What's Wrong with Perfect?

By R. Keith Mobley, Principal SME, Life Cycle Engineering

Granted, I am old and perhaps set in my ways but there is one thing that I just cannot understand. Why is everyone averse to striving for perfection? It seems that almost every time we broach the subject of improvement, the client always has a thousand and one reasons why their company cannot achieve and therefore should not pursue perfection in the form of asset utilization, cost of goods sold and elimination of waste.

If one looks at asset utilization, for example, many companies give up at least half of their installed capacity before actual production losses enter the picture. When a company elects to operate on a five-day, 24 hours/day production schedule, they automatically give up 104 days or 28.5% of their capacity. Add holidays, outage downtime and other arbitrary reasons for non-productive time and the net result is that only 40% to 50% of possible capacity is available—assuming no actual production (OEE) losses.

Over the past three years I have had the opportunity to evaluate numerous, multi-national, multiple plant organizations and the best asset utilization I found was 36%. None of them recognized their low utilization. According to their internal numbers, these plants were operating in the 75% to 90% asset efficiency or effectiveness range with no consideration for true utilization.

When we discussed the absolute need to improve their use of installed capacity none believed that they could or should try to achieve full utilization. Instead, each wanted to set their goals well below 100% -- in some cases as low as 60% to 70%. When pressured for a reason, the most common answer was, “We just cannot achieve higher levels of performance in our culture.” All had a myriad of reasons, such as cleaning requirements, seasonal sales, asset maintenance requirements, etc., but none had any data or statistics to support them.

Asset utilization losses compound when one considers those associated with operations. Overall Equipment Effectiveness (OEE) is the most common measure of these losses and includes actual run time, production rate and yield losses as a measure of effectiveness. Most of the clients we have evaluated over the past decade fail to accurately measure these losses and instead assume that they are a result of asset reliability and maintenance deficiencies.

In truth, the single largest source of OEE losses is reduced speed operation—caused solely by operators who elect to run at a lower speed. We have observed operations where as much as 40% of shift output is lost to run-below-rate decisions. One would think that enforcing consistent operation at the rated speed of an asset would be a no-brainer, right? Wrong. In most cases the management response is that the assets will not run at design. This type of response really bothers me as a reliability engineer and machinery designer. Machines are designed to operate at their design speed—anything less actually accelerates the wear and tear on the machine and will increase the interval and level of sustaining maintenance.

There are several things that I would like you to think about. First, take a long, hard look at your use of installed capacity. Do you really know what it is or are you relying on numbers that are skewed and give everyone a false sense of well-being? If your utilization is less than 8,760 hours per year, can you isolate and identify the reason for each day lost? Is each reason real and justifiable? There is one legitimate reason for not running 24/7/365: sustaining maintenance. All electro-mechanical equipment requires some level of maintenance to retain reliable performance and useful operating life. Depending on asset type, between 400 and 1000 hours per year (5% - 11%) should be allocated to maintenance. All other deductions from continuous operation are controllable losses.

Second, are you fully and effectively using those hours that you currently plan to run? Have you really considered the cost associated with your production schedule and mode of operation? How much time are you losing to changeovers and are they really necessary? Production planning and the coordination within the internal supply chain combine to severely reduce the effectiveness and increase the cost of most operations.

And finally, write down all of the losses, including everything. Once you have the list, calculate the cost of each of them. Remember that there is a real cost associated with everything and this is certainly true of production losses. For example, what is the cost associated with a fully manned production asset that produces one half of designed capacity? It should be obvious that your cost is double—it takes twice as long to make the same amount of product. What about running one shift a day? What is the cost of the idle capacity for the other two shifts?

Now, list the reason that you cannot eliminate each of the losses on your list. In light of the costs, are these justifiable? Can you justify these losses? Should you not seek perfection—full, effective utilization of your installed capacity? Can you really justify continued operation with some or all of these losses?

As stated at the beginning, I simply do not understand why anyone would choose to ignore obvious, controllable losses and not make a concerted effort to eliminate all—not just some of them. One cannot violate the laws of physics—there are only 24 hours in a day, seven days in a week and 365 days in a year. One should strive to effectively use all of this time—anything less is a controllable loss. If one is satisfied with less than perfection, then that’s all they will ever achieve. If you truly want to be world-class, you must seek perfection and never, ever settle for anything less.

MOBLEY'S 13th LAW:
"Seek perfection; never settle for anything less."

Thank you for taking the time to read this month’s letter. Hopefully, it has raised a few thoughts that will help you take the next step in your journey to excellence. I welcome your feedback and am happy to respond to specific questions. You can reach me at kmobley@LCE.com.

Best regards,
R. Keith Mobley
Principal, Life Cycle Engineering, Inc.

Keith Mobley has earned an international reputation as one of the premier consultants in the fields of plant performance optimization, reliability engineering, predictive maintenance, and effective management. He has more than 35 years of direct experience in corporate management, process design and troubleshooting. For the past 16 years, he has helped hundreds of clients worldwide achieve and sustain world-class performance. Keith can be reached at kmobley@LCE.com.

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