Lean thinking affects all facets of an organization. Every person, activity, product, service, process, system, or method represent an opportunity for continuous improvement.
If the devil is in the details, then lean thinking extends to understanding and improving the “little things” we do every day, not just as teams, but as individuals too. Lean thinking embraced at a personal level can collectively bring significant change to the company as a whole.
Lean companies are not immune to complacency. If it is indeed a journey, the pursuit of perfection through the elimination of waste never ends. Unfortunately, significant improvement opportunities also fall victim to Pareto’s law as the “low hanging fruit” becomes harder to find.
Lean initiatives identify and address high dollar opportunities at the onset. As time passes, the motivation and interest to pursue the minor and few remaining opportunities begin to dwindle.
Lean thinking at the micro-level gives us cause to become aware of, and to review, the activities and habitual routines we perform every day. Many small steps can make for a much-improved workplace. “The Best Way To Measure Your Personal Brand Success,” by Pia Silva (Forbes contributor – August 1, 2018) also supports this manner of thinking.
The “little things” from a company perspective may represent “big things” from an individual perspective. We can make the company a better place when we make improvements to our workspace.
Micro-lean for 2020 may be the next best thing. As has been said many times before, “There’s always a better way and more than one solution.”
If “Time is Money”, is it reasonable for us to consider that “Wasting Time is Wasting Money?”
Whether we are discussing customer service, health care, government services, or manufacturing – waste is often identified as one of the top concerns that must be addressed and ultimately eliminated. As is often the case in most organizations, the next step is an attempt to define waste. Although they are not the focus of our discussion, the commonly known “wastes” from a lean perspective are:
Correction (Non-Conformance – Quality)
Resourcefulness is another form of waste often added to this list and occurs when resources and talent are not utilized to work at their full potential.
Where did the Time go?
As a lean practitioner, I acknowledge these wastes exist but there must have been an underlying element of concern or thinking process that caused this list to be created. In other words, lists don’t just appear, they are created for a reason.
As I pondered this list, I realized that the greatest single common denominator of each waste is TIME. Again, from a lean perspective, TIME is the basis for measuring throughput. As such, our Lean Journey is ultimately founded on our ability to reduce or eliminate the TIME required to produce a part or deliver a service.
As a non-renewable resource, we must learn to value time and use it effectively. Again, as we review the list above, we can see that lost time is an inherent trait of each waste. We can also see how this list extends beyond the realm of manufacturing. TIME is a constant constraint that is indeed a challenge to manage even in our personal lives.
To efficiently do what is not required is NOT effective.
I consider Overall Equipment Effectiveness (OEE) to be a key metric in manufacturing. While it is possible to consider the three factors Availability, Performance, and Quality separately, in the context of this discussion, we can see that any impediment to throughput can be directly correlated to lost time.
To extend the concept in a more general sense, our objective is to provide our customers with a quality product or service in the shortest amount of time. Waste is any impediment or roadblock that prevents us from achieving this objective.
Indirect Waste and Effectiveness
Indirect Waste (time) is best explained by way of example. How many times have we heard, “I don’t understand this – we just finished training everybody!” It is common for companies to provide training to teach new skills. Similarly, when a problem occurs, one of the – too often used – corrective actions is “re-trained employee(s).” Unfortunately, the results are not always what we expect.
Many companies seem content to use class test scores and instructor feedback to determine whether the training was effective while little consideration is given to developing skill competency. If an employee cannot execute or demonstrate the skill successfully or competently, how effective was the training? Recognizing that a learning curve may exist, some companies are inclined to dismiss incompetence but only for a limited time.
The company must discern between employee capability and quality of training. In other words, the company must ensure that the quality of training provided will adequately prepare the employee to successfully perform the required tasks. Either the training and / or method of delivery are not effective or the employee may simply lack the capability. Let me qualify this last statement by saying that “playing the piano is not for everyone.”
Training effectiveness can only be measured by an employee’s demonstrated ability to apply their new knowledge or skill.
Time – Friend or Foe?
Lean tools are without doubt very useful and play a significant role in helping to carve out a lean strategy. However, I am concerned that the tendency of many lean initiatives is to follow a prescribed strategy or formula. This approach essentially creates a new box that in time will not be much different from the one we are trying to break out of.
An extension of this is the classification of wastes. As identified here, the true waste is time. Efforts to reduce or eliminate the time element from any process will undoubtedly result in cost savings. However, the immediate focus of lean is not on cost reduction alone.
Global sourcing has assured that “TIME” can be purchased at reduced rates from low-cost labour countries. While this practice may result in a “cost savings”, it does nothing to promote the cause of lean – we have simply outsourced our inefficiencies at reduced prices. Numerous Canadian and US facilities continue to be closed as workers witness the exodus of jobs to foreign countries due to lower labor and operating costs. Electrolux closes facility in Webster City, Iowa.
I don’t know the origins of multi-tasking, but the very mention of it suggests that someone had “time on their hands.” So remember, when you’re put on hold, driving to work, stuck in traffic, stopped at a light, sorting parts, waiting in line, sitting in the doctors office, watching commercials, or just looking for lost or misplaced items – your time is running out.
Is time a friend or foe? I suggest the answer is both, as long as we spend it wisely (spelled effectively). Be effective, be Lean, and stop wasting time.
We are often asked what companies (or types of companies) are using OEE as part of their daily operations. While our focus has been primarily in the automotive industry, we are highly encouraged by the level of integration deployed in the Semiconductor Industry. We have found an excellent article that describes how OEE among other metrics is being used to sustain and improve performance in the semiconductor industry.
Somehow it is not surprising to learn the semiconductor industry has established a high level of OEE integration in their operations. Perhaps this is the reason why electronics continue to improve at such a rapid pace in both technology and price.
The article clearly presents a concise hierarchy of metrics (including OEE) typically used in operations and includes their interactions and dependencies. The semiconductor industry serves as a great benchmark for OEE integration and how it is used as powerful tool to improve operations.
While we have reviewed some articles that describe OEE as an over rated metric, we believe that the proof of wisdom is in the result. The semiconductor industry is exemplary in this regard. It is clear that electronics industry “gets it”.
As we have mentioned in many of our previous posts, OEE should not be an isolated metric. While it can be assessed and reviewed independently, it is important to understand the effect on the system and organization as a whole.
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We recently received an e-mail regarding OEE calculations for batch processes and more specifically the effect on down stream equipment that is directly dependent (perhaps integrated) on the batch process. While the inquiry was specifically related to the printing industry, batch processing is found throughout manufacturing. Our more recent experiences pertain to heat treating operations where parts are loaded into a stationary fixed-load oven as opposed to a continuous belt process.
Batch processing will inherently cause directly integrated downstream equipment (such as cooling, quenching, or coating processes) to be idle. In many cases it doesn’t make sense to measure the OEE of each co-dependent piece of equipment that are part of the same line or process. Unless there is a strong case otherwise, it may be better to de-integrate or de-couple subsequent downstream processes.
Batch processing presents a myriad of challenges for line balancing, batch sizes, and capacity management in general. We presented two articles in April 2009 that addressed the topic of where OEE should be measured. Click here for Part I or Click here for Part II.
Ideally, we want to measure OEE at the bottleneck operation. When we apply the Theory of Constraints to our production process, we can assure that the flow of material is optimized through the whole system. The key of course is to make sure that we have correctly identified the bottleneck operation. In many cases this is the batch process.
While we are often challenged to balance our production operations, the real goal is to create a schedule that can be driven by demand. Rather than build excess inventories of parts that aren’t required, we want to be able to synchronize our operations to produce on demand and as required to keep the bottleneck operation running. Build only what is necessary: the right part, the right quantity, at the right time.
Through my own experience, I have realized the greatest successes using the Theory of Constraints to establish our material flows and production scheduling strategy for batch processes. Although an in-depth discussion is beyond the scope of this article, I highly recommend reading the following books that convey the concepts and application through a well written and uniquely entertaining style:
In his book “The Goal“, Dr. Eliyahu A. Goldratt presents a unique story of a troubled plant and the steps they took to turn the operation around.
Another book titled “Velocity“, from the AGI-Goldratt Institute and Jeff Cox also demonstrates how the Theory of Constraints and Lean Six Sigma can work together to bring operations to all new level of performance, efficiency, and effectiveness.
I am fond of the “fable” based story line presented by these books as it is allows you to create an image of the operation in your own mind while maintaining an objective view. The analogies and references used in these books also serve as excellent instruction aids that can be used when teaching your own teams how the Theory of Constraints work. We can quickly realize that the companies presented in either of the above books are not much different from our own. As such, we are quickly pulled into the story to see what happens and how the journey unfolds as the story unfolds.
Please leave your comments regarding this or other topics. We appreciate your feedback. Also, remember to get your free OEE spreadsheets. See our free downloads page or click on the file you want from the “Orange” box file on the sidebar.
We added a new page to our site to address some of the more frequently asked questions (FAQ’s) we receive regarding OEE. We trust you will find this information to be of interest as you move forward on your lean journey. We always appreciate your feedback, so feel free to leave us a comment or send an e-mail directly to LeanExecution@gmail.com or Vergence.Consulting@gmail.com
We have had an incredibly busy summer as more companies are pursuing lean manufacturing practices to improve their performance. OEE has certainly been one of the core topics of discussion. We have found that more companies are placing a significant emphasis on Actual versus Planned performance. It would seem that we are finally starting to realize that we can introduce a system of accountability that leads to improvements rather than reprimands.
Keep Your Data CLEAN
One of the debates we recently encountered was quantity versus time driven performance data when looking at OEE data. The argument was made that employees can relate more readily to quantities than time. We would challenge this as a matter of training and the terminology used by operations personnel when discussing performance. We recommend using and maintaining a time based calculation for all OEE calculations. Employees are more than aware of the value of their time and will make every effort to make sure that they get paid for their time served.
Why are we so sure of this? Most direct labour personnel are paid an hourly rate. Make one error on their pay or forget to pay their overtime and they will be standing in line at your office wondering why they didn’t get paid for the TIME they worked. They will tell you – to the penny – what their pay should have been. If you are paying a piece rate per part, you can be sure that the employees have already established how many parts per hour they need to produce to achieve their target hourly earnings.
As another point of interest and to maintain consistency throughout the company, be reminded that finance departments establish hourly Labour and Overhead rates to the job functions and machines respectively. Quite frankly, the quantity of parts produced versus plan doesn’t really translate into money earned or lost. However, one hour of lost labour and everyone can do the math – to the penny.
When your discussing performance – remember, time is the key. We have worked in some shops where a machine is scheduled to run 25,000 parts per day while another runs a low volume product or sits idle 2 of the 5 days of the the week. When it comes right down to the crunch for operations – how many hours did you earn and how many hours did you actually work.
Even after all this discussion we decided it may be an interesting exercise to demonstrate the differences between a model based on time versus one based (seemingly) only on Quantitative data. We’ll create the spreadsheet and make it available to you when its done!
Remember to take advantage of our free spreadsheet templates. Simply click on the free files in the sidebar or visit our free downloads page.
Many articles written on OEE (ours being the exception), indicate or suggest that the quality factor for OEE is calculated as a simple percentage of good parts from the total of all parts produced. While this calculation may work for a single line part number, it certainly doesn’t hold true when attempting to calculate OEE for multiple parts or machines.
OEE is a measure of how effectively the scheduled equipment time is used to produce a quality product. Over the next few days we will introduce a method that will correctly calculate the quality factor that satisfies the true definition of OEE. The examples we have prepared are developed in detail so you will be able to perform the calculations correctly and with confidence.
Every time a part is produced, machine time is consumed. This time is the same for both good and defective parts. To correctly calculate the quality factor requires us to start thinking of parts in terms of time – not quantity.
If the cycle time to produce a part is 60 seconds, then one defective part results in a loss of 60 seconds. If 10 out of 100 parts produced are defective then 600 seconds are lost of the total 6000 seconds required to produce all parts. Stated in terms of the quality factor, 5400 seconds were “earned” to make quality parts of the total 6000 seconds required to produce all parts (5400/6000 = 90%). Earned time is also referred to as Value Added Time.
As we stated earlier, for a single line item or product, the simple yield formula would give us the same result from a percentage perspective (90 good / 100 total = 90%). But what is the affect when the cycle times of a group or family of parts are varied? The yield formula simply doesn’t work.
The quality factor for OEE is only concerned with the time earned through the production of quality parts. Watch for our post over the next few days and we’ll clear up the seemingly overlooked “how to” of calculating the quality factor.
Until Next Time – STAY lean!
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The 5 WHY technique, developed by Sakichi Toyoda, is one of the core problem solving tools used by Toyota Motor Corporation and has been adopted and embraced by numerous companies all over the globe. This technique is unconstrained, providing the team with a high degree of freedom in their thinking process.
As we suggested in our “How to Improve OEE” post, the 5 WHY system is simple in principle. This simplicity may also be the downfall of this technique unless you take the time to understand and apply the process correctly. Other problem solving tools, such as Cause and Effect diagrams, allow for the development of multiple solution threads, in turn creating the potential for multiple solutions.
Some root-cause analysis experts have correctly identified some of the short comings presented by the 5-WHY technique including:
The approach is not repeatable – One problem, different teams, different solutions.
The scope of the investigation is constrained by the experience of the team.
The process is self directing based on the evolution of the “WHY + Answer” series.
The TRUE Root Cause may never be identified – Symptoms may be confused for Root Causes.
The inference that a root cause can be determined by a 5 tier “Why + Answer” series.
The Problem Statement defines the Point of Entry. It is imperative to define where the real problem begins.
We would argue that any problem solving or root-cause analysis tool is subject to some short falls in one form or another. Perhaps even in problem solving there is no definitive solution. Different problems require different tools and perhaps even different approaches. In the automotive industry, each customer has a different variation on the problem solving approach to be used and prescribe various tools to be used in the problem solving process.
For this reason, most companies do not rely on one single technique to approach their problem solving challenges. We would also argue that most companies are typically well versed in their processes (equipment and machines), products, and applications. As a result, having the right people on the team will minimize the experience concerns. There is no reason not to include outside expertise in or outside of your current industry.
One concern that can be dismissed from the above list of short comings is the inference that the solution can be found by a 5 tier “Why + Answer” series. There is no rule as to how many times the “Why + Answer” series should be executed. Although five times is typical and recommended, some problems may require even deeper levels. We recommend that you keep going until you have identified a root cause for the problem that when acted upon will prevent its recurrence.
The technique that we propose in this post will at least provide a method to validate the logic used to arrive at the root cause. Most 5-WHY posts, web sites, articles, or extracts on the topic seem to focus on a top-down or deductive “Why + Answer” logic sequence. The challenge then is to have some way to check the “answer” to see if it actually fits.
A simple way to validate the top down logic is to read the analysis in reverse order, from the bottom up, substituting the question WHY with the words “Because” or “Therefore.” To demonstrate the technique we’ll use an example based on a problem sequence presented in Wikipedia:
I am late for work (the problem):
Why? – My car will not start. (The Real Problem)
Why? – The battery is dead.
Why? – The alternator is not working.
Why? – The alternator belt is broken.
Why? – The alternator belt was well beyond its useful service life and was never replaced.
Why? – The car was not maintained according to the recommended service schedule. (Root Cause)
You probably noticed that we used a 6 “Why + Answer” series instead of 5. We did this deliberately to demonstrate that 5 WHY is a guideline and not a rule. Keep asking WHY until you find a definitive root cause to the problem. We could keep going to determine why the car was not maintained and so on to eventually uncover some childhood fear of commitment but that is beyond the scope of our example.
The CROSS CHECK – Root Cause Analysis Validation
Root Cause: The car was not maintained according to the recommended service schedule.
Therefore, the alternator belt was well beyond its useful service life and was never replaced.
Therefore, the alternator belt is broken.
Therefore, the alternator is not working.
Therefore, the battery is dead.
Therefore, the car will not start. (The Real Problem)
Therefore, I will be late for work.
Does the reverse logic make sense to you? It seems to fit. Does it sound like the owner of the car needed to be a mechanic or at least know one? When it comes to car trouble, we don’t seem too concerned about going to the outside experts (the mechanic) to get it fixed. Why do some companies fail to recognize that experts also exist outside of their business as well? In some cases, proprietary or intellectual knowledge would preclude calling in outside resources. Barring that, some outside expertise can certainly bring a different perspective to the problem at hand.
Caution! Stick to the Problem – Don’t Assign Blame
The original Wikipedia example identified the root cause as, “I have not been maintaining my car according to the recommended service schedule.” It would be too easy for someone to say, “Aha, it’s entirely your fault. If you only took better care of your things you wouldn’t have been in this predicament.” For this reason, we presented the case based on the facts. It’s not WHO it’s WHAT. This approach also tempers emotions and keeps the team focused on the problem and the solution.
Where do we start? Problem Entry Points
You have likely noted that the problem statement is the key to establishing a starting point for the 5 WHY process. A problem may have different entry points depending on what stage you become involved:
Late For Work
The car will not start
The battery is dead
The alternator belt is broken
Product Recalls and Warranty Returns are typical examples of where you may find multi-level 5 WHYs. Ultimately the suppliers of most products, like the Belt Supplier in our example, will also complete a 5 WHY. This is typically the case for most Tier I automotive suppliers.
WHY MAPS / TREES.
The one drawback or downfall of the 5 Why process as presented above and also used by most companies is the suggestion that a single “WHY + Answer” series will evolve into a neat single root cause. Our experience suggests that this is far from reality. We typically present the single series as part of the final solution, however, we can assure you that multiple root cause / solution threads were developed before arriving at the final result.
We use the WHY MAP (WHY TREE) as a tool that allows us to pursue multiple thought threads simultaneously. Pursuing multiple threads also stimulates new ideas and potential causes. In some cases the root cause analysis threads lead to the same or common root cause. Then it is a matter of selecting the most likely root cause.
Problem solving TREES come under many different names including Why-Tree, Cause Tree, Root Cause Tree, Causal Factor Tree, Why Staircase Tree, and Cause Map to name a few of them. As you can see from the names, they all serve to create, stimulate, and propagate ideas.
Regardless of the tool you use, finding the true root cause and ultimately the solution to resolve it is the key to your problem solving success.
We trust this post will provide you with some insight to using the 5-WHY approach for problem solving and will serve as a useful tool to improve your OEE.
As we are all aware, inspecting or measuring parts does not change the quality of the product. Likewise, measuring and reporting OEE alone does not solve problems or improve performance. While it is fair to say that increased focus and measurement of any process usually results in some degree of improvement, these are typically attributed to changes in human behavior due to observation and not necessarily real process improvements.
Using OEE to identify opportunities in your operation is the equivalent of turning the light on in a dark room. Although the room hasn’t changed, we certainly have a better understanding of what it looks like. As such, OEE is a vantage point metric that can be used to illuminate our understanding of the process and identify opportunities to drive improvements.
It is essential for your team to develop and utilize effective problem solving skills to successfully identify systemic and process root causes for failure and to develop and execute permanent corrective actions to resolve them. Our experience suggests that the lack of solid and proven problem solving skills coupled with poor execution is the leading cause of failure for new initiatives such as OEE.
We introduced an approach to improving OEE in our “Improve OEE: A Hands On Approach“, post (03-Jan-09). Although we identified some of the tools that could be used to solve of the problems, we didn’t spend much time going into the details. Over the next few posts, we’ll discuss some of the ideas in a little more detail.
The real problem for most companies is identifying what the real underlying root cause of the current “failure” mode is. Without a good understanding of the root cause, the solutions developed and implemented will not be effective, only serving to temporarily cure the immediate superficial symptoms.
Using effective problem solving skills to analyze the OEE data and to develop and execute permanent corrective actions will assure sustainable and ever improving performance.
Integrating OEE into your organization will take some time.However, the benefits are definitely worth the effort.Preparing an effective integration strategy will pay off dividends in the execution phase of your program and can serve as the core theme to launching many of your other lean manufacturing initiatives.
The challenge for many organizations is turning lean metrics, more specifically OEE, into part of the everyday language of the company.The world of sports provides an excellent analogy to demonstrate how metrics are a necessary and integral part of the games we watch.Baseball, football, basketball, hockey, cricket, and others all offer statistics or metrics that don’t necessarily determine the outcome of the game but certainly provide insight into the performance of the players and potential of the team.
While it may be a bit much to ask our employees to embrace lean performance metrics like OEE with the same energy and enthusiasm as they may have for sports, we can certainly encourage them by providing them with the education and training they need to better understand these metrics and why it is important to their future and the future of the company.
Defining the Need
It is imperative that you and your employees understand the need for an OEE system before even commencing with any physical implementation strategy.It is even more critical to define and understand what is being measured and how the measurements will be used to improve your operation or processes.
To be effective, the team must have confidence and trust in the leadership coupled with a firm understanding of the practical intentions of the OEE system.If employees perceive punitive intentions, you will most certainly lose.How OEE data is used in your operation or processes will determine how successfully it can be integrated across the entire organization.
Understanding the rules of engagement is the key to making the metrics meaningful and effective.Educating and training your team is at the very foundation of the lean journey.Without it, the efforts are sure to fail.Resistance to change is often fueled by lack of knowledge and understanding.
The VISE – Get the Commitment – Create the Charter
Vision:We will manage in Real Time using metrics to measure our performance and effective use of capital and human resources;
Intelligence:We will become students and teacher of our business, training and educating ourselves and each other;
Strategy:We will develop effective, detailed plans to support our vision, goals, and objectives to be a viable, sustainable, and growing business enterprise;
Execute:We will execute specific, detailed action plans in a timely and efficient manner, addressing all impediments to assure our success;
WHY:to drive continual improvement, support our lean initiatives, and eliminate waste in our organization.
Using acronyms can be an effective way to communicate your expectations.The VISE provides a strategic super-view that is easily embraced by any organization serious about their present and future business prospects.