Pulp and Paper Canada

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Calculating the risk of failure


February 1, 2001
By Pulp & Paper Canada

Mill managers are scrutinizing the inventory of spare parts they carry, which easily add up to million of dollars. “All large production facilities carry more spare parts they need,” says Craig Campbe…

Mill managers are scrutinizing the inventory of spare parts they carry, which easily add up to million of dollars. “All large production facilities carry more spare parts they need,” says Craig Campbell, a partner with PricewaterhouseCoopers’s global forest and paper practice in Vancouver. “The maintenance guys want to make sure they’re covered in case of equipment failure or downtime.”

And, until recently, with good reason. A downed paper machine can translate to millions of dollars of lost production. Yet, the advent of powerful computers and highly developed risk models that rely on statistical analysis, now make it easier for manufacturers to better estimate the level of risk of component failure.

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That approach gives managers (particularly financial people) another tool in deciding whether it’s necessary that a mill carry, say, a $5-million motor or transformer in its warehouse. In some cases, it might be more prudent to outsource such services as spare parts to a company like ABB, Campbell notes. “When it’s needed, they would quickly ship a piece of equipment to the mill site.”


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