Reliability &

Operational Excellence

A Reliable Plant is a
Safe,
Cost Effective,
Environmentally Friendly
Operation
November 2014
The RM Group, Inc.
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2012
 Contents
 Reliability
and Safety
 The Reliability Program
 Managing Cultural Change, Leadership,
and Aligning the Organization
 Implementation

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 Reliability and Safety

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 Safety is a Top Priority
 Most all organizations say safety is a
top priority
 They have policies, standards,
processes, systems, etc. to support this
 They are committed to enforcing these
policies

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 Safety Policy Statement
 All injuries are preventable

 No task is so urgent that it cannot be done safely

 Management must provide a safe work place

 We are each responsible for preventing injuries

 Everyone is empowered to stop unsafe behavior

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 Reliability and Safety Relationship
 Ifexecutives were truly committed to
safety…
 They would be committed to reliability,
and would have similar policies,
standards, processes, and systems
 They typically are not, and do not
 Consider a typical sampling of the data

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 Injury Rate v. AU/OEE
over Time - Company A

OEE/AU- % of Base
R = 0.80 120
135 R2 = 0.64
115
115
110
95
105
75
100
55
35 95
Injury Rate
15 90 OEE/AU
13
17
21
25
28
33
37
41
45
48
53
1
5
9

Month
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 Correlation of Corrective & Reactive Work
Orders with Injury Rate – Plant No. 1
400
Total Injuries per Year

350 R = 0.827
R2 = 0.684
300

250

200

150

100
6000 8000 10000 12000 14000

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 Correlation of PM & PdM Work Orders
with Injury Rate – Plant No. 1
400
Total Injuries per Year

350 R = 0.955
R2 = 0.911
300

250

200

150

100
4000 6000 8000 10000 12000 14000

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 The More Disciplined Your Maintenance,
the Fewer Injuries you have
(normalized to a base number)

5
R = 0.95
2
4 R = 0.90

2
Injury Rate

0
60 70 80 90 100

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 And, a Reliable Plant is Environmentally Sound
Asset Utilization vs. Environmental Incidents - Plant B
Environmental Incidents/yr

10
9
8
7
6
5
4
3
2
1
0
90 100 110 120 130 140

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 And, is More Productive -
AU/OEE vs. Reactive Maintenance

100
Asset Utilization (AU) or OEE

90 Slope= -0.24
80

70

60

50

40
10 20 30 40 50 60 70 80 90 100

Reactive Maintenance %
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 And, is More Cost Effective -
Reliability Index v. Production Unit Costs
(As reliability increases, costs decrease)
Production Costs $/Unit

120 R = 0.632
R2 = 0.40
110
100
90
80
70
60
50
30 40 50 60 70 80 90

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 Further:
 DuPont reported that the most likely person to be
injured is*:
 a maintenance technician,
 with less than two years experience,
 doing reactive work
 Exxon-Mobil reported that accidents are five (5) times
more likely in maintenance when doing breakdown
work than when doing planned and scheduled work**
 In ~66% of companies, ~60% of injuries occur while
doing reactive maintenance***

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 From the data we should conclude:

Safety is everyone’s responsibility &

Reliability is everyone’s responsibility

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 Establish a policy linking
Reliability and Safety
 If safe behavior is a requirement, for which you
have specific standards, then…
 Reliability and manufacturing excellence are
requirements, and you have specific standards
for operations and maintenance!
 If you believe in Zero Incidents/Injuries, you must
believe in Zero Failures/Unplanned Downtime –
Failures induce greater risk of injury
 Given this, operations & maintenance training
should be on a par with safety training
 Getting both reliability and safety requires:
tenacious application of best practice
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 Establish a Policy Linking
Reliability and Safety
 All injuries are preventable…
All injuries, and failures, are preventable
 No task is so urgent that it cannot be done safely…
No task is so urgent that it cannot be done safely, and reliably
 Management must provide a safe workplace…
Management must provide a safe, & reliable, workplace
 We are each responsible for preventing injuries…
We are each responsible for preventing injuries, and failures
 Everyone is empowered to stop unsafe behavior…
Everyone is empowered to stop unsafe, & unreliable, behavior

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 If you truly believe in
Safety, then

Reliability is a MUST
to minimize the risk of injuries,
to minimize costs,
and environmental incidents
(Should be given comparable executive attention as any
high-powered consulting recommendations)

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 The Reliability Program

A Commitment to Safety Requires

a Co-Commitment to Reliability
and Related Policies and Practices
(examples are provided below)

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 The Reliability Program Doing better Mtce will not
contribute much to Reliability

(note where most defects occur)

Install/
Design Buy Store Operate Maintain
Startup
(Life Cycle Cost) (With Discipline) (With Care)
(Cost of Ownership) (“Like a Store”) (With Precision)
Defects Defects Defects Defects Defects Defects

Root Causes
Rate Losses & Downtime
Unneeded Work - $$
Source: In Cooperation with
Injuries (& Env. Events)
Andrew Fraser,
Reliable Manufacturing Assoc. Asset Utilization Minimum unit cost
& of Production
Necessary Work
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 DESIGN -
For Reliability, Operability,
Availability, and Maintainability

(not just budget and schedule)

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 Life Cycle Cost and Cash Flow Considerations

Life Cycle
Cost Policy
Cash ROI
Flow
($)
Lowest installed
Cost Policy

Time

Minimum Life Cycle Costs =>

Maximum Long Term Profits

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 BUY/PURCHASE-
For Reliability using
Strategic Alliances,
Good Specifications & Standards, and
Focus on Total Cost of Ownership

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 Total Cost of Ownership
 Total Cost of Ownership- costs include:
 Price
 Drawings, bill of material, manuals, etc.
 Selection effort, including company staff, travel, etc.
 Procurement transaction, freight, duties
 Delivery, assembly, installation, startup
 Performance capability, efficiency, operability
 Maintenance/PM requirements, maintainability
 Energy efficiency
 Parts stocking, inventory, warranty
 Service levels (or lack thereof)
 Other costs…
 Only ~25% of total cost of ownership is price!
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 STORES –
Assure Reliability and
Availability of Spares

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 Stores are an asset, and should be treated so.
Stores should be run “like a store, a business”:
 Clean, well-organized, efficient
 Minimum stockouts, e.g., 1%
 And, minimum inventory - inventory turns of 2
 Stock levels related to use histories
 Receipt inspection- quantity, quality, part no.
 Quantities as indicated
 Everything in its place
Customer driven-- Run
by a manager
with an understanding
of needs & applications

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 INSTALL and STARTUP–
with precision for long life

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 Startup and Commissioning-
Critical to Reliability
 You’re 7-17 times more likely to
introduce defects during startup
than normal operation
 92% of rotating machinery has
defects at startup that result in
premature failure

Source: 1) Reliability Magazine, February 2001, and 2) Machinery Reliability

Conference, Phoenix, April, 2001

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 OPERATE RELIABLY –
with care and precision,
and within process limits

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 Reliability Based Operations

Reliability cannot be driven by the

maintenance organization. It must be
driven by the operating units, …and
led from the top. Charles Bailey, VP of Operations
Eastman Chemicals (Retired)

To expect maintenance to “own” reliability is like

expecting the mechanic at the garage to “own”
the reliability of our cars. Ron Moore

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 Of all production losses from ideal (AU/OEE),
~2/3rds are NOT equipment related;
~1/3rd are, but most of these are Ops driven;
Only ~ 10% of losses are Mtce driven
JIPM: 70% of eqpt. failures are preventable by operators

Changeovers, rate/quality losses,

raw material, market demand, Equipment Related
production planning, etc. Losses-Maintenance
Equipment Related
Losses- Operation
Non Equipment
Related Losses

Source: Author experience;

Similar findings reported by BASF-UK,
Eastman Chemicals, Whirlpool, and Borg-Warner-US
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 The Five Manufacturing Domains
World Class Manufacturing
Performance Levels
Strategic
Domain
Proactive Organizational
Domain Learning-
Eliminate Industry
Planned
Defects; Leadership
Domain
Lowest Cost
Reactive Fix it beforeCompetitive
Domain it breaks; Advantage
Least Stable
Fix it after No Surprises,
Regressive it breaks; Competitive Parity
Domain Most
Expensive
Don’t fix it
Overtime
Meet Budget, Source: W. Ledet
Heroes
Staged decay The Manufacturing Game;
Kingwood, TX
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 Reliability Based Operations (cont.)
To address these issues, we must have:
 Production and maintenance partnership-
communication, teamwork, common measures
 Consistency of operation across shifts
 Process Conformance and Capability - Stability
 Good shift handover practices
 Operator care/PM, training and skills

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 Correlation of Operator Care/PM and
Maintenance Costs (Avg data at each level for 200 plants surveyed)
16
R = 0.85
Original Equipment Cost

14
R2 = 0.73
12
Mtce Costs as a % of

10
8
6
4
2
0
0 1 2 3 4 5

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 Operator Care, Ownership (cont.)

Provide Basic Care- Competently, Safely

Take care of the place where you make your

living, so it will take care of you.

Mom

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 MAINTAIN –
For Reliability

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 Excess Defects Lead to Reactive Behaviors-
Typical Maintenance Practices
60
50
40
30 Time-based
20 Condition-based
Root Cause-based
10
0
Reactive Preventive Predictive Proactive

Source: Author’s surveys and The Reliability-based Maintenance Strategy: A Vision for Improving Industrial
Productivity, R. Moore, F. Pardue, A. Pride, J. Wilson, September 1993, CSI Industry Report.

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 Eliminate and/or Manage Defects-
Benchmark Maintenance Practices
60
Planned and/or Scheduled
50 Condition-based

40
30
Time-based Root Cause-based
20
10
0
Reactive Preventive Predictive Proactive

Source: Author’s surveys and The Reliability-based Maintenance Strategy: A Vision for Improving Industrial
Productivity, R. Moore, F. Pardue, A. Pride, J. Wilson, September 1993, CSI Industry Report.

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 Understand Degradation Process
(Avoid or Minimize the Consequence of Failure)

Onset of Failure Detect Potential Failure- Functional Failure-

System Meeting All System Not Meeting
Requirements All Requirements
(Resistance to Failure)

Pending Failure
Condition

Not Detected Broken- $$$

(PM- too much, too soon?) Maintenance/
Action Window
Performance
“PF Interval" Losses
(too little, too late)

Proactive* Predictive* Protective*

Stop/Delay Onset of Failure* Time

Sources: Ivara Corp, Hamilton, Ontario

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 Maintenance Costs v. CM/PdM%
(Typical Correlation)
Database - minimum of 25 plants; minimum of 5 companies

20
Note: Work Management and Planning & Scheduling
MUST be excellent to act on findings of PdM; and R2 = 0.96
Mtce Costs, %ARV

a proactive mindset is necessary for defect elimination

15

10

0
0 10 20 30 40 50 60 70 80 90 100

Source: John Schultz, Allied Reliability, Inc.;

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 Maintenance Costs v. % PM
20
R = 0.984
Mtce Costs, %ARV

R2 = 0.969
15

10

0
0 10 20 30 40 50 60 70 80 90 100

Source: John Schultz, Allied Reliability, Inc.;

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 In light of this, consider Reliability and
Asset Management - ISO 55000
 Asset – Anything that adds value. Asset
management plans must include:
 Business requirements over the coming 5-10 years
 Production’s role
 Design/capital projects’ role
 Purchasing/Store’s role
 Maintenance’s role
 All working collectively to manage the assets,
minimize losses, & add value to the business
 All must be aligned to business strategy and goals

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 Leadership,
Organizational Alignment,
and
Managing Cultural Change

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 Leadership
Leadership- the ability to inspire ordinary
people to consistently perform at an
extraordinary level

Leadership begs the question “How do I

get people to genuinely look forward to
coming to work every day?”

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 Level 5 Leadership
 Leadership - Floats to the person best
qualified to eliminate the source of
defects – nature of the work determines
who is in the lead position (Rank is not = Expertise)
 Leaders are willing to learn from others
 Types of Leadership:
 Executive leaders– provide vision and resources
 Operational leaders– provide time for worker
improvements
 Network leaders– provide the ideas for improvement
– If you want to understand the problems with the
work, ask the workers!
Source: Level 5 Leadership at Work,
The RM Group, Inc. Winston Ledet, et. al
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 Aligning the Organization

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 Most Organizations are not Aligned
 According to Harris Interactive Research (2006), only:
 37% of employees had a clear understanding of what the
organization was trying to achieve
 20% were enthusiastic about organizational goals
 20% saw a clear connection between their tasks and
organizational goals
 15% felt the organization enabled them to achieve their goals
 15% felt they were in a high trust environment
 10% felt their organization held people accountable
 13% felt there was a high-trust, highly cooperative working
relationships with other groups or departments
 Consider the consequences of this if you were a coach
and your team’s athletes felt this way

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 Align the Organization
 The process of organizing creates naturally
competing groups- shifts, areas, plants, etc.
 With increasing task inter-dependence,
collaboration and teamwork are essential for
organizational success. (e.g., production and
maintenance, between shifts, between marketing
and manufacturing)
 Alignment requires the creation of superordinate
goals that take priority over “group” interests:
 Remind people often to focus on the higher level goals
 Think at a systems level – don’t optimize at the
suboptimal level in your little silo – ask ‘what effect will
this have on the system’?
 Develop shared measures between “competing”
groups and partnership agreements Source: Edgar Schein,
Organizational Psychology
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 Managing Cultural Change-
A Process Model

“Culture – what people do when the boss isn’t around.”

Ian Fyfe, BP (now w/Ineos)

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 The best way to change and sustain an
organizational culture is by first changing
management behavior

You cannot think your way into a new way

of acting. You must act your way into a
new way of thinking.

John Shook, Author

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 Managing Change
Articulate a compelling reason for change- “positive tension”

Communicate your strategy, goals, and roles, repeatedly

Apply Leadership and Management Principles

Facilitate employee implementation of the change process

Measure the results- reinforce good behavior; challenge bad behavior

Stabilize the change/organization in the new order

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Repeat these steps, over and over
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 Facilitate Employee Implementation

People don’t want to change?

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 Facilitate Employee Implementation
 People do want to change,
 IF given compelling reasons for change
 IF there’s something in it for them:
 More secure future
 Better pay or rewards
 Less stress and hassle
 Less personal risk or fewer injuries
 IF they participate in the design of the changes:
 Set up structured improvement time, e.g., small action teams
 Train and apply the appropriate tools for their needs
 Remove the obstacles from their success
 Routinely solicit, and act on, their ideas for improvement
 Show gratitude and appreciation for their contribution
 All three IF’s must be addressed, aligning
employee interests with corporate interests
 “People own what they create” – help them create!
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 Stabilize the Changes
 Update procedures; train people; audit for
compliance; apply succession planning

 Assure Management Stability - It’s very

difficult to have process stability with
frequent management changes

 Ifthe change takes longer than executive

or organizational “attention span”, then it
is doomed to failure.
 Constancy of purpose is essential

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 Strategy for Implementation

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 Strategy for Implementation
 Led from the top- executive sponsorship
is essential (Permission is not sponsorship, or leadership!
Active engagement is essential)
 Production & Maintenance Partnership-
Clear goals and expectations must be set,
and reasonably achievable
 Shared KPI’s for reliability & business
results must be in the annual management
appraisal and bonus system
 Shop floor engagement process,
including cross functional teams, structured
improvement time, and a support structure
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 Implementing Reliability –
Effect on Maintenance Costs (Only)
Implementation Break-even
Bow-wave (10-30%) Point
(1-2 years)
Direct Cost of Maintenance

Invest

Planned PM Profit
(20-70%) Condition Based
(20-50%)
20-50%
Operator Maintenance Proactive/
Reactive
Maintenance Planned
(30-80%) 50-80%
Strive for Zero Downtime

Time 2-5 years

Source: Taking the Forties Field to 2010, R. L. Thompson, et al.,
BP Exploration, Presented at SPE international Offshore
European Conference, Aberdeen Scotland, Sept. 1993

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 Manage the Bow-wave using “Mini”
Bow-waves: Small Improvement Teams
Break-even
Point
Mini- (1-3 months)
Bow-waves
Direct Cost of Maintenance

Profit

Time

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 Correlation of AU/OEE with Key Practices
No single practice is dominant

Management

Overhaul
Perf. Msmt.

Stores
Operations
Teamwork

PdM

PAM
0.5

PM
0.4

Training
Correlation Coefficient

0.3

0.2

0.1

-0.1
We must be tenacious about
-0.2
doing many things really well
-0.3
Reactive

-0.4

-0.5

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 Engage the entire workforce
Business Impact, K$

A1 – Big Opportunities: A2 > A1

500
Solve using teams applying
RCM, Six Sigma, RCA, KT, etc.
400

300 A2- Myriad of Little Opportunities:

A1 A2
Leadership engaging all the workforce,
200 individually or in very small teams,
applying simple fixes, common sense, 5 Whys
100

0
1 6 11 16 21 26 31 36 41 46
Opportunities (> 100)

Sources: 1) David Burns, Reliability Services Ltd. Melbourne, Australia; 2) Similar Results
Reported by Sergio Barreiro of Braskem’s 19 Brazilian Plants
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 Engage the entire workforce (cont.)
 Eliminating small day to day problems
has a much bigger impact on results than
focusing on the major failures (Study by Los
Alamos National Labs, reported in Spiral Up by Jane Flinder)
 Engaged employees are 3X more
productive than average (ISR Research study of 41
companies & 360,000 employees, reported in Spiral Up by Flinder)

 Nothing changes until the shop floor

does things differently!

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 With all this in mind…
 Some 90% of reliability professionals are focused on
making maintenance practices better
 So, many launch into:
 RCM (but often without Operations’ support)
 RCA (when a good dose of 5 Whys & standard work would do)
 Six Sigma (before production processes are stable)
 Better planning and scheduling (for “un-planable” work)
 Developing asset management strategies (that are really just
maintenance strategies re-named to sound better)
 Often without eliminating the sources of the defects that
result in the maintenance requirements, e.g., poor design,
poor operation, poor purchasing and parts, etc.
 Result: doing more efficiently lots of unnecessary work
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 Keeping in mind the reliability process,
are you…

Maintenance and Reliability

Professionals?
Or

Reliability
Maintenance and

Professionals?
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 Appendix - Contact Details
Ron Moore
Managing Partner
The RM Group, Inc.
12024 Broadwood Drive
Knoxville, TN 37934
Tel/Fax: 865-675-7647
Email: RonsRMGp@aol.com

Ron Moore is the author of Making Common Sense Common Practice-

Models for Operational Excellence, 4th edition; of What Tool? When? A
Management Guide for Selecting the Right Improvement Tools, 2nd edition,
both from MRO-Zone.com; and of Business Fables & Foibles, and Our
Transplant Journey: A Caregiver’s Story, both from Amazon.com, as
well as over 50 journal articles. Ron’s latest book, Where Do We
Start Our Improvement Program? is scheduled for release in
September, 2014.
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