In the running of a typical manufacturing operation (Manufacturing is defined as any organization that takes material inputs, adds value and then sells the output), we are typically drawn into managing a great many moving parts. Everything from equipment repairs to managing absent employees sucks us into a minutia of detail. We lose the big perspective!
“When you’re up to your butt in alligators, it’s sometimes difficult to remember that the objective is to drain the swamp!”
What’s the solution?
Fortunately, there are three simple, basic measurements that can be used to manage the variables.
Today, I’d like to talk to you about these measurements. We’re not collecting reams of data, we only want enough to make good decisions and improve the financial performance of our company.
The three things that we want to measure are:
This item represents the amount of scheduled time that the operation is available to operate. This is most easily expressed as a percentage. It’s easy to think that the equipment is always available during working hours. Unless carefully managed, this situation is rarely the case and is often the cause of lost equipment capacity.
For example, let’s say that your saw is scheduled to run for eight hours, but at the last minute, the operator informs you that the blade needs to be changed. Since this is a block saw with a 10 foot blade, it’s going to take 90 minutes. The loss to productivity (90 minutes/480 minutes) is nearly 19%. One fifth of the planned productive eight hours scheduled for the saw has been lost to a foreseeable incident. The really painful thing here is that a large piece of the potential output (availability) of this saw has been lost and can never be reclaimed. That could be a big hit on financial income.
Common causes for availability losses are setup and loading times, operator breaks, adjustments, maintenance and breakdowns.
There’s an old saying that “a tool is only making you money when it’s converting material.”
Going with the block saw example above, let’s say that the cutting rate with the worn old blade was 65% of what the new blade will do. That means that in the same period of time, the new blade will cut at least 35% more product than the old blade.
Every piece of equipment has a theoretical optimum run rate. This means that with some simple math, we can calculate the output over time in tons, cubic feet, square feet or whatever you use to measure your production.
While the first measure was about availability of the production resource, this is about the speed of the resource.
Common causes for performance losses are obstructions such as logistical problems or searching for tools, small stops, operator inefficiency and decreased speed of the machine.
For our purposes, we’ll define quality as product that the customer is pleased to pay for. Or better yet, product that fully meets customer expectations.
Not all raw material that runs through our plant ends up as quality product.
Let me give you an example. We worked with a customer who had an equipment malfunction. The machine was going to be down for a while and since the machine represented the first step in the production process, this was a serious problem. In conversations with the quarry manager, we discovered that the regular quality output of the process was actually quite low and we discovered that this was because the stone they were running was lower grade from their own quarry. The decision was taken to have the quarry cut the quarry blocks into smaller sizes so that the remaining machines could handle them and to only allow the machines to work on high quality stone.
As a result of the changes and still without the large primary machine, their quality output increased by 4 tons per day. Profit for the system increased proportionately.
The quality measurement represents the amount of good product produced as a percentage of the total amount of raw material put into the system. The quality metric is a pure measurement of process yield that is designed to exclude the effects of Availability and Performance.
Three measurements that are the pulse points of a for-profit manufacturing operation. What do we do with them? Why even bother?
Consider what it would take to get a 10% increase in product output. What would it be worth to you to get between 10% and 30% increase in product output, with little or no increase in operating cost?
Collecting this minimal amount of information (Availability, Performance and Quality) would enable managers to tune the activities and begin to get a handle on Control and Predictability of the conversion operations. What is the likelihood that you could yield a 10% improvement in each of the areas, Availability, Performance and Quality? The likelihood is extremely high. Most stone conversion operations that we visit operate at between 50% and 65% in each of these measurements. Simply initiating the measurements will yield almost instantaneous improvement. Why is this so powerful? Simply put, the answer is that the improvement is free. For each increment of increased output, there is a corresponding increase in profit at the sale.
Your improvement is just waiting to be found!
For questions on this article, write to Pete at Pete@eurostoneusa.com, or call Pete at 404-633-2201 x405
Eurostone Machine is in the business of providing profit increases to our customers. We do this by offering the very best equipment available to the Stone Industry, advising our customers on the most advantageous way to integrate the equipment into the existing systems and finally by helping our customers to get control and predictability of their manufacturing profit goals.
Next time: Now that you have the three basic measurements and have better control, what’s next?