Cost effectiveness evaluation of external maintenance supplier utilization: a case study

Abstract: In order to maintain the quality in a system it is important to be aware of the effects of the maintenance and how it is structured. The cost effectiveness of a system is measured with respect to the reliability, availability and maintainability (RAM) and the total life cycle cost (LCC). Integrated Logistic Support (ILS) is a method used for designing a maintenance solution for a system. The ILS identifies maintenance actions needed for maintaining the system ability to operate at a certain level. Maintenance actions are usually performed by both internal and external suppliers. The use of external suppliers can be connected to changes in the RAM and total LCC for the system. This study is developing a method for calculating the cost effectiveness of a system with respect to both RAM and LCC and focusing on the utilization of external maintenance suppliers. The method is calculating a cost effectiveness index which is useable for comparing different maintenance solutions with each other. The cost effectiveness index is also useable for investigating how changes in the input values are affecting the cost effectiveness of a system. The developed method was tested in a real logistic maintenance structure in a case study at the company Combitech AB. The results showed that the RAM values were not changing linear to the LCC. Therefore, it is important to be aware of the possible cost increase when the RAM maybe is unaffected. The main conclusion of the study is that it is important to be aware of the importance of how both the RAM and LCC is changing when the input values are changing. A further conclusion is the importance of equally comparing different systems or maintenance solutions in order to secure the reliability of the comparison.