OUTSOURCING MAINTENANCE IN DEVELOPING COUNTRIES: AN AFRICAN EXPERIENCE

Whereas the decision in a developed economy terminal may be cost driven or purely strategic (e. g. to outsource noncore activities), in a developing economy the decision is more likely to be revenue driven – the need to boost low productivity caused by poor equipment availabilities. Thus, whilst the ultimate objective in both cases is to increase profits, the starting points, priorities and milestones may be quite different.

Our experience in container terminals on the African continent suggests that the primary rationale for outsourcing maintenance is to improve the general efficiency of the maintenance operation, in order to improve equipment reliability (reduce the frequency and duration of failures) and achieve consistently higher availabilities. Since equipment availabilities are generally low, the initial payoff in repairing equipment can be significant. Higher availabilities translate into more boxes handled which immediately improves the bottom line. The improvement can seldom be sustained, however, without a prolonged investment in training at all levels. This is the main reason why so many equipment refurbishment projects in Africa have had limited effect Africa is not short of people with ability. The enduring weakness has been inadequate education and training, often from secondary school onwards. The challenge is therefore to bridge the gaps in technical, supervisory and management training, often in situations where English is not the employees’ first language.

Most terminal privatisation agreements in developing countries include the requirement to take over the majority if not all the existing employees, and to select and train indigenous personnel to assume middle and senior management positions within a set timeframe. This has potential cost benefits in reducing the number of expatriate personnel, but creates special challenges, not the least being changing the mindset of previously state employed personnel. Any training programme therefore needs to include standardised assessments of all personnel, as well as courses to familiarise the staff with the fundamentals of good business practice. The standardised assessments serve to both identify management potential and to assess existing technical and supervisory competencies, as well as to provide a baseline for annual performance appraisals.

Outsourced maintenance in Africa thus usually has two primary objectives; improve equipment availabilities and train personnel. These require two different resources; an experienced maintenance supervisory task force plus a dedicated training team. Both inevitably compete for the time of the same maintenance staff, and managing this becomes a primary function of the maintenance manager.

Many terminals in Africa are not working to full capacity because of internal factors related to operational issues, spare parts procurement problems and poor equipment performance. The key to restoring profitability in such terminals and to win back lost customers is to increase the number of boxes moved per hour and per month. The revenue from a 10% increase in box throughput has a much greater impact on the bottom line than a 10% decrease in variable costs. In other words the primary focus must be on improving equipment availabilities, yard operations and the supply chain, rather than on cutting costs, because the corresponding payback is so much greater.

The overriding priority for the maintenance contractor must therefore be to achieve a sustained improvement in equipment availability. Although there may be different priorities and challenges when comparing maintenance between developing and developed countries, the fundamental principles remain the same. Implement a structured maintenance programme with strict adherence to routine services. Carry out regular wear and fatigue analyses. Keep comprehensive records, and institute a system to predict component change-out intervals. Monitor equipment and maintenance personnel performance, track costs, minimise wastage, and so on. The principles of best maintenance practice are universal.

INEFFICIENT AND CORRUPT PROCUREMENT PRACTICES Poor equipment availabilities in Africa are also related, however, to a number of factors external to the maintenance department.

Inefficient and corrupt procurement practices result in parts supply delays; inadequate maintenance infrastructure and equipment causes other delays. Erratic electricity supply, unreliable suppliers, defective workmanship by third parties; these all contribute to lowering availability. All these challenges must ultimately be met, and this is where outside help can be invaluable. Contracting in a maintenance team with appropriate experience in handling such problems can be very cost effective, particularly in the early years of a terminal concession or state rejuvenation programme.

Terminal operators in Africa, whether state or private, generally still see themselves as handling the equipment maintenance in the long term, and thus prefer to maintain control of the labour force and the procurement process. Outsourced maintenance is therefore usually focussed on maintenance management and subject to time limitations. Specific objectives are agreed upon at the outset, which in addition to availability and training objectives might include a range of infrastructure and procurement related tasks, equipment and stock audits, and so on.

The challenges in Africa are many and varied. The rewards, however, are significant when a terminal begins to operate in a systematic and efficient manner. Our involvement in the Dar Es Salaam container terminal has been a case in point. In three years the TICTS terminal management has completely overhauled the terminal operation. This, coupled with our participation in a comprehensive maintenance and training programme, has produced significant and sustained shareholder benefits in a short space of time.

The key to sustained maintenance improvement in developing country terminals is to systematically train all levels of maintenance personnel, implement sound maintenance practices with written procedures, and overcome or circumvent external impediments that otherwise limit the attainment of high equipment availabilities. Such activities lend themselves to outsourcing, particularly in the early stages of privatisation or terminal rejuvenation programmes.

Ted Adlard is a Consultant with Equipment Leasing and Maintenance Limited