Monitoring Consumption
In the present market conditions, most facilities are trying to stretch lubricants as far as possible to avoid the hassle and cost of purchasing more. With supply chain disruptions, lack of raw materials and difficulty finding lubricant packaging, it is becoming more important than ever to ensure there isn’t waste in the lubrication program related to the volume of lubricants used. The topic of waste is not a new one, especially when it comes to lubricants, but it seems to be one that is rarely tracked or monitored. In terms of disposal, lubricant purchases and a necessary check on our leakage protocols, few datasets can be more impactful.
Most organizations have an idea of what they spend each year out of their budget on lubricants, but few break it down to a specific volume of each lubricant that is purchased. Even fewer have an understanding of the total volume needed to fill every compartment in the plant. Therein lies one of the biggest opportunities to turn the Oil Consumption Ratio into an actionable target. The Oil Consumption Ratio is simply comparing the total volume of lubricant purchased to the total volume needed in the facility. This is a key performance indicator to help us monitor many aspects of the lubrication program but is often utilized as a metric to showcase how a program is maturing.
In its infancy, a lubrication program is often filled with unnecessary tasks such as over greasing, oil changes performed too often and leakage. As you can imagine, some of these are easier to fix than others, and some are more popular choices to attack than others. It’s not simply a matter of deciding not to change oil as often or to grease once a month instead of once a week; a fair amount of homework has to be done to help mature the program to where we have optimized our lubrication cycles. Leakage is a more straightforward fix but, depending on the system complexity of duty cycles, leaks may be hard to pinpoint and fix. Regardless, we can walk through the process of how to implement this KPI:
First, we need to baseline where we are currently sitting in terms of purchasing. Getting with the procurement team, we should be able to see how much money was spent on lubricant purchases over the last several years. While the cost is great to know, we are really looking to discover the total volume of lubricant ordered. This may be tedious, but getting a volume for each lubricant is the first step of the process. Some companies may decide to focus on the total volume and not break it down to individual lubricants, but there are benefits to seeing the details. This will become clearer as we move through the process.
| Prior Year | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|
| New Purchases | 10,000 gal | 4,500 gal | 2,100 gal | 1,420 gal |
| Machine Volume Charge | 4,200 gal | 4,600 gal* | 4,600 gal* | 4,600 gal* |
| Consumption Ratio | 2.4 | 0.98 | 0.49 | 0.29 |
While it isn’t necessary, determining how much of the lubricant exists in warehouse locations throughout the plant is what you should determine next. This would also be best broken down into each individual lubricant. When you start looking through all storage areas, you may be surprised by how many drums/buckets/totes of single lubricants you have sitting around. While the stored lubricant may feel like a stockpile for use when there are “emergencies,” it is actually a liability. Too often, these stored lubricants are beyond their shelf life; they could be grossly contaminated to the point that they aren’t fit for use. Also, a significant amount of stored lubricant may skew the consumption ratio, so understanding current inventory levels as well as maximum, minimum and reorder levels is important.
Once we have established our history of purchased volumes and our current stored volume, we need to figure out just how much of each lubricant is needed to completely fill all the machinery in the plant. While this task takes time and manpower, it yields powerful results. It is common for plants to know the details of large reservoirs or critical equipment; smaller pieces are often disregarded, and the information simply doesn’t exist in the CMMS. This process allows us to put our eyes on each piece of equipment, determine the volume, collect valuable operating data, and, ultimately, update our lubrication system (even if that is the CMMS). Keep in mind that, through this process, you should only focus on equipment that you intend to maintain. If you have a threshold of what is deemed “disposable,” then use that as your guide. Any equipment that is sealed or simply ran to failure should be neglected from this audit. As you are collecting the volumes, this serves as a good spot to check on your labelling of equipment for lubricants, as well as naming/numbering for consistency.
Finally, we want to check past work orders to determine how many of the pieces of equipment have recently had oil changes or significant top-ups. Perhaps many of you might not have that information available, which is okay, but it is something you will want to begin tracking and updating your work orders to include. This is also something that should be turned in with inspection routes/rounds. If an operator, lube tech or mechanic is topping something up, we want to know how much oil was added. This begins to let us determine where our biggest offenders are for our consumption ratio.
Once we have finished the data gathering and auditing stages, we are ready to begin developing our Oil Consumption Ratio dashboard. This can simply be a spreadsheet where we house the information. At the highest levels, we would place the total volume of lubricant purchased under the total volume of lubricant needed in the plant. A simple division of purchase volume by machine volume gives us the consumption ratio. Starting out, it is not uncommon to see a ratio of over two (purchasing more than twice the volume of lubricant needed to outfit the plant), but ideally, we should try to get as close to 0.2 as possible. To truly make the most out of this metric, you can break it down into more detail by showing the total volume of each specific lubricant purchased to the machine charge for that lubricant to find where the biggest offenders are and where areas of opportunity exist.
When you have the dashboard built, the focus shifts to automating data retrieval (to update the KPI). While this is often a yearly metric that is tracked, it can be updated monthly to show improvements in equipment classes that we are focusing on, such as hydraulics or gearboxes. This is where the work orders for oil changes and top-ups really help us understand where all the lubricant is going. For an even better look at consumption, you can compare purchase volume to disposed of volume; this is an indicator of how well your lube disposal program may be running.
While this metric may sound like something that is simply “nice” to do, you need to realize that it is focused on more than just the amount of money we’re spending on lubricants. When we stop to analyze the data, this metric can serve as a necessary check on many of our processes, including:
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Leakage - This is perhaps one of the biggest offenders to this metric. Not only does leakage require more lubricant, but it also cuts into our manpower. The hidden costs of leakage are no secret; there are disposal costs, spill cleanup costs and decreased equipment efficiency.
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Failures - One of the first things to happen when there is a significant equipment failure is the draining of oil. Once the repair is finished, the oil is refilled. This eats into the consumption ratio as many failures are avoidable and, with proper lubrication practices, shouldn’t occur in the first place.
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PM Optimization - As mentioned previously, many activities are done within a timeframe that was established without any reasoning. This leads to relubrication occurring more often than needed, thus consuming more lubricant than needed. Focus on dialling in the relubrication frequency based upon the remaining useful life of the lubricant and analysis of the data collected during the equipment audit. You might be amazed to find that the machines you are greasing weekly or changing the oil in yearly might be able to go two to five times longer between relubrication, even on a conservative scale.
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Storage/Stock Rotation - if the equipment isn’t consuming the lubricant, then look at the storage areas. This may shine the light on products that are sitting static and not moving through the lube room as quickly as we once thought they were. Periodic walk-downs of these areas are great, but seeing the ratio that lubricants are sitting in storage can be eye-opening to most program owners.
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Inventory “Shrink” - While it will be extremely difficult to account for every drop of lubricant coming into the plant, by comparing our usage to purchases to disposal volumes, we can start to uncover where our lubricant “shrink” may exist. This may be coming from leaks or spills that aren’t recorded or top-ups that aren’t turned in because our route sheets are “pencil whipped.” If the oil is consumed and not disposed of, this gives a great clue that our problem may be internal leakage.
The Oil Consumption Ratio has much to offer in terms of deliverable data. This KPI should be updated whenever new equipment is installed to keep it as accurate as possible. It also serves as a useful dataset to show how the lubrication program is maturing. We should try to minimize the consumption ratio year-over-year. This falls in line with many of the sustainability and environmental goals of companies. Plus, this provides us a great platform to showcase savings based upon hard dollars and not cost avoidance. Use the KPI to win over management and to get people on board with investments in the lubrication program.
