The four ‘strategic Ps’

Published:  27 September, 2007

Like the core skills required to become a proficient golfer, plant managers have four "Strategic Ps” available to help them achieve better return on assets: people, processes, plant equipment and predictive maintenance. Those companies, which learn to maximise the value of these core areas, are the ones that consistently outperform the competition and enjoy greater long-term success.

People: The often-overlooked variable

Technology, while critical to manufacturing operations, is not the sole variable in an organisation's success. You can have the most advanced technology available, but if people don"t know how to properly use or maintain it, the technology could become a cost and a liability rather than a net gain. In fact, now that technology is everywhere, it is people and their performance that make the crucial difference.

Often, plants become overwhelmed by technology because employees lack sufficient knowledge or operational skills for the jobs they are assigned. As a result, plants never have the time to plan ahead and ultimately become more and more reactive in their maintenance approach. This invariably leads to production delays and additional costs. In today’s high-tech world of industrial automation it has become increasingly important for companies to match closely employee skill levels with the specific needs of the equipment and processes for which they are responsible.

To achieve and sustain success in the area of human performance, companies must adopt a strategic, long-term approach. The first step is to conduct a broad-based performance assessment that analyses and identifies how well employees are performing their responsibilities and job assignments to identify their strengths and weaknesses. At the engineering and maintenance level, this may mean looking at competencies, readiness levels, preparedness of employees to take on new responsibilities, recruiting and/or hiring methods and policies for retaining staff. This information will also help recruit and select the best people for each skill profile.

Another key goal of the performance assessment is to determine the appropriate approaches to training that lead to the highest levels of retention or the most improvement in worker skills or knowledge.

Next, companies need to make sure their investments in people are aligned with the strategy of their organisation. If a company is continually willing to cut corners in the area of job training, this deficiency will weaken the value of this important pillar of your productivity strategy

Finally, to help ensure long-term success, it’s important to develop a set of metrics for measuring performance improvements. For best results, these metrics need to have controllability. The strongest performance measures are those that are “owned” by those who can influence performance and effectively used by these people to drive performance improvements.

The short-term benefit of investing in people is identification of opportunities throughout the organisation. The long-term benefit is putting processes in place that improve productivity.

Good processes = good results

For many, the term “processes” is instantly equated with production lines and manufacturing processes. That is a limited view of the term. Experience indicates that the highest- performing organisations are rigorous about all of their processes, especially as they relate to their development, documentation and ongoing commitment to improvement. Therefore, an important component of effective productivity strategy is understanding the processes governing engineering and maintenance functions. This includes the ability to point out the bottlenecks, eliminate activities that provide little return, and develop alternative ways to achieve better results.

If factors such as workflow systems, written procedures, critical production directions and maintenance guidelines are properly analysed, accurate and efficient solutions can be developed. When a problem arises is not the time to discuss a possible response; rather, it is time for action. In many cases, the reason for downtime is simply a lack of understanding of the current process and the factors limiting success, and not putting in the correct metrics to quantify impact.

As companies begin to evaluate, assess and redefine various processes, they’ll often uncover things that consume excessive resources. Understanding these processes, documenting alternatives and reducing the gap between occurrence and reaction time will improve results. This exercise can also help identify what activities it maybe appropriate for an outside service provider to perform.

The good news is that every time you implement a change, the smarter you get in terms of how you re-evaluate what you are doing and the more you become aware of other opportunities to reengineer, re-create and restructure. But you have to prioritise which ones are going to give you the biggest bang for the buck.

For example, an enormous cost drain for many companies is the build up of stockpiles of unnecessary spare parts - in the storeroom or “stashed” somewhere on the plant floor. In many plants, parts are automatically sent for repair and then returned to inventory, regardless of the number of spare parts already available. The net result is another extra spare part in inventory. The purchasing, insuring and storing of these spare parts can cost hundreds of thousands of euros each year. As this is repeated over time, excess parts continue to multiply.

In reviewing processes, keep in mind that the solution may not always involve a technology investment. In fact, many of today’s successful companies are not necessarily those with the newest equipment or the most resources, but rather the best manufacturing processes. Therefore, before investing in a solution, it’s important that managers clearly understand the problem they’re trying to solve. That’s because no matter how big or small the maintenance function, or what types of tools are employed, there is no substitute for basic process implementation. This is true of plant floor equipment as well as storeroom management and component repair services.

Know your plant equipment

In assessing the maintenance needs of plant equipment, organisations need to establish predetermined expectations of performance and uptime requirements. For example, if a line goes down, what is the maximum allowable downtime limit? One hour? Five hours? Two days? When equipment breaks down is not the time to figure out whether you have the needed parts on hand or whether maintenance personnel are available to minimise the delay.

In many cases, the value brought by an MRO department may be measured by how it impacts production throughput. Here equipment reliability is king. In this situation, the priority is on directly supporting production output goals and keeping equipment up and running.

In order to effectively optimise plant assets, companies must first document the facility’s installed base – including mechanical, electrical and electronic equipment. MRO managers need a complete understanding of which machines, as well as which components within those machines, are critical for maintaining asset availability. Considerations are given to the environmental conditions and maintenance history of equipment to produce a mean-time-between-failure (MTBF) report that predicts how long each component should last, given its performance history and current working conditions. The report provides recommendations for inventory levels to ensure that all critical parts are available when needed and excess items are minimised.

Using this information, companies can make informed decisions based on calculated MRO needs and also determine opportunities for improvement in spare-parts inventory. The result is an increase or decrease in spare-parts inventory that corresponds to operational needs.

Moreover, when considering new asset investments, instead of just looking at capital costs and depreciation benefits of new equipment, plant and department managers must also factor in the effects of operational costs, spares, service support and upgradeability. This requires developing an asset life-cycle plan that considers all the benefits of the current technology, while planning for upgrades to more advanced solutions.

Predictive maintenance: Making the transition

It’s well established that proactive maintenance is much less expensive than reactive maintenance. But for many companies, moving from a reactive to a proactive mode is one of the most difficult transitions. Historically, in rough times, the knee-jerk reaction has been to opt for short-term cost savings. This includes curtailing maintenance spending, ditching predictive activities and reverting to day-to-day fail-and-fix practices. In the end, short-term savings sacrifice longer-term gains.

Such spending decisions are short sighted and less strategic because they are often made in response to emergency situations. Often, what keeps companies trapped in a continuous cycle of reactive maintenance is a lack of data that shows the true costs of this approach.

In situations where companies are trying to change a culture (such as moving from a reactive to a proactive strategy), hard evidence is often required to alter the status quo. The most credible way to demonstrate the value is to examine past downtime situations, identify actions that could have minimised the impact, quantify the impact and calculate the improvement in a real-world example. This will help lay the foundation for future programs.

Being proactive requires a willingness to take action based on historical results versus waiting for a problem to arise. The key is that plants must be willing to make a small initial investment in proactive strategies, beginning with the most critical processes and machinery. They must then be able to measure and document the benefits.

By transitioning from reactive to predictive/proactive maintenance, organisations can significantly reduce their maintenance costs, with virtually no negative impact on productivity or facility availability.

Collaboration: Another key variable 

Companies continue to improve efficiencies, but opportunities for cost reductions still exist, particularly in the area of collaboration to support the four Strategic Ps. Whether applied throughout the engineering and maintenance organisations or focused solely on a specific activity, a collaborative strategy can be more cost-effective over the long term.

In today’s lean environment, it’s critical for companies to focus on doing what they do best – making products. In considering a collaborative approach, the first step is to look at the strategy of the organisation. Where does it intend to invest money and people? If it continually neglects and fails to provide adequate support for equipment, processes and people within a particular activity, then that activity is likely a good candidate for outside collaboration.

Many manufacturers already have a strong foundation in place, but with proper support and commitment from an outside partner, that function can be expanded in scope and effectiveness – without losing valuable employees.

The key to success in today’s competitive manufacturing environment is asset optimisation – both workforce and capital – to improve a company’s performance. As with any activity, there is always room for improvement. But those who learn to master the core skills – whether it’s putting, driving or the four Strategic P’s – will enjoy superior performance and have a distinct competitive advantage.

For further information please visit: www.rockwellautomation.co.uk