1 © Life Cycle Engineering 2011 Business Excellence powered by Rx R. Keith Mobley Principal, SME Life Cycle Engineering, Inc

1© Life Cycle Engineering 2011© Life Cycle Engineering 2011

Business Excellence powered by RxR. Keith MobleyPrincipal, SMELife Cycle Engineering, Inc.

3© Life Cycle Engineering 2011

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


Asset Reliability Losses

Source: The Plant Performance Group 1985 - 2010


Asset Utilization

Source: The Plant Performance Group 1985 - 2010

Maintenance 7%


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


World-Class Business

Marketing drives backlog and determines current and future production requirements

Production must respond to market demands and effectively use installed capacity

Maintenance must respond to both market demands and production needs, as well as provide sustaining maintenance that prolongs asset useful life

Excellence in and Integration of::

Production Asset Care

Marketing


The Focus of Reliability Excellence

Production

ReliabilityMaintenance

EH&S

Supply Chain

• Standard procedures• Waste and loss elimination• Quick changeovers• Stable, consistent processes

• Risk management• Asset management

• Loss, waste elimination• Performance

management

• Asset care• Useful life management

• Supply chain management• MRO materials management• Materials handling and JIT• Inventory management

Procurement

• Occupational Health & Safety

• Environmental Compliance


Reliable Processes

Visionary Leadership

Marketing & SalesSupply Chain

Logistics & Distribution

Operational Reliability

Human Resources

BusinessStrategy

Asset Management

Voice of Customer Quality

EH&SCapital Assets

Financial Risk Management


EFQM ModelLe

ader

ship

Pro

cess

es

Key

Per

form

ance

R

esul

ts

People

Policies & Strategy

Partnerships & Resources

People Results

Customer Results

SocietyResults

Innovation & Learning

Enablers Results

(European Foundation for Quality Management)

Business Excellence Models Stress:

• Leadership• Standard Processes• KPI

Models Assume:

• Asset Reliability• Universal Best Practices• Engaged Workforce• Enabling Work Culture


Reliability Excellence Model

MATERIALS MANAGEMENT

ASSET CARE

WORKSCHEDULING

WORK MANAGEMENT

PROCESSES

FACILITIES & EQUIPMENT

WORK MEASUREMENT

WORK PLANNING

WORKFORCE DEVELOPMENT

ORGANIZATIONAL STRUCTURE

SUPERVISIONINFORMATION MANAGEMENT

OPTIMIZATION

MANAGEMENT REPORTING

BUDGETING & COST CONTROL

MANAGEMENT OF CHANGE

EQUIPMENT HISTORY

AUDITS & ASSESSMENTS

RELIABILITY ENGINEERING

SUSTAINABILITY

OPERATOR CARE

PROCUREMENT

EQUIPMENT & PROCESS DESIGN

FUNCTIONAL PARTNERSHIPSMANAGEMENT COMMITMENT

PRINCIPLES

ORGANIZATIONAL BEHAVIOR

EMPLOYEE INVOLVEMENT

GOALS & OBJECTIVES

GOVERNING PRINCIPLES

OCCUPATIONAL HEALTH & SAFETY

CULTURE

PERFORMANCE MANAGEMENT

LOSS ELIMINATION


Aluminum WheelsProblem 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)


Standard Work Is Essential To Excellence

Mission

Policies

Standard Processes

Standard Procedures

Actual Practices

Actual practices define effectiveness and are created by standards and change management.

Why would standard work be met with resistance?


The Path To Standard Work In Production

Standard Work is Central to the Continuous Improvement Process

Standard Work

Standard WIP

• Available time • Customer demand

• Time Observation Form• Total work content

• Load Chart• Balance work• Enable flow• Required resources

• SW Combination Sheet• Content• Sequence• Timing• Outcome• Safety

Line BalanceWork Content & SequenceTakt Time

• Location• Amount• Enable Flow


Standard Work Should be Layered and Developed from the Bottom Up

ExecutivesTime on the floor to verify the chain of standard work is upheld and production process is stable

and improving

Value Stream ManagersMonitor and support supervisors in their ability to

carry out their standard work

SupervisorsMonitor and support team leaders in their ability to

carry out their standard work

Natural Work Team Leaders

Maintain production andensure standard work is followed

Layers of Standard

Work


Who Should Have Standard Work?

Role% of Work (time) that should be Standard

Executives 10-15%

Value Stream Manager 25%

Support Department Managers

50%

Supervisors 50%

Team Leaders 80%

Operators (Associates) 95+%

Maintenance Technicians 85% - 90%


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


Conduct Problem-solving

EFFECT

MAN

MATERIALS METHODS

MACHINES

Pareto Losses

Business Case Target Condition

Current Condition Action Plan

Metrics

Action Plan

Perfection

Seek

Target

Gap

Identify Losses

Standard Loss Elimination Process


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


Asset Utilization Losses

Installed Capacity = 58,867,200,000

5-Day Work Week = 16,128,000,000

3,225,600,000Two 5-Day Outages =

2,520,000,00030 Minute Cleaning/Shift =

29,615,040,000Total AU Losses =

Available Capacity = 29,252,160,000

50%

PM (9 Shifts) x 2 = 7,741,440,000


Operating Losses

Possible Capacity = 29,252,160,000

Uptime (Actual) (80%) = 5,850,432,000

14,626,080,000Production Rate (50%) =

475,292,160Quality Rate (98%) =

20,951,804,160Total OEE Losses =

Net Output = 8,300,355,840

OEE Losses

14%


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


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


A Representative Current State Map for a Family of Retainers at a

Bearings Manufacturing Company

ABC Steel Co.

ABC Enterprises

C/T = 3 seconds

C/O = 2 hours

Uptime = 75%

21,600 secs. avail.

1 shift

C/T = 22 seconds

C/O = 30 minutes

Uptime = 100%

25,200 secs. avail.

1 shift

C/T = 35 seconds

C/O = 45 minutes

Uptime = 75%

25,200 secs. avail.

1 shift

Workbook pg. 67


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


Asset Management

Organizational Strategic Plan

Other Organizational Requirements and Systems

Legal and Stakeholder Requirements and Expectations (Customers, Shareholders, Employees, Vendors, Society

Asset Management Policy• Asset Management Strategy• Asset Management Objectives• Asset Management Plans

Portfolio of Asset Systems and Asset (Diversity of Types, Criticalities, Condition and

Performance

Performance and Condition

Monitoring

Acquire, Create, Utilize

Maintain, Review and

Dispose

Organizational Values,

Functional Standards, Required

Processes

Asset Management Enablers and Controls

Continuous Improvement


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


Asset Management Encompasses

Operations Activities(Operator

Care)

Maintenance Activities


Key Process Categories

Principles and Culture Processes Optimization Sustainment

ThemesBuild Alignment and

PartnershipsDefinition and Discipline Key Business Processes

Proactive Management and Planning

Enhancing Systems and Processes

Levels Key Process Areas (KPA)

World Class

Excellence

Proactive

Emerging

Reactive1

2

3

4

5

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

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

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

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

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

Maturity Matrix


Educate

Involve Employees

StabilizeStandardize

Eliminate Waste

Operations Excellence

Reliability Excellence

Integrate Value Stream

Operational Excellence

Organize

First Contact

ObserveUnaware

Prepare for Change

Reliability Is Fundamental To Business Excel-lence

Business Excellence

Assess

Seek PerfectionBest-in-Class

Integrate Supply Chain


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


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

33© Life Cycle Engineering 2011© Life Cycle Engineering 2011

Thank you for your attention

Questions?

Documents

1 © Life Cycle Engineering 2011 Business Excellence powered by Rx R. Keith Mobley Principal, SME Life Cycle Engineering, Inc