Reliability & Operational Excellence A Reliable Plant is a Safe, Cost Effective, Environmentally Friendly Operation November 2014 The RM Group, Inc. Knoxville, TN
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Contents Reliability
and Safety The Reliability Program Managing Cultural Change, Leadership, and Aligning the Organization Implementation
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Reliability and Safety
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Safety is a Top Priority Most
all organizations say safety is a top priority They have policies, standards, processes, systems, etc. to support this They are committed to enforcing these policies
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Safety Policy Statement
All injuries are preventable
No task is so urgent that it cannot be done safely
Management must provide a safe work place
We are each responsible for preventing injuries
Everyone is empowered to stop unsafe behavior
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Reliability and Safety Relationship If
executives were truly committed to safety… They would be committed to reliability, and would have similar policies, standards, processes, and systems They typically are not, and do not Consider a typical sampling of the data
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120
R = 0.80 R2 = 0.64
135
115
115 110 95 105
75
100
55
95
35
OEE/AU- % of Base
Injury Rate v. AU/OEE over Time - Company A
Injury Rate OEE/AU
48 53
41 45
33 37
25 28
17 21
9 13
90
5
1
15
Month The RM Group, Inc. Knoxville, TN
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Total Injuries per Year
Correlation of Corrective & Reactive Work Orders with Injury Rate – Plant No. 1 400 350
R2 = 0.684
300 250 200 150 100 6000
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R = 0.827
8000
10000
8
12000
14000
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Total Injuries per Year
Correlation of PM & PdM Work Orders with Injury Rate – Plant No. 1 400 350
R2 = 0.911
300 250 200 150 100 4000
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R = 0.955
6000
8000
9
10000
12000
14000
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(normalized to a base number)
Injury Rate
The More Disciplined Your Maintenance, the Fewer Injuries you have
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R = 0.95 2 R = 0.90
4 3 2 1 0 60
70
80
10
90
100
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And, a Reliable Plant is Environmentally Sound Environmental Incidents/yr
Asset Utilization vs. Environmental Incidents - Plant B 10 9 8 7 6 5 4 3 2 1 0
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90
100
110
120
11
130
140
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And, is More Productive AU/OEE vs. Reactive Maintenance Asset Utilization (AU) or OEE
100
Slope= -0.24
90 80 70 60 50 40 10
20
30
40
50
60
70
80
90
100
Reactive Maintenance % The RM Group, Inc. Knoxville, TN
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And, is More Cost Effective Reliability Index v. Production Unit Costs Production Costs $/Unit
(As reliability increases, costs decrease) 120
R = 0.632 R2 = 0.40
110 100 90 80 70 60 50 30
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40
50
60
13
70
80
90
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Further:
DuPont reported that the most likely person to be injured is*:
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a maintenance technician, with less than two years experience, doing reactive work
Exxon-Mobil reported that accidents are five (5) times more likely in maintenance when doing breakdown work than when doing planned and scheduled work** In ~66% of companies, ~60% of injuries occur while doing reactive maintenance***
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From the data we should conclude: Safety is everyone’s responsibility & Reliability is everyone’s responsibility
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Establish a policy linking Reliability and Safety
If safe behavior is a requirement, for which you have specific standards, then… Reliability and manufacturing excellence are requirements, and you have specific standards for operations and maintenance! If you believe in Zero Incidents/Injuries, you must believe in Zero Failures/Unplanned Downtime – Failures induce greater risk of injury Given this, operations & maintenance training should be on a par with safety training Getting both reliability and safety requires: tenacious application of best practice
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Establish a Policy Linking Reliability and Safety All injuries are preventable… All injuries, and failures, are preventable No task is so urgent that it cannot be done safely… No task is so urgent that it cannot be done safely, and reliably Management must provide a safe workplace… Management must provide a safe, & reliable, workplace We are each responsible for preventing injuries… We are each responsible for preventing injuries, and failures Everyone is empowered to stop unsafe behavior… Everyone is empowered to stop unsafe, & unreliable, behavior
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If you truly believe in Safety, then Reliability is a MUST to minimize the risk of injuries, to minimize costs, and environmental incidents (Should be given comparable executive attention as any high-powered consulting recommendations) The RM Group, Inc. Knoxville, TN
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The Reliability Program A Commitment to Safety Requires a Co-Commitment to Reliability and Related Policies and Practices (examples are provided below)
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The Reliability Program
Doing better Mtce will not contribute much to Reliability
(note where most defects occur) Design (Life Cycle Cost) Defects
Buy
Store
(Cost of Ownership)
(“Like a Store”)
Defects
Defects
Install/ Startup
Operate
(With Discipline)
(With Care)
Defects
Defects
Maintain (With Precision) Defects
Root Causes
Rate Losses & Downtime
Source: In Cooperation with Andrew Fraser, Reliable Manufacturing Assoc.
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Unneeded Work - $$ Injuries (& Env. Events) Asset Utilization & Necessary Work 20
Minimum unit cost of Production Copyright Copyright 2014 2012
DESIGN For Reliability, Operability, Availability, and Maintainability (not just budget and schedule)
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Life Cycle Cost and Cash Flow Considerations
Cash Flow ($)
Life Cycle Cost Policy
ROI Lowest installed Cost Policy
Time
Minimum Life Cycle Costs => Maximum Long Term Profits
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BUY/PURCHASEFor Reliability using Strategic Alliances, Good Specifications & Standards, and Focus on Total Cost of Ownership
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Total Cost of Ownership
Total Cost of Ownership- costs include:
Price Drawings, bill of material, manuals, etc. Selection effort, including company staff, travel, etc. Procurement transaction, freight, duties Delivery, assembly, installation, startup Performance capability, efficiency, operability Maintenance/PM requirements, maintainability Energy efficiency Parts stocking, inventory, warranty Service levels (or lack thereof) Other costs…
Only ~25% of total cost of ownership is price!
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STORES – Assure Reliability and Availability of Spares
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Stores are an asset, and should be treated so. Stores should be run “like a store, a business”:
Clean, well-organized, efficient Minimum stockouts, e.g., 1% And, minimum inventory - inventory turns of 2 Stock levels related to use histories Receipt inspection- quantity, quality, part no. Quantities as indicated Everything in its place Customer driven-- Run by a manager with an understanding of needs & applications The RM Group, Inc. Knoxville, TN
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INSTALL and STARTUP– with precision for long life
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Startup and CommissioningCritical to Reliability You’re
7-17 times more likely to introduce defects during startup than normal operation 92% of rotating machinery has defects at startup that result in premature failure Source: 1) Reliability Magazine, February 2001, and 2) Machinery Reliability Conference, Phoenix, April, 2001 The RM Group, Inc. Knoxville, TN
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OPERATE RELIABLY – with care and precision, and within process limits
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Reliability Based Operations Reliability cannot be driven by the maintenance organization. It must be driven by the operating units, …and led from the top. Charles Bailey, VP of Operations Eastman Chemicals (Retired)
To expect maintenance to “own” reliability is like expecting the mechanic at the garage to “own” the reliability of our cars. Ron Moore The RM Group, Inc. Knoxville, TN
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Of all production losses from ideal (AU/OEE), ~2/3rds are NOT equipment related; ~1/3rd are, but most of these are Ops driven; Only ~ 10% of losses are Mtce driven JIPM: 70% of eqpt. failures are preventable by operators
Changeovers, rate/quality losses, raw material, market demand, production planning, etc.
Equipment Related Losses-Maintenance Equipment Related Losses- Operation Non Equipment Related Losses
Source: Author experience; Similar findings reported by BASF-UK, Eastman Chemicals, Whirlpool, and Borg-Warner-US The RM Group, Inc. Knoxville, TN
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The Five Manufacturing Domains Performance Levels
World Class Manufacturing
Strategic Domain Proactive Domain
Planned Domain
Eliminate Defects; Lowest Cost Competitive Advantage
Fix it before it breaks; Least Stable Fix it after No Surprises, Regressive it breaks; Competitive Parity Domain Most Expensive Don’t fix it Overtime Meet Budget, Source: Heroes Staged decay
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Reactive Domain
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Organizational LearningIndustry Leadership
W. Ledet The Manufacturing Game; Kingwood, TX Copyright Copyright 2014 2012
Reliability Based Operations (cont.) To address these issues, we must have: Production and maintenance partnershipcommunication, teamwork, common measures Consistency of operation across shifts Process Conformance and Capability - Stability Good shift handover practices Operator care/PM, training and skills
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Correlation of Operator Care/PM and Maintenance Costs (Avg data at each level for 200 plants surveyed) Mtce Costs as a % of Original Equipment Cost
16 R = 0.85 R2 = 0.73
14 12 10 8 6 4 2 0 0
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2
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3
4
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Operator Care, Ownership (cont.) Provide Basic Care- Competently, Safely
Take care of the place where you make your living, so it will take care of you. Mom
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MAINTAIN – For Reliability
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Excess Defects Lead to Reactive Behaviors-
Typical Maintenance Practices 60 50 40 30
Time-based
20
Condition-based
Root Cause-based
10 0 Reactive
Preventive Predictive
Proactive
Source: Author’s surveys and The Reliability-based Maintenance Strategy: A Vision for Improving Industrial Productivity, R. Moore, F. Pardue, A. Pride, J. Wilson, September 1993, CSI Industry Report. The RM Group, Inc. Knoxville, TN
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Eliminate and/or Manage Defects-
Benchmark Maintenance Practices 60
Planned and/or Scheduled Condition-based
50 40 30 Time-based
20
Root Cause-based
10 0 Reactive
Preventive
Predictive
Proactive
Source: Author’s surveys and The Reliability-based Maintenance Strategy: A Vision for Improving Industrial Productivity, R. Moore, F. Pardue, A. Pride, J. Wilson, September 1993, CSI Industry Report. The RM Group, Inc. Knoxville, TN
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Understand Degradation Process (Avoid or Minimize the Consequence of Failure)
(Resistance to Failure)
Condition
Onset of Failure
Detect Potential FailureSystem Meeting All Requirements
Pending Failure Not Detected
Broken- $$$ Maintenance/ Action Window “PF Interval"
(PM- too much, too soon?)
Proactive* Stop/Delay Onset of Failure*
Functional FailureSystem Not Meeting All Requirements
(too little, too late)
Predictive*
Protective*
Time Sources:
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Performance Losses
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Ivara Corp, Hamilton, Ontario *R. Baldridge, Cargill
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Maintenance Costs v. CM/PdM% (Typical Correlation) Database - minimum of 25 plants; minimum of 5 companies
Mtce Costs, %ARV
20
Note: Work Management and Planning & Scheduling MUST be excellent to act on findings of PdM; and a proactive mindset is necessary for defect elimination
15
10
5
0 0
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R2 = 0.96
10
20
30
40
50
40
60
70
80
90
100
Source: John Schultz, Allied Reliability, Inc.; Charleston, SC Copyright Copyright 2014 2012
Maintenance Costs v. % PM Mtce Costs, %ARV
20 R = 0.984 R2 = 0.969
15
10
5
0 0
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20
30
40
50
41
60
70
80
90
100
Source: John Schultz, Allied Reliability, Inc.; Charleston, SC Copyright Copyright 2014 2012
In light of this, consider Reliability and Asset Management - ISO 55000
Asset – Anything that adds value. Asset management plans must include:
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Business requirements over the coming 5-10 years Production’s role Design/capital projects’ role Purchasing/Store’s role Maintenance’s role All working collectively to manage the assets, minimize losses, & add value to the business All must be aligned to business strategy and goals
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Leadership, Organizational Alignment, and Managing Cultural Change
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Leadership Leadership- the ability to inspire ordinary people to consistently perform at an extraordinary level Leadership begs the question “How do I get people to genuinely look forward to coming to work every day?”
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Level 5 Leadership
Leadership - Floats to the person best
qualified to eliminate the source of defects – nature of the work determines who is in the lead position (Rank is not = Expertise) Leaders are willing to learn from others
Types of Leadership:
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Executive leaders– provide vision and resources Operational leaders– provide time for worker improvements Network leaders– provide the ideas for improvement – If you want to understand the problems with the work, ask the workers! Source: Level 5 Leadership at Work, Winston Ledet, et. al
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Aligning the Organization
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Most Organizations are not Aligned
According to Harris Interactive Research (2006), only:
37% of employees had a clear understanding of what the organization was trying to achieve 20% were enthusiastic about organizational goals 20% saw a clear connection between their tasks and organizational goals 15% felt the organization enabled them to achieve their goals 15% felt they were in a high trust environment 10% felt their organization held people accountable 13% felt there was a high-trust, highly cooperative working relationships with other groups or departments
Consider the consequences of this if you were a coach and your team’s athletes felt this way
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Align the Organization
The process of organizing creates naturally competing groups- shifts, areas, plants, etc. With increasing task inter-dependence, collaboration and teamwork are essential for organizational success. (e.g., production and maintenance, between shifts, between marketing and manufacturing) Alignment requires the creation of superordinate goals that take priority over “group” interests:
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Remind people often to focus on the higher level goals Think at a systems level – don’t optimize at the suboptimal level in your little silo – ask ‘what effect will this have on the system’? Develop shared measures between “competing” groups and partnership agreements Source: Edgar Schein, Organizational Psychology
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Managing Cultural ChangeA Process Model
“Culture – what people do when the boss isn’t around.” Ian Fyfe, BP (now w/Ineos)
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The best way to change and sustain an organizational culture is by first changing management behavior You cannot think your way into a new way of acting. You must act your way into a new way of thinking. John Shook, Author
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Managing Change Articulate a compelling reason for change- “positive tension” Communicate your strategy, goals, and roles, repeatedly Apply Leadership and Management Principles Facilitate employee implementation of the change process Measure the results- reinforce good behavior; challenge bad behavior
Stabilize the change/organization in the new order
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Repeat these steps, over and over 51
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Facilitate Employee Implementation
People don’t want to change?
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Facilitate Employee Implementation
People do want to change,
IF given compelling reasons for change IF there’s something in it for them:
More secure future Better pay or rewards Less stress and hassle Less personal risk or fewer injuries
IF they participate in the design of the changes:
Set up structured improvement time, e.g., small action teams Train and apply the appropriate tools for their needs Remove the obstacles from their success Routinely solicit, and act on, their ideas for improvement Show gratitude and appreciation for their contribution
All three IF’s must be addressed, aligning employee interests with corporate interests “People own what they create” – help them create!
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Stabilize the Changes Update
procedures; train people; audit for compliance; apply succession planning Management Stability - It’s very difficult to have process stability with frequent management changes
Assure
If
the change takes longer than executive or organizational “attention span”, then it is doomed to failure. Constancy of purpose is essential The RM Group, Inc. Knoxville, TN
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Strategy for Implementation
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Strategy for Implementation Led
from the top- executive sponsorship is essential (Permission is not sponsorship, or leadership! Active engagement is essential)
Production & Maintenance PartnershipClear goals and expectations must be set, and reasonably achievable Shared KPI’s for reliability & business results must be in the annual management appraisal and bonus system Shop floor engagement process, including cross functional teams, structured improvement time, and a support structure
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Implementing Reliability – Effect on Maintenance Costs (Only) Break-even Point (1-2 years)
Direct Cost of Maintenance
Implementation Bow-wave (10-30%) Invest
Profit
Planned PM (20-70%)
Reactive Maintenance (30-80%)
20-50% Operator Maintenance
Condition Based (20-50%)
Strive for Zero Downtime Time
Proactive/ Planned 50-80%
2-5 years
Source: Taking the Forties Field to 2010, R. L. Thompson, et al., BP Exploration, Presented at SPE international Offshore European Conference, Aberdeen Scotland, Sept. 1993 The RM Group, Inc. Knoxville, TN
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Manage the Bow-wave using “Mini” Bow-waves: Small Improvement Teams
Direct Cost of Maintenance
MiniBow-waves
Break-even Point (1-3 months)
Profit
Time
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Overhaul
Stores
PAM
PdM
PM
Operations
0.1 0 -0.1
We must be tenacious about doing many things really well
-0.2
-0.3 -0.4 -0.5
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Training
0.2
Perf. Msmt.
0.3
Teamwork
0.4
Reactive
Correlation Coefficient
0.5
Management
Correlation of AU/OEE with Key Practices No single practice is dominant
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Business Impact, K$
Engage the entire workforce A1 – Big Opportunities: Solve using teams applying RCM, Six Sigma, RCA, KT, etc.
500 400 300
A2 > A1
A2- Myriad of Little Opportunities: Leadership engaging all the workforce, individually or in very small teams, applying simple fixes, common sense, 5 Whys
A1 A2
200 100 0 1
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11
16
21
26
31
36
41
46
Opportunities (> 100)
Sources: 1) David Burns, Reliability Services Ltd. Melbourne, Australia; 2) Similar Results Reported by Sergio Barreiro of Braskem’s 19 Brazilian Plants
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Engage the entire workforce (cont.) Eliminating
small day to day problems has a much bigger impact on results than focusing on the major failures (Study by Los Alamos National Labs, reported in Spiral Up by Jane Flinder)
Engaged
employees are 3X more productive than average (ISR Research study of 41 companies & 360,000 employees, reported in Spiral Up by Flinder)
Nothing
changes until the shop floor does things differently!
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With all this in mind…
Some 90% of reliability professionals are focused on making maintenance practices better So, many launch into:
RCM (but often without Operations’ support) RCA (when a good dose of 5 Whys & standard work would do) Six Sigma (before production processes are stable) Better planning and scheduling (for “un-planable” work) Developing asset management strategies (that are really just maintenance strategies re-named to sound better)
Often without eliminating the sources of the defects that result in the maintenance requirements, e.g., poor design, poor operation, poor purchasing and parts, etc. Result: doing more efficiently lots of unnecessary work
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Keeping in mind the reliability process, are you…
Maintenance Professionals?
and Reliability
Or
Reliability Professionals?
Maintenance and
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Appendix - Contact Details Ron Moore Managing Partner The RM Group, Inc. 12024 Broadwood Drive Knoxville, TN 37934 Tel/Fax: 865-675-7647 Email:
[email protected] Ron Moore is the author of Making Common Sense Common PracticeModels for Operational Excellence, 4th edition; of What Tool? When? A Management Guide for Selecting the Right Improvement Tools, 2nd edition, both from MRO-Zone.com; and of Business Fables & Foibles, and Our Transplant Journey: A Caregiver’s Story, both from Amazon.com, as well as over 50 journal articles. Ron’s latest book, Where Do We Start Our Improvement Program? is scheduled for release in September, 2014.
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