Archive | March, 2000

161

2:42 am
March 2, 2000
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Who are you going to blame?

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Robert C. Baldwin, Editor

Shortly after my January editorial on “Walking the Talk” was published, I received an e-mail from Dave Larson, chief maintenance manager for a multiplant food processing company in the Midwest. He had a number of observations about the state of maintenance in the United States.

His thoughts on mechanic skill sets complement the management skill sets we discussed in our February issue. Here is what he had to say:

“Maintenance is no longer a repair function where the tool box and a knowledge of a trade is all you need to get by. These are part of what is needed; however, the modern day mechanic must be better equipped.”

He listed the following skills:
Computer skills:
Computer literate and keyboard trained; able to do light CAD/CAM drawings; spreadsheet, word processor, and CMMS capable
Financial skills:
Understands budgeting; able to do a cost analysis for a repair effectively; understands long-term planning and capital planning
Interpersonal skills:
Deals effectively with all levels of management; able to write effectively; able to take constructive criticism without complaint; peer-to-peer communication is a must
Work skills:
Electrical skills a must, plus another trade; trade school trained; MUST be able to adapt
Analytical skills:
Root problem analysis; determine what needs to be done first and then implement

Reader Larson says he is not all that impressed with America’s maintenance capability and suggests that we have allowed our skill levels to degenerate. “That is our fault,” he declares. “Blame management, Blame the union. Blame, Blame, Blame. That does nothing to help. We need to Train, Train, Train,” he charges.

He notes that most mechanics come from the trades or from the military and that the military source is drying up so the trade schools need to pick up the slack. His solution: get into the high schools and push the trade schools. We agree.

Reliability and maintenance organizations must get involved in training young people and actively support trade schools. It is the responsible thing to do because it will help to strengthen the nation’s industrial position. It is also the smart thing to do because the organizations that are involved with the schools will get to know the young people and have an inside track on hiring and keeping the best new talent.

If you are not involved in training, who are you going to blame. MT

rcb

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234

2:39 am
March 2, 2000
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Focus on Results and Change the Culture Along the Way

… Plus reduce equipment downtime by over 50 percent in less than one month!

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Robert M. Williamson, Strategic Work Systems, Inc.

Businesses often try to improve performance by “implementing” improvement programs. Unless these programs are focused on specific measurable and observable results, they are short lived. Why? Human nature clashing with the world of business. Getting people to quickly embrace change while achieving sustainable business results can be challenging.

Here is a real down-to-earth success story that shows how to focus on results and change the culture along the way. The subject plant is a very large manufacturing facility that operates 7 days, 24 hours. It is part of a multi-national corporation producing a common product worldwide. With many of the traditional cost-cutting, downsizing, and ISO 9000 programs well behind them, managers noticed little improvement in the bottom line. In fact, equipment performance and reliability was declining at a steady pace.

They asked repeatedly, “How can we be assured that this Total Productive Maintenance/Manufacturing (TPM/M) approach will address the issues and give us a significant return on our investment?”

The approach they took was focused, rather than a widespread implementation. First, they sponsored a day-long session to teach the fundamentals of TPM/M to operations, maintenance, technical, and plant management, including about 50 salaried and hourly leaders. At the end of this session, a smaller group brainstormed possible applications and approaches.

Within the next few weeks, they invited the TPM/M consultant back for a plant tour and meetings with potential TPM/M starting points. They looked for signs of equipment problems. They discussed equipment history and performance data. They looked at the preventive and predictive maintenance methods. The shops and spare parts conditions were reviewed. Lastly, they discussed plant process flow and the constraints or “bottlenecks.” It was unanimous.

There were two major constraints and the most troublesome was about to get worse after January 2000 because of market demands. In fact, there were four of these machine cells, each one identical to the others. This was to be the TPM/M starting point.

After some preparation, the company assembled a Pit Crew to learn and apply the elements of TPM/M to one of the four constraint machine cells. The Pit Crew included a mechanic, an electrician, a lead operator, the maintenance coordinator/planner, the area supervisor, the reliability leader for the department, the department process quality technician, and the area manufacturing manager.

Three days of TPM/M Pit Stop training included a blend of classroom theory, case studies, demonstrations, and hands-on application. The group had full access to the equipment each afternoon during the training. During the hands-on portions of the training, real-time root cause analysis was learned and performed on all of the chronic equipment problems. With the root causes of poor performance known, it was a matter of using the new TPM/M knowledge to eliminate the causes and then establish countermeasures to ensure they would not return. The group then applied the proven practices and improvements to the remaining three machine cells.

After one full month of operation, the bottleneck no longer existed. The results to date: 89 percent reduction in downtime-causing contamination, over 50 percent reduction in unplanned machine downtime, and less operator intervention to free jams. This new machine performance and reliability led to increased production throughput of nearly 250 percent per shift of operation.

Additionally, work requests now have correct machine and part nomenclature and work orders have meaningful information on the causes of problems. Operators have visual procedures and guides to assist in performing their tasks. The Pit Crew continues to meet weekly to address other machine issues and to complete the remaining improvements.

A return on the investment in TPM/M Pit Stop training was conservatively estimated at 20 to 1 in less than two months considering improved production throughput and reduced maintenance calls.

Not only did the company improve 1 of 4 machine cells in its plant within a matter of a few weeks, but it set the stage for improvements to the nearly 150 similar machine cells in the company, all with the same problems. MT


Robert M. Williamson, e-mail SWS_INC@compuserve.com; Internet www.swspitcrew.com

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295

5:33 pm
March 1, 2000
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Profit Driven Reliability

A six-step work process to increase profitability with reliability improvements.

A Fortune 500 specialty chemical company has doubled its profitability over the past five years, improving it from 7 percent to 14 percent as measured by return on net assets (RONA), after-tax operating profit divided by total net assets. To put this in perspective, a 7 percent RONA is typical for many large companies that consider themselves successful. Reliability’s contribution to cycle time improvements was a key enabler of this profitability improvement. Specifically, reliability improvements increased capacity and facilitated reduction of both inventory and order lead time policy.

Two distinct technical abilities are required to ensure that reliability improvements will result in profitability gains. First is the ability to identify high-impact reliability improvements. This requires identifying which financial variables produce the largest profitability improvement. Second is the ability to connect these financial terms to reliability. Connecting reliability to profitability typically requires computer simulation tools to link specific reliability improvements to competitive advantages that can deliver profitability gains.

Profit Driven Reliability*
Profit Driven Reliability (PDR) is a six-step work process using reliability modeling tools that harnesses reliability’s competitive advantage.

The first step in PDR is identifying the financial variables (such as sales, costs, expenses, or assets) that have the largest impact on profitability. These high-impact variables are known as PDR candidates. If PDR candidates have not already been identified by financial analysts, they can be identified using information from a financial statement. The easiest approach is to calculate the change in each financial variable needed to produce a specified gain in profitability. Since the proposed reliability initiative will seek to improve the PDR candidate, each PDR candidate should be screened for alignment with business strategy and feasibility. Completion of the first step is crucial to selecting a reliability improvement that will maximize profitability impact.

The second step is to enroll management by requesting their support in identifying a specific reliability improvement opportunity that will provide competitive advantages to improve the PDR candidate. A PDR candidate defines the business deliverable that the reliability initiative should provide. It does not define a specific reliability improvement, nor does it enroll management in the support of a reliability initiative directed at improving that variable. A specific reliability opportunity can be defined without approaching management; but a valuable opportunity to develop management support will be missed. Requesting management support will begin to enroll management in using reliability initiatives to increase profitability.

The third step is to define the specific reliability improvement that will deliver the desired competitive advantage (such as increased available capacity). Typically, reliability improvements provide competitive advantages that must be converted into profitability. Successful completion of the third step is an essential ingredient to ensuring that the reliability initiative will deliver the promised business benefit. This step requires an understanding of how reliability delivers competitive advantages and may require computer simulation tools.

The fourth step is to link reliability’s competitive advantages to profitability by formalizing the metrics and identifying the mechanisms to accomplish this. Reliability improvements may offer competitive advantages with high profitability potential but deliver little profitability gain if others fail to act on these competitive advantages. Converting reliability’s competitive advantages into profitability requires effectively communicating the improvement to individuals who are capable of acting on this knowledge by:

  • Communicating the reliability improvement in meaningful terms by developing both reliability and profitability metrics. Rather than reporting an elimination of downtime, more effective metrics might include the associated increases in sold and unsold capacity.
  • Verifying that everyone understands and is prepared to perform his role in harnessing the reliability improvement. Increasing profitability by improving reliability frequently requires the cooperation of others outside the reliability community. Unless these outsiders act on a reliability improvement, the improvement may fall short of its profitability potential.

The outcome of steps three and four is a PDR project. A PDR project is the reliability improvement project plus any actions required to convert the reliability improvement into increased profitability.

The fifth step is integrating the desired reliability improvement. For completeness, PDR includes a step to achieve the reliability improvement; however, PDR offers no tools or techniques to accomplish this. It is assumed that the necessary skills and tools to accomplish a reliability improvement are available.

The sixth step is feeding back results of the PDR project to the organization. This step is crucial in sustaining a culture of improving profitability with reliability. The sixth step is simply a brief report that contrasts final results with the initial state using metrics developed in step four. Any deviations from promised outcomes are briefly explained. The feedback occurs upon project completion as well as each time management support is requested for other initiatives.

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Fig. 1. The Errosion Of Profitability: Despite declining profitability, capital spending continued to climb. (Because the financials of a business are not public knowledge, corporate information available in the annual report was used. This information is representative of this business’ financials.)

A success story
Starting in the late 1980s, profit margins for the largest business unit of a Fortune 500 company began to shrink. Capital investment continued despite shrinking margins. The net effect was a rapid decline in business profitability over the next five years, as shown in Fig. 1. This decline began to strangle the company since this business supplied the bulk of the cash flow for other corporate investments.

Financial analysis of the 1993 financial statement by the Profit Driven Reliability financial analysis tool is shown in Table 1. Improving asset productivity through reliability looked very promising. The highest leveraged approach to improving profitability was to increase asset productivity (saleable capacity) of the existing assets. This approach was consistent with the long-term business plan for sales and capital expansion.

The business leaders were introduced to the concept of acquiring incremental capacity by increasing productive capacity of existing assets. Based on the potential profitability gain associated with improving reliability, the business leaders commissioned a pilot project. The pilot object was to quantify the incremental capacity resulting from reliability improvements within the plant gates, not to develop a specific reliability strategy.

Quick analysis of existing operations showed substantial lost production, apparently resulting from variation in product-specific batch cycle times. These variations were the consequence of process or mechanical failures. To quantify the incremental capacity associated with failure elimination, a reliability model was developed. The reliability model used existing batch card data (cycle time data for every batch and every processing step). The batch card data did not explicitly capture lost production time or attribute specific lost production time to a symptom. For example, batch card data for the first batch of product A might show that the second processing step took 13 hours. The reliability model predicted lost capacity given data defining current and optimum batch cycle times. Validation by comparing actual production to simulation output showed that the model matched reality.

The next step in the pilot was to use the model to quantify the capacity gains associated with improving reliability to the level achieved by other sites. The predicted capacity gains were sufficient to defer capital investment. The business elected to hold the plant accountable for bringing its facility performance up to the level of its more reliable sister plants, rather than purchase incremental capacity with capital dollars.

In response to the request of the business leaders, site management was persuaded to develop a reliability strategy that could deliver the needed improvement. The reliability strategy was developed and implemented. The predicted capacity increase was achieved. Analysis of the pilot project established that reliability improvements were a cost-effective source of incremental capacity. For this business, incremental capacity purchased by reliability projects costs approximately 10 percent of capacity purchased by capital projects. A work process was developed to guarantee that the business would use capital dollars only as the last resort to purchase incremental capacity. To sustain commitment to the reliability purchased capacity, widely published metrics were instituted. Two key metrics were asset productivity and incremental capacity cost.

300profitfig2

Fig. 2. Profitability After Reliability Strategy Implementation: Profitability increased while capital intensity decreased after implementation of a reliability strategy in 1993.

A simple work process was developed to ensure that reliability would be the preferred mechanism for increasing capacity. The work process consisted of one rule: there was no approval for capital expenditures more than $100,000 if reliability could deliver the incremental capacity. To support the new capital deployment process, a reliability model tool kit was developed and rolled out to every site. The reliability model tool kit allowed site personnel to develop a reliability model to simulate their site operations. All capital requests required justification provided by the reliability model.

Today the business reaps the rewards of its commitment to acquiring incremental capacity from the most cost-effective source. Fig. 2 shows the increase in profitability and the simultaneous decline in capital spending.

Suggestions for implementation
Harnessing reliability’s competitive advantages requires a tight alliance with the business throughout the reliability improvement process. A work process and tools similar to those provided in PDR are needed to form and sustain this alliance. To implement a similar process, it should contain these key elements:

Start with a business need. Without this up-front connection to the business, outstanding reliability improvements may have minimal impact on profitability. Connecting to the business can be accomplished by defining the profitability leverage of key financial variables and mapping these terms to business strategy.

Develop management support for the concept before the specific project. Generally, it is a mistake to introduce a specific reliability initiative first. Introducing a specific initiative at this point can imply that there is an idea searching for justification. A more effective approach is to establish how reliability can satisfy business needs prior to the introduction of any reliability initiative.

Select reliability improvements based on their ability to deliver quantifiable business benefits. Quantifying business benefits may require computer models. Ironically, more value was discovered in less complex, high-level models than in more complex, detailed models. This is not a reflection on the relative value of the two types of models; rather, it is the result of the resources and culture. Today, the resources to support widespread use of detailed models are not available. In addition, high-level models were quickly used early in a project when decisions had profound consequences on project profitability. Early in a project, there is usually insufficient data to support the use of more complex models. Finally, the high-level models were user-friendly with a short learning curve, so their use became wide spread.

Define strategy, work process, and metrics that will ensure profitability impact of reliability initiative. The profitability impact of a reliability project can be dramatically increased when it is leveraged through the business by changing fundamental business processes. In the case study, the dramatic results were possible because reliability contributions were considered in the capacity planning and capital deployment processes. Integration of reliability into other processes requires the development of common metrics for inter-process communication.

Sustain momentum by widely publishing metrics. Management commitment is sustained by its belief that an approach is more effective than its alternatives. This belief must be nurtured by publication of the business and reliability outcomes of a project.

Reliability is a powerful tool for providing competitive advantages that can increase profitability. Harnessing this tool requires the assistance of others outside of the reliability community. Ultimately, it is the support of the business leaders that will harness reliability’s competitive advantages, moving reliability from the plant floor to the boardroom.

An article next month will define the foundation concepts and tools needed to link a high-impact financial term to a reliability opportunity. Application of these tools and concepts will allow a user to predict the business benefits associated with specific reliability improvements. MT


This article is based on a paper presented at Process Plant Reliability 99, October 1999, Houston, TX.

*Profit Driven Reliability is a service mark of RonaMax, LLC, Yardley, PA.

Carol Vesier, Ph.D., is principal at RonaMax, LLC, Yardley, PA 19067; telephone (215) 736-2315; e-mail cvesier@ronamax.com; Internet www.ronamax.com

Table 1. Business PDR profitability analysis (1993 Financials)

PDR candidates

Change needed to increase RONA from 4.6 percent to 5.6 percent

Fixed assets¹ Zero capital investment for one year²
Receivables

Eliminate 69 percent of receivables²

Inventory

Eliminate 87 percent of inventory²

Cost of goods sold

Cut cost of goods sold by 2 percent

Maintenance cost Cut maintenance cost by 20 percent
Asset productivity³

Increase facility uptime by 6 days if capital
spending unchanged; OR

Increase facility uptime by 2.5 days with
no capital budget for 1 year

1 Fixed assets are primarily the manufacturing equipment.

2 Any money released by reducing total assets (fixed assets, inventory, and receivables) must be either returned to the stockholders or re-invested at a higher rate of return.

3 Asset productivity is the percent of maximum production that a facility is capable of delivering. To impact profitability, any gains in asset productivity must be sold or used to reduce the asset base.

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433

2:28 pm
March 1, 2000
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Fluorescent Leak Detection Cuts Refrigerant Costs

Refrigerant leaks in air conditioning and process control systems cost industry hundreds of millions of dollars every year. Companies that allow refrigerants to escape unchecked into the atmosphere risk fines from the Environmental Protection Agency of $25,000 per day for each violation. So it’s imperative that all leaks be detected and repaired as quickly as possible. However, repairing the leaks is not the biggest problem; finding them is.

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Dye deposited from leaks glows bright yellow when scanned by a high-intensity ultraviolet or UV/blue light lamp.

Finding leaks
Ron Baldridge, air conditioning and refrigeration technician at Boeing Corp. in Palmdale, CA, originally had tried electronic detectors to find a troublesome refrigerant leak. He and his staff searched unsuccessfully for the elusive leak (or leaks) for more than 3 months.

Unfortunately, electronic detectors cannot be counted on to find multiple leaks. When there are several leaks in an area, a large leak often will hide or mask smaller ones.

After the first leak is found and repaired, the unit is recharged with a new supply of refrigerant, which again escapes into the atmosphere because of the remaining leaks that were not found.

Not until the system fails a second time do most service personnel consider looking for multiple leaks. It is not uncommon for large systems, especially older ones, to have 5, 10, or more leaks at the same time.

Baldridge next tried a simple and inexpensive method to find the leak: fluorescent leak detection. “We immediately pinpointed multiple leaks in a single inspection.

“In our 23 years of doing this kind of work, this system is definitely the easiest, quickest, and most accurate method of leak detection,” Baldridge said. “Another benefit is that you don’t have to be concerned with wind or convection currents when looking for leaks. With some leak detection methods, you have to spray a solution over the entire system. This gets quite messy, especially on evaporators and condenser coils.”

How fluorescent leak detection works
The user adds a small amount of OEM-approved fluorescent dye into the air conditioning system, then allows the dye to circulate throughout the system. Wherever the refrigerant escapes, so does the dye.

Although the refrigerant evaporates, the dye remains at the sites of all leaks. When the system is scanned with a high-intensity ultraviolet or UV/blue light lamp, the dye glows bright yellow to pinpoint the precise location of every leak.

“We use the Spectroline method to detect leaks in our comfort air for offices, as well as for temperature-controlled laboratories where we test electronics on chilled tables,” Baldridge continued. “We make equipment for the Space Station and motors for Delta rockets and the Space Shuttle.

“No matter where we check for leaks, this method cuts refrigerant expenses because we spot leaks while they are still small. And since we find the leaks so quickly, our labor costs have been reduced considerably.” The fluorescent leak detection method has been shown to reduce inspection time by 75 percent or more.

Fluorescent leak detection was invented in 1955 by Spectronics Corp., Westbury, NY. This leak detection method is so accurate that it locates the smallest, most elusive leaks in tubing, soldered joints, fittings, coils, valves, compressors, and more.

Ideal for preventive maintenance programs
Fluorescent leak detection allows a service technician to see leaks from up to 20 ft away. This eliminates the need for ladders and lift platforms, which also helps cut inspection time.

With other leak detection methods (electronic detectors, bubble solutions, and halide torches), a technician must be very close to the leak, within about 1/4-3 in. in order to locate it.

Also, with these methods, technicians can only spot check a system. Fluorescent leak detection allows them to check an entire system in minutes, find all the leaks, repair them, and check to make certain the leaks were repaired correctly.

Spectronics’ AR-GLO fluorescent dye is the only OEM-approved, solvent-free dye. It remains safely in the air conditioning system until the lubricant is changed.

To check for leaks, scan the system with a lamp. If there are any leaks, they will glow brightly. Future leaks will be found instantly with the lamp whenever the system is reinspected.

Another advantage of fluorescent leak detection is that it allows easy confirmation of repairs. After a leak has been fixed, clean off the remaining dye from the site with a nontoxic spray cleaner or with a water-based dye remover.

Then, after the equipment has operated long enough for the refrigerant to circulate fully, recheck the site with the lamp. If there is no glow, the leak has been repaired properly. MT


Information supplied by Mike Fleming, Spectronics Corp., 956 Brush Hollow Rd., Westbury, NY 11590;telephone (516) 333-4840; Internet www.spectroline.com

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