Business Excellence powered by Rx
R. Keith Mobley
Principal, SME
Life Cycle Engineering, Inc.
© Life Cycle Engineering 2011
© Life Cycle Engineering 2011
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Reliability Myths
• Reliability only applies to physical assets
• Reliability is a maintenance-only problem
• Asset reliability is dominate reason for poor
business performance
• Asset reliability is dominate reason for low asset
utilization
• Excessive maintenance cost limits competitive
ability
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Asset Reliability Losses
Source: The Plant Performance Group 1985 - 2010
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Asset Utilization
Maintenance 7%
Source: The Plant Performance Group 1985 - 2010
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Reliability
• The probability that a business process, work
procedure, capital asset and employee will –
without exception – perform its required
function in both normal an abnormal day-to-day
operations
• It is a holistic issue and must be resolved with a
holistic solution
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World-Class Business
Excellence in and Integration of::
Marketing drives backlog and
determines current and future
production requirements
Marketing
Production
Maintenance must respond to
both market demands and
production needs, as well as
provide sustaining
maintenance that prolongs
asset useful life
Asset Care
Production must respond to
market demands and effectively
use installed capacity
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The Focus of Reliability Excellence
• Supply chain management
• MRO materials management
• Materials handling and JIT
• Inventory management
• Standard procedures
• Waste and loss elimination
• Quick changeovers
• Stable, consistent processes
Production
Supply Chain
Procurement
EH&S
• Occupational Health & Safety
• Environmental Compliance
Reliability
Maintenance
• Asset care
• Useful life management
• Risk management
• Asset management
• Loss, waste elimination
• Performance management
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Reliable Processes
Visionary Leadership
Financial
Risk Management
Supply Chain
Marketing & Sales
Voice of Customer
Quality
Business
Strategy
Asset
Management
Capital Assets
EH&S
Logistics & Distribution
Human Resources
Operational Reliability
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EFQM Model
(European Foundation for Quality
Management)
Results
People
Results
Policies &
Strategy
Partnerships &
Resources
Processes
Leadership
People
Customer
Results
Society
Results
Key Performance
Results
Enablers
Business Excellence Models
Stress:
• Leadership
• Standard Processes
• KPI
Models Assume:
•
•
•
•
Asset Reliability
Universal Best Practices
Engaged Workforce
Enabling Work Culture
Innovation & Learning
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Reliability Excellence Model
SUSTAINABILITY
PERFORMANCE
MANAGEMENT
AUDITS &
ASSESSMENTS
EQUIPMENT
HISTORY
EQUIPMENT &
PROCESS DESIGN
WORK
MEASUREMENT
MANAGEMENT
REPORTING
OPTIMIZATION
RELIABILITY
ENGINEERING
MANAGEMENT
OF CHANGE
INFORMATION
MANAGEMENT
SUPERVISION
ORGANIZATIONAL
BEHAVIOR
PROCUREMENT
FACILITIES &
EQUIPMENT
PROCESSES
WORK
MANAGEMENT
WORK
PLANNING
WORK
OPERATOR
SCHEDULING
CARE
ASSET
CARE
LOSS
ELIMINATION
WORKFORCE
DEVELOPMENT
MATERIALS
MANAGEMENT
CULTURE
GOVERNING
PRINCIPLES
GOALS &
OBJECTIVES
ORGANIZATIONAL
STRUCTURE
BUDGETING &
COST CONTROL
OCCUPATIONAL
HEALTH & SAFETY
EMPLOYEE
INVOLVEMENT
PRINCIPLES
MANAGEMENT COMMITMENT
FUNCTIONAL PARTNERSHIPS
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Aluminum Wheels
Problem Statement
• Average Production: 5,600 wheels per day
• Profit: -$2.31 per wheel
• Downtime: 1% (unscheduled)
Perception
• Obsolete foundry technology
• Asset reliability
Reality
• Failure to adhere to standard procedures
Results
• Average Production: 12,000 wheels per day
• Profit: $40.63 per wheel
• Downtime: 1% (unscheduled)
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Standard Work Is Essential To Excellence
Actual practices
define effectiveness
and are created by
standards and change
management.
Mission
Why would standard
work be met with
resistance?
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The Path To Standard Work In Production
Takt Time
Work Content
& Sequence
Standard
WIP
Line Balance
• Time Observation Form • Load Chart
• Available time
• Balance work
• Customer demand • Total work content
• Enable flow
• Required resources
•Location
•Amount
• Enable Flow
• SW Combination Sheet
• Content
• Sequence
• Timing
• Outcome
• Safety
Standard Work
Standard Work is Central to the Continuous Improvement Process
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Layers of
Standard
Work
Standard Work Should be Layered and Developed
from the Bottom Up
Executives
Time on the floor to verify the chain of standard
work is upheld and production process is stable
and improving
Value Stream Managers
Monitor and support supervisors in their ability to
carry out their standard work
Supervisors
Monitor and support team leaders in their ability to
carry out their standard work
Natural Work Team Leaders
Maintain production and
ensure standard work is followed
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Who Should Have Standard Work?
Role
Executives
% of Work (time) that
should be Standard
10-15%
Value Stream Manager
25%
Support Department
Managers
50%
Supervisors
50%
Team Leaders
80%
Operators (Associates)
95+%
Maintenance Technicians
85% - 90%
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Alumina Refinery
Problem Statement
• Excessive failures of 700 Surry pumps (MTBF: 6 months)
• Maintenance cost $12M per year
Perception
• Poor maintenance practices
Reality
• Mode of operation (control range)
Results
•
•
•
•
Failures virtually eliminated (MTBF: 36 months)
Maintenance cost less than $100K per year
Energy use reduced by $11.3M per year
Improved process performance
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Standard Loss Elimination Process
Identify Losses
Pareto Losses
Gap
Target
Seek
Action Plan
Business Case
Conduct Problem-solving
MAN
Target Condition
MACHINES
Perfection
Current Condition
EFFECT
Action Plan
Metrics
MATERIALS
METHODS
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High-speed Manufacturing
Problem Statement
• Loss production, missed deliveries
• High production costs
Perception
• Maintenance deficiencies
• Operators not performing
Reality
• Management decisions limited utilization to 50%
Results
• Restructured operating plan
• Eliminated losses within OEE
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Asset Utilization Losses
Installed Capacity =
58,867,200,000
5-Day Work Week =
16,128,000,000
Two 5-Day Outages =
3,225,600,000
30 Minute Cleaning/Shift =
2,520,000,000
PM (9 Shifts) x 2 =
7,741,440,000
Total AU Losses =
Available Capacity =
29,615,040,000 50%
29,252,160,000
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Operating Losses
OEE Losses
Possible Capacity =
29,252,160,000
Uptime (Actual) (80%) =
5,850,432,000
Production Rate (50%) =
14,626,080,000
Quality Rate (98%) =
475,292,160
Total OEE Losses =
20,951,804,160
Net Output =
8,300,355,840 14%
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7 or 8 Wastes of Lean
1. Defects
2. Overproduction
3. Transportation
4. Waiting
5. Inventory
6. Motion
7. Processing
8. Skills – Not utilizing people’s talents
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High-speed Manufacturing
Problem Statement
• Chronic failure to meet production goals
• Losses in excess of 22 billion units per year
Perception
• Reliability of the production modules
Reality
• Modules starved for WIP materials
Results
• Throughput increased by 20 billion plus units per year
• Production cost per unit reduced by $0.0105
• Production (operating) hours per year reduced by 120
days
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ABC
Steel Co.
ABC
Enterprises
A Representative Current State Map
for a Family of Retainers at a
Bearings Manufacturing Company
Workbook pg. 67
C/T = 3 seconds
C/T = 22 seconds
C/T = 35 seconds
C/O = 2 hours
C/O = 30 minutes
C/O = 45 minutes
Uptime = 75%
Uptime = 100%
Uptime = 75%
21,600 secs. avail.
25,200 secs. avail.
25,200 secs. avail.
1 shift
1 shift
1 shift
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Refinery
Problem Statement
• Excessive maintenance cost for repair of heat exchangers
• Low thermal efficiency in the slurry process
Perception
• None—performance accepted as norm
Reality
• Contracted maintenance services unacceptable
Results
• Cleaning rather than replacing tubes
• Thermal efficiency improvement of 55%
• Reduced maintenance cost by $6.3M per year
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Asset Management
Legal and Stakeholder Requirements and Expectations
(Customers, Shareholders, Employees, Vendors, Society
Other Organizational
Requirements and Systems
Organizational Strategic Plan
Asset Management Policy
• Asset Management Strategy
• Asset Management Objectives
• Asset Management Plans
Organizational
Values,
Functional
Standards,
Required
Processes
Acquire,
Create, Utilize
Maintain,
Review and
Dispose
Portfolio of Asset Systems and Asset (Diversity
of Types, Criticalities, Condition and
Performance
Continuous
Improvement
Performance
and Condition
Monitoring
Asset Management Enablers and Controls
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Food (Bakery Products)
Problem Statement
• 50% Scrap rate on baked cookie line
• Missed deliveries and loss of market share
• Constant jams and miss-feeds
Perception
• Poor maintenance practices
Reality
• Low bid system (inherent design deficiencies)
• Poor changeover procedures
Results
• Scrap rate 3%
• On-time delivery
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Asset Management Encompasses
Operations
Activities
(Operator Care)
Maintenance
Activities
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Maturity Matrix
Key Process Categories
Principles and Culture
Processes
Optimization
Sustainment
Themes
Build Alignment and
Partnerships
Definition and Discipline
Key Business Processes
Proactive Management
and Planning
Enhancing Systems and
Processes
Levels
Key Process Areas (KPA)
Strong, active leadership
Clear, concise vision and mission
Universally shared values
Effective, cascading goals
Full integration of business functions
Empowered, motivated workforce
Reliance on natural work teams
Proven, standard processes
Roles & responsibilities known by all
Negligible variation in work practices
Accountability is accepted part of job
Employees’ contribution rewarded
Natural work teams self-directed
Full integration of functional groups
Strategic business plan governs
Detailed tactical operating plan
Effective universal communications
Cascading KPIs effectively measure
Asset utilization is optimum
Risks are known and well managed
Budgets are activity-based
Culture of continuous improvement
All decisions are data-driven
Stretch model in-place for workforce
Executives leads CI and example
Real-time performance feedback
Loss elimination institutionalized
Seek perfection is workforce’s
mantra
Vision statement provides focus
Seamless functional coordination
Full employee involved in operations
Motivation and morale high
Absenteeism and turnover minimum
Open, honest communication
Standard processes & procedures
Non-value activities eliminated
Loss and waste minimized
Variability tightly controlled
Performance trends at or near goals
Workforce skills enable success
Executive team leads plant team
Management team committed to Rx
Increasing use of work teams
Mutual trust firmly established
Reactive events are rare
Performance management in place
Leadership empower workforce
Workforce embraces change
Proactive
Workers accept Vision statement
Partnership agreements established
Moderate inter-function coordination
Motivation and morale improving
Absenteeism and turnover moderate
Effective strategic plan used well
Cascading KPIs established & used
Work variability decreasing
Workforce skills improving
Effective performance measures
Executive sponsor committed to Rx
Management team resistance
First attempts using natural teams
Growing mutual trust at all levels
Reactive events becoming exception
Focus shifting from now to future
Leadership committed to change
Workforce involved in change
First signs of workforce ownership
Emerging
Initial vision statement exists
Communication plan between silos
Early signs of coordination
Motivation and morale variable
Absenteeism and turnover high
Initial Strategic business plan exists
Cascading goals and objectives
Moderate to high variability in work
Skills training program evolving
Minimal performance measures
Senior leadership missing
Traditional hierarchical management
Planning is minimal and isolated
Limited efforts at problem-solving
Reactive events decreasing
Focus shifting from survive the day
Need for change acknowledged
Leadership becoming involved
Some employee involvement
No vision of the future
Highly siloed organization
Adversarial functional relationships
Coordination poor or non-existent
Motivation and morale low
Absenteeism and turnover high
No goals and objectives
Ad hoc processes and procedures
High variability in work execution
Workforce skills lacking
Ineffective performance measures
Errors and failures are norm
No leadership
Autocratic management
Budget compliance management
Limited or ad hoc planning
No continuous improvement effort
Reacting to events is the norm
None
5
World Class
4
Excellence
3
2
1
Reactive
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Reliability Is Fundamental To Business
Excellence
Best-in-Class
Business Excellence
Stabilize
Operational Excellence
Standardize
Involve Employees
First Contact
Unaware
Observe
Prepare for
Change
Assess
Eliminate Waste
Educate
Integrate Value Stream
Organize
Operations Excellence
Reliability Excellence
Integrate Supply Chain
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First Steps
• A journey to Business Excellence starts with:
– A holistic, truthful assessment of your current state
– Take nothing for granted, question everything
– Develop a roadmap for the future – start with the
basics and build upon them
– Have a real sense of urgency – but do not be in a
hurry
• Do not forget the workforce – your real asset
– Effective change management and employee
involvement is crucial to success
– Remember that change cannot be mandated
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Conclusion
• Reliability is a fundamental requirements of
business excellence – its not optional
–
–
–
–
Business policies and practices
Work processes, procedures and practices
Workforce development and empowerment
Physical assets
• Reliability is holistic. It cannot be limited to
select functions or its focus limited to a few
variables
• Business Excellence powered by Reliability
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Thank you for your attention
Questions?
© Life Cycle Engineering 2011
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