An interesting question was posted on the LinkedIn MES - Manufacturing Execution Systems group recently by Elisa Rocca of Siemens: "OEE: how to approach root cause analysis?" She goes on to say that "I was wondering how to best execute the root cause analysis for a filling & packaging line." and later in the discussion that:
"I would like to decouple the RCA investigation from levels 1 and 2 [PLCs and SCADA systems directly controlling the machines - FG], conducting the entire analysis into MES.
... I'm wondering whether you see the RCA as an "online" analysis performed during the acquisition of OEE data, or as an "offline" analysis done on historical data using reporting tools"
My Response:
The challenges with root cause analysis of any live process metric, including OEE, are:
1. A priori you do not know what data you are going to require to solve the problems that exist, since you do not know what these problems are!
2. You will have a range of users for this RCA, from Operators and Supervisors, who's needs will be near real time, to Engineers, who will perform their analysis mainly historically.
3. You will probably need to combine 'hard' data from your equipment with judgement / big picture input from humans in the process.
4. You need to ensure that the effort required to perform the RCA is minimized: the more work required, the less likely it is to get done, and the greater the opportunity for confusion and arguments!
What does this suggest?
You are right to decouple your RCA from levels 1 & 2: they are great for machine management, but are too inflexible, machine focused and simplistic (analytically) to provide the solution you need. Similarly, ERP (in a manufacturing context) and MES systems are focused on dispatching, routing and recording production, rather than analysing the performance of the process.
Your requirements are the motivation for Enterprise Manufacturing Intelligence systems. I would suggest looking for EMI systems and rating them by the following attributes:
1. Flexibility -- could a Process Engineer configure their own analytics?
2. Scalability -- you will rapidly scale to large numbers of data sources and volumes of data. Is the system architected to cope with this?
3. Analytical Power -- you are going to need to analyse your process along many axes: machine, product, batch, shift, material, etc, and to perform sophisticated analyses to correlate causes and effects. Does the system provide the power you need in its tool set?
4. Ability to combine data from many sources, including friendly interfaces for human operators. Is there an easy way to capture human input and combine it with machine data?
5. Automation -- the system should do 80% of the analytical work automatically, especially the 'drudge' number crunching that does not require human judgement, otherwise this will not get done at all! How is this handled, and how long does the user have to wait for the results? Again, if the answer is >> a minute, the User is unlikely to wait, no matter how useful your data!
See here for the full discussion.
Friday, April 2, 2010
Monday, November 23, 2009
Impressive Opportunity from a Small Experiment
Just published an analysis on the Fraysen Systems website today called "Material Flow Co-ordination Case Study" which gives the results -- with their agreement, of course -- of a quick opportunity analysis we did for one of our Clients. What is striking is:
- The amount of information that we were able to collect from a simple experiement;
- The size of the improvement opportunity we uncovered together.
Thursday, November 5, 2009
There is a Gap between Operational Excellence and Business Reality
Why do Managers not rush to put into practice every recommendation by their Lean Consultants, or to install Manufacturing and Business Intelligence systems? There is plenty of data to suggest that in general these methods and systems produce outstanding returns, and this is backed up by detailed analyses of selected leading companies.
I think there are just too many "IF"'s between the proposition and the return. In essence, when a Lean Consultant presents their report, they are saying "if you invest management time in changing your organisation's behaviour, and if you get your people to behave in this way, and if the consistently apply these methods even if it appears more expedient in a crisis to go back to the old ways, then you will reap the benefit of my advice." Similarly vendors of Operational and Business Intelligence tools are saying "if we pick the right KPIs (Key Performance Indicators) to monitor, and if you make monitoring these KPIs part of your people's management process, and if they respond quickly and appropriately when they are alerted to an issue, and if they carry the action through to closure, then our system will deliver a return on your investment."
Think about it: in a world where at least on the face of it a new machine will increase your throughput because it's advertised cycle time is 20% lower, or you can save millions in labour costs by moving to China because they earn 1/10 of people in the West, it is asking a lot of your Client to make such a complicated and contingent cased to their Board / Senior Management and then ask them to invest money in it. Should we just give up? No - we just need to make a better case, and I believe that by taking responsibility for the Client's problem, rather than limiting ourselves to being just a part of the solution, we can!
I think there are just too many "IF"'s between the proposition and the return. In essence, when a Lean Consultant presents their report, they are saying "if you invest management time in changing your organisation's behaviour, and if you get your people to behave in this way, and if the consistently apply these methods even if it appears more expedient in a crisis to go back to the old ways, then you will reap the benefit of my advice." Similarly vendors of Operational and Business Intelligence tools are saying "if we pick the right KPIs (Key Performance Indicators) to monitor, and if you make monitoring these KPIs part of your people's management process, and if they respond quickly and appropriately when they are alerted to an issue, and if they carry the action through to closure, then our system will deliver a return on your investment."
Think about it: in a world where at least on the face of it a new machine will increase your throughput because it's advertised cycle time is 20% lower, or you can save millions in labour costs by moving to China because they earn 1/10 of people in the West, it is asking a lot of your Client to make such a complicated and contingent cased to their Board / Senior Management and then ask them to invest money in it. Should we just give up? No - we just need to make a better case, and I believe that by taking responsibility for the Client's problem, rather than limiting ourselves to being just a part of the solution, we can!
Wednesday, October 21, 2009
The Operations Management Dilemma
Having spent a large part of my career in developing and selling Operational Intelligence Systems, I am one of many businesspeople around the world -- Manufacturing Systems vendors, Business Intelligence providers, Lean Manufacturing consultants and Six Sigma Black Belts who make their money persuading corporations to focus senior management attention on how they operate, and to spend money on ways to improve it. After all, a company's operations are what deliver value to its Customers and Owners, so why wouldn't they want to invest effort and resources in making them better. Right?
A presentation by Eoin O'Driscoll, (chair of the Irish Government's Enterprise Strategy Review Group) at the 2009 Midwest Entrepreneur Showcase gave me pause. In discussing how to create value for Customers, he referred to Peter Drucker's assertion that "Because its purpose is to create a customer, the business enterprise has two—and only these two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs" (my italics). Therefore we in the "Operational Excellence" industry are trying to persuade corporations to spend scarce management time thinking about things that they do not consider core to their success, and then follow that up by asking them to invest even more money into an area of the business they already consider to be primarily a cost. What’s wrong with this picture?
While the issue is not quite as black and white as I describe above -- otherwise there would be no manufacturing software companies or Lean Six Sigma consultants at all -- it does jib to a startling degree with what we see in the market. In 2004, average western manufacturing efficiency was quoted as 45%, with world class companies at 85%. The figures have not changed that much since; the opportunity has been obvious for decades -- see the US vs. Japanese auto industry saga -- and yet many companies still at best reluctantly invest leadership time and effort into Operational Excellence as it's currently sold. They don't want what the industry is trying to sell them. Could they be right?
A presentation by Eoin O'Driscoll, (chair of the Irish Government's Enterprise Strategy Review Group) at the 2009 Midwest Entrepreneur Showcase gave me pause. In discussing how to create value for Customers, he referred to Peter Drucker's assertion that "Because its purpose is to create a customer, the business enterprise has two—and only these two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs" (my italics). Therefore we in the "Operational Excellence" industry are trying to persuade corporations to spend scarce management time thinking about things that they do not consider core to their success, and then follow that up by asking them to invest even more money into an area of the business they already consider to be primarily a cost. What’s wrong with this picture?
While the issue is not quite as black and white as I describe above -- otherwise there would be no manufacturing software companies or Lean Six Sigma consultants at all -- it does jib to a startling degree with what we see in the market. In 2004, average western manufacturing efficiency was quoted as 45%, with world class companies at 85%. The figures have not changed that much since; the opportunity has been obvious for decades -- see the US vs. Japanese auto industry saga -- and yet many companies still at best reluctantly invest leadership time and effort into Operational Excellence as it's currently sold. They don't want what the industry is trying to sell them. Could they be right?
Monday, August 17, 2009
High Velocity Business
I had the pleasure to read Steven J. Spear's "Chasing the Rabbit" during my Summer vacation, in which he discusses the unique attributes of industry leading companies like Toyota and Alcoa. What Mr. Spears wanted to understand is why these companies have maintained and even extended their competitive advantage over their peers, even as these peers have learned from these leaders and themselves improved. Interestingly, what he singles out as unique about these companies is not that they apply methodologies such as Lean and Six Sigma, although they do, and very effectively, but the fact that they apply these methods in the context of a business culture which is focused on learning and improvement, from the 'highest' to the 'lowest', in everything they do.
What these companies do is simply to recognise that their businesses are complex systems which it is impossible to design perfectly from the outset. So instead of pretending that the system is perfect, and making do as best they can, they accept that there are going to be opportunities for improvement, and invest in their ability to spot, understand, address and learn from these opportunities. As a result, whereas their competitors come to work on a Tuesday at a similar level of performance as on Monday, and expecting to have to overcome most of the same problems as faced them on Monday, the High Velocity Business is coming to work having solved at least some of Mondays problems for ever, and therefore is starting the day at a higher level. These improvements quickly accumulate over time, propelling the High Velocity Business forward even as competitors repeatedly attempt to catch up.
What these companies do is simply to recognise that their businesses are complex systems which it is impossible to design perfectly from the outset. So instead of pretending that the system is perfect, and making do as best they can, they accept that there are going to be opportunities for improvement, and invest in their ability to spot, understand, address and learn from these opportunities. As a result, whereas their competitors come to work on a Tuesday at a similar level of performance as on Monday, and expecting to have to overcome most of the same problems as faced them on Monday, the High Velocity Business is coming to work having solved at least some of Mondays problems for ever, and therefore is starting the day at a higher level. These improvements quickly accumulate over time, propelling the High Velocity Business forward even as competitors repeatedly attempt to catch up.
Thoughts about Starting a Technology Business: Final Thoughts
It always takes longer than you thought, so don’t be impatient, but do plan and provide for the long haul, whether that be by recruiting investors with deep pockets, or having another line of business that keeps you going. Do try to make your mistakes as early as you can. You are going to learn from your mistakes, and the only way you are going to succeed is by taking the risk that you might fail. Don't be too worried about what other people will think of you, or that they will remember your failures. In my experience, people are too busy with their own lives, and just aren't interested anyway, so take advantage of that and don't worry too much!
Thoughts about Starting a Technology Business: People
Hiring and managing people in your own business is different from doing the same as a manager in a large corporation, so here are some thoughts about that.
Firstly, you will be anxious to hire people to help you, and may find it difficult to imagine that people will actually want to come and invest their futures in your improbable little venture. Don’t hire the first willing candidate just because he or she is there! There are many adequate to good people in every profession. It is rare to find great people. It is also rare to find people who want to work for a small start-up, but these are the people you have to find, and you are better off hiring no-one if you can't than to hire a journeyman or someone who would prefer the "safety" of a large corporation, but needs a job right now.
Understand and specify clearly what you need the person to do. You are starting the next great business, so anyone you hire should be excellent at their job, should be willing to work to demanding targets, does not bring baggage (i.e. avoid the brilliant but trouble types!), and is willing to accept risk for reward (typically equity), which you should be prepared to give willingly and reasonably generously to the right people!!
One important point: don’t hire just for company! Being an entrepreneur is lonely. Being an entrepreneur who hired a less than stellar person so you wouldn't feel so alone is lonely and a pain in the neck.
When you have hired, remember: you are the boss. Don’t be afraid of confronting issues. Raise then respectfully with the aim of resolving them, not beating people up. Remember you are under a lot of stress, so it will be tempting to blame other people, especially your team. That said, be prepared to fire / part company quickly, especially early on if you find one or both of you have made a mistake. It's best for everyone if done with dignity.
In all your dealings with your employees, partners, consultants and other team members, be consistent, honest and empathetic. Remember you are the boss, and the reason they are there: it’s your job to inspire them, not theirs to inspire, reassure or comfort you. Finally, lead, don’t drive! You'll get some results by threatening or manipulating people. You will get much more by making them want to do their best for you and the company.
Firstly, you will be anxious to hire people to help you, and may find it difficult to imagine that people will actually want to come and invest their futures in your improbable little venture. Don’t hire the first willing candidate just because he or she is there! There are many adequate to good people in every profession. It is rare to find great people. It is also rare to find people who want to work for a small start-up, but these are the people you have to find, and you are better off hiring no-one if you can't than to hire a journeyman or someone who would prefer the "safety" of a large corporation, but needs a job right now.
Understand and specify clearly what you need the person to do. You are starting the next great business, so anyone you hire should be excellent at their job, should be willing to work to demanding targets, does not bring baggage (i.e. avoid the brilliant but trouble types!), and is willing to accept risk for reward (typically equity), which you should be prepared to give willingly and reasonably generously to the right people!!
One important point: don’t hire just for company! Being an entrepreneur is lonely. Being an entrepreneur who hired a less than stellar person so you wouldn't feel so alone is lonely and a pain in the neck.
When you have hired, remember: you are the boss. Don’t be afraid of confronting issues. Raise then respectfully with the aim of resolving them, not beating people up. Remember you are under a lot of stress, so it will be tempting to blame other people, especially your team. That said, be prepared to fire / part company quickly, especially early on if you find one or both of you have made a mistake. It's best for everyone if done with dignity.
In all your dealings with your employees, partners, consultants and other team members, be consistent, honest and empathetic. Remember you are the boss, and the reason they are there: it’s your job to inspire them, not theirs to inspire, reassure or comfort you. Finally, lead, don’t drive! You'll get some results by threatening or manipulating people. You will get much more by making them want to do their best for you and the company.
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