December 25, 2016 / best practices, bottlenecks, continuous improvement, KPIs, lean manufacturing, LIT, performance metrics, workflow process
Lean manufacturing is nothing new. Principles based on continuous improvement, streamlining production, and machine efficiency have long changed the way manufacturers operate. Industry leaders like Jorgensen Forge have been using lean manufacturing tools like 5S and Total Productive Maintenance (TPM) for years to lower costs, improve responsiveness, and increase efficiency.
However, as stated in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, lean manufacturing is evolving. “Companies that ‘got lean’ years ago are focusing on continuous improvement, and a growing number of high-mix, low-volume operations are tweaking traditional methods to fit their specific situation,” the eBook states.
A recent article series published by IndustryWeek takes this idea further, arguing that lean manufacturing should be evolving. “I am convinced that for Lean to remain relevant as a strategy for improving manufacturing effectiveness it needs to evolve to the point where expert practitioners are NOT needed for most typical Lean transformations,” consultant Paul Ericksen states here in the first article of the series. “Lean shouldn’t be a mystery or black art that is only successfully conducted by an elite group of practitioners. For this to happen, additional Lean concepts, strategies, metrics, processes, and tools need to be developed.”
Specifically, Ericksen argues that the lean evolution needs to go beyond simple “tweaks” and instead, should change its current emphasis on waste elimination to one of total business performance (i.e., revenue). He calls this Next Generation Lean.
- Lean’s current focus on reducing Cost-of-Goods-Sold waste needs to be expanded to cover all waste associated with Order Fulfillment.
- Introducing an overriding strategy of lead-time reduction to Lean practice will change it from a methodology that produces isolated tactical impacts to one that delivers more comprehensive strategic transformation.
- An industry-wide, customer-focused metric for lead-time needs to be adopted to support strategic Lean practice.
- Market specific (customer-based lead-time expectations and competitor order fulfillment proficiency), build-to-demand capability is a company’s Lean end game.
- A lead-time metric could then be used to quantify a company’s current Lean status, as well as to define what it means for a specific company to be considered Lean. The difference between their current Lean status and their Lean end game goal quantifies a Lean-ness gap, finally giving Lean practitioners a concrete way to say where a company is in its Lean journey.
While Ericksen’s theory may or may not make sense for your shop, one key point is worth noting: Your approach to lean manufacturing should be continuously improving and evolving right alongside your operation. If your forging operation has been using lean manufacturing tools for years, perhaps it’s time to re-evaluate and reconsider how those tools could better serve your company.
November 15, 2016 / bottlenecks, continuous improvement, industry news, KPIs, lean manufacturing, material costs, productivity, root cause analysis, strategic planning
The metals industry is constantly facing challenges—high inventory levels, fluctuating raw material costs, and declining shipments to name a few. To help offset the challenges and meet customer demands, industrial metal-cutting companies have long turned to continuous improvement practices to reduce downtime and boost productivity.
In fact, continuous improvement is an essential practice for today’s metal-cutting organizations. As stated in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, the difference between a metal-cutting company that survives versus one that thrives is continuous improvement.
One continuous improvement tool executives are incorporating into their operations is “obeya.” As defined here in a blog from visual solutions provider Graphics Products, obeya (also spelled oobeya) is a Japanese term for “big room” or “great room.” In lean manufacturing, it is a dedicated room that is reserved for employees to meet and make decisions about any production challenges.
According to the blog, the idea behind obeya is for employees to collaborate easier and solve problems faster by having a central location to meet, share, and discuss key information. Benefits of using obeya include:
- Efficiency – Leadership can save time by brining visuals, data, and other vital resources together in one place.
- Focus – Project leaders can focus on the right issues faster by having the right team members in the same room at the same time.
- Collaboration – Employees can easily work together in real-time across disciplines, saving time and improving communication.
Like other lean practices, obeya is part of the Toyota Production System (TPS), which also includes 5S, Kaizen, and Total Productive Maintenance (TPM). According an article from IndustryWeek, obeya is also referred to as the “brain” of TPS and is often called the “Adrenaline Room” at Toyota.
“We call it the Adrenaline Room because we are trying to encourage our manager to address the day, every day, urgently, to improve the output to our customers, internal and external,” Scott Redelman, senior manager, production control and logistics at Toyota Industrial Equipment Manufacturing, told IndustryWeek. “So if we think about each process or each person—even within our four walls—as the customer, how do we aggressively have the adrenaline and the energy, the sense of urgency to quickly react and grow together to make that improvement for the customer? We have to have the adrenaline to do it.”
Industrial metal-cutting companies have also benefitted from obeya. As described in IndustryWeek, ball-bearing manufacturer Timken created an obeya at its Shiloh, N.C. plant four years ago to help meet sudden growth at the time. The company also added an obeya at its Honea Path, S.C. plant earlier this year. According to operations manager Robert Porter, the investment is paying off with productivity improvement year over year, even in down years.
Obeya, however, isn’t just placing your managers in a room and hanging charts on the wall. To ensure obeya is an effective tool, the Lean Enterprise Institute suggests managers focus on a few key issues:
- Customer complaints. Reviewing customer complaints keeps the organization focused on the customer, as well as the end product. The obeya is the space where employees can find ways to improve the process, product, and value the company offers.
- KPIs and objectives. Track key performance indicators (KPIs) and clearly display the overall objective. Have manages report on performance improvement progress and discuss ways to achieve the goal faster.
- Future changes. Post planned changes in the obeya so that everyone can start thinking about possible challenges or problems the change may create.
While there are many continuous improvement tools available, obeya has proven itself valuable. In fact, Toyota considers it one of its lean pillars. Industrial metal-cutting companies that are looking to stay ahead of the competition in today’s challenging market can experience the benefits of obeya too.
What lean manufacturing tools are you using to improve your metal-cutting operation? Is obeya one of them?
September 30, 2016 / best practices, bottlenecks, continuous improvement, KPIs, lean manufacturing, LIT, operations metrics, performance metrics
Most companies that have adopted lean manufacturing strategies know the importance of measurement. When a manufacturing operation can quantitatively assess their performance, it can start to make significant improvements and set realistic goals to stay competitive. In fact, according to a series of case studies on high production metal-cutting companies, measurement was noted as a key best practice.
However, metrics are only meaningful if they are tied to strategy. That’s where key performance indicators (KPIs) come into play. Unfortunately, some companies fail to understand the purpose of KPIs and, therefore, are unable to take full advantage of the benefits they can provide. All KPIs are metrics, but not all metrics are KPIs. Understanding the difference is critical.
What are KPIs?
KPIs are the measurements selected by a company to give an overall indication of the health of the business. KPIs are typically dominated by historical, financial measurements, but most experts agree that they are more valuable if they also include operational measurements. Unfortunately, choosing the right KPIs to track isn’t as easy as it sounds and takes careful consideration.
There are hundreds of KPIs that can be measured, but experts suggest that companies focus on a select few. According to the University of Tennessee’s Reliability and Maintainability Center (RMC), manufacturers need to make sure all KPIs are aligned with the company’s business goals and strategy. Tasks should be explicit and all actions should support a larger goal. When it comes to KPIs, it is quality—not quantity—that matters.
Choosing the Right KPI
Because they are tied to strategy, KPIs will vary by organization. However, an article from Red Lion outlines seven of the common production KPIs used on automated plant floors:
- Count (Good or Bad). An essential factory floor metric relates to the amount of product produced. The count (good or bad) typically refers to either the amount of product produced since the last machine changeover or the production sum for the entire shift or week.
- Reject Ratio. Production processes occasionally produce scrap, which is measured in terms of reject ratio. Minimizing scrap helps organizations meet profitability goals so it is important to track whether or not the amount being produced is within tolerable limits.
- Rate. Machines and processes produce goods at variable rates. When speeds differ, slow rates typically result in dropped profits while faster speeds affect quality control. This is why it is important for operating speeds to remain consistent.
- Target. Many organizations display target values for output, rate and quality. This KPI helps motivate employees to meet specific performance targets.
- Takt Time. Takt time is the amount of time, or cycle time, for the completion of a task. This could be the time it takes to produce a product, but it more likely relates to the cycle time of specific operations. This KPI helps manufacturers quickly determine where the constraints or bottlenecks are within a process.
- Overall Equipment Effectiveness (OEE). OEE is a metric that multiplies availability by performance and quality to determine resource utilization. Production managers want OEE values to increase because this indicates more efficient utilization of available personnel and machinery.
- Downtime. Whether the result of a breakdown or simply a machine changeover, downtime is considered one of the most important KPI metrics to track. When machines are not operating, money isn’t being made so reducing downtime is an easy way to increase profitability.
Making it Count
For many managers, the above list and the resulting data may feel overwhelming. Others may be so afraid of missing something that they end up measuring more information than necessary. For example, research from the Advanced Performance Institute finds that less than 10% of all the metrics that are collected, analyzed and reported in businesses are ever used to inform decision-making. That means 90% of the metrics are wasted, or worse, used to drown people in data while they are thirsting for insights.
The question then becomes: How many KPIs are enough? Or, even more so, how much data is too much?
An article from IndustryWeek suggests that companies follow the “Rule of Three,” which involves dividing all KPIs into organizational categories and then focusing on the top three metrics within that category. This is a good way to keep managers focused on improvement without data overload.
If you are still unsure where to place your focus, the University of Wisconsin-Madison recommends that manufacturers in 2016 zero in on KPIs that fall under the following four themes:
As a high production manufacturer, odds are that your ball and roller bearing operation is already tracking some of the above KPIs. However, if that is not the case, now is the time to start identifying a few to measure. If the process feels overwhelming, do some research, ask your supply chain for help, and get started. In the words of quality expert H. James Harrington: “Measurement is the first step that leads to control and, eventually, to improvement.”
June 20, 2016 / agility, human capital, industry news, KPIs, lean manufacturing, maintaining talent, operations metrics, performance metrics, skills gap, strategic planning
In today’s lean manufacturing world, managers and executives are encouraged to “stay grounded” and find out first-hand what is happening in their operations. As we stated in a previously published blog, improvement decisions can’t be made in an ivory tower. Instead, lean experts advise manufacturing executives to make the time to visit the shop floor—also known as taking a “gemba walk”—so they can see their operation from the front lines.
At the same time, however, today’s competitive market requires leaders to keep a pulse on “megatrends” so they can create innovative, strategic solutions that balance internal efficiency with external demands. In other words, even small shop managers need to be tracking larger scale trends so they can stay competitive and respond to changing customer expectations and an evolving manufacturing industry.
According to Modern Machine Shop, the recent MFG Meeting in Palm Springs, CA highlighted some bigger picture trends that are shaping manufacturing. Below is a summary of three key trends, as reported by Editor Mark Albert:
- Navigating a sea of information. Albert notes that in three to five years, more than a trillion objects will be networked. “Products and user communities will merge,” he states. “The structure of the factory will evolve into a social network. Designers and manufacturers must be ready to create products that behave like living organisms.”
- Cyber security. “The pervasive interconnection of things (which exists today) exposes every company to a massive threat from cyber criminals and malicious hackers,” Albert states. “Companies must adopt defensive strategies that build in, not bolt on, protection at every level.”
- Stay optimistic. Albert says that despite what seems to be persistently negative influences and nagging uncertainties, the economic outlook for U.S. manufacturing is positive. As one leading economist asserted at the MFG meeting, a calm and rational analysis sees better times ahead—as indicated by the numbers, not the emotions.
A contributed article appearing in IndustryWeek echoed similar trends, but zeroed in on the effect “Big Data” will have on manufacturing. “The ability to collect and analyze large volumes of data in economic transactions has revolutionized customer care in the retail and finance sectors,” the article states. “In manufacturing, Big Data will accelerate the integration of IT, manufacturing, and operational systems on the shop floor and lead to better forecasting and understanding of plant performance.”
The IW article also noted the changing demographics of the workforce—a trend of which most machine shops and industrial metal-cutting companies are well aware. According to the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal Cutting Organization, by the year 2020, most companies will have five generations in the workplace. This may certainly create some challenges, but as the eBook explains, managers can also use this demographic mix to their benefit by leveraging the different strengths found within their multigenerational workforce.
“While younger, less experienced workers may lack industry knowledge, they are typically more technology savvy and more willing to embrace new techniques,” the eBook explains. “Seasoned workers, on the other hand, may be resistant to both change and technological improvements; however, they typically have a vast amount of experience and loyalty, and may be able to mentor new employees.”
Of course, these are just some of the big-picture trends affecting machine shops, and many are already responding. As reported in our “Machine Shop Outlook for 2016,” a benchmarking study from Modern Machine Shop revealed that leading U.S. machine shops this year are focusing on workforce training and talent to close the skills gap, improving shop floor practices to optimize processes, and investing in future technology to stay competitive.
How is your shop responding to these megatrends?
May 25, 2016 / best practices, continuous improvement, KPIs, LIT, operations metrics, performance metrics
Regardless of what is happening in the market, there is one challenge that forges and other industrial metal-cutting organizations are always fighting, and that’s downtime. In fact, despite a trend toward internal process improvements, an industry benchmark study revealed that machine downtime, blade failure, and operator error remain the top-three sources of frustration for industrial metal cutting operations on the shop floor.
To combat this issue, many shops are turning to metrics like overall equipment effectiveness (OEE). Although this type of measurement has traditionally been used in large production facilities, smaller and medium-sized shops are starting to find OEE to be a useful way to track and improve the effectiveness of their production machinery.
What is OEE?
OEE is a best practices metric that measures the percentage of production time that is truly productive. It takes into account all six types of loss, resulting in a measure of productive manufacturing time.
In simple terms, OEE can be described as the ratio of fully productive time to planned production time. According to leanproduction.com, it can be measured in one of two ways:
(Good Pieces x Ideal Cycle Time) / Planned Production Time
Availability x Performance x Quality
(You can find a more detailed description of the calculation here, as well as a sample calculation.)
A plant with an OEE score of 100 percent has achieved perfect production—high quality parts as fast as possible, with zero down time. While that’s ideal, it’s not quite possible in the real world. According to oee.com, studies show that the average OEE rate among manufacturing plants is 60 percent, which leaves substantial room for improvement. Most experts agree that an OEE rate of 85 percent or better is considered “world class” and is a good long-term goal for most operations. The good news is that 85 percent is achievable. As this case study from Metalforming magazine describes, Magellan Aerospace in Kitchener, Ontario, Canada was able to improve its OEE from a mere 36 percent to a world-class 85-percent-plus after implementing a new “shop floor to top floor” software program.
Managers can use OEE as both a benchmark and baseline. Specifically, leanproduction.com says it can be used to “compare the performance of a given production asset to industry standards, to similar in-house assets, or to results for different shifts working on the same asset.” It can also be used as a baseline “to track progress over time in eliminating waste from a given production asset.”
How to Use OEE Effectively
So how do you use OEE correctly? Below are a few pointers from an article from IndustryWeek:
- Use OEE as an improvement measure—not a Key Performance Indicator (KPI).
- OEE is best used on a single piece of equipment or synchronized line.
- There is no absolute that works as an OEE benchmark or target—it’s relative to your situation.
- Use it as a yardstick, not a club.
Also, just because you aren’t a high-volume producer, don’t assume OEE isn’t for you. Check out this article from thefabricator.com, which describes how automated data collection can help smaller shops better measure OEE in more custom manufacturing applications. Another archived article from Production Machining describes other ways to apply OEE concepts to medium and small-sized shops.
As the IW article states, OEE can be misused and misunderstood, but it is not a “bad metric.” When calculated and applied correctly, OEE can be very useful in helping companies quantify and uncover new improvement opportunities.
May 15, 2016 / best practices, continuous improvement, human capital, KPIs, lean manufacturing, LIT, productivity, root cause analysis
There’s a well-known saying that a business is only as good as its people, and industrial metal-cutting operations are no exception. Effective teams are an essential component to the overall success of a business, especially one that aims for continuous improvement.
According to the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Company, “continuous improvement initiatives need to be a team effort to be sustainable.” In other words, to improve your industrial metal-cutting operations to its fullest potential, you need to have the right people with the right skills to keep your plan on course. Without a team backing the process, the very notion of any continuous improvement program is impossible.
Of course, the real challenge is building a strong continuous improvement team. As a recent article from IndustryWeek points out, just because a company works in teams doesn’t mean it is good at teamwork. Management’s goal has to be more than simply building a team; the goal needs to be building an effective team.
What does a successful continuous improvement team look like? An article from the Institute of Industrial and Systems Engineers provides nine best practices used by highly effective continuous improvement teams:
- Look at more than just numbers. Continuous improvement is very metric-driven, but don’t forget about inefficiencies that might show low numbers or those that aren’t easily quantified such as infrastructure, sanitation and preventative maintenance.
- Develop cross-functional teams. Expand your team to include more than just members from operations, engineering and quality. Cross-functional teams discuss and agree to solutions minimizing negative impacts before they happen.
- Define goals. Know what you want to achieve and how you are going to achieve it. More importantly, make those goals focused and achievable. Focusing on one set of challenges will allow you to see improvements quickly.
- Use automated KPIs. Collecting the right information at the right time will enable you to improve performance and eliminate inefficiencies.
- Utilize operators selectively. Operators are there to operate the line, not report data. While they can provide focused information when needed, don’t abuse their knowledge.
- Determine root causes. Whenever an issue arises, conduct a root cause analysis to find the real reason why it occurred.
- Focus on impactful, measurable change. You’ve analyzed the root causes, utilized cross-functional teams to prioritize issues and established a consensus for your process change. Now is the time to implement it and make sure it has the impact you thought by checking in with your team, tracking metrics and making adjustments as needed.
- Implement incentives that motivate. Reward hard work with an incentive program. Improve your operations by investing in your people.
- Benchmark. Competition is healthy. Know what others in the metal-cutting industry are tracking and their results. Use the comparison to further improve your operation.
Do you have a continuous improvement team? What habits do you feel make it an effective team?
May 10, 2016 / best practices, Cost Management, cost per cut, KPIs, lean manufacturing, operations metrics, optimization, predictive management, productivity, ROI, workflow process
As fabricators continue to seek new ways to optimize their operations, many are turning to software. Whether using it to connect the plant floor to the front office, or to measure key performance indicators (KPIs), data shows that more and more fabricators view software as a smart—and necessary—manufacturing tool.
For example, according the “2016 Capital Spending Forecast” from the Fabricators & Manufacturers Association International, more than 94 percent of survey respondents said their software spending this year would either remain the same or increase. This is significant, especially as more and more reports show that many companies are pulling back on spending this year.
A separate benchmarking survey from Modern Machine Shop shows that leading shops are more likely to utilize advanced software programs in their operations. Specifically, the survey found that top-performing machine shops (referred to as “top shops”) are more apt to utilize software solutions like enterprise resource planning (ERP) and toolpath simulation software in comparison to other shops.
While there are many reasons software is becoming a valuable tool for manufacturers, for fabricators, a lot of it has to do with evolving customer demands. “As more custom fabricators are taking on more design work—beyond just design for manufacturability—engineering and estimating functions become more complex, especially as that work focuses on more subassemblies and full assemblies that call for multilevel bills of material and a multitude of sourced parts,” states a report from thefabricator.com. This, the article continues, is causing shops to invest in better methods of communication, as well as software tools like CAD/CAM, nesting systems, and ERP.
The good news is that as more manufacturers embrace software, the more tools are being developed—both by software designers and supply chain partners. Like consumers, industrial manufacturers are finding that where there is a need or challenge, there is indeed “an app for that.”
In metal cutting, specifically, there are several tools fabricators can use to help optimize their operations—many of which are free of charge. Below are two in particular that fabricators may find helpful:
- Bandsawing. SawCalc, a web-based software program from LENOX, is a free online tool that helps plant managers and operators solve band-sawing challenges encountered in the field by providing cutting recommendations for maximum blade performance. Users have free access to the program, which determines the proper cutting parameters based on material composition, size and shape, as well as the machine model. The program’s library of materials is regularly updated, providing accurate cutting recommendations for 54 country standards, and more than 35,000 materials and 9,000 band saw machines. Because the program is web-based, managers and operators can access the service right from the shop floor. Aerodye Alloys, a service center featured here in a case study, says that using the online tool has helped increase efficiency at one of its facilities by about 15 to 20 percent.
- Circular Sawing. For fabricators using circular saws, Tsune America has developed Sawculator, a free web-based software tool to assist fabricators and other industrial metal-cutting companies with pre-planning their sawing requirements. The downloadable program allows users to perform automatic US and Metric Dimensional Conversions on the fly, makes automatic suggestions for proper blade selection and chip load, provides more than twenty cutting job outlines, and calculates everything from estimated blade life and bar utilization to trim cut and net cutting time. Users can report prospective cutting jobs to their computer screen, as well as send it to concerned participants on the job via a local printer, email or Smart phone outputs. You can view a video of how the program works here.
Enhance Your Toolbox
Having the right tool for the job has always been a critical part of any metal-cutting operation, but fabricators are finding that it pays to have more than just hardware in their strategic toolbox. While it will never replace the important work machinery and other hardware tools perform on the shop floor, software tools can further optimize cutting operations by measuring important metrics, analyzing job trends, automating certain functions, and educating operators on proper cutting parameters. Although some software programs can be costly in terms of both money and training time, there are plenty of free tools available that can help even the smallest fabrication shop improve their operations.
What software tools are helping your shop optimize operations?
May 1, 2016 / best practices, customer satisfaction metrics, industry news, KPIs, lean manufacturing, LIT, operations metrics, performance metrics, productivity, quality, strategic planning
As companies look for new ways to stay competitive, more and more manufacturers are utilizing “big data” and analytics in their operations. In fact, according to the results of a survey from Deloitte and the Council on Competitiveness, these types of advanced technologies have the power to put the U.S. back on the map as the most competitive manufacturing nation.
“CEOs say advanced manufacturing technologies are key to unlocking future competitiveness,” the report summary states. “As the digital and physical worlds converge within manufacturing, executives indicate the path to manufacturing competitiveness is through advanced technologies, ranking predictive analytics, Internet-of-Things (IoT), both smart products and smart factories via Industry 4.0, as well as advanced materials as critical to future competitiveness.”
Specifically, the report states that the application of these more advanced and sophisticated product and process technologies will help the U.S. and other traditional manufacturing powerhouses of the 20th century (i.e. Germany, Japan, and the United Kingdom) reclaim their spots as the most competitive nations in 2016. The U.S. in particular is expected to take the number one spot away from China by the end of the decade.
What does this mean for industrial metal-cutting organizations? It means that if you haven’t already considered using data and software analytics in your facility, it may be time to revisit the idea. If data-driven manufacturing has the ability to make nations more competitive, that certainly says something about what it can do for individual companies.
Metrics that Matter
For many industrial manufacturers, the thought of using data may seem a bit daunting; however, it doesn’t have to be as complicated as it sounds. For example, a metal service center featured here in a white paper started by developing an internal software system that automatically tracks the number of square inches processed by its existing sawing equipment. At any point, the manager can go to a computer screen, click on a particular band saw or circular saw, and see how many square inches each saw is currently processing and has processed in the past. Gathering this type of data allows the service center to easily track trends and quickly detect problem areas.
Richards Industries, a Cincinnati, OH, company that manufactures industrial valves, is using data in a similar way, according to a recent article from Modern Machine Shop. Although the company has been practicing lean manufacturing for years, it recently installed a machine-monitoring system that enables shop floor personnel to track activities and record the performance of its machine tools. “Like readings from a Fitbit or Jawbone, the data gathered and analyzed by this system is making the company more aware of how well machine time and manpower count toward productivity,” Modern Machine Shop reports.
Of course, these are just two examples. There are many other ways manufacturers can utilize data and advanced analytics to improve their operations. An article from IndustryWeek calls out a few key metrics industrial metal-cutting companies should consider as they implement data and analytics tools into their factory:
- Line speed by product. Take note of when and how often your line manufactures certain types of products; and then use tools to track the time and effort required to generate meaningful output for each. That way, you’ll have a better handle on what mix would produce the greatest profit.
- Granular utilization data. Look at the specific days and hours your factory produces its greatest output, as well as at what mix and with which operators on the floor. In other words, study the conditions that lead to the very best outcomes and then seek to reproduce those outcomes on a regular basis.
- Error rates correlated by product and employee. Avoiding mistakes is every bit as important as optimizing your mix and hours on the floor. Use Big Data and analytics tools to study error rates and then correlate the results by product and employee.
- Assembly speed by product and employee. Careful and error-free production is important, but so is speed, especially for facilities that deal with high volume. By using data and analytics tools to segment production, you can get a clearer understanding of what products are easier to produce and then ask your floor leaders why.
Whether you decide use data to gain productivity, monitor machines, or improve quality, the point is that data-driven manufacturing is here, and companies big and small are taking advantage of its many benefits. If you haven’t jumped on the bandwagon yet, don’t get overwhelmed. Just get started.
How are you utilizing data to improve your operations and stay competitive?
February 10, 2016 / benchmark study, bottlenecks, KPIs, LIT, operations metrics, performance metrics, preventative maintenance, quality, workflow process
Manufacturing leaders know that measurement is the only way to truly gauge how their operations are performing and, more importantly, identify areas that need improvement. However, many companies fail to realize that metrics can be applied to every area of an organization, not just production.
One area that can greatly benefit from measurement is maintenance. A strong maintenance department keeps equipment up and running, which directly impacts production schedules and costs. As an article from Reliable Plant points out, maintenance should be treated just like any other business area.
“You must make good decisions that add value,” the article states. “This means you need input and lots of it. Making decisions based on gut feelings just doesn’t cut it these days. Key performance indicators (KPIs) can provide the input you need to help meet this lofty objective.”
Where Do You Start?
As we covered in a previously published blog, the challenge for many metal fabricators is knowing which metrics to measure, especially in niche areas like maintenance. Not all KPIs are created equally, and the goal should be quality—not quantity—when it comes to metrics of any kind.
According to Lifetime Reliability Solutions (LRS) Consultants, maintenance KPIs should reflect achievement and progress in meeting an agreed maintenance benchmark. “In measuring maintenance performance we are concerned not only with doing good maintenance work, we are also concerned that the maintenance work we do successfully removes risk of failure from our plant and equipment,” LRS advises on its website.
The consulting firm suggests that maintenance managers use a mix of lagging indicators and leading indicators so they have an understanding of what is happening to the risk and performance of their operational assets through maintenance efforts. “Lagging indicators use historic data to build a performance trend line,” LRS writes, while leading indicators use historic data to monitor if an operation is doing those activities that are known to produce good results. A good example of a lagging indicator related to machine health is Mean Time Between Failures (MTBF), whereas a leading indicator in maintenance might be the percentage of condition inspection work orders performed when they fall due.
In general, LRS suggests maintenance managers consider using KPIs within the following six categories:
- Maintenance Delivery (e.g., Proportion of Work Orders Performed when First Scheduled)
- Maintenance Work Quality (e.g., Number of Rework Work Orders)
- Equipment Reliability (e.g., Asset mean time between failures)
- Operational Risk Reduction (e.g., Number of Equipment Improvement Work Orders Completed)
- Maintenance Resource Usage (e.g., Proportion of Work Orders Started at the Time Scheduled to Start)
- Maintenance Costs (e.g., Maintenance Cost Component of Unit Cost of Production)
Why Do Maintenance KPIs Matter?
Like any other business area, maintenance performance can directly impact the bottom line. For example, if maintenance personnel fail to follow a shop’s preventative maintenance (PM) schedule, a host of problems can arise, ranging from lower quality cuts to unplanned machine downtime. As confirmed by a recent benchmarking study of fabricators and other industrial metal-cutting companies, maintenance tasks like PM can impact job completion rates, blade life, and material costs.
With the right KPIs in place, maintenance managers can make sure that maintenance performance is up to par, as well as play a key role in ensuring that the shop as a whole operates as optimally as possible.
How are you measuring maintenance performance at your fabrication shop?
January 5, 2016 / best practices, continuous improvement, Cost Management, industry news, KPIs, operations metrics, performance metrics, predictive management, preventative maintenance, productivity, quality, strategic planning, workflow process
The economic uncertainty from 2015 is unfortunately spilling over into 2016. As reported in a recent IndustryWeek article, the head of the International Monetary Fund Christine Lagarde said “global growth in 2016 will be disappointing and patchy” due to rising interest rates in the U.S. and a slowdown in China, among other reasons.
The most recent metal service center shipments confirm the gloomy forecast. According to data from the Metal Service Center Institute, service center shipments of both steel and aluminum were down—albeit at slower rates—in November compared to both the previous month and year prior.
Given current economic conditions, it’s not surprising that metal service centers are using metrics and data to improve their operations—the only aspects of their businesses they can control. As reported in a white paper from LENOX Institute of Technology, market leaders know that proactive—not reactive—improvement is the key to being successful in today’s market.
When it comes to metrics, more and more companies believe key performance indicators (KPIs) are the best means for gathering quantifiable and traceable measurements because they are tied directly to business strategy. In fact, KPIs are so popular that the University of Tennessee’s Reliability and Maintainability Center (RMC) started an initiative called “Six Metric Areas to Best Practices” to help companies focus on the right metrics and align them to their organization.
As reported by Plant Services, Tennessee’s RMC initiative focuses on three guidelines:
- Work on what matters. There can be hundreds of KPIs, but only a few of them can dramatically improve an initiative. Make sure these KPIs are aligned with the company’s business goals and strategy. Tasks should be explicit and all actions should support a larger goal.
- Data should be industry specific. While using an average is a good place to start when determining improvement goals, it is important to look at industry specific data to ensure those goals remain realistic. Averages provide a guideline, but specific data provides meaning and context as to what is attainable or not, depending on market, costs and other industry related factors.
- Use benchmarks. Other data, according to industry, should act as a guideline and provide focus for ongoing improvements. RMC plans to publish competitive gaps and summarize results for participating companies.
As part of its initiative, RMC has also identified six universal KPIs that all companies, regardless of industry, should consider adopting. These include the following:
- Percent Reactive Maintenance, including data on predictive, preventive, and capital projects
- Maintenance Cost/Replacement Asset Value, expressed as a percent
- Overall Equipment Effectiveness (OEE), including availability, performance, and quality
- Inventory Turns for both overall product and maintenance, repairs and operations (MRO) spare parts
- Mean Time Between Failure (MTBF)
If your service center isn’t already using some of the above KPIs, now is the time to consider identifying at least a few, if not all, of them. If the process feels overwhelming, do some research, ask for help, and start measuring. In today’s uncertain economy, manufacturers can’t afford to ignore the operational areas that need improvement. As they say, you can’t improve what you can’t measure.
Are you using KPIs to optimize your operations? What metrics have resulted in the most improvement for your metal service center?