Category: Uncategorized

OEE and ERP

Implementing an ERP (Enterprise Resource Planning) system is a lot of work and happens to be where we’ve been spending most of our time and resources over the past few months.  The OEE reporting spreadsheet we planned to release some time ago is complete and we’ve been using it on some of our core production processes.  

Some have emailed, asking when the spreadsheet will be published.  We plan to make this spreadsheet available once we are satisfied that it serves the purpose we originally intended.  The tools we provide here are offered free of charge and the urgency of releasing them is offset by revenue driven opportunities that in turn support our site and make these “free” resources possible.

Since we are implementing a new ERP system, we also have the opportunity to create and generate customized OEE reports from data already being collected as part of the normal production reporting process.  As the lead for implementation, I am in the unique position of tailoring the data collection and reporting requirements in kind.  This of course is one of the few tasks of many currently under way.

As you may expect, the ERP system runs from a highly structured and more sophisticated database than that of a simple spreadsheet.  As mentioned in many past posts, a commitment to OEE will eventually require a database for more efficient and effective data processing.  Having the opportunity to incorporate OEE from current organic data is less disruptive and represents a significant step forward to real time OEE reporting.

Crystal Reports

We could generate database queries from Excel to further evolve the development of our spreadsheet, however, Crystal Reports integrates nicely with our database front end and the reports are available to everyone on the network.  In other words, the necessity for a spreadsheet is superseded by the need for customized reporting using Crystal Reports.  We can also use Crystal Reports with Excel and many other data sources.

Crystal Reports is a de facto standard in industry and a license is relatively inexpensive considering the powerful capabilities it brings to your data.  A mere mention here in this post does little to expose the merits of using Crystal Reports and we recommend that a little research of your own is warranted.

Your feedback matters

If you have any comments, questions, or topics you would like us to address, please feel free to leave your comment in the space below or email us at feedback@leanexecution.ca or feedback@versalytics.com.  We look forward to hearing from you and thank you for visiting.

Until Next Time – STAY lean

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Using TRIZ for Problem Solving – Introduction

Using TRIZ for Problem Solving – Introduction

A famous quote from Albert Einstein, “The problems that exist in the world today cannot be solved by the level of thinking that created them.“, applies to the discussion of problem solving and more so to the topic of TRIZ, The Theory of Inventive Problem Solving, developed by Genrich S. Altshuller.

TRIZ – Theory of Inventive Problem Solving

Genrich S. Altshuller developed TRIZ based on his search for a standard method to solve problems.  At the very basic level, once a problem is identified the objective is to determine whether a similar problem has already existed elsewhere.  If so, study the solution and determine whether it can be incorporated into the current solution being sought.  Taken one step further, consider the possibility that a different perspective of the problem may also present a unique inventive solution.

It does not seem too far fetched that the problem to be solved has occurred elsewhere in a completely different context.  The solution that is found may also be out of the context but the concept may lead to an innovative solution for the current problem at hand where one never before existed.

The application of TRIZ requires an open mind.  We often bring our “tool box” of experience to the table and draw on those tools and our wealth of knowledge to create a solution.  TRIZ is a tool that can be used to create completely new and unique solutions to a given problem.  This doesn’t mean that we need to abandon our current technology and know-how; it simply means that there may be other options where the current know-how and / or technology may not apply or it may be applied in a manner that is quite different than it is today.

Identify the Real Problem to be Solved

Any problem solving method can only be successful if the true root cause is identified.  Once found, a clear and concise problem statement must be formulated to assure that the solution developed and implemented indeed addresses the true root cause.

Searching for Solutions:

Once a problem has been identified, the next question is, “How do we solve it?”  There are a number of techniques that can be used such as brain storming and idea mapping, however, one seldomly used technique is TRIZ:  Theory of Inventive Problem Solving.

Every day we are challenged with a diverse range of problems from machine malfunctions to defective parts.  The very nature of any company’s operations requires an immediate fix to restore operations to “normal”.  Recognizing that a problem exists is not the same as understanding what the problem is and effectively solving the problem requires that we have identified the true root cause and not just the symptoms.

Many tools are readily available to even help us address these concerns or identify where opportunities exist to make improvements.  Unfortunately, these tools seldom provide the solution to the problem.  Too often we are trapped inside the box of current thinking, technologies, standards, methodologies, present knowledge, and even company policy.  Our own levels of thinking and plausible solutions are influenced and limited by our current understanding and knowledge of the problem as well as our own experiences.

The Basis for Using TRIZ to Solve Problems:

Technology

In some cases, product or part designs themselves may be constrained as engineers and designers work to generate a design tailored to a specific, known, technology.  Quality Function Deployment is one strategy that provides a platform to explore alternative design and process approaches before committing to a specific technology or process.

It is worth noting that, although product design is critical, processes and technologies used to manufacture the product itself are often overlooked and seldom are the process constraints and their affects ever considered.  There are many examples where numerous hours are wasted attempting to develop tools using traditional technologies to produce parts that conform to the wishes of engineers and designers.

How do we actually go about solving problems where the technology or the design present constraints that prevent success?  This is the basis for TRIZ:  We have clearly identified the problem to be solved, now we need a solution to resolve it.

Problem Classifications

Although problems may have varying degrees of difficulty, the solutions for them can only fall into one of two overly simplified categories:  Known or Unknown.  While this classification may appear simple on the surface, consider the unknown solution.  Is it truly unknown or is it only unknown to you.
  1. Known:  Surrogate process already proven and only requires adaptation for the current situtation.  The “problem solver” has an awareness or experience related to the solution.
  2. Unknown:  Typically, solutions are often limited by the scope of experience of the person or person(s) attempting to solve the problem.
    1. The problem solver is not aware of the solution’s existence (Personal)
    2. The solution is outside the problem solver’s scope of experience, training, or field of expertise, but may exist within the company (Company)
    3. The solution is not known within the company but is known within the industry (Industry)
    4. A solution can be realized although it does not presently exist (Outside Industry).
    5. Requires an inventive solution that goes beyond improving the existing condition and is not known to exist anywhere.
  3. Although a solution may be found or developed internally, it may not necessarily be ideal.  We recommend continual review of trade journals, going to trade shows, and networking not only with industry peers but outside your areas of expertise as well.

We will pursue the TRIZ methodology as both a learning and problem solving method.  Often times the solution to a problem requires a different perspective to achieve an effective resolution.

Applying TRIZ in the real world:

TRIZ can be used to develop solutions in a wide range of applications.  As Contingency Plans are developed, you may determine that a solution is required to address a problem or crisis that company has not yet experienced.  As we have discussed, the information or solution to the pending “crisis” may already exist elsewhere.  Similarly, improvements to Overall Equipment Efficiency may require solutions to be developed to address problems or opportunities that are inhibiting continued improvement. 

We will continue to pursue the application of TRIZ in the real world and present a more detailed case study.  

Note:  We would also recommend and encourage you to visit http://www.mazur.net/triz/ for an indepth presentation and detailed discussion of TRIZ.  This site provides greater detail and background that is presently beyond the application or scope of this series.

Until Next Time – STAY Lean!

 

 

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Until Next Time – STAY lean!

Vergence Analytics

OEE – A Vantage Point Metric

We use the term Vantage Point Metrics to identify those metrics that are core to the day to  day management of your business.  The objective is to distinguish these metrics from the “noise” that is easily created by other less significant metrics.

Determining Vantage Point Metrics is simply a matter of identifying those metrics that are critical to the profitability of your operation.  A few simple examples include Safety, Overall Equipment Effectiveness (OEE), Labour Efficiencies, Profit, Absenteeism, Cost of Non-Quality, Delivery Performance, Performance to Schedule, and Inventory Turns.

Climate Control

Keep the number of metrics to a minimum.  To many metrics can create noise and loss of focus.  What is important to who.  Can the metric be measured in real time?  Can the people reviewing the data make changes in real time?  If the data being collected cannot be used to make decisions to correct a current trend then why is it being measured?

Although we can’t control the weather, we certainly spend a signficant amount of time, money, and resources to get up to the minute data and short term forecasts.  Only the few key metrics are reported with an explanation of the various environmental influences that may affect the forecast in the short term.

In a similar way, Vantage Point Metrics are those few that have a direct relationship or impact on the current business climate.  Changes in the weather may cause us to alter both personal and business plans.  Agriculture, NASA, and Aerospace companies rely on the weather as a dynamic component of their business.  Vantage Point metrics should assimilate the same sensitivity to climate change in your business.

Measuring for measurement’s sake is waste.  Measure critical to success factors that can be used to alter or change the course of business as required.  Real time data collection in conjuction with short response-control loops is the key to using these metrics successfully.

Consider managing your personal cash flow in real time versus performing a month end summary.  Anyone who has purchased fuel for their vehicle this past year is keenly aware of the fluctuations in pricing and the cost of filling the tank.  As the variation in price increases, we in turn become more sensitive to our purchasing habits.

What is the Vantage Point Metric that would allow you to manage your fuel purchases?  Is it the price per gallon or litre at the gas station?  Could it also be worthwhile to monitor the price of a barrel of oil?  Our logic suggests that a direct correlation between price at the pump and the cost of barrel of oil should exist although our experience strongly suggests otherwise.  Repair costs, refinery costs, weather, and the value of the dollar, all seem to have an impact on the price at the pump.

Fortunately, gas pumps display the price in real time as the tank is being filled.  Knowing our current cash position allows us to fill our tanks to such an amount that we don’t exceed our ability to pay for it.  This is measuring and managing in real time.  The Vantage Point metric in this case is CASH.  It is possible to manage cash flow in real time to determine what and how much can be purchased.  If cash is the Vantage Point metric, it becomes clear that many business transactions can be controlled and understood from this one simple metric.

Consider what Vanatage Point Metrics can do for your business.  Focus on the few metrics that provide the greatest level of control and management of your business.  Keep it simple and keep it real.

Overall Equipment Effectiveness or OEE provides a single metric that combines Availability, Performance, and Quality into one unique index.  It is very possible to drill down into the details of the metric as required.

Inventory turns is another Vantage Point metric that tells a story much greater than just how well material is moving through your organization.

Training

Turning ordinary metrics into Vantage Point metrics requires training all employees, associates, or business partners.  They need to clearly understand what the metric is measuring and the various aspects or elements of the business climate that can affect positive change.

When the weather is reported on the news, the forecast is typically accompanied by an explanation of the reasons for the current weather conditions and future forecast.  They don’t just post a weather map on the screen and leave it for the viewer to determine the emerging weather patterns.  Similarly, Vantage Point Metrics require supporting details and explanations to educate the team on the meaning of the data and how to respond to the current conditions and what the effects will be if we don’t.

Metrics can be extremely valuable if selected and used wisely.  Easy data is not necessarily meaningful data.  Collecting and analyzing the data is the beginning not the end of the process.  Measuring absenteeism for example is not a difficult task.  Understanding why certain behavior patterns exist and affecting change to produce positive results is the journey to be pursued.

The Six Sigma DMAIC model (Define, Measure, Analyze, Improve, and Control) suggests that we already know that a problem exists.  This model does not support Vantage Point Metrics in that a defined outcome or goal has been established.  The data is analyzed to determine and define the root cause for the current trend.  Improvements are then formulated into an action plan, implemented, and monitored accordingly.  The metric continues to serve as continual feedback as actions are taken.

You can either wait for the problem to define itself or implement Vantage Point Metrics that will prevent the problem from occurring all together.

Most people have had the opportunity to drive a car or truck and know that we need to obey the rules of the road.  A speeding ticket is a problem that is readily defined.  It is a problem not only because it could cost you some money but repeated occurrences could also result in the loss of your licence to drive.  To avoid this dilemma from happening you can monitor your Vantage Point Metric (the speedometer) and respond to the current conditions – all in real time – and avoid the ticket.

When or if we do receive a speeding ticket, it is the result of a conscious decision to speed, not mere fate or bad luck.  As such, the issue, like many, becomes that of not adhering to policy or standard operating procedure.

Focus on the vital few Vantage Point Metrics to achieve stability in your organization.  As problems are resolved and opportunities to improve are pursued, new metrics will begin to surface that will bring even more positive results to the bottom line.

Lean Culture

Background

Being in business for many years is, and can be, both a blessing and a curse.  On one hand, the company has established itself and is well rooted in its chosen industry.  On the other hand, it has established and well rooted “behaviors” built on a culture that have stood the test of time.  This could be for better or worse.

Today’s economic conditions are forcing many company executives to make extremely difficult decisions, including severe cutbacks (layoffs), bankruptcy, insolvency, sale, and even closure.  If your business is still viable at this point in time, congratulations may be in order, or, the impact of the current economy is simply lagging.

The automotive executives, particularly those seeking government assistance, are quickly learning that something must change and quickly.  In fact, the federal governments of both the Canada and the United States have mandated “change” as a prerequisite to receiving funding.

Entitlements and Accountability

We are not looking to assign blame or assert accountabilities for the current economic crisis.  We would strongly suggest however, that there is probably no better time to achieve a company wide “buy-in” to the concepts of lean manufacturing.

Sometime before and even during the “fall”, many seemed to be reluctant to recognize that changes were imminent.  No one person can be held accountable for the current economic climate. 

Unfortunately, rationalizing poor performance was simply attributed to the natural course of events and are consistent with historical economic cycles.  Several problems with this rationalization persist.  If the best predictor of future performance is past performance, then why didn’t “we” take the necessary steps to prepare for such a recurrence of events.  If this was predictable, then why did this seem to take everyone by surprise?  Who should be held accountable?

“Labour” was very reluctant to make any concessions until the government mandated a review and indepth analysis of competitor labour agreements.  The announcement of plant closures and significant “down” days has seemingly created a new perspective.

Engage for Success

To some, everything was fine … until you came along and suggested that “we need to change” in order to survive.  Could it be that the path of least resistance is also the path to peril?  Improvements are always easier to implement than “change”.

As Lean practitioners, we need to be cognizant of the individuals who may be impacted by the improvements that must be made.  We should also stress that the goal of Lean is not to displace people from your organization.  The ultimate goal of lean is to increase your value added activity that in turn will improve your competitive position and stimulate future growth.  Your competitors should be concerned about displacing employees.

A well designed situational assessment and the manner in which it is conducted may open the doors to improved performance as opposed to a wall of resistance to change.  The key to overcoming this resistance and preventing backlash is through effective communication and participation of all employees from the top down or bottom up.

Another important point to make is this.  Everyone likes to be involved in a successful venture.  This extends beyond your employees and the walls of your business.  Customers like to be associated with success too.

The Olympics present a good example of this.  Think of the extreme efforts companies take to be associated with Gold Medal athletes as part of their branding strategy.  Everyone wants to be associated with a winner.  Taking this one step further, consider the extreme efforts and personal sacrifices that the athletes themselves have taken to achieve this level of success.

Where does your company fit into the economy – leaders or losers?  Is everyone on board?  Today’s climate has likely created the opportunity to bring everyone on board without even having to ask.  The real breaking point occurs when company and self preservation become synonymous.

LEAN Strategy and Metrics

Once a sense of purpose has been established, your lean strategy can be developed and executed with the full support of your team.  As part of your implementation strategy, training should be at its core.  People will be more prepared to embrace the “new” way of doing business when they understand why they are doing what they do.

Naturally, people will want to know that the new way of doing business is making a difference and that they are contributing to this success.  Your training program should provide a clear definition of the metrics being used and how they correlate to the “success” of the company.  Posting charts on the wall is not going to sustain a lean culture for long unless the people understand what the charts mean.  Reading a foreign newspaper is of no use unless you understand the language.

Lean Strategy

Almost every article, book, or blog will tell you that the focus of Lean is the “ELIMINATION of WASTE”.  We recommend taking slightly different approach.  Our reasons for this come from our own successes at implementing lean.  Too many people don’t know what waste is or even looks like.  Yes, you can train people on the “7 or 8” categories of waste, and yet they still don’t recognize waste outside of the context that was used to explain it.

Our approach focuses on True Customer Value.  Does the activity add value from the customer’s perspective.  If NOT, it is waste.  This approach makes it much easier to discern waste in your company.

Again an example may serve us best.  When buying a pizza for home delivery, what do you, as a customer, perceive as value?  We would argue that since we are paying for the pizza, the quality of the pizza is where the value should be focused (taste, temperature, and so on).

Do we care what kind of car the delivery person was driving?  Do we care where the pizza box was purchased or how many were in inventory?  Do we care how many hours of overtime were worked or how many products had to be expedited in to meet customer orders?  Do we care that the “company” covers speeding tickets per driver?  Do you care if they cut their own wood to heat the stove or if they use gas or electricity?  Do we care how many speeding tickets the driver incurred?  The answer to all, if not most, of the above questions is likely a resounding NO.  I’m willing to pay a reasonable price for a great tasting pizza.

To put it plainly, if the customer doesn’t see value in it, then why should you?  Simple enough right?  From this perspective, waste is readily recognized and identified as any policy, practice, or activity that does not add or create value for our customer.

One definition of Lean that many could easily embrace as there own is “A systematic approach for delivering the highest quality, lowest cost products with the shortest lead-times through the relentless elimination of waste.”  Could the same objectives be achieved through the relentless pursuit of value?

The most difficult challenge will be convincing someone that what they are doing is “waste”.  Most people would be insulted or offended by any statement that suggests they have been wasting their time all these years.  We would recommend acknowledging the current level of success and thanking them for their efforts accordingly.  You could almost be in a position to apologize for the current way in which a task is being completed.  Keep in mind that, in many cases, we are only looking to change the method or the HOW.  In other words, the WHY remains the same.  What was being done was not a waste, it’s simply a matter of achieving the same end more efficiently and using our time more effectively.

Lean is a very effective means of sustaining a viable business enterprise even during these difficult times.  It is difficult for some to see how the current economic crisis can be opportunity knocking.  Those who are succeeding today have already responded during their times of crisis and envisioned what we now call Lean.

Until Next Time – Stay LEAN.

Variance, Waste, and OEE

What gets managed MUST be measured – Including VARIANCE.

It is easy to get excited about the many opportunities that a well implemented LEAN Strategy can bring to your organization.  Even more exciting are the results.

Achieving improvement objectives implies that some form of measurement process exists – the proof.  A clear link should be established to the metric you choose and the activity being managed to support the ongoing improvement initiatives.

Measure with Meaning

Why are you “collecting” OEE data?  While OEE can and should be used to measure the effectiveness of your manufacturing operations, OEE on its own does not present a complete solution.  It is true that OEE presents a single metric that serves as an indicator of performance, however, it does not provide any insight with respect to VARIANCES that are or may be present in the system.

We have encountered numerous operations where OEE data can be very misleading.  OEE data can be calculated using various measurement categories:  by machine, part number, shift, employee, supervisor, department, day, month, and so on.

VARIANCE:  the leading cause of waste!

Quality professionals are more than familiar with variance.  Statistically capable processes are every quality managers dream.  Unfortunately, very little attention or focus is applied to variances experienced on the production side of the business.

Some may be reading this and wonder where this is going.  The answer is simple, rates of production are subject to variance.  Quite simply, if you review the individual OEE results of any machine for each run over an extended period of time, you will notice that the number is not a constant.  The performance, availability, and quality factors are all different from one run to the next.  One run may experience more downtime than another, a sluggish machine may result in reduced in performance, or material problems may be giving rise to increased quality failures (scrap).

So, while the OEE trend may show improvement over time, it is clear that variances are present in the process.  Quality professionals readily understand the link between process variation and product quality.  Similarly, variation in process rates and equipment reliability factors affect the OEE for a given machine.

We recommend performing a statistical analysis of the raw data for each factor that comprises OEE (Availability, Performance, and Quality) for individual processes.  Analysis of OEE itself requires an understanding of the underlying factors.  It is impractical to consider the application of ANOVA to OEE itself as the goal is to continually improve.

How much easier would it be if you could schedule a machine to run parts and know that you will get them when you needed them?  You can’t skip the process deep dive.  You need to understand how each process affects the overall top-level OEE index that is performance so you can develop and implement specific improvement actions.

The best demonstration we have seen that illustrates how process variation impacts your operation is presented through a “process simulation” developed from Eli Goldratt’s book, The Goal.  We will share this simulation in a separate post.  Experiencing the effect of process variation is much more meaningful and memorable than a spreadsheet full of numbers.

Conflict Management and OEE

In some environments we have encountered, the interpretation of LEAN strategy at the shop floor level is to set minimum OEE performance objectives with punitive consequences.  This type of strategy is certainly in conflict with any Lean initiative.  The lean objective is to learn as much as possible from the process and to identify opportunities for continual improvement.

Management by intimidation is becoming more of a rarity, however, we have found that they also give rise to the OEE genius.  If performance is measured daily, the OEE genius will make sure a high performing job is part of the mix to improve the “overall” result.  This is akin to taking an easy course of study to “pull up” your overall average.

It is clear from this example, that you will miss opportunities to improve your operation if the culture is tainted by conflicting performance objectives.  The objective is to reveal sources of variation to eliminate waste and variation in your process, not find better ways to hide it.

Variance in daily output rates are normal.  How much are you willing to accept?  Do you know what normal is?  Understanding process variance and OEE as complementary metrics will surely help to identify more opportunities for improvement.

FREE Downloads

We are currently offering our Excel OEE Spreadsheet Templates and example files at no charge.  You can download our files from the ORANGE BOX on the sidebar titled “FREE DOWNLOADS” or click on the FREE Downloads Page.  These files can be used as is and can be easily modified to suit many different manufacturing processes.  There are no hidden files, formulas, or macros and no obligations for the services provided here.

Please forward your questions, comments, or suggestions to LeanExecution@gmail.com.  To request our services for a specific project, please send your inquiries to Vergence.Consulting@gmail.com.

We welcome your feedback and thank you for visiting.

Until Next Time – STAY Lean!

"Click"

OEE and Standardized Work

Overall Equipment Efficiency (OEE):  Standardized Work

After you start collecting OEE data for your processes, you may notice significant variance between departments, shifts, and even employees performing the work.  Of the many aspects that you will be inclined to investigate, standardized work should be one of them.

Making sure that all employees are executing a process or sequence of processes correctly and exactly the same way every time is the topic of standardized work.  The OEE data may also direct you to review how the processes are being executed by some of the top performers to determine if they are truly demonstrating best practices or simply cutting corners.

Lean practices are founded on learning by observing.  We cannot stress the importance of observing an operation to see first hand what opportunities for improvement (waste elimination) are available.  OEE data is a compass that directs you where to look; however, the destination for improvements is the process, the very source from where the data originated.

Establishing Standard Cycle Times

One of the first questions we usually ask is, “How were the standard cycle times determined?”  Was the standard based on best practices, quoted rates, time studies, name plate ratings, or published machine cycle times?

We recommend conducting an actual time study using a stop watch and calculating part to part (button to button) cycle times accordingly.  We have used the stop watch capability of the BlackBerry many times.  Results for lap times and total elapsed time are easily recorded and can be e-mailed as soon as the study is complete.

The sample size of course will depend on the actual rate of the machine and should be statistically relevant.  One or two cycles is not sufficient for an effective time study.

For operator “controlled” processes, we recommend involving the employees who normally perform the work when conducting the time study.  It doesn’t make sense to have the “office experts” run the equipment for a short burst to set a rate that cannot be sustained or is just simply unreasonable.

Many processes, those dependent on human effort or automation, are usually controlled by PLC’s that are also capable of providing the machine cycle time.  At a minimum, we recommend validating these cycle times to at least satisfy yourself that these are part to part or “button to button” cycle times.

For automated operations, PLC’s can typically be relied upon to provide a reasonable cycle time.  Without going to far into process design and development, you will need to understand the elements that control the process sequences.  Some processes are driven by time controls (an event occurs after a period predetermined period of time) versus those that may be event-driven (an event occurs based on satisfying a dependent “sensor on-off” condition or similar “event signal” mechanism.

The real key to understanding the process being studied is to develop a flow chart clearly defining each of the process steps.  It is of equal importance to observe the differences that may be occurring between employees performing the work.  Either the instructions lack clarity or habits (good or bad) have been developed over time.  Although templates exist to aid in the development of standardized work, don’t wait to find the right tool.

Using Video – Record it Live

We highly recommend using a video recorder to capture the process in action.  With the technology available today, video is readily available and a very cost-effective method of documenting your processes.  Video presents several advantages:

  1. Captures activities in real-time.
  2. Provides instant replay.
  3. Establish process or sequence event timing in real-time.
  4. Eliminates need for “stop watches” to capture multiple event timing.
  5. Can be used as a training aid for new employees to demonstrate “standardized work practices”.
  6. Can be used to develop “best practices”.
  7. Reduces or minimizes potential for time measurement error.

We have successfully used video to not only develop standardized work for production processes, but also for documenting and recording best practices for tool changes, set up, and checking or inspection procedures.

Standardized work eliminates any questions regarding the proper or correct way of performing the work required.  Standardized work procedures allow additional development work to be completed “offline” without further disruption to the production process.

Conclusion:

Of course, Standardized Operating / Work procedures are required to establish effective and meaningful value stream maps but even more importantly, they become an effective tool to understand the opportunity for variances in your OEE data, certainly where manual or “human” controlled operations are concerned.

It has been argued that OEE data in and of itself is not statistically relevant and we are inclined to agree with this statement.  The simple reason is that the processes being measured are subject to significant internal and external variances or influences.  Examples may include reduced volumes, product mix changes, tool change frequency, employee turnover, and economic conditions.

As mentioned in many of our posts, it is important to understand “WHAT and WHY” we are measuring.  Understanding the results is more important than the result itself.  A company looking to increase inventory turns may resort to smaller production runs and more frequent tool changes.  This will reduce Availability and, in turn, will result in a lower OEE.  The objective may then be to find a way to further reduce tool change times to “improve” the Availability.

The use of OEE data can vary in scope, ranging from part specific performance to plant wide operations.  As the scope of measurement changes, so do the influences that impact the net result.  So once again, we urge you to use caution when comparing data between personnel, shifts, departments, and production facilities.  Typically, first or day shift operations have greater access to resources that are not available on the “off’ shifts.

Perhaps the greatest “external” influence on current manufacturing operations is the rapid collapse of the automotive industry in the midst of our current economic “melt down”.  The changes in operating strategy to respond to this new crisis are bound to have an effect on OEE among other business metrics.

The ultimate purpose of Lean practices is to reduce or eliminate waste and doing so requires a rigorous “document and review” process .  The ability to show evidence of current versus proposed practices will reduce or eliminate the roadblocks that may impede your continuous improvement objectives.

While the post is brief today, hopefully the message is helpful.

Until Next Time – STAY Lean!

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LEAN Environment: Waste Management and OEE

In recent years much emphasis has been placed on the state of our environment and LEAN can help our cause.  If we consider just how much energy and resources are consumed due to inefficiency and waste.  OEE is a measure of how effectively time is used as a resource; however, it does not necessarily reflect the waste that is created in other areas.

To understand the real implications of waste, we need to extend the impact outside of the manufacturing environment, beyond the factory walls.

Consider the cost of non-quality.  Scrap and rework costs are readily calculated since we know how much we pay for labour and materials.  However, we rarely consider the outside costs and potential impact to our environment.  This raises more questions than answers as these costs are beyond our realm of expertise and control.

What is the real cost of a scrap part?  How many trucks are on the road today carrying material to replace products that should have been made right the first time?  How much extra labour is incurred through the value stream to replace this material? 

What are the disposal costs associated with scrap material?  Can it be recycled?  What are the costs of recycling and what is the impact to the environment?  It is one thing to recycle products after they have served their useful purpose, but what about the costs incurred to recycle products that were simply defective and never made it to market?

How much energy and resources are wasted simply because capacity is burdened by inefficiencies in our manufacturing operations?  The costs of working overtime to manufacture parts due to “lost time” during the regular work week or to recover quality losses due to rework and scrap all have an impact on the environment.

How many employees are driving their cars to work overtime that could have been avoided or prevented?  What is the cost to work a shift of overtime at your company?  What is the cost to the environment?  How many cars made the trip to the plant burning fuel unnecessarily because of our inherent manufacturing inefficiencies and waste?

How much money is spent paying for trips to customers to replace defective material or to justify the reasons for failure?  How much expedited freight is incurred due to quality, process inefficiency, or capacity mismanagement?

We have identified many questions that should have some bearing on our social responsibilities as manufacturers or providers of goods and services.  The value stream of your products and services has an impact on the environment beyond your factory walls and affect the environments of communities around the globe.

The next time you scrap a part that was originally made offshore; consider the effort required to deliver it to your factory floor.  The implications of transporting products around the globe can’t help but stress the need to use them wisely.

Where does OEE fit into all of this?  If 100% OEE is the Ideal, then anything less is the opportunity to eliminate waste.  When we look at our operations and the problems we encounter on a daily basis we are reminded to: See, Solve, Share, and Start again.

Until Next Time – STAY Lean!

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OEE, Downtime, and TEEP

We have received several inquiries regarding equipment down time – periods of time when the machine is not scheduled to run.  We consider this to be scheduled down time or idle time and does not affect Overall Equipment Effectiveness (OEE), since no production was planned during this period.

OEE measures overall equipment effectiveness during planned production or SCHEDULED up time.  Do not confuse idle time with tooling or material change over as these activities should be part of the scheduled machine time – periods where the machine is not scheduled to run.  After hours or weekends are examples of idle time.

TEEP or Total Equipment Effectiveness Performance is another variable, similar to OEE, and measures the Total Equipment Effectiveness Performance based on calendar time – the total time the equipment is “present”.  If process “A” is in your plant for 24 hours a day, 7 days a week, then the total time required to make good parts is divided by the time the asset, process, or equipment is “present” and is therefore “technically available” for the time frame being considered.  Typically this is based on calendar time – 24 hours per day and 7 days per week.

Another way to view TEEP is to consider it as a measure of how effectively the total capacity of a process or machine is being utilized to make GOOD parts.  In short, TEEP could be defined as a measure of Equipment Capacity Utilization Effectiveness.

TEEP Calculation Example:

In the metal stamping business, raw coil steel is processed through a die that runs in a stamping press to manufacture the parts.  The ideal cycle time for may be 30 strokes (or parts) per minute.  While the press may be scheduled to run for 16 hours, it is technically “present” or available 24 hours.  If, in a given day, a total of 18,000 GOOD parts were produced over 16 hours of scheduled production time, the OEE is easily calculated.

We will first calculate the IDEAL hours required to produce 18,000 parts at 30 spm.  The IDEAL rate per hour is 1,800 parts (30 spm * 60 minutes  / hour).  Therefore the IDEAL time to produce 18,000 good parts is 10 hours (18,000 parts / 1,800 per hour).

If this is a two shift operation, the net available time is 16 hours (scheduled) and the OEE for the day is calculated as 10 / 16 = 62.5 %.

Since the press is always present, 24 hours per day – 7 days per week, the Daily Equipment Effectiveness Performance (DEEP) in this case is 10 / 24 = 41.7 %.  While this example only represents a single 24 hour day, the basis for calculation is the same.  If the time frame is one week, one month, one quarter, the Total Equipment Effectiveness Performance for that time frame is calculated using the following formula:

TEEP = Total IDEAL Time to Produce Good Parts / Total Gross Time Available

FREE Downloads

We are currently offering our Excel OEE Spreadsheet Templates and example files at no charge.  You can download our files from the ORANGE BOX on the sidebar titled “FREE DOWNLOADS” or click on the FREE Downloads Page.  These files can be used as is and can be easily modified to suit many different manufacturing processes.  There are no hidden files, formulas, or macros and no obligations for the services provided here.

Feel free to leave any comments or send your questions to LeanExecution@gmail.com

Until next time – STAY Lean!

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