Rein in out-of-control HVAC maintenance costs
Keeping customers physically comfortable—especially when shopping for high-priced jewelry—is a critical aspect of successful retail. For one nationwide retailer of diamond jewelry, this comfort came at a cost: nearly a million dollars a year in reactive HVAC maintenance costs across its portfolio. This isn’t only expensive but also causes unplanned store downtime, poor customer experiences, and the need to purchase expensive temp cooling or heating units while waiting on parts or new equipment.
With more than 2,400 locations, the nationwide jewelry retailer needed a better strategy to manage its HVAC maintenance spend. With reactive maintenance—critical fixes and emergency replacements—eating into its budget, the retailer needs to control this spend, create a more predictive budgeting model, and allow for increased capital expenditures.
Implementing a preventative maintenance program
With the goal of lowering overall annual operating and reactive repair costs, SMS Assist looked at implementing a proactive asset replacement program along with a comprehensive preventative maintenance program that would keep equipment running as expected with fewer failures and unexpected fixes. The goal of this program is to move from a reactive-spend model to one where 80 percent is planned spend with the remaining going to the repair and maintenance budget.
Scheduling asset evaluations
The first step in establishing a preventative maintenance program is properly evaluating existing assets. The SMS Assist team spent several weeks assessing the condition of the assets and documenting all visible and mechanical deficiencies. Of the assets evaluated, this is what the team found:
- 62 needed immediate repair
- 650 in new or like new condition
- 978 worn but functional
- More than $26 million in potential capital spend over the next eight years
Proposing a program
Based on the budgetary needs of the retailer as well as the condition of existing assets, SMS Assist was able to create a program that would reduce reactive spend, preserve existing assets, and allow for future capital planning. The resulting program splits preventative maintenance into two areas: rooftop units and airflow.
- For rooftop units, two major seasonal inspections would happen in the fall and spring to focus on the equipment such as compressors, heat exchangers, drain lines, and motors.
- To address airflow, the program would change the air filters quarterly and belts annually while cleaning coils and return air grills twice a year.
Stabilizing then lowering reactive spend
With the preventative HVAC maintenance program in place, projected reactive spend over the next several quarters is predicted to stabilize and fall as preventative maintenance spend remains consistent. This model allows the jewelry retailer to create a more predictable capital spend budget for the next eight years. In addition to budget stability, the jeweler also achieved these benefits:
- Consistent uptime by delivering asset repairs well in advance of interruptions
- Lower costs by avoiding the most expensive repairs and secure long-term program savings
- Improved performance by having assets perform as expected, or better—and more consistently
- More insight into spend by providing asset repair data that enables greater accuracy in spend forecasting and visibility into trends
- Enhanced brand value and delighted customers through consistent, high-quality assets that make for better locations, better brand experiences, and satisfied customers
The jeweler can now continue to provide a great customer experience while being able to plan for the long-term health of its locations.