CAT® DEALER IMPLEMENTS

DEFINED MINING
MAINTENANCE AND REPAIR
PROCESSES
Managing equipment is a necessary component of doing business that takes mining companies
away from their core competencies—extracting and processing materials. While equipment
management may be time-consuming, costly and complex, it also offers mine sites a number of
improvement opportunities that can have a significant impact on their bottom line.

Over the years, Caterpillar Inc. has recognized the benefits that can be realized by improving
the way Maintenance & Repair (M&R) activities are performed. As early as the 1990s, the heavy
equipment manufacturer began developing a maintenance model for mining mobile equipment,
and in 2006 formally adopted a set of 10 distinct processes and routines that enable a proactive
maintenance support system. The majority of Cat® dealers make many of these processes a
key part of their maintenance activities for mining customers, and encourage customers that do
their own maintenance to embrace them as well.

In 2012, Cat dealer PT Trakindo Utama began a substantial undertaking to incorporate all 10 of
the defined M&R processes in an effort to support and standardize its maintenance operations
within Indonesia. Two years later, after a significant investment in time and people and a pilot
implementation on an actual customer site, Trakindo became the first Cat dealer in the world to
implement the full set of the recommended processes.

The achievement earned the dealer accolades and recognition from Caterpillar for its effort and
commitment. But the true beneficiaries of the M&R processes are Trakindo’s customers, who
will reap the rewards of improved maintenance and repair services with increased machine
availability, faster turnaround time, improved fleet performance—and lower costs overall.

DEFINING A PROACTIVE MINING MAINTENANCE SYSTEM

Today’s mining companies are focused on meeting their production goals efficiently and at the
lowest possible costs. And the companies that support them—like Caterpillar and Cat dealers—
are continually searching for ways to help them achieve these demanding goals.

Equipment plays a primary role, and the ability of machines to perform according to their
specifications relies on three major factors—maintenance, design and application. Each of
these three areas has to be considered and managed effectively to optimize equipment
productivity.

“The primary goal of the maintenance organization is to make sure machines keep doing what
they’re designed to do, in the application where they’re operating, for their entire productive life
cycle,” says Tim Siekmann, a product support manager for Caterpillar’s Global Mining
organization. “There are a number of routines and processes that must be followed to make
sure that happens, and by following them we can help minimize equipment downtime and the
production losses that come with it.”

A machine’s productive life cycle is determined by the life of its major components. The end and
beginning of each new cycle are marked by the Planned Component Replacement (PCR) event.
Inside these multiple cycles, the equipment will require distinctive maintenance activities that
are either predictive, preventive or corrective.

“Every one of these maintenance events must be managed and executed efficiently, triggering
all the necessary processes,” says Abelardo Flores, a Caterpillar senior market professional.
“The goal is always to repair before failure, so we can maximize availability at the lowest cost.”

With access to the maintenance organizations of mines around the world through its Cat dealer
network, Caterpillar was able to study them and build a solid understanding of processes and
techniques that are effective, as well as those that should be corrected or avoided.

“We learned a lot about processes and the resources required for an effective maintenance
organization,” recalls Sean Gladieux, a product support manager for Caterpillar’s Global Mining
organization. “But we also realized the importance of partnership. A combined commitment from
the mining customer, from Caterpillar as their equipment manufacturer, and from their dealer as
a support partner, is the key to success.”

This experience and understanding led to the development of a Proactive Maintenance Support
System—a maintenance model in which the condition and application of the equipment are
being constantly monitored to detect and schedule needed repairs before failures occur. Key to
the model are 10 defined processes organized around five principal steps:

1. Detect machine defects

2. Plan repairs before failure
3. Execute the repairs
4. Evaluate process performance
5. Correct through continuous improvement
“These five principle steps reinforce the main concept of condition-based maintenance and the
search for ways to continually improve based on the results and performance we’re measuring,”
says Gladieux. “While adherence to the defined processes is important, we also left room for
new approaches and techniques that contribute to successful results.”
Trakindo maintenance shop

OUTLINING THE 10 PROCESSES

A maintenance system is made up of many functions that co-exist and interact with each other.
The 10 processes developed by Caterpillar were designed to define the functions of an effective
maintenance system, not the organization itself.

“No matter how your maintenance organization is structured, you have to make sure that the
key functions are present,” says Gladieux, “These functions will ultimately determine the roles
and responsibilities that any organization will have to consider in the process of structuring its
on-site and off-site support.”

1. Preventive Maintenance

High-frequency, fixed-interval, planned activities that include well-defined service routines,

proactive defect detection and repair execution.

Preventive maintenance activities provide a good and steady platform to execute and control
the basic maintenance tasks, and also provide maintenance teams an opportunity to accomplish
minor repairs at the same time. Each of the activities must be fully planned by defining the
activities, procedures, personnel, time, tools, parts and consumables required.

2. Condition Monitoring

Timely and accurate detection of changes in equipment health, operation and application
severity in support of a repair-before-failure maintenance strategy.

The goal of Condition Monitoring (CM) is the early detection of any potential failures or
abnormal conditions. But the real benefit of CM is realized when those detections are quickly
turned into actionable recommendations that allow the scheduling of repairs to address them.

“At world-class mines, there are often many different kinds of machine inspection and condition
monitoring routines and disciplines,” says Gladieux. “These routines complement one another,
and each one provides part of the total picture of the machine condition.”

These routines include:

1. Equipment Inspections
2. Fluid Management/Analysis
3. Machine Electronic Data
4. Application Severity
5. Machine Repair History

3. Backlog Management

A planning function designed to effectively manage the pending to-do list via scheduled repairs
or corrections before failure.

Backlog is the work that has not been completed by the nominated “required-by” date. Backlogs
are also managed as pending workload for the repair centers. Caterpillar’s approach to Backlog
Management is to view it as a powerful tool to proactively prevent failures.

“We like to say that if your machine has a defect that needs to be corrected, you are already
late,” says Flores “That defect is indeed a backlog.”

4. Planning & Scheduling

The “brain” of the maintenance operation. It plays a critical role in achieving a target
of 80 percent scheduled events.

A repair-before-failure philosophy and achievement of a high percentage of planned and

scheduled repairs should be the foundation of the overall repair strategy. The Planning &
Scheduling function plays a critical role in the achievement of these goals. During this process,
the maintenance organization defines and gathers necessary fleet equipment information,
transforms it into clear and effective plans and activities, schedules their execution and controls
the results.

“During this process, we determine what to do, how to do it and when to do it,” says Flores. “To
be effective, we need to identify any special resources or parts that will be needed, understand
the labor required, and make sure we will have the shop space to complete the activities. Then
we pass this information on to the scheduling team to coordinate facilities and select the best
execution dates.”

5. Parts Management

An essential logistical function that will help ensure the right part, in the right quantity, is in the
right place at the right time.

A maintenance team that has the parts and components necessary at all times is the ideal
scenario, and achieving this goal requires strong and clear communications between the parts
and maintenance departments. An accurate and complete demand history and a well-supported
forecast of future needs will enable the parts team to successfully define, implement and
maintain the correct on-site parts support.

The role of the parts organization goes well beyond simply ordering parts. An optimized parts
department is responsible for managing the parts supply channel, hiring specialized labor,
ensuring the right support tools are in place, maintaining facilities, and managing an inventory of
parts, components, consumables and tools.
“The on-site storage of parts and components is a challenge,” says Siekmann, “These items are
expensive and must be properly stored to ensure they are in perfect condition when needed.”

6. Component Management

A combination of many activities necessary to successfully manage components and achieve

their expected lives, which is critical to meeting the desired cost per ton.

There are dozens of major activities that make up the component management process, which
begins by defining the component life goals; a component repair, rebuild, replace strategy; and
inventory. Activities include component tracking, contamination control, CM, PCR forecasts,
inspections, transportation and storage, and planning and scheduling. A successful component
management process relies on close communication, accurate data and performance
evaluations through all steps of the process.

“While all repairs are important and affect equipment availability, those that affect components
have the greatest effect on operational costs,” says Flores. “Components are key cost drivers.
That’s why we made component management a separate process. It’s very important.”

7. Repair Management

The organization and management of the resources necessary to perform efficient and effective
repairs.

Once the repair and maintenance activities have been determined—whether scheduled or
unscheduled—resources must be allocated and prepared to complete the work. There are two
distinct service areas to be considered: the shop and the field. Because of the nature of the
services performed in these two areas, effective mine-site maintenance organizations recognize
the need to establish the support in the same way, developing and assigning specialized crews
and equipment to each of them.

Field service is the first line of support. This organization is responsible for responding to
unscheduled calls, quickly diagnosing and making a repair decision, and defining the course of
action. This team also serves as the eyes and ears in the field—observing application and
operations and reporting performance.

The shop is dedicated to scheduled repairs, such as preventive maintenance activities and
PCRs, as well as unscheduled repairs that cannot be performed in the field because of their
duration, resources and contamination control concerns. The shop is also responsible for
coordination of other on-site repair centers, such as tires and welding.

“We also can’t forget the importance of enabling our people with the appropriate tools and
facilities to get the results we need,” says Gladieux.

8. Human Resources/Training

A defined list of activities that ensure that the maintenance organization successfully manages
its most important asset—its people.

Each person in the maintenance organization brings a set of values, personal goals and
competencies that will depend on their past experience and education. Successful organizations
take an inventory of these skills and assign the correct person to the appropriate function or role
in the organization. Other considerations of this process include recruiting, outsourcing, career
 management (including skills assessment and training needs), labor management, benefits and
compensation, retention and succession, and regulations compliance.

“Having the right number of people, with the right skills, is the key to any successful
maintenance organization,” says Flores. “They must be organized effectively to execute their
jobs, and they must share a common goal.”

9. Performance Evaluation

The gathering of relevant data, and then transforming that data into information that can be
used to manage performance.

Effective maintenance management requires measuring performance, comparing results with

targets and goals, discovering those areas that are substandard and focusing on activities to
improve or correct them, and ensuring sustainability of the gains already obtained.

During this process, the maintenance organization must identify goals; define the Key
Performance Indicators (KPIs) that will be used to measure performance; design and implement
the data collection process; gather information; calculate, analyze and report results; and finally,
identify the corrections that will be necessary to manage them.

“We specifically included performance evaluation as one of our recommended processes to

encourage the disciplined analysis of the information gathered by the on-site maintenance
organization,” says Flores. “You can’t successfully manage your operation without solid
information and meaningful metrics.”

10. Continuous Improvement

The logical final function in the M&R Process, involving the entire organization in the search for
solutions.

After measuring and detecting problems or areas of opportunity, a formalized approach is

necessary to guide the organization and keep the team on track and focused on these areas.
There are many Continuous Improvement (CI) methodologies or models available from which to
choose, adopt and adapt to specific site characteristics. Caterpillar follows the 6 Sigma
approach to identify the root causes of problems and identify possible improvements. The major
steps in any CI process include:

 Identify opportunities
 Determine the impact and prioritize
 Assign projects
 Define the problem, scope and outcomes
 Conduct meetings to measure, analyze and document
 Present a solution to the process owners
 Implement
 Follow up (measure, analyze, document)
 Validate the solution or recycle back to the CI team
 Communicate results
“Continuous Improvement is a never-ending effort, not a one-time solution for all problems,”
Flores stresses. “It’s a long journey that we have to keep alive as long as our maintenance
organization exists.”

PUTTING THE PROCESSES IN ACTION

Cat dealer Trakindo’s journey to the successful implementation of all 10 M&R practices began
nearly a decade ago, when the dealership was introduced to what was available from Caterpillar
in terms of M&R support. While attending training and learning more about the processes, the
dealer team realized the importance of implementing these activities for its customers in
Indonesia, where Trakindo has responsibility for supporting equipment at multiple mining
projects.

“The mining business in Indonesia has always been challenging. Providing consistent, world-
class product support has been one of the most critical ways we can support our customers,”
says John Noreiks, head of Trakindo’s Product Support Division. “Our journey to succeed at
Equipment Management has had its highs and lows since our first Maintenance and Repair
Contract (MARC) in the mid-1990s in the jungles of Kalimantan, but we strive for a continuous
improvement culture that helps us progress our performance.”

The growth of mining over the years has challenged Trakindo specifically in the area of people
skills. “The M&R disciplines presented us with an opportunity to further progress our ability to
achieve consistent world-class performance year after year with our predominately Indonesian
workforce.”

Trakindo agreed to pilot the M&R project in partnership with Caterpillar to better meet the needs
of its customer Newmont Mining Corporation, at its Batu Hijau site in Indonesia. Batu Hijau,
operated by Newmont subsidiary PT Newmont Nusa Tenggara (PTNNT), is a large open-pit
mine located in the southwest region of the island of Sumbawa in Indonesia. The mine ore
deposit contains primarily copper with gold and silver in a minor content scale.

PTNNT operates a large fleet of Cat equipment: 111 793C and 793D haul trucks, two 994F
Wheel Loaders, 11 Dozers (four D10Ts and seven D11Rs), four 854G Wheel Dozers, three
24M Motor Graders, and three 390D Hydraulic Excavators.

This large fleet is primarily maintained by Trakindo under a Maintenance and Repair Contract
(MARC). Trakindo considers itself a partner with Newmont, not only because of the contractual
obligations outlined in the MARC, but also in the success and sustainability of the Batu Hijau
operation. To help in this effort, Trakindo began an initiative to implement defined maintenance
and repair processes that will help sustain the gains on site, prepare the organization for future
challenges, and deploy the process standardization region-wide. Flores served as the project
leader from the Caterpillar Global Mining organization.

“While meeting the terms of the MARC is important, what we really focus on is giving that
specific site what they need to succeed,” says Flores. “At Batu Hijau, they were looking to
increase the physical availability of their machines—having equipment available to meet their
production goals, and increasing their utilization.”

Mick Turner, who was on the on-site technical support manager at Batu Hijau during the
process implementation, explains that the site had a goal of no more than 10 percent equipment
downtime. “Trakindo accepted the challenge to deliver that goal, providing a reliable fleet of
mining equipment that would enable the site to achieve production goals at the lowest cost per
tonne,” he says.
Machine availability at Batu Hijau was at 86 percent, says Flores, with a goal of moving that up
to the 90 percent benchmark. Newmont began an improvement initiative to achieve this goal in
partnership with Trakindo. The initiative began in 2010, when experts from Caterpillar Global
Mining completed an assessment of the maintenance organization’s performance at Batu Hijau.

“We identified that the maintenance model required some attention to ensure peak performance
was being delivered and that it would be sustainable,” recalls Turner. “Caterpillar subject matter
experts completed a detailed review, along with representatives from Trakindo. As a result, a
project charter was developed, goals were set, and process owners were identified and trained.”

The initial assessment identified a number of “quick wins” that could be easily implemented to
start getting availability headed in the right direction. “These activities showed a direct positive
impact on the physical availability of the 793 fleet and served as a turning point in the effort to
prove that the M&R processes had great potential for Batu Hijau,” says Flores.

The first attempt at implementing the M&R processes began in January 2011, but the outcome
was not progressing well by Caterpillar Global Mining standards. “The effort and commitment
were there,” recalls Flores. “But an additional study at another mine site identified performance
gaps and confirmed that additional training was necessary to improve the M&R processes within
the Trakindo organization.” Trakindo officially re-launched the M&R Implementation Project at
Batu Hijau in Janary 2012, with support from the equipment management team from the
dealer’s headquarters in Jakarta, Indonesia. Caterpillar Global Mining experts also supported
the re-launch.

“We worked alongside Trakindo to provide training and help develop the necessary skills,” says
Flores. “We developed a baseline for their performance and did regular reviews and validation
based on that assessment.”

The four core processes—Preventive Maintenance, Condition Monitoring, Backlog Management

and Planning & Scheduling—were successfully implemented from May 2012-May 2013, and the
remaining six were implemented and successfully validated in May 2014.

MAKING AN INVESTMENT
The Trakindo initiative at Batu Hijau proved that it is possible for a maintenance organization to
successfully implement all 10 of the Caterpillar M&R processes. But it also proved that it is not
an easy endeavor.

“It requires a lot of training, focus and investment from everyone involved,” says Flores. “The
project at Batu Hijau required a long-term commitment from Trakindo and Caterpillar Global
Mining, as well as the patience and support of the people at the mine site.”

Trakindo dedicated 10 people from its Jakarta headquarters equipment management readiness
team to join the 50 people already working on the implementation in Sumbawa, as well as
provided project leaders at Jakarta and on site. The dealership estimates more than 115,000
man-hours were invested in the project. Caterpillar provided an on-site performance engineer as
well as a Caterpillar Global Mining Subject Matter Expert (SME) for a total commitment of nearly
5,000 man-hours. These man-hours combined are the equivalent of 25 full-time employees
dedicated to the project for its 2½ year duration.

TRANSFORMING THE MAINTENANCE ORGANIZATION

After identifying the gaps in its performance of the processes in 2011, the Trakindo team in
Sumbawa has transformed its maintenance organization in just a few short years. The team
made remarkable improvements in its baseline scores to achieve and exceed its process
conformance score of 85 percent in all 10 M&R processes, becoming the first Cat mining dealer
to accomplish this task.

Many of the team’s most significant changes were seen in the four core processes. Preventive
Maintenance performance went from a baseline of 45 to a final score of 85. Condition
Monitoring improved from 50 to 87, Backlog Management from 42 to 85, and Planning &
Scheduling from 40 to 88. Trakindo’s biggest improvement was in Performance Evaluation,
which soared from a baseline of 35 to a final score of 85. The dealer’s highest score was in the
Parts Management area, which improved from a baseline of 70 to a final score of 94.

“Implementation of the processes and making the changes necessary to succeed has provided
Trakindo with many benefits,” says Noreiks. “The dealership now has a team of well-trained
technicians, a premier equipment management organization, and the tools and systems
necessary to succeed not only at Batu Hijau but on any mine site. The processes are scalable
to meet our customers’ specific requirements. We are also now taking these disciplines to
customers in other industries.”

DELIVERING RESULTS TO THE MINE SITE

At Batu Hijau, the results of Trakindo’s massive process implementation effort are being seen
directly in the performance of its equipment fleet. Since March 2014, physical availability of
machines has been consistently at 90 percent, a remarkable achievement considering that most
of the site’s haul trucks have exceeded 100,000 hours of operation.

By using the KPIs identified by the customer site—such as Physical Availability, Mean Time
Between Shutdowns and Mean Time to Repair — Trakindo is able to measure performance and
continue to ensure it is meeting the targets.

At one point, asset utilization began to fall below targets, but thanks to its new adherence to the
processes, Trakindo was able to quickly remedy the situation. “Trakindo’s on-site organization is
not only capable of maintaining the fleet and obtaining world-class KPIs, but it also has the tools
to apply when needed to recover from a difficult situation,” Flores says.

“Passion, discipline and a full commitment from the whole team are the key success factors in
achieving the certification,” says Marsy Marsiyah, Trakindo site project leader. “We are
committed to advancing the customer forward, and recognize that sustainability of this process
implementation is crucial.”

“Newmont is really seeing the benefits of this initiative,” says Flores. “They’re impressed by how
far Trakindo has come and are excited about the additional results they will see in the future—
not just at this site, but at others.”

In fact, Turner, who was one of the leaders of the maintenance organization at Batu Hijau, has
now begun working at Newmont’s Boddington gold mine in Australia and has asked the Cat
dealer there to begin a similar continuous improvement project to allow Boddington to enjoy the
same type of results.

“Sustainable results have and continue to be delivered at Batu Hijau, to a point where they are
now considered best in class,” says Turner. “The key driver to these results was the fact that
Newmont, Trakindo and Caterpillar worked together as one team. These trustworthy and
enduring relationships played an important role in ensuring key milestones were delivered.”

Since joining Newmont Boddington Gold, Turner has begun working with Caterpillar and local
Cat dealer WesTrac team to look for ways to improve M&R performance on site. Five of the 10
M&R processes were assessed and the team has been working together to implement quick
wins.

“Having experienced the positive contribution the M&R processes have made, I would
encourage all maintenance organizations to consider replicating the program,” says Turner. “It’s
all about being better today than we were yesterday—and even better tomorrow.”

EARNING RECOGNITION
As a result of it efforts at Batu Hijau, Trakindo earned special recognition from the Caterpillar
Global Mining organization. “This is a very significant achievement,” says Ruediger R. Kaub, a
Caterpillar Global Mining regional manager in Southeast Asia and Japan. “Trakindo worked
extremely hard for this achievement and proved it can be done. We are proud to have them
represent Caterpillar.”

This achievement is also an example of how mining operations and equipment management
organizations around the world can share information and learn from one another to positively
impact their operations — and their profitability.

“Caterpillar has always gathered and shared best practices from its customers and dealers
around the world,” says Gladieux. “We know that standardizing processes, like we have done
with equipment management, is critical. We succeed when we establish a common foundation,
incorporate and share best practices, measure with the same KPIs, and join efforts in a well-
structured environment of continuous improvement.”