PART 4 – CARAVEL SOLUTIONS UNIQUE ASSET UTILIZATION APPROACH

Asset Utilization Manufacturing Opportunity Index (MOI)

A unique analysis called Manufacturing Opportunity Index (MOI) is the next approach we discuss. In the last Caravel asset utilization approach blog, Part 3, we focused on the run time component of asset availability. Based on our experience in a number of different industries, there are other factors that can also affect asset utilization.

The expansion of traditional asset utilization calculations provides a more robust picture of how well the facility is running and how much additional production may be obtained from existing assets. Caravel Solutions’ unique analysis, called Manufacturing Opportunity Index (MOI), utilizes these factors and places them on a similar profitability improvement scale as asset utilization.

Categories for Manufacturing Opportunity Index (MOI)

  • Compliance events – resulting from running at too high or too low operating rates, resulting from downtime events, permit limitations or changes, long term business impact
  • Quality – includes shutdown and startup off quality, meeting quality specifications through production blending, exceeding quality specifications, rerunning off-specification products or intermediates
  • Yield – changes to feedstock, changes to product mix, operation of intermediate equipment, recycle, waste
  • Fixed costs – impact of reliability on fixed costs over time, impact of downtime and repairs, etc.
  • Variable margins – variations due to yield, energy, raw materials availability and quality, high or low margins at the time of downtime events, seasonality
  • Energy effectiveness – reliability of sources, energy used per unit of production

SEE ALSO – Caravel Solutions Blog – Manufacturing Performance Optimization

Consideration of these additional categories in conjunction with asset utilization gives a more complete picture of the improvement opportunities in a given facility or system. This allows identification of typically three to five KEY opportunities to increase profitability of the business.

If you believe your team needs assistance building or benefiting more from an asset utilization process, contact us at [email protected]. We can work with you to identify options and develop an effective path forward as well as providing support during implementation.

Written by Allen Lasater

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© Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.

PART 3 – CARAVEL SOLUTIONS UNIQUE ASSET UTILIZATION APPROACH

Run time analysisIn the last Caravel asset utilization approach blog, Part 2, we focused on the run rate component of asset availability. The next step in the process is to analyze RUN TIME information, diving as deeply as relevant data exists.

Run Time Analytics – Scheduled and Unscheduled Downtime

The first step is a review of the historical data on downtime. For scheduled downtime, the following factors should be evaluated:

  • Frequency of scheduled downtime
  • Key drivers for the frequency
  • Reasons for the scheduled work – time based, condition based, EHS risk management
  • Opportunities for shortening the duration
  • Opportunities for lengthening the interval between outages
  • Level of pre-planning
  • Management of scope
  • Choice of times for outages – high or low demand, high or low margin
  • External resources required
  • Opportunities for reducing startup losses

Key factors for unscheduled downtime include:

  • Frequency of failures of critical equipment
  • Duration of repairs needed to get facility back on line
  • Causes for downtime – controllable or uncontrollable
  • Impact on profitability – shutdown and startup losses, customer requirements
  • Maintenance costs, overtime costs, shutdown and startup costs
  • Impact on environmental, health and safety – risk management

Analysis of the factors impacting scheduled downtime will reveal opportunities to improve the scheduling, preparation, execution, cost impact and risk management associated with planned downtime events.

Analysis of the factors impacting unscheduled downtime often reveal opportunities to focus on key causes to reduce or eliminate them, as well as improve preparedness for future events to minimize the length of the unscheduled outage.

If you believe your team needs assistance building or benefiting more from an asset utilization process, contact us at [email protected]. We can work with you to identify options and develop an effective path forward as well as providing support during implementation.

Written by Allen Lasater

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© Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.

PART 2 – CARAVEL SOLUTIONS UNIQUE ASSET UTILIZATION APPROACH

run rate analysis for maximum achievable capability

In the last Caravel asset utilization approach blog, Part 1, we focused on some key rules of thumb metrics as a starting point for what good looks like. The first step in the process is to analyze RUN RATE information, diving as deeply as relevant data exists.

Maximum Achievable Capability (MAC)

A review of historical operating data should be available to calculate the current MAC for the plant. By evaluating factors that affect MAC, opportunities to improve performance will be revealed. Examples include:

  • How many times MAC operation has been achieved
  • Conditions in the plant at the time MAC operation was achieved
  • % of MAC achieved over the past two to three years
  • Stability of operation at MAC operating rates
  • Impact of MAC on reliability
  • Impact of compliance constraints on MAC

By evaluating the factors that affect run rate versus MAC, opportunities to increase the run rate should be revealed. Impacting causes could include:

  • Raw materials – availability and quality
  • Operations personnel capability
  • Reliability of equipment that causes slow backs rather than down time
  • Planning and logistics – includes inventory constraints
  • Seasonality
  • Complacency
  • Production trials
  • Market conditions

A similar process is conducted to determine the MAC for all product lines. Sometimes it is assumed that sufficient data is not available for this level of detail, but an analysis should be conducted to validate or refute that assumption.

SEE ALSO – Caravel Solutions Blog Asset Utilization Part 2 – Focusing on Losses

The deeper the run rate analysis is performed, the more opportunities for improvement that are revealed. That said, even high level run rate analysis generally identifies one or two key opportunities. Many of the opportunities to improve run rate performance are relatively low cost to implement, requiring little to no capital investment.

If you believe your team needs assistance building or benefiting more from an asset utilization process, contact us at [email protected]. We can work with you to identify options and develop an effective path forward as well as providing support during implementation.

Written by Allen Lasater

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© Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.

PART 1– CARAVEL SOLUTIONS UNIQUE ASSET UTILIZATION APPROACH

Asset Utilization Approach

Caravel Solutions uses a modified asset utilization concept to evaluate the overall economic effectiveness of operating facilities. The heart of the analysis is to determine overall asset utilization, then adjust based on key modifying factors. Following the analysis, Caravel typically provides three to five key improvement opportunities with specific options to capture those opportunities.

Remember that asset utilization is a combination of how much is produced per time period when the facility is running (run rate) and how often the facility runs (run time).

Asset Utilization Rules of Thumb Metrics:

  • #1 – Commodity operations are not likely to be profitable much below 80% asset utilization
  • #2 – Specialty operations are not likely to be profitable much below 70% asset utilization
  • #3 – First quartile run rate performance is 96% or higher depending on the industry
  • #4 – First quartile run time performance is 98% or higher depending on the industry
  • #5 – First quartile asset utilization is typically around 94% depending on the industry

We are frequently asked why profitability drops so quickly with asset utilization? Although other factors come into play, it is primarily due to fixed costs being spread over too few units of production.

Caravel Solutions takes into account other factors that have been shown through experience to impact facility profitability and often provide opportunities for significant improvement. More about these other factors in an upcoming post.

If you believe your team needs assistance building or benefiting more from an asset utilization process, contact us at [email protected]. We can work with you to identify options and develop an effective path forward as well as providing support during implementation.

Written by Allen Lasater

 

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© Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.
By | 2017-05-16T03:32:35+00:00 May 11th, 2017|Categories: Asset Utilization, Optimize Yield and Quality|0 Comments

ASSET UTILIZATION PART 3 – USING THE INFORMATION FROM THE ASSET UTILIZATION PROCESS

asset utilization process

In the previous blog, Asset Utilization Part 2, we focused on the types of production losses that are typical for manufacturing facilities and why it is important to categorize losses properly. At the plant level, it is essential to ensure that the root cause(s) is minimized or eliminated. At the business level, it is essential to ensure that the right investment of time and resources is made in the right places.

It is not possible to attack all the problems that occur relative to production losses. Once the asset utilization process is in place and working, we can determine where production losses were found and attribute each loss to an identified cause. The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes. The information from the asset utilization process can provide the 20% of the production loss problems that, if resolved, will return 80% of the value.

Advantages of Examining Root Cause Analyses in the Asset Utilization Process

So, if market demand is greater than supply, we will know if we need to invest in additional capacity or if we have enough opportunity to unlock available capacity through our reliability improvement efforts. We will know what the lost profit opportunity is, which will tell us where to invest our resources and capital. And we will learn how good our equipment standards are, as we see what types of equipment continue to fail.

Unlike some other reliability improvement efforts that fail to demonstrate financial results, the asset utilization process focuses on eliminating the most impactful causes of production losses, which is one of the most cost effective means of improving plant profitability.

If you believe your team needs assistance building or using an asset utilization process, contact us at [email protected]. We can work with you to identify options and an effective path forward and, support you during implementation.

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Source: “Asset Utilization: A Metric for Focusing Reliability Efforts” by Richard Ellis of The RE Group, presented at the Seventh International Conference on Process Plant Reliability, October 1998.

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© Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.
By | 2017-05-09T13:33:30+00:00 May 9th, 2017|Categories: Asset Utilization, Root Cause Analysis|0 Comments

ASSET UTILIZATION PART 2 – FOCUSING ON LOSSES

In the last asset utilization blog, we focused on where losses occur, providing key information to support the business decisions that will be made to improve asset utilization.

The next focus is on why losses occur.  Unless we truly understand the root cause(s) of the loss, we will not know who should help define, work or successfully minimize or eliminate the problems.

Causes not within control of the manufacturing plant:

  • Acts of nature – Plants have the ability to plan for some weather events, such as hurricanes. The robust preparation for shutdown and startup can result in minimizing the downtime impact of these events.
  • Raw material shortage – Running reduced rates and downtime due to unanticipated raw materials shortages. The procurement team is responsible for investigating the cause(s).
  • Utility shortage/outage – Utilities that can impact production include power, water and process gasses.
  • Permit limitations – As plants expand and/or increase production capability incrementally, government issued operating permits may limit the allowed amount of production.
  • Sales demand – This category includes running at reduced rates or incurring downtime due to seasonal or market demands.

Common causes within control of the plant:

  • Planned outages – Although necessary to meet permit requirements as well as maintain the reliability of critical equipment, the time required for planned outages reduces the amount of production that can be made.
  • Equipment failures – Every production loss involves a piece of equipment. However, it is necessary to conduct root cause analyses (RCA) to determine the true root cause so the problem can be eliminated.  Often it is something other than the equipment itself.  So be careful not to overuse this category.
  • Process – This category covers production losses not associated with equipment failures. Like the equipment failure category, this category can also be overused if an RCA is not performed.
  • Process controls – The ever-increasing complexity of process control and safety integrated systems increases the likelihood of process control faults causing production losses.
  • Operating procedures – Operating procedures are integral to the safe and effective operation and maintenance of plant equipment, especially for abnormal conditions that rarely occur. However, these operating procedures can be misunderstood, misused, misapplied or ignored, leading to production losses.  Sometimes categorized as human factors.
  • Product quality – Off quality production can impact production losses.

Categories such as Other or Miscellaneous do not add value to the process, so even if one of the above categories does not exactly fit, use the one that is closest after conducting an RCA.

If you believe your team needs assistance building or using an asset utilization process, contact us at [email protected].  We can work with you to identify options and develop an effective path forward as well as provide support during implementation.

Source: “Asset Utilization: A Metric for Focusing Reliability Efforts” by Richard Ellis of The RE Group, presented at the Seventh International Conference on Process Plant Reliability, October 1998.

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 © Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.

WHY IS ASSET UTILIZATION A POPULAR RELIABILITY METRIC?

Asset utilization is a popular reliability metric because, simply stated, these metrics measure the difference between what an asset is capable of producing and what it is actually producing. This difference reveals the “hidden factory” – the capacity that is already available to you with some work and perhaps a small capital investment.

The common definition of asset utilization is the ratio of actual production to the production that could be made if the asset ran at maximum capacity for the entire year producing 100% first quality product. For the asset utilization measurement process to be effective, documentation of the equipment, cause, business impact and reliability efforts utilized is critical for each loss event.

Asset utilization can be a valuable measure at many levels of the business. To take full advantage of the metric, information must be able to be rolled up by the program used to manage the data.

Typical Levels of Asset Utilization include:

Equipment – pumps, motors, valves, etc.
Process System – steam, condensate, plant air, cooling water, etc.
Process Area or Plant – typically identified by the products produced
Site or Division – identified by a specific location or a geographic area
Business – corporate business segments
Industry – agricultural, chemical, paper, power, mining, food, textiles, etc.

The higher-level groupings allow benchmarking with others in the business or industry to understand competitive standing in that arena. Information from asset utilization can also guide decisions on expansions and the associated capital expenditures. If the asset utilization data reveals sufficient capacity is available in the “hidden factory,” then a major expansion would likely not be the best utilization of capital and resources.

If you believe you have untapped capacity within your current assets and your team needs assistance identifying where and what to do to capture it, contact us at [email protected]. We can work with you to identify your options, design an effective process forward and support you during implementation.

Source: “Asset Utilization: A Metric for Focusing Reliability Efforts” by Richard Ellis, presented at the Seventh International Conference on Process Plant Reliability, October 1998.

Follow us on LinkedIn: Caravel Solutions on LinkedIn

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WORK PROCESS TUNE UP

Here at Caravel Solutions, we are seeing more and more manufacturing operations like this one.

Several years ago, Kathy Gifford was presented with an opportunity to help their organization work more efficiently and effectively together and, it sounded good. To ensure the success of the overhaul, she:

  • Was given a list of all the tasks for which each role was responsible, clearly described with inputs and outputs and metrics to track performance.
  • Saw that all the information handoffs were equally well documented, and that all the roles were well defined.
  • Received the necessary training to educate all plant personnel on how to conduct the key elements of their roles and how to work together efficiently.
  • Made sure that the leadership team understood they were responsible for ensuring everything worked as designed, and the change was sustained.
  • Even had internal experts on each role trained up to be able to sustain the changes that the work processes would bring.

The metrics Kathy put in place were successful in measuring positive progress.

Work Process Design

WHAT ON EARTH HAPPENED?

  • Where did the changes go?
  • Why aren’t the metrics still being tracked?
  • Why haven’t the key roles and work process experts been maintained?
  • How could it all have fallen apart?
  • The investment in the change was huge – it touched every person in the plant. How could it all have evaporated into thin air?

Well, probably life at work happened.  Leaders moved on.  Other initiatives just as new and shiny came along.  Maybe the market changed.  Perhaps even an acquisition or divestiture.  It was just easier to go back to the way it used to be – the “old” way wasn’t that bad, was it?  Why fight the people who didn’t want to change?  It was easer just to let the rubber band snap back.  And besides, everyone forgot why this change was so important anyway.

Does any of this sound familiar?  Do you need the results you were expecting?  How far off the mark are things really?

If you realize the ‘old’ way simply isn’t working to support the level of success and you want some help to put the pieces back together to get the results that will increase productivity and the bottom line, contact us at [email protected].

Caravel Solutions can work with YOU and your team to conduct a quick assessment. We can identify the two or three key gaps that will bring the performance of the work processes back in line to a level that will restore the overall economic effectiveness of your operating facility and achieve the desired results. And we will coach and mentor your team to ensure they will understand (1) the reasons for the changes and (2) know how to sustain the needed performance.

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© Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.
By | 2017-04-25T14:54:46+00:00 April 25th, 2017|Categories: Uncategorized, Work Process Design|Comments Off on WORK PROCESS TUNE UP

OPEX ACADEMY – CERTIFICATION OF KEY ROLES AND RESPONSIBILITIES FOR SUSTAINABLE RESULTS

Caravel Solutions works with manufacturing facilities in the chemical, petrochemical, pulp and paper, building products, paint and coatings, nonwovens and textile industries to develop and implement work processes that improve the efficiency and effectiveness of the work being performed.

We are now working with clients to restore previously implemented work processes to achieve the expected results after a performance fall off over OpEx Academytime.  One of the common gaps we’ve observed is that the people who held the key roles during and right after implementation moved on to another role.  Often there was little or no knowledge transfer between the person who originally held the role and their successor.

To bridge that gap and restore the foundation of the key roles, we’ve created the OpEx Academy. Clients utilize the OpEx Academy to train, coach, verify skills and knowledge, and then certify individuals for key roles and mission critical tasks within the work processes.  The first part of the certification process is training conducted in the classroom and, when appropriate, in the field.  The second part of the certification is observation, coaching and mentoring of the employees as they conduct the daily routines of the role or task for which they are being certified.  The final step is a detailed assessment of the skills and knowledge of the employees to ensure they are capable of high performance in the role or task, after which certification is awarded.

We currently have the following work process certifications:

  • Operations/Maintenance Gatekeeper
  • Introductory Maintenance Planner
  • Advanced Maintenance Planner
  • Maintenance Scheduler
  • Kitter
  • Creating Work Requests
  • Basic Root Cause Analysis

If you think that your employees can benefit from certification in these areas, contact us at [email protected].  We can work with you to provide skilled and knowledgeable trainers/ coaches, who have many years of experience in the work processes and in the roles of concern to you, who can quickly bring your employees up to high performance.

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© Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.
By | 2017-05-16T11:32:36+00:00 April 19th, 2017|Categories: Asset Utilization, MPO - Manufacturing Performance Optimization, OPEX Academy, Optimize Yield and Quality, Work Process Design|Comments Off on OPEX ACADEMY – CERTIFICATION OF KEY ROLES AND RESPONSIBILITIES FOR SUSTAINABLE RESULTS

WHAT THE HECK IS MANUFACTURING PERFORMANCE OPTIMIZATION?

MPO is Caravel’s unique way of looking at the overall economic effectiveness of an operating facility to help identify and tune in to the operating sweet spot that returns the most value to the customer and to the business. Think of it as modified asset utilization.

So now you’re wondering what that means and your next question might be: “How does this differ from the usual way of looking at asset utilization?” The typical measures of operations efficiency and asset utilization don’t take into consideration all the variables that truly impact the utilization of your assets. Things like run rate, run time, scheduled and unscheduled downtime, compliance, quality, yield, raw material availability and quality, changing customer demand … and as you dive deeper, the list gets longer and longer.

Caravel Solutions has developed a unique way to take into account the other factors that have been shown through our experience to significantly impact facility profitability. These areas often provide opportunities for significant improvement.

Contact us to learn more about how Caravel’s new product – Manufacturing Performance Optimization – can find the sweet spot that brings out the best in your operation.

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© Caravel Solutions Blog, 2017. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Caravel Solutions with appropriate and specific direction to the original content.
By | 2017-05-16T11:40:18+00:00 April 5th, 2017|Categories: MPO - Manufacturing Performance Optimization|Tags: , , |Comments Off on WHAT THE HECK IS MANUFACTURING PERFORMANCE OPTIMIZATION?