Capital Projects - Do We Minimize Initial Outlay?

Frequently when a capital investment or other large modification project is proposed in a manufacturing plant, discussions focus on how to minimize the cost of a capital project. This makes a lot of sense - why spend more than we have to? The typical tension is the plant wants to "gold plate" everything, install redundancy, capitalize spare parts and so on - the project managers only worry about "on time and on budget" and they walk away after start up - the financial types think about time value of money DCF-ROI and see any lower cost option as a better project based on the financials.

We agree with all of these perspectives, but believe the best solution is to take a step back and look beyond the cost of the project. I have frequently said that I don't care how much a capital project costs! After people recover, and assuming they have not thrown me out of the room; I make the point that what I think is important is the total life cycle cost of a project vs just the initial capital outlay. Which would you prefer - a project that costs $200 with an annual operating cost of $20, or a project that costs $150 with an annual operating cost of $75? Hmm... The initial cost of a capital project is only one part of the overall evaluation.

Synchronous LLC has discontinued on site consultations, and we regret that we are currently unable to accept new clients. We are however, strongly committed to maintaining a dialogue on operational excellence for the process industry - so check this space! Please send us an information request at Sales@SynchronousLLC or send us a note to our web site www.SynchronousLLC.com and we will be happy to recommend a highly competent practitioner to assist you. We do not recommend or refer anyone that we do not know well, and any referral of ours meets our standards for excellence.

Supplier Partnerships - part 2!

Yesterday we wrote about "supplier selection to support reliability." Suppliers have a key role to play in your plants reliability efforts - but beyond reliability, what criteria should we use to select and manage supplier partnerships? Consistent with our philosophy of "keep it simple" here are eight key performance indicators and objectives:

- Partnership agreements should be documented and should detail the basis for the agreement.
- Supplier stocking and consignment terms and methods for reducing physical inventory and costs should be in place.
- Use blanket orders to the maximum extent possible.
- Maintainability and reliability requirements should be specified (see yesterday!)
- A feedback process for resolving problems should be documented. I know this seems obvious, but this can be easily overlooked.
- Use electronic communications, data transfer, order entry, etc to the maximum extent possible.
- Measurement- with the goal of minimizing emergency, spot, or "out of agreement" orders.
- Measurement of stock items and types.

We also think that "partner" suppliers should routinely provide spare part recommendations, and the frequency of preventive maintenance requirements (PM, PdM, CBM, etc). Synchronous experts are prepared to assist you in developing your key, and critical supplier partnership relationships. For additional information send us an information request to Sales@SynchronousLLC.com, or review our complete portfolio of service offerings at our web site www.SynchronousLLC.com .

Please be advised that effective 1 September 2007 we will transform our service offering to providing industry and operational excellence concepts and advice, but we will no longer provide on-site consultations or engage new clients. Current customers can continue to expect the same fully dedicated support and advice, but on limited hours of availability as we have already communicated to designated company contacts - usually the project manager. Thanks to all of our loyal and dedicated clients, who have allowed and honored us to be part of their transformation efforts...

Thanks my friends, Rob Baldwin, Managing Principal

Supplier Selection to Support Reliability

A typical approach for manufacturing companies to control expenses and help assure reliability is supplier consolidation, and equipment standardization. Any strategic supplier selection should include key metrics like equipment life - mean time between repairs (MTBR) and overall life; monetary losses from equipment failures; production losses and repair costs; and annual maintenance costs including preventive maintenance, overhaul, and repair costs.

Best practice is to factor these elements into a RCA/FMEA analysis for defining spare parts and preventive maintenance efforts. Frequently you can tie your operating and maintenance efforts to a supplier commitment for equipment life. If you operate and maintain equipment properly - they will warranty a certain life cycle. A great agreement can include the supplier keeping (owning) critical, and expensive spare parts in a readily available warehouse location close to your plant. Once confidence in the relationship is established, you can even move critical spares to be available on consignment in your stores warehouse.

Synchronous experts are deeply experienced in optimizing the intersection of supplier selection, standardization, reliability, and plant performance. Send us an information request to Sales@SynchronousLLC.com, or review our complete portfolio of service offerings at our web site at www.SynchronousLLC.com

Batch vs Continuous Manufacturers

We frequently hear about how different continuous manufacturers are from batch/discrete manufacturing plants. Having experience with both, we fully agree. We shouldn't let these differences deter us from pursuing operational excellence in any type of manufacturing plant. The goal of operational excellence remains the same - what is ideal performance, and how far away from ideal is my plant?

Studies have shown that the people that operate continuous plants report their performance as much closer to ideal than operators of batch plants do. We are not sure if this is truly the case, but it may be the result of operators of batch plants feeling they can always make up for lost production with the next batch - not fully appreciating that time lost is lost forever. In a continuous manufacturing plant mistakes are always highly visible - there is no place to hide when production is down.

Synchronous experts are experienced in both batch/discrete and continuous manufacturing plants. We can help you define your ideal performance and develop a plan to get as close as economically possible. Send us an information request to Sales@SynchronousLLC.com or review our complete portfolio of services at our web site www.SynchronousLLC.com

Production Bottlenecks - A Dynamic View

Bottlenecks occur in every manufacturing plant. We usually find that everyone from site managers to production operators know what the bottleneck "is." The problem is that frequently - different people believe the bottleneck is in different locations. With an inconsistent view on production bottlenecks, various parts of the organization may take nonconstructive or even detrimental actions to the overall production rate.

Bottlenecks can be dynamic and change on a daily basis. One day a lack of a raw material may be the bottleneck, on another day unscheduled downtime in a production area, on another day a rate reduction in another area, the more complex the manufacturing process the greater number of potential bottlenecks.

The limiting factor of production on any given day depends on which equipment is down, which processes are difficult to control, quality of incoming raw materials, the most recent production requirement from sales. This effect is further compounded when one process feeds another in a manufacturing plant.

Synchronous experts are well positioned to help you understand the factors that affect your overall equipment effectiveness (OEE), and to map and manage your dynamic bottlenecks. Send us an information request to Sales@SynchronousLLC.com or visit our complete portfolio of service offerings at our web site www.SynchronousLLC.com

Leadership - Management, or Both?

Which is more important, leadership or management? Organizations tend to focus more on leadership because management is easier to teach, and most companies need far more managers than leaders. We feel that both leadership and management are necessary to achieve operational excellence. In our engagements we ask our clients: "What can you do to lead your organization to operational excellence, and still manage day-to-day operations?"

Leaders challenge the status quo; trust the organization; innovate and develop; ask what and why; do the right things; watch the horizon; and set the example.

Managers accept the status quo; control; administer and maintain; ask when and how; do things right; watch the bottom line; and occasionally make public examples.

There are lots of models for leadership. We think it usually comes down to vision, reality, courage, and ethics. Leading your organization to operational excellence is hard work that almost always pays off. Synchronous experts are well positioned to help you develop and implement your programs. Send us an information request to Sales@SynchronousLLC.com or review our complete portfolio of services at our web site www.SynchronousLLC.com

Worst Practices - Let's get Maintenance Right!

In a manufacturing environment, reactive maintenance beyond 20 - 30% of total labor hours should be considered pretty bad. We would call that a "worst practice." Reactive maintenance costs at least double than maintenance in a "planned" environment. Worse that that - reactive maintenance results in longer periods of downtime. Even worse, when machinery runs to failure, a plant needs to expend resources on frequent overtime, and extraordinary resources to get "everything back on line."

We believe that plants that operate with "best practices" have a strong reliability culture. The middle ground is companies that have a "repair" culture. Our view is that manufacturing plants that have the view that maintenance is a reliability function, not a repair function have the best performance. We believe in a fix forever vs a forever fix mentality.

Synchronous experts have a seasoned perspective on maintenance and reliability in the real world manufacturing environment. Send us an information request to Sales@SynchronousLLC.com, or please consult our complete portfolio of services at our web site www.SyncronousLLC.com