Downtime reduction: A Profitable Road to Success
By Pulp & Paper Canada
It is striking to notice that relatively few companies have taken adequate action to focus their attention on actively increasing their uptime. This may be caused by the trend to start up all kinds of...
By Pulp & Paper Canada
It is striking to notice that relatively few companies have taken adequate action to focus their attention on actively increasing their uptime. This may be caused by the trend to start up all kinds of cost reduction programs to increase shareholder value instead of focussing on profit increment, the actual goal of all stakeholders of the organization.
To overcome these circumstances, many companies invested heavily in deploying ERP-systems (Enterprise Resource Planning). However, in their vision to increase profit, more and more production organizations realize that investing in technology seldom automatically improves results, but that improvement of the interaction between used technology and employees is the key to improving the organization and its results. In the presented process of downtime reduction, this notion plays an important role.
It is necessary for producers to be more aware of the positive impact uptime increment has on the profit of their company. Special attention should be paid to the importance of the human factor as a valuable addition to many production and maintenance concepts to close the gap between these ‘theoretical’ management concepts and the reality to execute downtime reduction at the work floor.
From our research, it is known that a wide variety of downtime definitions are being used within the paper and board industry. Besides being confusing, it also makes downtime quantities of different companies difficult to compare.
The following definition of downtime is used within this article:
Downtime = every minute (second) of the year no saleable product is produced.
Note that this definition not only includes machine failures, stoppages and commercial stops, but also production time in which non-saleable product is produced because of unacceptable quality deviations.
Financial advantages of uptime increment
One of the ways for a factory to increase profit is increasing production through increasing uptime. This will not only increase profit when the extra production can be sold, but will also lead to some other unrestricted advantages.
Derived from a standard economic break-even analysis, a straightforward model is developed to estimate the financial impact of uptime increment for a single paper board machine. Based on simple rules, this model calculates the financial profit that results from selling extra production realized by the increased availability of production time. Other financial advantages of downtime reduction are excluded for simplicity.
As an example, the case studied reduced its downtime on a single machine from 15% to 14%. The machine has an annual output of 100,000 tonnes solid board/paper. From the model (and reasoning), it can be concluded that the increase in profit is especially strong in situations where the ratio between fixed and variable costs is high.
Using these typical cost structures and a profit margin of 10% as input for the financial model, the resulting profit increment approximately varies between 4.7% and 8.2% for every percentage point downtime decreases.
For many companies, the profit increasing effect of downtime reduction will probably be the main reason to take measures to realize this. Besides this, a few other advantages can be realized at the same time and will even be realized when the freed production capacity cannot contribute to a higher turnover and profit because of commercial reasons.
Higher availability: Available capacity is closer to the designed / theoretical capacity.
More stable production process: Less failure will improve the stability of the process.
Planning improvement: A more stable process will improve the predictability of that process. The more predictable, the better the production and maintenance planning can be.
General process knowledge increase: When it is clear to everybody what the main problems are and the main goal is, people are more willing to think and discuss about root causes and possible solutions. These discussions will increase the knowledge about the process and will lead to quicker solutions.
Product quality improvement: Fewer disturbances in the process give less variation in product quality and reduce poor quality costs.
Less energy consumption: Less energy is wasted on refuse and reject. Less energy is wasted when all stoppages are concentrated to one single stop, e.g. less heat is lost.
Better organization: Frequent, unambiguous analysis of solid and up-to date downtime data in which everybody has trust, not only supports the organization in recognizing the main problems and prioritizing them, but also prevents needless discussions about bottlenecks in the process. This gives the organization a rest. The time and mental energy saved can be spent on finding root causes and possible solutions.
Downtime reduction process
Reducing downtime continuously requires good information followed by appropriate action. By studying all necessary steps, a process model has been derived.
Recognizing that downtime reduction should be seen as a process, is a first but very important step towards achieving the defined goal. It opens, for example, the way to using proven strategies like Business Process Improvement (BPI) for effective and efficient improvement. Of course each step of the process is accompanied by conditions to be able to obtain the desired output. Generally speaking, this process can only function well if all people involved have the tools and conviction to communicate well and work together carefully. Hence the human factor plays an important role in the registration, analysis and improvement phase.
Besides the importance of a process-oriented approach to downtime reduction, an essential element is the description of the production process in terms of functions.
Each step within the production process, each operation on the product, can be seen as applying a function to the product and each function can be seen as the result of two or more sub-functions and so on. In this way the production process can be visualized as a rafter diagram: the main production process is the backbone, the branches are functions and sub-functions. This detailing continues over a grey area where geographical definitions transform into root-causes. e.g. a possible ‘leaf’ could be named: “Glue supplies not delivered.”
Having such a description means that all malfunctions can now be assigned to a function which cannot be performed properly. The more details that are known about the cause, the deeper the registration of the malfunction and its root-cause.
This viewpoint of the process has the following advantages:
* It does not require detailed knowledge of applied technology. Technical and business administrative information melts together. The information becomes multi-functional:
* It is also understandable to non-technicians. This improves the knowledge of, and the communication between different disciplines in finding solutions;
* It makes it possible (for higher) management to benchmark different sites by analyzing the processes on higher levels (one of the principles of world-class manufacturing);
Because no difference is made between technical and production dependable malfunctions, the often unhealthy ‘competition’ between departments like Technical Services and Production (and their budgets) disappears. The integration of these departments will improve.
After the replacement of process machinery, only the deeper levels of the tree need to be adapted. On the higher functional level nothing will change. Hence there will be no gap in the analysis of the installation.
This functional definition of the production process will be very useful in the registration step of the downtime reduction process and is crucial f
or the analysis step.
Scope of the process
To prevent misunderstandings, it is useful to pay attention to the scope of the downtime reduction process:
* It focuses on the production process and closely linked supporting processes, like stock preparation and energy supply.
* It is generally not supported by maintenance software. Maintenance software is mainly a tool to manage the costs of the maintenance department. One of the types of data maintenance software tries to collect is the time worked on a certain part. This can be a spare part and working on it does not stop the machine from producing.
* It is seldom really supported by the process computer, ERP and other logistic or production administrative systems. One of the functions of ERP software is to collect information (e.g. production amounts) on the process during uptime of the production facility. Detailed information is rarely collected on machine status when failures occur. One can say that ERP focuses on the uptime part. Downtime reduction software focuses on the downtime part.
Process failure information
Without meaningful and solid data about the amount and causes of downtime (failures, stoppages, unacceptable quality deviations), it is impossible to perform any analysis whatsoever. So gaining data and verifying it are the first steps to be taken.
In an ideal situation, a machine would be fully equipped with sensors that could notice any failure in the process and register it in a central database.
To minimize the amount of work and maximize the quality of the registered data, a software tool should be provided that guides the operator step-by-step in the composition of each registration of downtime.
To ensure optimal use, the collected data should be published and be available on-demand. Despite the fact that this today is no longer a technical hurdle, lots of companies are reluctant to implement this technology.
Correction and feedback
In some situations it is necessary to verify the registered data later with other production data that in the meantime has become available from other systems.
Tools to perform this correctional step quickly and easily, should be part of the supporting software. After this correctional step, the already published data has to be replaced by the corrected data to inform people.
Unless an effective feedback system exists, measurement is a waste of time, effort and money. In other words: measurement is the lock — feedback is the key. Without their interaction, the door to improvement cannot be opened.
The goal of analyzing downtime data is to give quickly a clear and reliable insight into the downtime situation of the production process during an arbitrary period of time. This step can (and should) be automated as much as possible to be able to quickly and continuously monitor the actual downtime situation and trends.
The analysis of downtime data should have meaning for both the employees and the company. Frequently updated graphs on the level of the overall process and of the main process steps are useful for everybody involved in the production process.
Preferably the creation and publication of these pre-defined graphs should be performed automatically and regularly (or on-demand) to ensure that everybody uses the most up to date and reliable information. This also prevents the availability of the analysis from becoming dependent on the presence and priorities of a single person. Besides, from experience, it is known that companies only scarcely invest in people that can focus independently of any department on this type of work.
The analysis software tool should make it possible for management to make custom analysis to investigate problems in more detail by zooming in on one or more levels in the functional structure of the installation.
Necessity to use advanced software
Although the main structure and course of the process are visible, people can not form a clear picture of all influences that can lead to process failure, let alone pick the single correct root-cause most responsible for downtime. Unfortunately, this is encountered on an almost daily basis as a result of human relations and power politics within management. Software should be used to set priorities and manage the corrective actions.
Priorities, plan and budget
Desired uptime, economical risks and current affairs, production and technical management, along with analysis, can define priorities in solving the problems. An overall plan should be created for a structured approach to tackle all prioritized problem areas. The analysis has in these cases only functioned as a trigger and will keep functioning to monitor progress. For each of the remaining prioritized problems, this overall plan should exist out of roughly defined projects. For each project, important project parametres like a concrete, precise, exact and measurable goal, quality, time, and resources should be estimated to be able to give an impression of the costs of all improvement plans (budget).
With this information on assets and liabilities, pay back times can easily be calculated. If required, top management can eventually be asked for budget approval.
Based on the experience of developing a MIS (Management Information System) to support the downtime reduction process and using it for several years in the paper industry, the following can be concluded:
Depending on the cost structure of a company and assuming a profit margin of 10%, the profit increment approximately varies between 4.7% and 8.2% for every percentage point the downtime decreases.
Less downtime will lead to a more stable process with numerous advantages for the organization.
To succeed in increasing uptime, it is of vital importance to approach downtime reduction as a (continual) process to which proven strategies can be applied to improve and streamline the process effectively and efficiently.
The human factor plays an important role in each step of the downtime reduction process, from noticing and registering failures, interpreting analyzed data and defining corrective actions, to participating in improvement projects. This requires a team approach. Management should give positive incentive by providing feedback, training, coaching, rewards, time and other means of support.
In contrast with sensors, people can often notice multiple effects caused by a single problem. Interpretation of this information can quickly lead or point to the root cause. Achieving downtime reduction by investing in sensors is therefore probably only successful in certain niches.
The presented philosophy can be a useful addition to many production and maintenance concepts.
For further information, read the full articles by contacting:
Jeroen Kleef is the owner of S&S Systems. He initiated the paper from which this article originated and can be contacted via: email@example.com
Marcel Rooij owns Rooij Consultancy and is the main author of the paper from which this article originated. Today he delivers an invaluable contribution to the development of the third generation downtime reduction software. He can be contacted via: firstname.lastname@example.org