Liquid Lean 1

Liquid LeanDeveloping Lean Culturein the Process Industries

© 2010 by Taylor and Francis Group, LLC

Liquid Lean

Raymond C. Floyd

Developing Lean Culturein the Process Industries


Productivity PressTaylor & Francis Group270 Madison AvenueNew York, NY 10016

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Library of Congress Cataloging‑in‑Publication Data

Floyd, Raymond C.Liquid lean : developing lean culture in the process industries / Raymond C. Floyd.

p. cm.Includes index.ISBN 978-1-4200-8862-5 (hbk. : alk. paper)1. Manufacturing industries--Management. 2. Chemical industry--Management. 3.

Production management--Quality control. 4. Manufacturing processes--Quality control. 5. Industrial efficiency. I. Title.

HD9720.5.F57 2010658.5’1--dc22 2009044531

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I wrote this for my wife, Marsha, and my daughters, Erin and Allison.

They have been the best part of my life.


vii

Contents

Foreword ............................................................................................... xvAcknowledgments ...............................................................................xix

1Chapter Business Results in Process Industries ............................. 1

Introduction .................................................................................1How ἀ is Book Is Organized: Shingo Prize Criteria .............2Business Results: Improve Performance with Lean ...............3Beat the Competition with Very Flexible Manufacturing .....4Improve Performance with Lean and an Engaged Workforce .....................................................................................7Gain First Mover Advantage....................................................10Achieve Prompt Improvement ................................................13All Companies Can Benefit from Lean, but Not All Do ......14

Disruptive Changes ..............................................................15Why the Process Industry Needs Its Own Version of Lean .........................................................................................16

Transforming the Raw Material .........................................17Indirect Material Transformations ....................................18Time as an Independent Element of Production .............19Special Case: Continuous Processing ................................21

Notes ............................................................................................22

2Chapter Lean Enterprise Thinking ............................................... 23

Introduction ...............................................................................23Developing a Western Lean-Enabling Culture .....................25

Historical Perspective ..........................................................27Early View of Lean: Just-in-Time Manufacturing ...........27Early View of Engaged Employees: Quality Circles ........ 30

ἀ e Eight Sources of Waste ......................................................32ἀ e Relationship between Inventory and Operating Problems .................................................................................... 34Value Streams and Support Processes ....................................36Lean Values: Inventory Reductions Can Sustain Improvements ............................................................................39


viii • Contents

Lean Values: Culture of Engagement..................................... 40Notes ........................................................................................... 42

3Chapter Policy Deployment ........................................................... 43

Introduction .............................................................................. 43Large Events and Small Events ............................................... 44A Strategic View of Manufacturing ........................................45Strategic Alignment and Necessary Boundaries ................. 48Prerequisites for Structured Autonomous Improvement ..............................................................................50Strategic Direction ....................................................................52ἀ e Role of Communication in Achieving Strategic Alignment .................................................................................. 54

Limiting Opportunities for Improvement ........................59Deploying Strategic Intent ...................................................... 60

Simple Statement of the Goal ............................................. 60Prose Statement of Intended Future State .........................61Prose Statement of Current Reality ....................................61Objective Measures of Progress ..........................................61Interim Performance Targets ..............................................62Formatting Goal Statement .................................................62

Translating Strategic Intent throughout the Organization ..............................................................................63Framework for Action ..............................................................69

How Quality Stations Work ................................................70Display the Team Goals ..................................................71Display What the Team Has Completed ......................73Show the Work in Progress ............................................74Provide Interactive Space ................................................74

Policy Deployment in Action: Conversations at a Quality Station ......................................................................75

Internal Team Conversations .........................................76External Team Conversations ........................................79

4Chapter Improving Flexibility and Availability in Mechanical Equipment .................................................... 81

Introduction ...............................................................................81


Contents • ix

Single Minute Exchange of Dies System ................................82What We Can Learn from NASCAR ................................ 84Translating NASCAR Success to Our Plants ....................85

Preparation .......................................................................85Teamwork ......................................................................... 88Equipment .........................................................................89

How to Use the SMED Concept ..............................................91ἀ e Five Key Components of SMED Practice .......................92

Separation of Activities ........................................................94Modification of Rate-Limiting Internal Activities .......... 99Modification of the Work Team .......................................102Modification of the Equipment ........................................103

Modify Equipment to Maximize Efficiency ...............104Preparing for Events and Sustaining the Improvements .....................................................................109

Outcome of Improvements ...........................................110

5Chapter Operational Planning to Improve Chemical Transitions ...................................................................... 113

Introduction .............................................................................113ἀ e Causes of Chemical Inflexibility ....................................114

Chemical Contamination ..................................................114Unintended Conversions ...................................................114

Fixed Sequence Variable Volume Production .....................115ἀ e Concept: A Comprehensive Approach to the Production Cycle ................................................................116What We Can Learn from the New York Subway System ...................................................................................117

ἀ e Four Components of FSVV Practice .............................119Typical Operating Problems ............................................ 120

Changes in Process Conditions .................................. 120Additives and Modifiers............................................... 120Changes in Reactive Chemicals ...................................121

ἀ e Fixed Sequence ............................................................121Establishing a Fixed Sequence .................................... 122

FSVV Inventory Policy ..................................................... 126Days of Demand in Inventory ..................................... 126ABC Inventories .............................................................127


x • Contents

FSVV Inventory Policy ................................................ 128Wheels within Wheels ..................................................130

Variable Volume Scheduling .............................................131Continuous Improvement ................................................ 134

Sustainability over Time .........................................................136ἀ e “Exception” Problem ..................................................136

6Chapter Assessment and Improvement of Other Accumulations ................................................................ 139

Introduction .............................................................................139Structural Differences between Process Industries and Mechanical Manufacturing ...................................................140

Small Accumulations in Process Industries ...................141

7Chapter Statistical Quality Improvement ................................... 153

Introduction .............................................................................153ἀ e Power of Statistical Quality Combined with Lean Manufacturing .........................................................................153

Statistical Methods in the Process Industries ................ 154Basic Statistical Concepts ..................................................156Six Sigma ..............................................................................157Process Improvement before Statistical Analysis ..........159Process Improvement Using Statistical Analysis ...........160Operational Improvement with Statistical Analysis .....161

Statistical Models of Process Performance ..........................162Using Statistical Analysis: ἀ e Process Capability Index .....................................................................................163

Capable Processes ..........................................................164Incapable Processes .......................................................165

Using SPC at the Frontline in a Process Plant .....................168Using a Run Chart ..............................................................169

When the Run Chart Says the Process Is Operating Normally ......................................................169When the Run Chart Says the Process Is Producing an Unexpected Result ................................171When the Run Chart Says the Process Is “Nearly Normal,” but Results Are Drifting ..............................172


Contents • xi

Avoid the Waste of Excess Quality .......................................174Notes ..........................................................................................175

8Chapter Mistake Proofing or Poka-Yoke ..................................... 177

Introduction .............................................................................177Mistakes Come in Two Parts .................................................178ἀ e Consequences of Mistakes ..............................................179

Mistake Proofing: Preventing Consequences .................180Mistake Proofing Is Common Knowledge ......................180

Warning Systems .....................................................................181Four Types of Warning Systems .......................................182

Poka-Yoke Practice 1: Physical Separation .................182Poka-Yoke Practice 2: Visual Signals ...........................185Poka-Yoke Practice 3: Pattern Recognition ................189Poka-Yoke Practice 4: Simple Physical Devices and Other Minor Changes ...........................................191

Approaching Perfect Production ..........................................192

9Chapter Equipment Reliability and Operator Care.................... 195

Introduction .............................................................................195Finding the Cause: Separating the Processes from the Equipment ................................................................................195

ἀ e Role of Equipment Reliability in Lean Practice .................................................................................196

Operator Care ..........................................................................197ἀ e Fundamentals of Operator Care ...............................199Phase I: Basic Care ..............................................................199

Keep the Equipment Clean ...........................................201Keep the Equipment Cool .............................................216Keep the Equipment Lubricated ................................. 220

Phase II: Advanced Techniques ........................................221Define Your Goals ..........................................................221Change the Oil and the Filters .................................... 222Pay Attention ................................................................. 223Autonomous Maintenance as an Element in Improvement ................................................................. 225

Autonomous Actions ............................................................. 229


xii • Contents

1Chapter 0 Lean Leadership and Ethics: Creating an Engaged Workforce ....................................................................... 235

Introduction .............................................................................235Improvement Experiences at the Frontline .........................237ἀ e Structure of Employee Engagement ............................. 238ἀ e Elements of Engagement ................................................ 238

Clear Goals ..........................................................................239Skills Necessary to Achieve the Goals ............................ 240Time to Make Improvements ........................................... 243Access to the Resources ἀ at Cause Change ................. 244Framework for Action ....................................................... 246

Engage Frontline Teams ........................................................ 247What to Do When Teams Do Not Engage ..................... 248

Refresh the Understanding of Small Event Improvement ................................................................. 249

ἀ e Subjective Elements of Engagement ............................. 250Lack of Trust in Management ...........................................251Disruption by Team Members ..........................................253

Intentional Disruption ................................................. 254Unintentional Disruption ............................................ 256

Industrial Culture ....................................................................257Notes ......................................................................................... 258

1Chapter 1 People Development ....................................................... 259

Introduction .............................................................................259Impact of Competent People on Organizational Performance ............................................................................ 260

Competence Defined ..........................................................261Basic Competence .............................................................. 262

Basic Competence Development ................................ 264Superior Performance ....................................................... 264Critical Positions ................................................................ 266

Finding the Right Management Tool .................................. 267A Quick Description of Our Analysis ............................ 267ἀ e Influence of Critical Positions on Improvement ...................................................................... 267

Individual Contributors ............................................... 268


Contents • xiii

Subject Matter Experts or Mentors ............................ 269Leaders .............................................................................271

Identifying Critical Roles in Your Organization............271Common Misconceptions ............................................272

Developing Highly Competent People .................................274Beginning the Process ........................................................275Prompt Improvement ........................................................ 277

Sustaining the Improvement .................................................278

1Chapter 2 Leadership: Initiating and Sustaining Lean Operations ...................................................................... 281

Introduction .............................................................................281Transforming an Organization and Sustaining the Change ......................................................................................281

Sustaining Improvement .................................................. 284Process Documentation ............................................... 285

ἀ e Role of Transformational Leadership .......................... 286Sustaining Leadership ....................................................... 289When the Leader Is Not the CEO ................................... 290

Getting Started ....................................................................... 292ἀ e Value of 6-Month Intervals....................................... 292ἀ ree Attributes of a Successful Beginning ....................293

ἀ e Value of Shared Vision ......................................... 294ἀ e Value of Immediate Pilot Projects ...................... 294ἀ e Value of New Tools ................................................ 298

Notes ......................................................................................... 307

Index .................................................................................................... 309

About the Author ................................................................................ 325


xv

Foreword

In business, as in life, having good ideas is only part of the key to suc-cess. ἀ e ability to communicate those ideas and put them into action is the real test. In a career spanning four decades in both the mechanical and process manufacturing industries, Ray Floyd has repeatedly met and exceeded that challenge.

Ray is a proud practitioner of what is now known as “lean manufactur-ing.” As he describes in these pages, the principles of “lean” are all about engaging frontline workers to help manufacturing plants identify and reduce wasteful practices and to achieve continuous improvement across their operations.

ἀ e starting point for all this is something that reflects one of my own core beliefs, based on more than three decades of experience in the oil and gas industry. What Ray and I have both learned is that the vast major-ity of frontline workers are honest, hardworking individuals who want to deliver top-flight results. ἀ e job of management is to give employees the tools and the encouragement to do the right things in the right ways.

ἀ e result is a classic “win/win” situation. For employees, the work-place becomes a more engaging, creative environment where they have the opportunity to make a real difference in the reliability and quality of day-to-day operations. For management, there is the revelation of how significantly our plant operations can be improved when we set forth clear strategies and goals and then empower the real experts—our frontline workers—to deliver the goods.

Like Ray’s earlier book, A Culture of Rapid Improvement: Creating and Sustaining an Engaged Workforce, this new volume is aimed at people who want to lead change in their organization and those who will help and advise the leaders. I firmly believe both books are “must read” material for managers and leaders involved in plant operations of all types.

In Liquid Lean: Developing Lean Culture in the Process Industries, Ray draws on his wealth of experience as a senior executive with General Motors, Exxon, and, most recently, Suncor Energy. ἀ e book focuses on applying lean manufacturing principles to the chemical and process industries. As Ray points out, by “going lean,” these industries stand to benefit even more than mechanical manufacturing operations such as auto


xvi • Foreword

plants. ἀ at is because, relatively speaking, liquid plants are more capi-tal intensive and any interruption in the industrial process is very costly. ἀ is is particularly true of continuous process industries like Suncor’s oil sands operation, which runs 24 hours a day, 365 days a year, and relies on a complex series of steps to transform raw resources into market-ready transportation fuels.

As I write this foreword, Suncor is still in the relatively early stages of implementing lean manufacturing principles as part of our renewed cor-poratewide focus on operational excellence. Yet, even at this early stage, we see tangible results. As Ray documents in this book, lean practices allowed Suncor to reduce costs and increase productivity at precisely the time we most needed to do so—during a period of rapid decline in world oil prices.

True to Ray’s time-tested lean manufacturing model, most of the improvements we have made and continue to make flow from the inge-nuity and initiative of our frontline workers. I will cite just one example, described in detail in Chapter 9. After our operators were enabled to take a more active role in servicing their equipment, they noticed that pump seals were failing prematurely. ἀ e cause was easily corrected, yet mechan-ics who had previously been assigned to the task from time to time were apparently too focused on replacing the seals to worry about why they were failing. After years of disruptive failures on an important pump, the problem was quickly identified and resolved.

Readers will find in these pages plenty of other accounts of Suncor’s journey toward getting leaner—not all of them entirely flattering. Ray is candid about describing times we were convinced one factor was to blame for an operational inefficiency, only to discover the root cause was some-thing else altogether. I have no problem with Ray relating these stories. Like him, I believe the only unforgivable thing about making a mistake is failing to learn from it.

It is important to stress, as Ray does, that making your business leaner is not about making it meaner. After all, one of the worst ways to motivate employees to strive for continual improvement is to use any cost savings that result from their innovations to justify shrinking the workforce. ἀ at is why when Suncor initiated a recent major redesign of our organizations for maintenance, support services, engineering, and sustaining projects, we made it clear up-front that the initiative—expected to generate more than $100 million in annual savings—would not result in any job losses.

One of the things I like best about Ray and this book is his ability to address complex issues in concise and easily understood terms. Readers


Foreword • xvii

will appreciate how he anchors an entire chapter on the awkwardly named single minute exchange dies (SMED) technology by comparing this lean manufacturing tool to what goes on at your average NASCAR competi-tion. Or how he eases into a discussion of “mistake proofing” your corpo-ration by repeating a baking lesson learned from his mother: Always break your eggs in a separate bowl and examine them before adding them to the mix to avoid one bad egg spoiling the batter.

As a business leader, I know that it is impossible to overstate the impor-tance of operational excellence. ἀ is creates the value on which we build our corporate reputation. For our investors—and for all stakeholders—how we perform today determines their level of confidence in how we will perform tomorrow.

What Ray provides in this book is a road map for achieving excellence across plant operations that demonstrably generates tangible results in as little as 6 months and can lead to transformative change, even in a large organization, in the span of a few years.

Reaching out to engage an entire organization in a system of continuous improvement is a very appealing concept and I have witnessed the excite-ment in the field that comes from pursuing this kind of positive change. I would urge all manufacturing managers and leaders to read this volume carefully and to take Ray’s lessons to heart. ἀ ey will be doing their orga-nizations, their shareholders, and their employees a great service.

Richard L. GeorgePresident and CEOSuncor Energy, Inc.


xix

Acknowledgments

Full credit for the ideas and experiences described in this book belongs to my colleagues at General Motors, Exxon Mobil, and Suncor Energy. Without them, I would have had nothing to report. Several among them deserve special mention. Don Powell, John Webb, John Laibe, and Gene McBrayer of Exxon were inspirational and empowering leaders during the early days and throughout the critical development of this material for application in the liquid industry. Kirk Bailey, Steve Williams, and Rick George of Suncor enabled the most recent work, where we quickly deployed 20 years of Exxon experience into a new business and a new country, dem-onstrating both the aggregating impact and the portability of the con-cepts. My colleagues on the Suncor Oil Sands Management Committee have made amazing contributions—individually and collectively—to this work. ἀ ese men and women all made very special contributions to me and to the resulting experiences described here. I sincerely thank each of them for his or her help.

Michael Sinocchi of Productivity Press deserves a lot of credit for dem-onstrating remarkable patience when I advised him that I was “unretir-ing” to join Suncor. ἀ e result of this was that the manuscript was a year late and completely rewritten.

Of course, the foundation for everything that I do is my wife, Marsha. Whenever I am uncertain about the right thing to do, I just watch Marsha. Somehow, she always knows.

Raymond C. Floyd


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