[Update published June 13, 2017] This article talks about a unique analysis called Manufacturing Opportunity Index (MOI). 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 numerous 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.
Manufacturing Opportunity Index (MOI) Categories:
- 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
The MOI process typically identifies numerous opportunities to increase profitability associated with run rate, run time and/or the additional MOI factors such as yield or quality. Consideration of these additional categories in conjunction with asset utilization gives a more complete picture of the improvement opportunities for a facility or system.
All opportunities should be captured and prioritized based on their impact to achieving strategic and tactical facility and business goals. Knowing that there are other improvement initiatives likely underway, it is critical not to focus on more than 2 or 3 key opportunities for asset utilization to increase profitability of the business and ensure successful implementation.
For each key opportunity identified, the next step is to determine, in as much detail as is warranted, WHY this opportunity exists and to explore ways to allow the organization to institute changes to capture the specific opportunity. As the organization moves forward in capturing the key opportunities, other opportunities will be identified and move into key focus themselves.
To reiterate a CRITICAL POINT – focus on too many opportunities dilutes the attention given to each and typically leads to reduced speed of opportunity capture or worse, failure to effectively execute.
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