The Alliance: Building a Business Case with OEE . . .Yes It Can Be Done!
"OEE is a pervasive driver of Business Performance” says Pete Hock, senior director/continuous improvement of ConAgra Foods, Omaha, Neb. “When measured consistently and transparently throughout the enterprise, OEE can enable distortion free, fact based decisions that will impact financial performance.”
One of the leading projects in the Alliance for Innovation & Operational Excellence (AIOE) is the effort to provide the CPGs with a set of guidelines that all can use. This benefits both the CPG manufacturer and its suppliers through a common language and set of metrics that can be consistently applied throughout the industry.
“A fundamental need for all CPG manufacturers is to improve the reliability of making shippable product, when wanted, at the pace needed, every single time” says Mark Hanley, asset reliability manager at Land O’ Lakes, Arden Hills, Minn. The problem for most is that currently there is no consistent definition and application of OEE. “Launching an OEE data collection process doesn’t have to be expensive, but it does take a lot of forethought and care,” says Hock. “False starts leave lasting impressions. [My advice is] be deliberate and start only what you can successfully execute. Measure success by the improvements your data enables you to achieve.
Then expand and reapply—both your data systems and improvement processes.” The Operational Reliability Solutions Group within the AIOE, comprised of 16 CPG manufacturers representing all industry sectors and six suppliers of equipment and technology, has been collaborating throughout 2011 on developing a set of guidelines for the industry. At PACK EXPO Las Vegas, Hock and Hanley presented the work-in-progress of “Building a Business Case for OEE.”
What is the Business Case?
As detailed on the chart above one can readily see the connection to Shareholder value is driven through the “performance dimension” within manufacturing operations. In that regard OEE has a direct impact.
How does one get started (or restarted the right way)? The team will be recommending, in its technical report to be released in Q1 2012, that a set of Guiding Principles be adopted by the company. A summary of those Principles are that OEE:
- reflects operations performance, exposes and quantifies losses
- data enables managers to prioritize and plan improvements in manufacturing, customer service, working capital and capital investments
- data must include all losses and be measured consistently
- measurement needs to be accurate, detailed and easy to understand The guidelines will be presented as a journey to achieving excellence.
Getting Started: Data Collection Strategy
This step of the journey is defined as getting started because many decisions need to be made as you develop a strategy for your company. You will need to develop a reason for the data collection and a cost effective data collection method. A data collection strategy is the development of what data needs collection, how often, and in what method can you collect it. For example, you may look to collect data automatically and what data to collect manually.
Gaining Traction: Data Analysis
This step is defined by multiple layers of analysis and methods including event analysis, loss analysis, refining of goals and objectives and developing a plan to expand OEE are the critical elements of this step.
Experience Success: Acting on Data
In addition to previous steps, this phase is focused on improvement including: taking corrective actions, PDCA (Plan-Do-Check-Act) of change implemented, refining expectations, rewards and recognition, communication, reporting, identifying metrics to sustain and developing control plans to institutionalize the process.
Acceptance: Monitoring Data
Predictable and reliable equipment performance is monitored by plotting OEE percentage by shift, over long periods of time—such as weeks or months.
Consistent and accurate data must be the goal—explain it and challenge its validity if necessary to reach acceptance.
Transparency: Sharing A review of the data strategy will help to enable proper data sharing and summarize for easy consumption by the company and data is shared across the production floor, site and with headquarters. During this transparency step, many teams will look for easier ways of sharing and rolling up data to a larger audience.
Best Practices and Culture: Achieving Excellence
This step defines multiple teams across a site or across many sites, sharing what they learn, how they solved issue, and showing other newer team members how the business approaches production.
Making it Work for your Company: The Journey
The team realizes that the Journey to OEE becoming a reliable and predictable tool for an organization can be one of many pitfalls. We encourage all manufacturers and suppliers to read the Guidelines for OEE when they are released in early 2012.
You can get connected with this topic right now by going to http://community. pmmi.org/alliance/Home/. You can view the presentation now; soon we will be starting conversations about lessons learned by our team members and begin sharing ideas.
Learn how the Alliance can bring value to your company and your professional development in many other areas of manufacturing; become a part of the AIOE Connected Community.
The mission of The Alliance for Innovation & Operational Excellence (AIOE) is to generate “Upstream Solutions for Downstream Success” AIOE serves leading consumer products companies and other stakeholders through marketplaces, education and research and communities of practice established to address key issues and solve critical problems within and across vertical markets. Industry professionals can collaborate through AIOE to produce upstream innovations for continuous improvement of their supply chain operational performance.
For more information about the Alliance go to http://www.pmmi.org/AIOE
Stephen Perry and Stephen Schlegel are the managing directors of the AIOE.