reliability & operational excellence · correlation of pm & pdm work orders with injury...

The RM Group, Inc.

Knoxville, TN Copyright 2012 Copyright 2014 1

Reliability &

Operational Excellence

A Reliable Plant is a

Safe,

Cost Effective,

Environmentally Friendly

Operation

November 2014

Copyright 2014

The RM Group, Inc.

Knoxville, TN Copyright 2012 Copyright 2014

Reliability and Safety

The Reliability Program

Managing Cultural Change, Leadership,

and Aligning the Organization

Implementation

Contents

2

The RM Group, Inc.



3

The RM Group, Inc.


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

Safety is a Top Priority

4

The RM Group, Inc.


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

5

The RM Group, Inc.


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

Reliability and Safety Relationship

6

The RM Group, Inc.


Injury Rate v. AU/OEE

over Time - Company A

15

35

55

75

95

115

135

1 5 9 13 17 21 25 28 33 37 41 45 48 53

90

95

100

105

110

115

120

Injury Rate

OEE/AU

Month

OE

E/A

U-

% o

f B

ase

R = 0.80

R2 = 0.64

The RM Group, Inc.


Correlation of Corrective & Reactive Work

Orders with Injury Rate – Plant No. 1

R = 0.827

R2 = 0.684

100

150

200

250

300

350

400

6000 8000 10000 12000 14000

To

tal In

juri

es

per

Ye

ar

The RM Group, Inc.


Correlation of PM & PdM Work Orders

with Injury Rate – Plant No. 1

R = 0.955

R2 = 0.911

100

150

200

250

300

350

400

4000 6000 8000 10000 12000 14000

To

tal In

juri

es

per

Ye

ar

The RM Group, Inc.


The More Disciplined Your Maintenance,

the Fewer Injuries you have

R = 0.95

R2 = 0.90

0

1

2

3

4

5

60 70 80 90 100

Inju

ry R

ate

(n

orm

alized

to

a b

ase n

um

ber)

The RM Group, Inc.


And, a Reliable Plant is Environmentally Sound Asset Utilization vs. Environmental Incidents - Plant B

0

1

2

3

4

5

6

7

8

9

10

90 100 110 120 130 140En

vir

on

men

tal In

cid

en

ts/y

r

The RM Group, Inc.


And, is More Productive -

AU/OEE vs. Reactive Maintenance

40

50

60

70

80

90

100

10 20 30 40 50 60 70 80 90 100

Reactive Maintenance %

Slope= -0.24

Ass

et U

tiliz

atio

n (

AU

) o

r O

EE

The RM Group, Inc.


And, is More Cost Effective -

Reliability Index v. Production Unit Costs

(As reliability increases, costs decrease)

R = 0.632

R2 = 0.40

50

60

70

80

90

100

110

120

30 40 50 60 70 80 90

Pro

du

cti

on

Co

sts

$/U

nit

13

The RM Group, Inc.


Further:

DuPont reported that the most likely person to be

injured is*:

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***

14

The RM Group, Inc.


From the data we should conclude:

Safety is everyone’s responsibility &

Reliability is everyone’s responsibility

15

The RM Group, Inc.


Establish a policy linking


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

The RM Group, Inc.

Knoxville, TN Copyright 2012 Copyright 2014 17 17

Establish a Policy Linking


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

The RM Group, Inc.

Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 18

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.



A Commitment to Safety Requires

a Co-Commitment to Reliability

and Related Policies and Practices

(examples are provided below)

The RM Group, Inc.


Minimum unit cost

of Production

Design Store Operate

Defects Defects Defects

Unneeded Work - $$

Asset Utilization

&

Necessary Work


Root Causes Rate Losses & Downtime

Source: In Cooperation with

Andrew Fraser,

Reliable Manufacturing Assoc.

Buy

Defects

Install/

Startup

Defects

Maintain

Defects

(Life Cycle Cost) (Cost of Ownership) (“Like a Store”)

(With Discipline) (With Care) (With Precision)

(note where most defects occur)

Injuries (& Env. Events)

Doing better Mtce will not

contribute much to Reliability

The RM Group, Inc.


DESIGN -

For Reliability, Operability,

Availability, and Maintainability

(not just budget and schedule)

The RM Group, Inc.


Life Cycle Cost and Cash Flow Considerations

ROI

Lowest installed

Cost Policy

Life Cycle

Cost Policy Cash

Flow

($)

Time

Minimum Life Cycle Costs =>

Maximum Long Term Profits

The RM Group, Inc.


BUY/PURCHASE- For Reliability using

Strategic Alliances,

Good Specifications & Standards, and

Focus on Total Cost of Ownership

The RM Group, Inc.


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!

The RM Group, Inc.


STORES –

Assure Reliability and

Availability of Spares

The RM Group, Inc.


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.


INSTALL and STARTUP–

with precision for long life

The RM Group, Inc.


Startup and Commissioning-

Critical 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.


OPERATE RELIABLY –

with care and precision,

and within process limits

The RM Group, Inc.


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.


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

Equipment RelatedLosses-Maintenance

Equipment RelatedLosses- Operation

Non EquipmentRelated Losses

Source: Author experience;

Similar findings reported by BASF-UK,

Eastman Chemicals, Whirlpool, and Borg-Warner-US

Changeovers, rate/quality losses,

raw material, market demand,

production planning, etc.

The RM Group, Inc.


Overtime

Heroes

No Surprises,

Competitive Parity

Competitive

Advantage

Organizational

Learning-

Industry

Leadership

Regressive

Domain

Reactive

Domain

Planned

Domain

Proactive

Domain

Strategic

Domain

Meet Budget,

Staged decay

Perf

orm

an

ce

Leve

ls

Don’t fix it

Fix it after it breaks; Most Expensive

Fix it before

it breaks;

Least Stable

Eliminate Defects; Lowest Cost

Source: W. Ledet

The Manufacturing Game;

Kingwood, TX

World Class Manufacturing

The Five Manufacturing Domains

The RM Group, Inc.


Reliability Based Operations (cont.)

To address these issues, we must have:

Production and maintenance partnership- communication, teamwork, common measures

Consistency of operation across shifts

Process Conformance and Capability - Stability

Good shift handover practices

Operator care/PM, training and skills

The RM Group, Inc.


Correlation of Operator Care/PM and

Maintenance Costs (Avg data at each level for 200 plants surveyed)

R = 0.85

R2 = 0.73

0

2

4

6

8

10

12

14

16

0 1 2 3 4 5

Mtc

e C

os

ts a

s a

% o

f

Ori

gin

al E

qu

ipm

en

t C

ost

The RM Group, Inc.


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

The RM Group, Inc.


MAINTAIN –

For Reliability

The RM Group, Inc.


Excess Defects Lead to Reactive Behaviors-

Typical Maintenance Practices

0

10

20

30

40

50

60

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.

Time-based

Condition-based

Root Cause-based

The RM Group, Inc.


Eliminate and/or Manage Defects-

Benchmark Maintenance Practices

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.

Planned and/or Scheduled

0

10

20

30

40

50

60

Reactive Preventive Predictive Proactive

Time-based

Condition-based

Root Cause-based

The RM Group, Inc.


Understand Degradation Process (Avoid or Minimize the Consequence of Failure)

Time

Co

nd

itio

n

(Resis

tan

ce t

o F

ailu

re)

Sources: Ivara Corp, Hamilton, Ontario

*R. Baldridge, Cargill

Onset of Failure Detect Potential Failure-

System Meeting All

Requirements

Broken- $$$ Maintenance/

Action Window

“PF Interval"

Functional Failure-

System Not Meeting

All Requirements

Pending Failure

Not Detected (PM- too much, too soon?)

Performance

Losses (too little, too late)

Protective* Predictive* Proactive*

Stop/Delay Onset of Failure*

The RM Group, Inc.


Maintenance Costs v. CM/PdM% (Typical Correlation)

Database - minimum of 25 plants; minimum of 5 companies

R2 = 0.96

0

5

10

15

20

0 10 20 30 40 50 60 70 80 90 100

Mtc

e C

osts

, %

AR

V

Note: Work Management and Planning & Scheduling

MUST be excellent to act on findings of PdM; and

a proactive mindset is necessary for defect elimination

Source: John Schultz, Allied Reliability, Inc.;

Charleston, SC

The RM Group, Inc.


Maintenance Costs v. % PM

R = 0.984

R2 = 0.969

0

5

10

15

20

0 10 20 30 40 50 60 70 80 90 100

Mtc

e C

os

ts,

%A

RV

Source: John Schultz, Allied Reliability, Inc.;

Charleston, SC

The RM Group, Inc.


Asset – Anything that adds value. Asset

management plans must include:

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

In light of this, consider Reliability and

Asset Management - ISO 55000

The RM Group, Inc.


Leadership,

Organizational Alignment,

and

Managing Cultural Change

The RM Group, Inc.


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?”

The RM Group, Inc.


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:

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

The RM Group, Inc.


Aligning the Organization

The RM Group, Inc.


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

The RM Group, Inc.


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: 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

The RM Group, Inc.


Managing Cultural Change-

A Process Model

“Culture – what people do when the boss isn’t around.”

Ian Fyfe, BP (now w/Ineos)

The RM Group, Inc.


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

The RM Group, Inc.


Managing Change

Articulate a compelling reason for change- “positive tension”

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

Repeat these steps, over and over

Communicate your strategy, goals, and roles, repeatedly

The RM Group, Inc.


Facilitate Employee Implementation

People don’t want to change?

The RM Group, Inc.


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!

The RM Group, Inc.


Stabilize the Changes Update procedures; train people; audit for

compliance; apply succession planning

Assure Management Stability - It’s very difficult to have process stability with frequent management changes

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.


Strategy for Implementation

The RM Group, Inc.


Strategy for Implementation

Led from the top- executive sponsorship is essential (Permission is not sponsorship, or leadership!

Active engagement is essential)

Production & Maintenance Partnership- Clear 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

The RM Group, Inc.


Implementing Reliability –

Effect on Maintenance Costs (Only)

Implementation

Bow-wave (10-30%)

Break-even

Point

(1-2 years)

Time

Dir

ect

Co

st

of

Main

ten

an

ce

2-5 years

Planned PM

(20-70%)

Reactive

Maintenance

(30-80%)

20-50%

Operator Maintenance

Strive for Zero Downtime

Condition Based

(20-50%)

Proactive/

Planned

50-80%

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

Profit

Invest

The RM Group, Inc.


Manage the Bow-wave using “Mini”

Bow-waves: Small Improvement Teams

Mini-

Bow-waves

Break-even

Point

(1-3 months)

Time

Dir

ect

Co

st

of

Main

ten

an

ce

Profit

The RM Group, Inc.


Correlation of AU/OEE with Key Practices

No single practice is dominant

Reacti

ve

M

an

ag

em

en

t

Te

am

wo

rk

Pe

rf. M

sm

t.

Tra

inin

g

Op

era

tio

ns

PM

Pd

M

PA

M

Sto

res

Ove

rha

ul

-0.5

-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

Co

rre

lati

on

Co

eff

icie

nt

We must be tenacious about

doing many things really well

The RM Group, Inc.


Engage the entire workforce

0

100

200

300

400

500

1 6 11 16 21 26 31 36 41 46

Busin

ess I

mpact, K

$

Opportunities (> 100)

Sources: 1) David Burns, Reliability Services Ltd. Melbourne, Australia; 2) Similar Results

Reported by Sergio Barreiro of Braskem’s 19 Brazilian Plants

A2 > A1 A1 – Big Opportunities:

Solve using teams applying

RCM, Six Sigma, RCA, KT, etc.

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

The RM Group, Inc.


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!

Engage the entire workforce (cont.)

The RM Group, Inc.


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

The RM Group, Inc.


Keeping in mind the reliability process,

are you…

Maintenance and Reliability

Professionals?

Or

Maintenance and Reliability Professionals?

The RM Group, Inc.


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 Practice-

Models 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.

reliability & operational excellence · correlation of pm & pdm work orders with injury...

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