Up Time Magazine- August/September 2008

Performance OEE Tons Total Revenue @2,500/te Production Cost Consisting of: Current 60% 236,000 $590M $450M $250M $125M $75M $140M Future 87% 342,000 $855M $535M $350M $115M $70M $320M $180M need to invest additional capital immediately. It now has options for its future demand requirements and will likely use internal capital vs. taking the risk of acquiring a competitor. Action Plan/Next Steps Now that ABC sees the possibility of meeting market demand with their current assets and accepts that there is only a limited need to invest additional capital, the following questions must be asked: “Where should we start with our improvement effort?”, and “What improvement tools best apply to our business?” Most companies look for relatively easy ways to identify the biggest opportunities that are the easiest to do for improvement. But, most middle managers are not “systems thinkers”, that is thinking of their manufacturing plant as a complex system that must be fully understood as to inputs, outputs and variables. Rather, most tend to be “event thinkers”, wherein one reacts to an event without fully appreciating all the actions and circumstances that led to the event occurring. All of ABC’s plants have a site strategy and improvement plan, and the tools they are applying are numerous. They’ve been bombarded with promotional material and success stories regarding the use of tools and methods such as Lean Material/Variable Other Fixed Costs Labor Total Gross Profit Incremental Gross Profit Table 1 - Example of ABC’s Aggregate OEE Performance and Its Financial Beneﬁts 342,000 tons per year over the coming 4 years. Note that material and other variable costs do not increase linearly due to anticipated improvements in yield and quality with a more stable process. Likewise, labor and other fixed costs are actually decreased slightly because of improved productivity in the labor force. All in all, the company will more than double gross profit contribution, with existing assets, avoiding the need to purchase a competitor, as well as the Manufacturing, Six Sigma, Supply Chain Management, Total Productive Maintenance, Reliability Centered Maintenance, Root Cause Analysis, and Kaizen, just to name some of the more common ones. They’ve used these in one form or another, and it seems that when properly applied, they work well. The “best” one seems to depend on the particular business situation, and given that, there may not be one “best”. The question that many managers ask is, “How do I know which one to apply and where to start?” Explained in the next section is a model for applying Process Mapping to analyze the details of the losses discussed above, and to develop an action plan specific to those losses to focus the management teams on the value to be achieved in the coming 3-4 years. The Manufacturing Plant as a Business System Any manufacturing plant should be thought of as a business system, and management and shop floor must understand the events or defects (anticipated or otherwise) that occur resulting in the loss of capability of that system. In a perfect world our plant would run perfectly all the time. We’d have perfect quality, maximum production rates, no unplanned downtime, and product changeovers would be instantaneous. www.uptimemagazine.com 15 http://www.mobiusinstitute.com http://www.mobiusinstitute.com/simulators.html http://www.mobiusinstitute.com http://www.mobiusinstitute.com 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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