units; cream products, casein, caseinate, and whey protein manufacture. Once
production flow ceased, the raw milk storage silos rapidly filled as they were capable of
holding just a third of the peak daily volume produced at nearly 1000 farms.
Consequently, dairy transport tankers were left standing at the site waiting to unload.

3. Transport delays resulted, leading to delayed “pickups” of raw milk from the dairy farmer
owners of Bay Milk. A backlog of full trailers in the morning meant that unhappy
farmers would be ringing the Bay Milk Products CEO and a tense day was in store
getting the plant back to a normal state.
There was a lack of confidence from one day to the next about plant availability and
adherence to the transport schedule. Transport schedulers, drivers, farmers and company
executives accepted the uncertainty as inevitable in the world of dairy equipment
performance. Bay Milk managers expected after hours callouts at home, waking them
in the middle of the night for notification or questions regarding the latest production
emergency, which the “on-call” trades persons were already attending. The” tyranny of
urgency” was often the order of the day.
In addition to the pickup delays, a high level of replacement parts usage resulted along
with increased internal and external contract labour costs. Equipment failure also
resulted yield and grade cost losses and reduced financial performance for products. The
“iceberg” effect of equipment failures was not tracked or apparent in 1995. There was
unrealized opportunity for improvement.
Figure 2. Maintenance “Iceberg” of Hidden Costs
THE MAINTENANCE BEST PRACTICES JOURNEY:
In 1996, a new maintenance manager, while gathering information about maintenance
systems performance, was inspired by the description of plant reliability and the
financial, cultural and lifestyle improvements at the Buckeye Pulp & Paper Mill in
Florida. Buckeye had won the NAME, (North American Maintenance Excellence),
Award 1994. The description of Buckeye‟s performance was used to challenge the Bay
Milk maintenance performance. The maintenance manager suggested that the
tradespersons and maintenance leadership consider embarking on a project to reduce
126
• Maintenance Budget
• Hidden Costs
Labour, Material,Labour, Material,
OverheadsOverheads
Equipment Downtime
(Availability)
Reliability (Stop/Start)
Increased
Cost of
repairs
Quality
Impact on larger
inventories
Longer
Customer
Lead timesLost Profit
Safety
Waste

4. breakdowns to zero like Buckeye. He was supported by the maintenance coordinator,
who has suggested that removal of the wage-based “callout” system that was
incentivizing a breakdown culture. Ironically and unbeknown to the Bay Milk
maintenance department, Christer Idhammar and the IDCON organization had played a
key role in the Buckeye Pulp & Paper maintenance systems improvement and subsequent
success. They would learn about that relationship six years later.
Without a definitive maintenance best practices systems knowledge or consultant, Bay
Milk‟s maintenance management, supported by the Site Manager, a proponent of Russell
Ackoff‟s Idealised Design approach to operations systems, encouraged the trades group
to consider what actions and systems changes and goals were required to embark on a
pursuit of maintenance best practices and achievement of a zero breakdowns.
Initially, in the first half of 1996, the trades staff‟s reaction to the proposal was either
guarded or indifferent. Tradespersons regarded the zero breakdown goal as an
impossible target, and presumed that the new maintenance manager was setting them up
for failure. The proposal was also setting them up for a loss in. Several of the trades
persons explained their suspicions and the fact that management „had never done
anything for their benefit” to the new maintenance manager, and there was no reason to
believe things would be any different going forward.
Midway through 1996, the former maintenance manager, (now the Cream Plant
operations manager), and a colleague who was operating a successful private
engineering business, proposed to “contract out” the maintenance services at the Bay
Milk site. The proposal was made to the Bay Milk Board of Trustees for consideration.
Shortly after the contract out proposal, the new maintenance manager made a proposal to
the Bay Milk Products Board of Directors for support of a best practices maintenance
programme including the introduction of TPM (Total Productive Maintenance). He
argued that the proposal would not require contracting out of the maintenance department
to deliver substantial bottom line improvements. It was an example of savings through
reliability improvement. The Bay Milk Board members were incredulous, but
supportive of the concept in principle. They were uncertain how such a substantial

5. increase could be achieved when they hadn‟t identified the potential.
2
Question to Bay Milk Board of Directors 1996
Introduction of MBP & TPM Program potential benefits
Figure 3: Maintenance Best Practices Improvement Potential
Maintenance management and tradespersons alike realized that the opportunity for self
determination and improvement could be replaced by the specter of contract maintenance
and immediate job loss and cost reductions following the “contract out” proposal to the
Board of Directors.
This possibility motivated the trades group to engage in serious discussion among
themselves, resulting in the completion of their own proposal and vision of a world class
maintenance operation entitled, “Engineering Services Idealised Design Proposal.” The
document defined their expectations for their work environment including determination
of hours of work rosters, training, increased self management, and replacement of the
wage-based callout system with a salarised day/callout remuneration proposal that would
protect their current level of earnings.
.
Management countered with a “no loss / no gain” approach for the that would
incorporate the 20% of their earnings for “callout payments” into a salary figure as long
as they worked whatever hours were required to keep the plant in operation.
The site manager and maintenance management took up the trades‟ offer and pitched the
proposal to the Bay Milk CEO. The deal was ready to sign by August 1996 when the
amalgamation of Bay Milk Products Ltd. with the much larger New Zealand Dairy
Group was announced. The new salarised payment proposal was put on hold as Bay
Milk executives were aware of the need to avoid potential conflict with the NZDG
collective employment philosophy. After several months in limbo, the NZDG General
Manager was persuaded to allow the “trial” for the Edgecumbe tradespersons salarisation
for two years.

6. 1997 proved to be a “breakthrough year, with immediate results flowing from the new
payment system. Tradesmen felt that they were now “getting out of bed for nothing,”
because the callout payment was included in their salary. The attention to daily, informal
preventive maintenance checks increased dramatically. Breakdowns had been reduced
by 15% within six months of the signing of the new salary agreement.
New behaviours became evident. The tradespersons cooperated more openly with each
other to solve problems. Job protection was reduced. Both the control systems and
mechanical trades groups suggested that they cover the callouts and day work of two of
their top problem solvers so they could devote their time to resolution of the Top Ten
Breakdown items which were now being actively tracked. Callouts were further reduced
by 40% in 1998, thereby improving the “lifestyle” of the trade staff as defined in the
Idealised Design document.
One mechanical tradesman decided to leave the company in 1998 as a result of the new
system. When asked for his reason for leaving Bay Milk, he said , “before this new pay
system started, I only had one boss. Now, with this team concept and responsibility for
callouts in our assigned areas, I‟ve got 15 bosses!” It was true. If there was an overnight
call-out in his area, the tradesperson who was “on call” was likely to give him a rev-up if
the reason for the callout was negligence, like a missed preventive maintenance task or
obvious fault that should have been picked up during his or her inspection rounds.
This equated to a “punishment” system that had previously been left to maintenance
management, not the trades persons themselves. In the years to come, this negative
reward behaviour was spontaneously replaced with a positive reward system where the
person “on call” started purchasing morning “chips” for all the trades staff when he went
through his callout roster without having to come into the plant. A recognition and
reward for the support by his colleagues for their attention to preventive maintenance
tasks and his well being.
An abortive attempt to implement a Total Productive Maintenance system was initiated
by maintenance management, with reluctant operational support in 1997. Lacking an
adequately detailed and defined implementation process, while trying to cut costs on
consultant fees, the initial three TPM projects failed to produce results. The TPM
programme was perceived as a “maintenance initiative” and was abandoned.
One of the positive outcomes from the aborted TPM implementation was the provision of
a template for a maintenance systems “self assessment” with ten elements and five ranges
from Innocence to Excellent, (See Figure 6). The short descriptions for each of the ten
elements of best practices in the TPM along with the information gathered from the
Buckeye Pulp & Paper article and various SMRP (Society of Maintenance & Reliability
Professionals) conference notes provided the basis for an understanding and definition of
the systems and practices requirements for maintenance excellence.
The Edgecumbe site concentrated primarily on root cause analysis and elimination of
items on the annually refreshed Top Ten Breakdown listing. There were also

7. improvements in the vibration and lubrication analysis programmes at the Edgecumbe
site.
A mission, vision statement was established during a first annual Maintenance Team
Building workshop in 1997. Key performance indicators were established to measure
success rates in reducing breakdowns, callouts, repair & maintenance expenditure as a
percentage of capital equipment replacement, (since the site was undergoing continued
capacity up-grades). There was insufficient understanding of the requirements for
establishing a highly effective planning & scheduling system as well as improved
equipment standards and preventive maintenance systems. The site continued to repair a
great deal of equipment, including expensive centrifuge overhauls, on a time rather than
condition basis. Operations management were fearful of departing from equipment
manufacturer‟s maintenance recommendations, and current maintenance practices and
analysis had not yet provided a reason to do so.
In 1998, two mechanical tradesmen volunteered to conduct a “common sense,” criticality
analysis of all mechanical equipment to improve preventive maintenance. The decision
was made to go down this path rather than hire consultants to conduct what was
perceived as an expensive and time consuming Reliability Centered Maintenance (RCM)
analysis. The common sense approach took six months to define and implement, but led
to further reduction of potential breakdowns and callouts. A new weekly key
performance measure was created and tracked to ensure that critical preventive
maintenance task completion rates were 95% or higher.
In October 1998, New Zealand sunshine, rain. grass and cows produced a record “flush;”
peak flow of milk. All NZDG sites were required to run at full capacity with zero
breakdowns to ensure that “milk wasn‟t spilled.” If a plant suffered a major breakdown,
there was a possibility that raw milk would have to be dumped during the four week
peak period or shipped to a Kiwi Dairy Cooperative, a competitor. At the Edgecumbe
site, the maintenance trade staff were apprised of the situation by maintenance
management and asked for a recommendation. The tradespersons volunteered to
immediately assume a 24/7 roster, with 12 – hour shifts for each of them, to cover the
plant in order to minimize response time to any failure. This was an unprecedented offer
by an EPMU union members at the NZDG. The maintenance trade staff organized
themselves on the roster without management involvement and carried out the 24/7 cover
for six weeks instead of the planned four week period. The Edgecumbe site ran smoothly
through the period and took on extra milk from several other NZDG sites that suffered
major breakdowns.
In November of 1998, the maintenance manager met with the NZDG General Manager
to request a two year extension of the salary contract for the Edgecumbe maintenance
EPMU members. The GM granted the extension of the “Edgecumbe trial” as a result of
the positive impression created during the recent “flush,” and the documented reliability
improvement of the of the Edgecumbe site. The GM stipulated that , “you will join us
(NZDG / EPMU collective wage-based agreement) or we will join your collective in two
years time.” This was a huge boost to the morale of the maintenance staff at the

8. Edgecumbe site. Proof positive that “performance provides freedom,” one of the
Edgecumbe site mottos in their efforts to retain self determination and independence
from the NZDG culture.
By the end of 1998 most of the Edgecumbe tradespersons had completed a three-month
trial as team maintenance coordinator for their area-based team. . The tradespersons had
collectively organized themselves into three “area-based teams” to cover the entire site
when the process kicked off as part of the Idealised Design. At the end of 1998 they had
re-organised their structure to a two-team approach, with team members alternating from
one team to the other in a staggered, planned approach over three years. This ensured
that they kept their plant knowledge current for callout duty and that they did not become
stagnant. They had also recommended several changes to their weekly rosters in terms
of days on/off and hours of work. The number of callouts had reduced proportionately
by the number of breakdowns and the total amount of overtime, particularly during the
Winter Shuts had also reduced.
Management had accepted most of the trade group‟s recommendations for roster changes
and teams. The trades also took responsibility for scheduling vacation, monitoring
overtime to ensure fair distribution, and inter-team discipline and conformance to
standards of conduct and time-keeping. They were hesitant to take on the role of formal
disciplinarians against their union colleagues, and that role has remained with
maintenance management to present day.
After most of the trades persons trial “stints” as coordinators for their respective teams,
they realized that some were best suited to “work on the tools,‟ and others for leadership
roles. They collectively made the decision to appoint specific leaders to the team
leadership positions. They also played a key role in the selection of new apprentices as
well as participating on the recruitment panels for maintenance management and full-
time trade roles, which seldom became vacant. These practices were initiated and
encouraged by maintenance management. They were a required outcome of the
Idealised Design document.
It should be noted, that when the salarised day/callout system was put in place in late
1996, their was a fair degree of trepidation. Management was worried that the
tradespersons would immediately reduce their overtime to a minimum or zero, argue
about callouts to after hour breakdowns, and fail to provide an adequate amount of
overtime to complete the winter shut work. Trades persons feared that management
would demand additional overtime, reduce contractor cover and generally work them
harder, longer for no additional pay. Both sides took risks, and both sides delivered on
their promises. Trades staff had guaranteed to management that they would provide
whatever coverage was required to keep the plant running. They did not request or
utilize additional contractor hours. They volunteered for additional overtime as in the
case of the 1998 Flush, and even scheduled OT during the Winter Shuts to ensure that
they got all their work completed and minimized callouts for the coming dairy season.
Management continued to provide training support and contractors as they had in the
past. The net result was improved plant performance and more time at home due to

9. reduced callouts and overtime for the trades staff, increased cooperation and reduced
stress at work for both groups. A win-win situation if there ever was one.
In 1999, several members of the trades staff approached maintenance management with a
request to try a second implementation of the Total Productive Maintenance, (TPM),
programme. They said that they would never get to „Zero Breakdowns” without the
support of the operators. It was agreed that one control systems technician and one
mechanical technician along with an operator from the caseinate protein powder plant
would attend an introductory lecture presented by the Centre for TPM,
Australasia, to determine whether their approach would work. The conclusion was
favourable, and a proposal was made to the Site Manager to embark on a second
implementation of the TPM programme, this time with one of the operations managers as
the leader of the TPM initiative rather than the maintenance manager. All was agreed
and the TPM programme was launched.
The Focused Equipment and Process Improvement pillar of the CTPM programme was
chosen as the first initiative by the Edgecumbe site TPM Steering Committee. This was
in line with the CTPM philosophy of getting some “runs on the board” with cross-
functional improvement teams in structured 12 week cycles. The initial “pilot teams”
made up of maintenance tradespersons, operators and technical support people facilitated
by a CTPM leader were highly successful. Bottom line savings were realized,
troublesome equipment and process issues were resolved and maintenance staff realized
that in many cases the “UFO‟s” couldn‟t avoid problems given the narrow margin for
error with prior process control, incorrectly designed equipment. A sense of teamwork
and respect were developed during each FEPI initiative. More than 40 FEPI team
initiatives were completed at Edgecumbe during the next five years.
Figure 4; Example of one of the Focused Equipment Improvement Teams
As a result of the cooperation between maintenance trades and operators on FEPI and
Work Area Management (WAM) projects, where trades persons assisted operators in

10. reconfiguring their work areas, operators became more competent and willing to support
maintenance staff with their efforts to reduce callouts and improve plant availability.
Informal and formal training in equipment operation and repair was provided by
maintenance staff to operators. Increasingly, operators volunteered to make simple
repairs to equipment during night shifts so their maintenance “partners” could remain
home. This ensured that a full compliment of maintenance trades persons were available
on a daily basis to complete preventive maintenance and planned work. Operators
realized the advantage of this approach. Maintenance staff responded by volunteering to
help operators solve process problems, make modifications to plant more willingly and
keep lines of communication open. Maintenance staff provided their operational
counterparts with Christmas food hampers, particularly in the business units where
cooperation was the greatest. Another “win-win” result and the basis for increased
cooperation with the planning and scheduling improvements and other aspects of
maintenance best practice that followed in 2003 and ultimately the award of the World
Class Maintenance score in 2009.
The Work Area Management (WAM) pillar of the CTPM programme was initiated in the
maintenance workshops in 2000. The training by the CTPM representatives was well
received and provided the basis for redesigning the layout of equipment, large rotable
equipment items in the forklift accessible storage area, and the system for identification,
shipment, return and inspection of rotable mechanical and electrical equipment. Helter
skelter storage of equipment on shelves and unidentified and un-serviced rotable
equipment was replaced by a system designed by the trades staff themselves that worked
simply and without fault. A sense of pride and a reduction of frustration resulted which
provided the basis for further refinement in the years to come.
Figure 5. Work Area Management Initiative for Rotable Storage

11. In 2000 the NZDG recruited a New Zealand based company to implement a maintenance
best practices programme at the seven dairy manufacturing sites. The consulting firm
was selected to consolidate the learnings of the seven maintenance managers along with
their own learnings and expertise. While the programme was less than world class, it
provided the Edgecumbe maintenance programme a platform to demonstrate its position
of leadership and share learnings with other NZDG sites as well as gain additional
executive level support for the value of maintenance excellence.
The CTPM “self-assessment” maintenance survey continued to be utilized and
Edgecumbe maintenance staff and management rated themselves in the 80‟s (out of 100
possible points), convinced that they were nearly a world class operations. As a result,
further effort to improve on the elements of maintenance best practice diminished during
the next two years. Significant bottom line results had been achieved, callouts and
breakdowns had been reduced by 80% from the 1996 levels, and Edgecumbe was
recognized as the leading maintenance organization within the small world of NZDG.
Figure 6: CTPM Maintenance Audit (Self Assessment) - Edgecumbe Scores 1996 - 2002
In 2002, the New Zealand dairy industry was “re-engineered.” The three largest
companies NZDG, KIWI and Southland amalgamated into a single cooperative
organization which provided huge opportunities for rationalization and resulted in the
single largest GDP earner for New Zealand. The new company was named Fonterra.
The new General Manager of Fonterra‟s NZ dairy manufacturing operations recognized
that there was a need to improve the plant availability at the 22 manufacturing sites. He
MAINTENANCE SELF ASSESSMENT SURVEY
Leadership & Capability Processes
Maintenance
Management
V & Strategy
Performance
Measures
Organisation
Structure
Human
Resources
Knowledge
Base
Maintenance
Tactics
Materials
Management
Planning
&
Scheduling
Contractor
Management
Reliability
Engineering
Personal action
plans and
appraisals are
clearly tied to the
Maint Mgmt
Strategy.
On-going
benchmarking of
metrics and
processes Full
cost database
Maint structure
supports
training of
operators in
equip
functions,
minor
servicing, and
root cause
failure analysis.
Empowered,
flexible, world
class workers.
Self-managed
team focus.
Expert systems
used. Fully
Integrated Into
CMMS; common
database.
The Prev / Pred
Maint Plan Is
continuously
being optimised
The "right" tactic
is applied based
on analysis.
Stores system
integrated to CMMS
and accounting
system. Bar- Coding
of all stores items.
+90% all maint
jobs planned and
scheduled at least
the week before.
Linked short,
medium, and long
term planning.
Small number of
Contractors used
on long term risk
sharing
partnership
agreements with
high
innovativeness.
Risk and
unplanned
failure reduced
to best in
industry.
Maint
improvement
action plans are
linked to the
Maint Mgmt
Strategy.
Statistical
Process Control
applied to Maint
Process
Measures. Equip
specific maint
costs available
Established
teams for key
objectives in the
Maint Mgmt
Strategy.
Multi-skilled
trades with
process capability
analysis and basic
operating skills
Easy access to
Knowledge Base
available to all
employees at all
times.
Prev / Pred Maint
Plan exists for all
maintainable
items. Emphasis
on Predictive
maint. All tactics
understood.
Single source
supplier partnerships
established and
effective. Area
stores with
visual controls.
Long term asset
planning
established.
Critical path
analysis used for
all rebuilds,
shutdowns.
Contracts are
established
based on the
principle of
"risk sharing"
Effective Root
Cause Analysis
successfully
applied to extend
equipment life
A clear Maint
Mgmt Vision &
Strategy is
documented and
communicated
to all employees
Input, Process,
Output
measures
reviewed and
displayed.
Downtime by
cause.
Segregated
maint costs
reviewed.
Decentralised
with central
support. Clearly
written
mandates/ roles
for each maint
function and
group.
Trades have
problem
identification &
solving, team
dynamics and
training skills
Document
control system
established.
CIMS installed
and used to
manage
Knowledge Base
Prev / Pred Maint
Plan exists for key
equipment.
Compliance is
more than 95% as
scheduled.
Spares classified
with separate
strategies. Spares
linked to
BOMs/Equipment
Drgs.
Standardisation
policies exist
All but
unexpected
failures planned.
All planned jobs
specify safety,
labour, materials,
tools, technical
data
All contractors
repairing rotables
are capable of
Original Equip
Manufacturer's
testing
Basic Equip
Conditions
established.
Good failure
database. All
major failures
investigated;
PMs modified.
No clearly
documented
Role of
Maintenance
or Maint Mgmt
Vision & Stratew
exists
Some downtime
records. Maint
costs regularly
available but
not segregated
into area/ line.
Centralised
maint with
alignment to
production.
Team approach
to technical
problem solving.
Trades have
OH&S and maint
support
(inspection,
reporting) skills
Plant register
established and
used for data
collection. All
drawings and
equipment
information
Identified
System exists to
Identify all
maintainable
items. Emphasis
on time-based
inspections and
overhauls.
Stores catalogue
established.
Inventory accuracy
+95%. AN spares
identified and
protected
Work Request/
Work Order
system
established. Major
rebuilds,
shutdowns fully
planned and
programmed.
Contractors used
for peak loads
and non- core
maint work
Collect the data.
Equipment
histories
occasionally
reviewed for
failure analysis.
Our main role Is
to fix it when it
breaks / fails
Inaccurate or
no maint
downtime
records. Maint
costs not readily
available.
Centralised
maint with no
alignment to
production.
"Command and
Control"
approach.
Trades have their
basic trades skills,
however little or
no technical or
support training
given
Ad-hoc
records. No plant
register or
control of
drawings.
If it ain't broke,
don't fix It."
Annual shutdown
and inspections
only.
Ad-hoc stores. No
costing or control of
spares.
No planning. Little
scheduling. Short
term focus.
All maint
work carried
out by in-
house
resources
No failure
records.
p
R
O
A
C
T
I
V
E
C
o
m
p
e
t
e
n
c
e
„02
U
n
d
e
r
s
t
a
n
d
i
n
g
„01
A
w
a
r
e
n
e
s
s
„99
„96
„00
0
R
E
A
C
T
I
V
E

12. initiated a “joint working party” between the maintenance engineering managers and the
EPMU organisers and delegates. A new position was created to coordinate the Baseline
Maintenance Best Practices (BMBP) project, the outcome of the EPMU/Fonterra Joint
Working Party. The National Maintenance Engineering Manager role was created in
February 2002 and awarded to the Edgecumbe maintenance manager as a result of the
success of the Edgecumbe maintenance improvement programme, and the comments
made by EPMU delegates from Edgecumbe site at the kick-off of the Joint Working
Party initiative.
The first order of business for the Joint Working Party was the establishment of a
Steering Committee for the BMBP project. The goal of the Steering Committee was the
establishment of a definition for MBP (Maintenance Best Practices) and a process to
reach it. The steering committee, consisted of sixteen members from maintenance
management, human resources, operations management and EPMU delegates and
national organizer. They formulated a plan to tour all 22 dairy manufacturing sites and
conduct an audit of maintenance practices using the CTPM “self assessment” and a
questionnaire to gain insight regarding union members age, level of work satisfaction,
management / union relations, training and a host of other issues. This tour was
completed by July 2002.
Figure 7. Fonterra Joint BMBP Working Party Steering Committee 2002
In May, 2002, members of the BMBP JWP Steering Committee, along with 15 other
maintenance management and trade representatives, attended a presentation by Christer
Idhammar on Current Best Practices for maintenance at the annual VANZ conference in
Hamilton, New Zealand. The Steering Committee members immediately recognized
that IDCON had the detailed maintenance best practices definitions, written documents
and consulting resources required to support the BMBP programme implementation.

13. It was more than surprising to discover that IDCON had been involved in the
maintenance improvement initiative at Buckeye Pulp and Paper Mill, which resulted in
their successful pursuit of the NAME Award as mentioned earlier.
There was some contention about the selection of IDCON Inc. as the preferred provider
for the BMBP Project. The Dairy Workers Union had initiated a manufacturing
excellence programme, TRACC, that contained a maintenance improvement module.
The DWU argued that the addition of another provider was unnecessary. The
implementation of the TRACC programme‟s maintenance module was not scheduled for
several years however, and the General Manager of Fonterra encouraged the BMBP Joint
Working Party Steering Committee to forge ahead with their selection of IDCON and the
subsequent programme as immediate improvements in the maintenance performance
were a requirement. There were no experienced and reputable maintenance consultants
within New Zealand at the time, and there were are a host of other international
maintenance consultants to be considered. The Steering Committee elected to stick with
IDCON because of the “common sense” approach, the quality of the training documents,
the audit materials and the fact that other international consultants would probably be
equally or more expensive. IDCON also supported the Steering Committee‟s intention
to train Fonterra‟s own, internal consultants rather than relying on a host of consultants
for the duration of the project.
The Steering Committee members agreed, unanimously, to contract Christer Idhammar
for a visit to conduct a “pilot” CBP audit at one of Fonterra‟s largest dairy manufacturing
sites, Te Rapa, and to follow that up with an introduction of Current Best Practices at
five locations throughout New Zealand during the months of August/September 2002.
The presentations would also include a review of audit findings at the Te Rapa site, and
review of the BMPM business case and strategic plan with Fonterra Manufacturing
Executives.

14. Figure 8 : IDCON CBP Audit Process Summary – Basis for Fonterra MBP Project
The Te Rapa audit indicated that results of the CTPM Self Assessment might have been
over-stated. The IDCON CBP scores was exactly half the score of the CTPM self
assessment. The BMPP Steering Committee recognized the depth and value of the CBP
audit both as a measurement tool as well as a descriptive document that could be used to
chart the required improvements for the maintenance excellence initiative at the Te Rapa
site and at any other Fonterra site.
C. Idhammar confirmed the business case proposal for the BMBP programme to the
Fonterra Manufacturing executive council, but warned that the timeline of 4 years for
reaching best practices was “optimistic.” The introductory presentations by Idhammar at
the five NZ venues were very successful. There were many maintenance and operations
personnel in attendance that recognized the potential for improvement. Following the
tour of the country and the education of the Steering Committee there was an admission
that most of the Fonterra sites were operating in what Idhammar described as the “cycle
of despair,” responding reactively to breakdowns with little formal planned or preventive
maintenance programmes.

15. Christer Idhammar IDCON,INC. c_idhammar@idcon.comChrister Idhammar IDCON,INC. c_idhammar@idcon.com 88
Market
Production Plan
Maintenance
Planning &
Scheduling
Do
Record
Analyze & Improve
Prevention
and Early
Detection
Technical
Database
IDCON’ Maintenance Productivity Circle
React
Repair
Return
Repeat.
Figure 9: IDCON Cycle of Despair Template.
There was a 4.5% shortfall in availability between the 2002 Fonterra plant availability
performance and best practices plant availability of 99%. That shortfall represented an
idle, $350 Million dollar dairy manufacturing facility amongst the 22 operating sites.
There was $22 million per year to be added to the bottom line for an investment of $8
million in systems, training, and practices over the four year project. The size of the
prize was identified and incorporated into the corporate Operational Excellence
improvement projection.
A second key breakthrough for the Fonterra BMBP programme followed in November
2002 when five Fonterra employees visited the Alcoa Mt Holly aluminium smelter in
Charleston, North Carolina. They also visited another NAME award winner, Novozymes
Inc. and attended the Results Oriented Reliability conference sponsored by IDCON in
Raleigh, North Carolina. The opportunity to “see” two best practices maintenance
programmes and meet practitioners of maintenance best practices at the RORM
conference made “believers” out of the three maintenance managers, the EPMU delegate
and the operations manager that attended. They were able to share their stories and
observations from the trip along with their personal belief in the Fonterra BMBP project
for years to come with the rest of the maintenance and operations people at Fonterra.
In 2003 and 2004, the rate of improvement of the BMPM programme faltered as the
organization struggled to get the Fonterra “flywheel” turning. IDCON assisted with
winning over the hearts and minds of non-believers at a number of the major sites with a
“jump – start” support consultant for the planning and scheduling process.
In 2004 the Edgecumbe site realized that it had not achieved best practices as they
believed after scoring 53% on the IDCON CBP, not exactly half of their CTPM self
assessment, but markedly below their perceived level of performance.

16. Edgecumbe was one of three sites where the CBP was conducted by Christer Idhammar
along with a cross- functional BMBP “Audit” team that was tasked with learning the
audit process and delivering it at all remaining Fonterra sites. The BMBP Steering
Committee agreed to discontinue the CTPM self assessment audit in favour of the
IDCON CBP audit and had recommended the purchase of the license and training of
Fonterra employees to conduct the audit themselves on an annual or semi-annual basis at
each site. The intention was to motivate the pursuit of maintenance best practices
through the pursuit of an annual increase in the CBP audit score.
The Edgecumbe maintenance organization faced their own “fly-wheel” inertia, taking up
the new challenge to re-ignite their maintenance improvement programme with mixed
emotions. The lifestyle improvement and performance results seemed adequate. There
was talk of competition with several other sites that were part of the initial training audit
to be the first to reach world class threshold of 75%. The new maintenance manager and
coordinator at Edgecumbe used the audit results and the IDCON training materials on
planning & scheduling, equipment care and condition monitoring to define their goals for
improvement in the coming years. The focus would be to complete documentation and
measurements for the planning & scheduling system as well as executing a true daily/
weekly planned maintenance programme.
Additionally, the Edgecumbe maintenance trades and management realized that a review
of plant criticality and failure developing periods was required that would lead to
improved preventive maintenance tasks, documentation and measurements.
Improvements in the two most highly weighted elements of the IDCON CBP audit, (See
Figure 8), would improve maintenance effectiveness as well as raise the rating to world
class standards. IDCON consultants would be used to provide direction and coaching
for the improvement activities during the initial stages until internal expertise was
capable of taking over both at the Edgecumbe site and as part of the national
Maintenance Best Practices project team that was formed in 2004 to increase the speed of
systems implementation.
Initially, there was some reluctance by the Edgecumbe tradespersons to look at
formalizing the planning and scheduling and preventive maintenance programmes to the
degree required. The challenge to be the first to reach world class at Fonterra was a key
motivator, along with the growing recognition that formalizing, documenting the detailed
practices was also a requirement to survive the test of time. There was a danger that the
„lifestyle” and performance, the freedom itself, could be lost when the “old guard”
retired in the years commencing from 2010 onward, when a number of the staff had
indicated they would be looking to leave the company.
In 2004, as part of the Fonterra organization, the Edgecumbe trades staff perceived a
potential for loss of their salarised collective employment agreement with the EPMU.
Fortunately, after review by the BMBP Steering Committee and Human Resources
collective employment experts, the Edgecumbe collective employment agreement was
adopted as the preferred option for all Fonterra sites, with the recognition that its

17. implementation would take some time. Several of the former Kiwi Dairy sites had
already made the successful transition to the new standard collective, but a majority of
the former NZDG sites were still operating on the wage-based system. The delegates had
succeeded in convincing tradespersons their that management could not be trusted and
movement to the salarised document was not in their best interests. A failure to perform
or improve at Edgecumbe might result in a loss of favoured collective agreement status
for the salarised day/callout practice that the Edgecumbe trade persons agreed was best
for them.
In 2004, the BMBP Steering Committee convinced Fonterra executive management to
increase the number of apprentice trade trainees in the system from four to forty-four
over a multi-year period. A new apprentice qualification incorporating the IDCON
defined principles for maintenance excellence was initiated by Fonterra, the EPMU and
several other New Zealand manufacturing organizations. This was fortuitous as it would
provide an opportunity to train trade staff from “day one” and also provide the materials
to train the „in service” trades persons in the concepts of maintenance excellence. This
meant that the Edgecumbe site would have at least two apprentices continuously within
their midst going forward to add new energy and support for the pursuit of world class
maintenance. The increase in apprentices was perceived as a very positive result by the
EPMU membership and organizers. Another example of management “walking the talk”
and delivering on something that was in the best interests of the union members and the
company.
The Edgecumbe maintenance department spent 2004 and 2005 working on improvements
to the Planning & Scheduling and Equipment Care and Condition Monitoring (preventive
maintenance) elements. The entire maintenance department continued to conduct
annual, facilitated Business Plan and Strategy reviews annually. It was at these events,
that management and trades leaders re-newed their commitment and adjusted strategy
and resources to achieve the year‟s goals. The importance of these expertly facilitated
annual reviews and affirmations was a key ingredient in the success of the journey.
Nationally, an initiative was put in place by the newly formed Maintenance Best
Practices Project Team to improve the computerized maintenance management system
standardization and to reduce the amount of work during the Winter Shuts. A template
and computer spreadsheet was developed to facilitate the analysis of plant criticality and
preventive maintenance tasks for existing winter shut programmes and for sites where no
formal programme existed. The results of this analysis during 2004 and 2005 was a
reduction of 15% of Winter Shut tasks across all sites, (and associated savings), as well
as a comparable reduction in start-up failures.
In 2007, an IDCON CBP audit conducted by “internal” Fonterra audit team scored the
Edgecumbe site at 65% and the Kauri site close behind at 63%. Competition was fierce
and there was a belief that the audit team was overly critical. The Edgecumbe

18. maintenance department recognized that additional improvements could and were
required for maintenance systems. Several of the “young gun” tradespersons took on an
increased leadership role from the original initiators of the programme.
In October 2009, Christer Idhammer conducted the Current Best Practices audit at the
Edgecumbe site. The resulting score was 78%, three per cent above the World Class
threshold of 75% !!!
62 WWW.IDCON.COM
Total CBP Scores
0
10
20
30
40
50
60
70
80
2003 2006 2007 2009
CBP Score
World
Class
Figure 10:; World Class CBP Audit Results for Edgecumbe October 2009
RESULTS:
The following graphs and bullet points illustrate the improved plant performance and
lifestyle that have resulted from the maintenance excellence journey at Edgecumbe

19. Figure 11: Edgecumbe Breakdown Reduction Trend = 78% Reduction with balance of
breakdowns primarily intentional “run to failure” events
F99 F00 F01 F02 F03 F04 F05 F06 F07 F08 F09 F10
Actual/Forecast $4,541,636 $4,396,000 $4,866,785 $4,909,973 $4,604,006 $5,078,321 $5,592,104 $5,775,076 $5,500,000 $5,637,400 $5,921,000 $6,868,000
Equip Replacement Cost$253,478,428 $264,000,000 $273,252,000 $281,636,520 $295,661,050 $380,029,600 $400,750,000 $449,311,553 $463,240,473 $540,000,000 $560,000,000 $581,443,600
ERV Actual % 1.79% 1.67% 1.78% 1.74% 1.56% 1.34% 1.40% 1.29% 1.19% 1.04% 1.06% 1.18%
Figure 12 : R&M Expenditure Savings
Repair & Maintenance Actual Expenditure (R&M) versus Equipment Replacement Value
(ERV) is used to calculate the R&M reduction since the capital value has increased. (e.g.
R&M $ in F10 = $10.3M at 1.79% vs. $6.86M = $3.45M reduction)
Edgecumbe breakdown trends
0
200
400
600
800
1000
F96 F97 F98 F99 F00 F01 F02 F03 F04 F05
Edgecumbe R&M/ERV Ratio
33% Reduction
1.79%
1.67%
1.78%1.74%
1.56%
1.34%1.40%
1.22%1.19%
1.04%1.10%1.19%
0.00%
1.00%
2.00%
3.00%
F99
F00
F01
F02
F03
F04
F05
F06
F07
F08
F09
F10

20. 19
As a result capacity is up 40% @ 4.7%* CAGR,
in F03 we were awarded “Fonterra’s most reliable site”
(Compound Annual Growth Rate)
Edgecumbe daily milk capacity
2.50
2.75
3.00
3.25
3.50
3.75
4.00
F96 F97 F98 F99 F00 F01 F02 F03 F04 F05
Millionoflitresperday
 Capacity has increased dramatically with minimal capital spend – estimated at 1/10th of that
required for new plant investments
 As this gain is reliability and speed based our costs structures have gone down in similar
proportions to the gains
 Flow on effects into yield and grade have been significant
*Adjusting for
the product
mix capacity
CAGR is still
4.1%)
Figure 13: Capacity Increase of 40% (Result of Operational Excellence Initiatives
of which Maintenance Best Practices was a key element). G.Gunnell, Edgecumbe Site
Manager, 2005.
Key “Bottom Line” Results (2010 vs. 1996):
.
 Past Eight years Zero Lost Time Injuries for Maintenance Department
 Breakdowns and Callouts (after hours responses) reduced by 80%
 Capacity Increased by 40%
 Plant Availability at 98.5% +
 R&M expenditure (avoided cost) reduction of 33%

21. CONCLUSIONS:
Figure 14: World Class Maintenance Team October 2009
Following the October 2009 CBP audit and recognition of World Class status, some of
the comments from the Edgecumbe trade staff were surprising; “ I was surprised that we
reached it, there are so many things we can still improve!?” A comment that could be
expected from a group of people that have realized that the “enemy of better was the
thought you were the best.” Some of the trades staff are currently discussing how they
can now “close the 22% gap to get to 100%!” It is this sort of thinking and recognition
that the “Journey” is never complete that have given Edgecumbe the results so far.
Steadily increasing financial benefits as well as the work and home lifestyle
improvements have been enjoyed by the Fonterra Edgecumbe operations, management
and tradespersons throughout the journey. While it‟s difficult to quantify the intangible
benefits, all would attest to the enjoyment of reduced stress levels, a positive impact on
work relationships and family life. Definitely more time for hunting and fishing and time
with the family.
One could argue that there have been four key elements of success:
1. Creation and acceptance of the salarised collective employment agreement and
the inclusion of the Idealised Design document .

22. 2. The partnership developed between operations and maintenance facilitated by the
CTPM and Operational Excellence cross-functional problem solving and other
initiatives
3. The definitive IDCON CBP documentation & audit tools and consulting support
4. The “constancy of purpose” provided by operations & maintenance management
along with tradespersons and operational staff.
The collective employment agreement developed in partnership between the EPMU and
maintenance management at Edgecumbe and supported by the Idealised Design
document created by the Edgecumbe tradespersons have resulted in the creation of a non-
prescriptive document that defines the aims, goals and practices in general terms and has
replaced the voluminous descriptive, wage-based document. The positive union-
management relationship at Edgecumbe has been based on delivery of promised actions
including the self-managed team approach and the good will from both sides in regard to
work hours reduction and commitment to provide necessary resources. . The incentive
provided by the day/callout salary continues to be regarded as the primary motivator for
breakdown reduction, cross-functional cooperation and continuous improvement actions.
As mentioned earlier, the CTPM Focused Equipment Process Improvement initiative
provided a detailed, defined framework for cross-functional problem solving and the
elimination of annoying, costly, and stressful equipment and processes. The CTPM
approach has been superseded by the Operational Excellence programme at Fonterra.
Both have provided the context for cooperative, continuous improvement activities that
have demonstrated that both the operations and maintenance staff have each other‟s “best
interests” at heart; the foundation for a trusting and mutually respectful relationship, “a
partnership of operations and maintenance that equals production,” as Christer Idhammar
has often said.
The Edgecumbe maintenance department believed it had reached world class
performance in 2002. The maintenance excellence initiative, as a result of the Fonterra
BMBP project provided the introduction to the IDCON CBP audit document, training
materials, and consultant services. These materials and guidance were essential for
further improvements, credible performance and guaranteed sustainability.
During the twelve year journey, the three site managers never wavered in their support of
the pursuit of maintenance excellence. With the initiation of the BMBP programme by
Fonterra at a corporate level in 2002, the executive management provided an important
additional boost, which included recognition in 2003 of the BMBP initiative as one of the
most successful programmes of the new company. A key morale and respect boost for a
discipline that had previously been regarded as a “necessary evil.”
At the maintenance manager level, there were three maintenance managers and
coordinators during the 12 year period and all of them were “internal” appointments,
people who knew the philosophy and systems and had a vested interest in maintaining
and promoting the initiatives. Additionally, the national BMBP manager, (the former

23. site maintenance manager), was physically based at the Edgecumbe site from 2002 –
2006. He was able to provide support and connectivity to the national programme and
its resources for the Edgecumbe maintenance department. The opinion leaders within
the trade group were present for the entire journey. The only risk at the trades level was
the incorporation of new apprentices and the hiring of several replacement tradespersons.
The tradespersons stipulated that a “fit” with the existing philosophy and maintenance
excellence programme was an absolute pre-requisite. All newcomers to the maintenance
department enhanced the energy and commitment to reach the world class target.
The support and low turnover of managers in the each of the four production units at the
Edgecumbe site was also a key to success. The partnership and “win – win” relationship
established between the maintenance and operations personnel was a key element in the
continuity of the journey.
The Fonterra Edgecumbe site has succeeded in demonstrated that “reliability drives down
costs,” and improves over-all “performance that guarantees freedom.”
24
Reliability Focus –Buckeye Benchmark vs. Edgecumbe
0.8
0.85
0.9
0.95
1
1.05
1.1
1 2 3 4 5
Maintenance costs
Production throughput
0.4
0.6
0.8
1
1.2
1.4
1.6
1
3
5
7
9
11
Maintenance costs
Production throughput
Reliability Focus - Buckeye Reliability Focus - Edgecumbe
Figure 15: Buckeye Benchmark Matched by Edgecumbe Results !
Reliability Reduces Costs & Increases Capacity. Excellence