Up Time Magazine- August/September 2008

Reliability % Note that because it is on a log plot, most of the losses tend to be under the process optimization area, not the asset (equipment) optimization area. By working diligently with this model, the approach has been refined and enhanced. Now it is possible to analyze: ned -In Operating Variability % - Target Goal 90% competitor site to see if this approach would help to provide more compelling evidence to pursue buying this competitor’s facility. The results of the analysis are shown in Figures 4 and 5. In this analysis, and based on Figure 5, it appears that the competitor’s site has left $70MM to $75MM profit loss on the table for a $73MM Ton capacity plant. The analysis also yielded an $80MM profit loss for the $131MM Ton capacity at Turkey Creek as shown in Figure 4. ilit y Operational Excellence 100% Daily Production De sig Asset Optimization Losses - (e.g. equipment failures, raw material supply shortages, etc.) typically includes all major special cause or reliability issues. Process Optimization Losses - (e.g. yield issues, late starts, early quits, poor management decisions, etc.) typically includes efficiency and utilization or common cause or variability issues. Variable Margin - for a lost unit of production is then utilized and applied to both categories of losses to define $COUR (Cost of Un-reliability) and $COV (Cost of Variability) to dollarize the total improvement potential. “Transformational Analytics” will help to challenge a company’s status quo in driving strategic and tactical decisions to: • Improve Safety • Improve Production Output Effectiveness • Improve Process Reliability • Reduce Production Variability • Reduce Costs • Improve Business and Capital Planning Figure 3 - Transformational Analytics Plot • Create a Proactive and Can-Do Work Environment Getting back to our story, the “ABC” management team is concerned about the amount of time it will take to actually make the acquisition, and to integrate the two company cultures. While “ABC” is arguably not performing at a World Class level, it is seeking to become better and is open to new concepts, notwithstanding the occasional healthy dose of skepticism. Its competitor appears to be intensely driven by cost cutting, and the state of the assets is poor. Years of cost cutting have left the assets in visibly poor condition, and safety and environmental issues appear to be a major risk for any such acquisition. Moreover, the competitor is seeking $500M, appears unwilling to be acquired in a stock swap, and by seeking mostly cash, would require “ABC” to take on some $300M in debt. Leadership within “ABC” have decided to assign a team, including the LSP experts, to utilize “Transformational Analytics” to perform the analysis on the data from Turkey Creek and the Both facilities are operating at 90% 99.9 0.1 .2 .3 .5 1 23 5 7 10 PO Losses or AO Losses or Special Cause Common = 22% Cause PR% - Goal Target > 90% =78% .2 .3 .5 1 23 5 7 10 20 30 50 100 300 500 1000 99.9 0.1 Daily Production (Tons) Daily Production (Tons) Figure 4 - Turkey Creek Analytics Plot www.uptimemagazine.com Figure 5 - Competitor ‘X’ Analytics Plot 11 http://www.uptimemagazine.com

Table of Contents Feed for the Digital Edition of Up Time Magazine- August/September 2008

Up Time Magazine- August/September 2008 Contents Upfront Upclose Information Technology Lubrication Infrared Maintenance Management Motor Testing Precision Maintenance Reliability Ultrasound Vibration Upgrade

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