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3:51 pm
May 18, 2011
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Measuring Through A Chain Of Success

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Connecting these important links can bring clarity to an operation and benefits to its bottom line.

By Brian Becker, Ed.D., and Brent Miller, Reliability Management Group (RMG)

Processes exist for specific purposes. They are intended to reduce costs, improve throughput and assure safety. Although this should be obvious, operational-oriented organizations often are not clear on what is expected from their processes when modifying or installing new ones. Installing or maintaining current maintenance and operational processes, as well as key performance indicators (KPIs), can be powerful, but incomplete if financial results are not precisely determined. Without clear financial goals and alignment from the executive offices to the shop floor, organizational levels can unwarily work toward different goals, resulting in higher costs, less throughput and reduced safety profiles.


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This article discusses the importance of defining the purpose of any process and how process measurement includes financial results. The notion of a Chain of Success© is introduced with a Routine Maintenance Chain of Success©. The four steps of a Chain of Success are defined; key issues for each step are identified and the relationship between strategic asset management and the chain is reviewed. (How to use this chain to steer the organization after process implementation is beyond the scope of the article.)

Setting the stage
After years of acquisitions, a global, proactive energy corporation found similar operating sites working off very different safety and hazard standards and procedures. Given these inconsistent practices, incidents were on the rise, averaging $13,000 each.

To stop the bleeding, the organization set out to implement a corporate-wide operational integrity pro-gram. In the interest of ensuring a culture of safety first, management sought to standardize hazard and safety processes across the enterprise. The vision was far-reaching and included assuring that all hazards were identified and mitigated.

When it came to the fundamental purposes of a wide array of safety and hazards processes, the executive team could not, at first, agree on how to measure success. Field superintendents, on the hook for local implementation, dug in their heels, indicating, “We are willing to change, just as soon as management lets us know what they expect to see happen.” Later, the executive team vetted each item on a long wish list that included  environmental compliance, improved culture and better community relations.

During this examination, it was discovered that every process could be tracked back to some combination of revenue through uptime, reduced risk, better resource utilization and improved safety. Ultimately, the team realized that process improvement resulted in either reducing costs or improving throughput—and that going through the activity of creating a Chain of Success was an important first piece in implementation commitment. That’s because the exercise of creating a Chain clarified what results were expected. As one executive put it, “Historically, we would jump to commitment before gaining clarity and true consensus on process objectives.”

Establishing the links
In today’s fast-paced operations, it is easy to assume the purpose for any process. We may have inherited processes or take for granted that our processes are working by gathering KPIs. Such indicators are important, but without truly understanding the financial impact of processes, we can—unknowingly—leave significant revenue on the table. Whether you are a CEO, a plant manager, supervisor, engineer or senior operator, knowing process success factors is fundamental to operational performance. That’s a given, isn’t it?

Unfortunately, when multi-level stakeholders have been asked what they see as the purpose of processes, their answers have varied considerably, from “It’s to help us run the equipment” to “ monitoring reliability” to “impacting the bottom line” to “It’s the way we do things here.” All these answers are right in one way or another, but can be a problem when implementing processes: Quite simply, people can have different process purposes in their heads and, therefore, be committed to very different goals.

To maximize performance, executive teams need to assure that all operational levels are aligned by understanding the purposes and effects of operational processes. How do processes impact efficiency, reliability and safety? These three variables, often separated for analytic purposes, are, in reality, interwoven in daily operational life. Understanding them (and the processes that serve them) can lead to lower unit costs, waste reduction, process stability and safety—all of which contribute to the bottom line. We have come to call this relationship between process and business results a Chain of Success.

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Fig. 1. Process with a Purpose©

It’s important to understand that like any system, the Chain of Success is only as strong as its weakest link. Furthermore, like any system, the steps are mutually dependent on each other. Not only is this chain an effective tool for gaining alignment on process results, it reinforces management’s use of KPIs and is a powerful method for communicating what is expected.

Given the multiple purposes a process can serve, it is crucial to align operating personnel around:

1) The purpose of any process;

2) Defining valid process metric requirements;

3) Using the metrics to monitor and improve performance;

and

4) Measuring the added financial result.

Without alignment on process results, commitment to implementation and data to measure improvement, process performance and revenue can be substantially reduced. For example, participating in a process such as short-interval scheduling or incident management is important, but unless the business result is understood and illustrated, stakeholders can engage in activities that have little or no contribution to the bottom line. Thus, knowing, at any organizational level, how success is defined, measured and communicated is critical for continuous performance improvement.

Connecting the Chain of Success
A well-articulated Chain of Success is a tool that establishes the fundamental purpose for any process. As the Process with A Purpose© graphic in Fig. 1 shows, it comprises: 1) the process; 2) how the process is measured (a statistic depicting the processes’ “health”); 3) the process results; 4) the financial results that are expected.

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Fig. 2. A Routine Maintenance Chain of Success© (Source: Masters of Implementation © 2005 Rev 1.5) Click to Enlarge.

Figure 2 illustrates a Routine Maintenance Chain of Success that models the process steps required to drive financial results. If a process is working, we could expect that the number of work orders completed would go up and hours per work order would go down, while equipment uptime improved and material usage went down. The resulting business impact would be better financial results via improved product throughput, along with cost savings from reduced operations and maintenance expenses and fewer recordable accidents.

Frequently, managers 1) confuse the human learning curve for resistance to change; and 2) don’t consistently utilize metrics to direct work. Therefore, ensuring full process installation and sustainability requires extensive coaching of first-line, middle and senior executives as the organization learns how to adjust to new process expectations and to productively use metrics to improve.

In short, the Chain of Success defines and illustrates how a process creates results. As noted previously, processes exist not as an end in themselves, but for a specific purpose. For plant managers, performance success rests on operational and maintenance processes resulting in the achievement of annual revenue and safety targets; for supervisors, articulating a clear rationale for matching behavior with procedure helps transcend any one individual’s process preferences and working habits for the overall enterprise good. Moreover, having metrics provides teams with required improvement feedback. With compliance to procedures, operators understand that what they consistently do on the job is the difference between a thriving, growing enterprise and one with a wider opportunity for equipment failure.

Although process success can be attributed to many factors—such as culture, employee skills, etc.—establishing a Chain of Success is a starting point in precisely articulating the purpose of any process. Granted, process causes and effects are complex and tough to sort out. Without a clear starting point (such as this type of chain), operational variance can be even harder to determine. If the purpose and measurement of a process are not pre-determined, what conclusions can be drawn about success? Let’s go through the individual steps in the process.

Step 1…
Savvy operations managers understand that having repeatable processes in place are required for stable performance. Equipment operation and maintenance must only vary from shift to shift based on appropriate operating parameters. The Chain of Success in Fig. 2 identifies seven maintenance work-management processes required for robust maintenance performance: work identification, planning, scheduling, accomplishment, documentation and measurement and analysis (M&A).

Step 2…
This step identifies the required outcome and metrics that describe the “health” of each process. Such criteria as work-request accuracy and a clean and accurate backlog, etc., are indicators of how well a process is being used and maintained. Creating a Chain of Success requires establishing leading and lagging indicators by which the process will be measured and improved. Leading indicators are ahead of performance, predicting the future: They alert you in advance to the performance of your assets, which, in turn, allows you to be proactive. Conversely, lagging indicators follow the performance event: They tell you after the fact what asset performance has been—something that can, in turn, lead to a reactive approach!

Step 3…
This step provides process results. Trends in the data indicate the effectiveness of the process. Are hours per work order going down or up? How many work orders are being completed monthly, etc.? Such data can provide important flags for conducting further investigations and root cause analysis. It is important to note that having established an agreed-upon formula reinforces the credibility of the data. If reports are sitting on shelves and not being used, it is likely that the data is not seen as useful or credible.

Step 4…
Given there is a logical sequence to the Chain of Success, one might assume the first place to start constructing one is the first step: identifying the process. This is like identifying the solution before knowing the problem. The first step really is determining what business results are desired. What is the desired outcome and how are business results defined?

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Fig. 3. How the SAM plan informs step 4

Linking to strategic asset management
Typically, most plants have a strategic asset-management (SAM) plan often configured in 5- to 10-year increments. Although there can be many SAM definitions, for this article strategic asset management refers to the comprehensive, systematic road map of creating, maintaining and disposing of assets through a complex series of continuously improving processes. SAM seeks improvements in efficiency, effectiveness and overall performance objectives. For asset-intensive organizations, strategic asset management should assure the right work is done at the right time. The strategic asset-management plan should inform Step 4 as illustrated in Fig. 3.

Once you’ve determined and prioritized what is desired (Step 4) in alignment with the long-term asset strategy, determining the required process (Step 1) to achieve the result comes next, followed by Steps 2 and 3 (establishing measurement criteria and trend data). In this way, processes are aligned with the SAM plan. In addition, the chain serves as a communication tool that fosters conversation about process expectations and a platform for multi-level feedback.

The financial results are the reasons for the processes in the first place. The first three steps are powerful but incomplete without Step 4. Having KPIs alone or assuming business impact is generated by process does not establish the clean line-of-sight cause and effect required for precise management and performance. It is Step 4 from which the Chain of Success is built—and it is the processes’ reasons for existence. Before processes are implemented or modified, the financial goals must be clarified. Without clear targets, the type of process solutions may well be misguided. Without a clear understanding of cause and effect, much time and resources can be focused on the activities not associated with strategic intent.

Lessons learned
A Chain of Success is an effective tool for determining the purpose of any process, especially when linked to strategic asset management. By first establishing what results are expected over time, a process that will achieve the desired results can be chosen—as long as leading and lagging indicators are established to signal the health of the process and the resulting trends.

Successful implementation requires engaging in a discussion of desired results and the appropriate process fit to achieve the desired objectives. This conversation results in establishing clarity of purpose, consensus on objectives and how the process will be measured and reported. Keep in mind that clarity and consensus support multi-stakeholder alignment. This, in turn, is likely to sustain process implementation over time and thereby link process with a purpose to strategic asset management. MT

Brian Becker is a project manager with Reliability Management Group (RMG), a Minneapolis-based consulting firm. With 30 years of business experience, he has been both a consultant and manager. Becker holds a Harvard doctorate with a management focus. Email: bbecker@rmgmpls.com.
 

Brent Miller is vice president of Operations at Reliability Management Group. He has 30 years experience in both engineering and management consulting and has led multiple projects in refining, power utilities and facilities management industries for RMG. Email: bmiller@rmgmpls.com.

 

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