Saturday, January 30, 2016

Closing the “Last Mile” of Efficiency

Performance Management holds different priorities for corporate management and plant-level stakeholders. Corporate stakeholders tend to emphasize technologies that provide visibility so they care more about the “I” as in Manufacturing “Information” Systems. In contrast, plant-level stakeholders tend to emphasize technologies that provide control so they care about the “E” as in Manufacturing “Execution” Systems (MES) capabilities. These two perspectives converge when both stakeholders realize the need for an integrated approach to tackle the “last mile of efficiency.”

What we have observed is that the vast majority of companies have put in place good practices. Although many of these practices are largely manual or paper-based, they have made progress in their efforts to reduce waste. But these paper-based processes often “hit a wall” when they reach the 90% mark on the three “OEE pillars” because losses at this point often result in “micro-stoppages” that are akin to profits “bleeding by a thousand paper cuts.” Two core challenges must be addressed: Knowing (seeing events in context) and Acting (to recover in a timely manner.)

When companies approach this “last mile” threshold, it changes how they view the scope of the solution because they realize visibility (even if it is real-time) isn’t enough – real-time control is equally important to enable real-time KPI management via a closed-loop process. Specifically, work process integration becomes critical to empower front-line workers to “fix problems at the source” as illustrated below:

We have found that there is “maturity” journey that companies go on in order to achieve efficiency.  We developed the following framework as our internal assessment – it is meant to give an idea of where a company could be in their evolution.

Too often companies are not align on where they are relative to systems, culture, and alignment between the different aspects of the company.

Performance Management Maturity Model

As we have stated many times Operational Excellence is not a project it is journey, and we have found having a framework built on experience as the best way set up the path for companies.
Where do you fit in this maturity road. 

Monday, January 4, 2016

2016 the turning point in the Operational Work Transformation!!

Will this statement stand true to the operational execution world we live in, probably only time will tell, but based on the trends I outlined at the end of 2015, and looking forward I believe 2016 provides the opportunity.

By the way, welcome to 2016 may it be an exciting and productive year!
The holiday break it provides a time to reflect and discuss, and in one conversation my last blog was raised and really “how much transformation was happening?” Initially, I thought it was a comment against the trend we are seeing with the “Operational Transformation”, but this was a friend working in a major food manufacturing company. His comment was actually the momentum of change is well underway, and happening at increasing pace.
There were 4 areas that he felt his business and associated industry where trying grapple with to stay ahead:

1/ Agility of effective, valued products and brands to the market (which he stated was regional, eg specific tastes of similar products changed by region and so your go to markets, packaging, etc. His example was around cheese how the tastes in say Mexico for cheese are totally different to Australia, and then Italy. This leads the increased importance of regional new products vs global new products, and effective speed and cost of innovation, execution and introduction.. So the challenge of “new product Innovation” and then “New Product Introduction” and delivering it to the market at the correct margin to be competitive in timely manner is a whole focus. His comment was this is the core competitive advantage that his company identifies, and must keep driving while dealing with the other transformations happening.    

2/ Operational Workforce transformation: He agrees with me that too much focus has been on the “aging workforce issue” and that most of HR and Operational teams have missed the bigger transformation, and that is the one of new generation work methods and transformation in workspace that goes with it. He felt like his company woke up to this mid way thru last year when they could not just not fill positions, but are having significant challenges in retaining talent, not within the company but in roles. He felt like initially people thought that would just get a transition to a new workforce yes younger of different experience. But they had not realized that way in which people will work, think, interact, and gain satisfaction will also change.

3/ “Planet Awareness, Image”: this one was an interesting discussion, as he raised it as a real strategy for evolving the brand of the company to been seen as proactive to the environment, to attract further “feeling satisfaction” of customers. He also stated that government regulation, and increasing costs of disposing of waste, and energy costs also are now seen a significant bottom line costs, and must be managed more efficiently. But during this discussion, it was also clear that the perception of being “proactive to the environment” in use of energy, carbon footprint, environment etc was also a key strategy for attractive talent to work in the company.

4/ Transparency across the total product value chain, “end to end”. This strategy was about tractability and making sure they happy with brand all the way to customer, but also about cost as they were “outsourcing” increasing amounts of the value chain. But this did not mean they lost responsibility for product while in “outsourced manufacturing partners” execution. The transparency across the supply chain enables increased flexibility and lower costs through inventory reduction.
These 4 strategies are combined with the current strategies to increase plant performance utilization and lower cost of materials through waste /loss reduction.
When you sit back and look at these strategies a constant set of pillars came up in the Operational Solution approach:

·       Everyone having access to information and knowledge no matter their state or location, this means internet becomes a part of the solution backbone.
·       Cyber Security is very much top of mind, both in strategy to secure,  manage, to contain cost and risk.
·       Data validation/ and contextualization, if transparency and faster decisions are required how do you gain consistent information across different sites. \
·       Delivering a new “operational Workspace/ experience” that has embedded knowledge that does not get stale, and enables imitative learning for a dynamic and collaborative workforce.

As the night conversation went on it was clear that the 4 strategies was really about changing the way in which the company manages and executes operational work, no matter how big or small. But becoming in control of not just the planned product work, but the day to day, minute to minute work at the different levels of the operational loop.

Based on the trends of 2015, this long conversation, I wonder if we will see 2015 as the year people recognized that needed to rethink how they handling “Operational Work”. With 2016 becoming the year where momentum continues to grow on projects turning to programs, that span plants, and value chain and an increasing amount of companies put teams, strategies and programs in place to evolve their operations to transform the way handle “operational Work”!

You might ask what about “big data” and the “internet of things” but these are technologies that will be part of the enabling system for a  new operational solution.

Sunday, December 20, 2015

What did 2015 mean to Operational System?

As we enter the final weeks of 2015, did it live up to what we expected, what trends did it star to cement into Operational System design.

These are just some of observations I have seen:

1/ Shift to significant operational transformation programs, vs just projects, as accelerated in the second half of 2015. Certainly we have seen a lot of projects initially started or investigated as projects in 2014, in 2015 reemerge as multi-site, multiyear transformation programs. With the understanding that these programs are on journey both in technology, but also operational goals/ outcomes, and culture.
Certainly a couple of us have seen a significant amount of time allocated to evolving these opportunities working with the customer to help define their outcomes, the approaches, this has been and is still continuing as educational process for all involved. This is fundamentally changing the engagement models between end user vendors and engineering houses as a partnership, requiring changes on both sides.

2/ Cyber Security/ Application Security: This continues to grow as a huge area of interest, but this year it shifted not only how to secure, but how to maintain successfully, evolve their business and agile operations in a tighter security model. Realization that cost is not just in setting up a secure operational environment, but the cost of evolving and sustaining it while maintaining an agile business requires a strategy on it’s own.

3/ Operational Awareness/ Effectiveness: Understanding, not the “aging workforce” but the transformation in both “workforce culture/ approach” and transformation in “Workspace”  are real. That today's and last ten years of operational systems will not satisfy the agile decisions that required, but also the changing workspace culture and methods. The amount of workshops and strategies sessions I have asked to be involved in 2015 was three times that of 2014, and they were clear strategic discussions around people and how people will operate in the future.

4/ Understanding and reality of Internet of Things: The hype has been here and continues around IOT. But there has been some real sole searching in many industrial companies to understanding what it means to them. Many it dawned as the operational alignment end efficiencies they have in the “walls of the plant” now can extend to the “mobile plant”. In Oil and Gas, and Mining moving to include “extraction” wells, equipment in the operational process in real-time. In many other industries, it moved the mobile receivables plants, distribution trucks and then the distribution centers, etc. to be included in the “end to end” operational control.

5/ Realization that the Operational architecture of the future near and long term will have Internet and “cloud” as a natural part of it, and we must design the security, and systems assuming on premise and off premise architecture.

All of the above does surprise us, based on the trends, but it is good to see the shift from talk to reality. I would expect that 2016 this strategic journey programs to increase. Certainly the scope of operational responsibility is changing include a end to end supply chain, that means move outside the plant walls with the traditional systems, and we will see the alignment of Process operations and utility operations (power) into one operational strategy and control.   

Have a very happy holiday season and may 2016 continue the momentum to deliver operational solutions that will handle the "operational transformation" happening around us.

Sunday, December 6, 2015

Accelerated Training is the only way to Deal with Dynamic Workforce Paradigm

As time period workers are in a role and especially a site, the systems and culture of learning, interacting and gaining knowledge must change. This happens with the knowledge and learning coming from this system as the worker requires and prepares for executing a task, vs tradition class / face to face sessions.

Operations teams in a broad range of manufacturing have discovered that the workforce, especially operators, are changing jobs more frequently.  This challenge has become more important than the “aging workforce”, although this also contributes to the acceleration of turnover.  There must be a strategy which effectively trains operators faster than their turnover.

One part of training best practices is to continue the training throughout the operators’ work term, such as summarized in the following diagrams:

The right-hand diagram summarizes some amount of acceleration in benefits, where OTJ is on-the-job training.  While this acceleration appears to be attractive, this acceleration isn’t enough – the time to profitability is still several years.  So an additional strategy is necessary, as shown in the following diagram:

The above diagram describes a strategy of acceleration: instead of focusing on the basics, the training focuses on the dynamic aspects.  This means that the operators are trained as early as possible on “advanced” topics.
The power generation industry has developed a measure of operator excellence called “error free”.  It is a measure where loss of production or damage to equipment was identified with operator errors.  During the last 7 years, power generation companies have demonstrated up to 6:1 acceleration in achieving “error free” status.
The technical change in the training simulators is focused on simulating the dynamic aspects such as weather, supply chain demand and changes in raw materials.

Sunday, November 29, 2015

Forecasting and Predicting, Must be a Cornerstone of the Modern Operational System

For the last couple of weeks Stan and I have been working with a number of leading companies in Oil and Gas, Mining, and F & B around their Operational Landscape or experience of the future.
Too often the conversations start off from a technology point, and we spend the initial couple of days trying to swing the conversation to the way in which they need to operate in the future and what their plans are around operations.

It becomes clear very quickly that there is allot of good intent, but real thought into how they need to operate in order to meet production expectations both in products and margin has not been worked through.

Over and over again we see the need for faster decisions, in a changing agile world, and this requires an "understanding of the future" this maybe only 1/2 hour. The time span of future required for decisions depends on role, (same as history) but it is clear that modeling of future is not just something for the planner, it is will become a native part of all operational systems.

This blog from Stan captures some of the necessary concepts.
Operations management systems must deliver better orientation than traditional reporting or decision support systems.  One important aspect of operations is the dynamic nature – there will be a journey of changing schedules, changing raw material capabilities, changing product requirements and changing equipment or process capabilities.

It might be helpful to consider desired and undesired conditions, using the analogy of driving a car on a long trip.  The planned route has turns, and it may involve traffic jams, detours, poor visibility due to heavy rain or fog; the driver and the car must stop periodically; and the driver may receive a telephone call to modify the route.  The following diagram is a sketch which displays how an integrated view might appear:

In the above example, the actual performance is at the upper limit for the target, and the scheduled target and constraints will shift upward in the near future.  The constraint is currently much higher than the scheduled target limits, but it is forecast-ed to change so that in some conditions in the future, the constraint will not allow some ranges of targets and limits.  This simple view shows a single operations measure with its associated constraints and target.
  • At this stage, we propose a definition of “forecasting”: a future trend which is a series of pairs of information, where the pairs include a value and a time.  The accuracy of the values will be poorer as the time increases, but the direction of the trend (trending down or up, or cycling) and the values in the near future are sufficiently useful.
  • In contrast, “predicting” is an estimate that a recognized event will likely happen in the future, but the timing is uncertain.  This is useful for understanding “imminent” failures.

The following diagram shows an example of estimating the probabilities of 5 failure categories, where the first (rotor thermal expansion) is the most likely.

Given these two definitions, it is helpful to consider industrial equipment behaviors.
  • Several types of equipment, especially fixed equipment such as heat exchangers, chillers, fired heaters etc. exhibit a gradual reduction in efficiency or capacity, or exhibit varying capability depending upon ambient temperature and the temperature of the heat transfer fluid (e.g. steam, hot oil, chilled water).  While the performance is changing, the equipment hasn’t failed, although its performance might reach a level which justifies an overhaul.  In extreme cases, sudden failures can occur, such as tube rupture or complete blockage.  These benefit from “forecasting”.
  • Other types of equipment, such as agitators, pumps, turbines, compressors etc. exhibit sudden failures.  These benefit from “predicting”.

One analogy of incorporating both “forecasting” and “predicting” is that it is like driving a car without looking forward through the windshield/windscreen, such as shown in the following sketch:

In the above sketch, the road behind the car is clear, but ahead, a potential collision will occur.  High-performance operations requires that teams prevent unplanned shutdowns or other events.

Saturday, November 21, 2015

The Benefits if Using TOGAF with ISA-95

Blog by Stan Devries:

ISA-95 is the strongest standard for operations management interoperability, and its focus is on data and its metadata.  ISA-95 continues to evolve, and recent enhancements address the needs of interoperability among many applications, especially at Level 3 (between process control and enterprise software systems).  One way to summarize ISA-95’s focus is on business and information architectures.

TOGAF is the strongest standard for enterprise architecture.  One way to summarize TOGAF’s focus is on business architecture, information architecture, systems/application architecture and technology architectures.  When considered with this perspective, ISA-95 becomes the best expression of the data architecture within TOGAF, and ISA-95 becomes the best expression of portions of the business architecture.  Central to the TOGAF standard is an architecture development method (ADM), which encourages stakeholders and architects to consider the users and their interactions with the architecture before considering the required data.  The key diagram which summarizes this method is the following:
The circular representation and its arrows summarize the governance features.  One example is the architecture vision (module A in the above diagram).  This vision could include the following principles as examples:
  •          Mobile will be a “first class citizen”
  •          Interaction with users will be proactive wherever possible
  •          Certain refinery operations must continue to run without core dependencies
  •          Take advantage of Cloud services when possible

This framework provides a better language for each group of stakeholders.  The following table, which is derived from the Zachman framework, maps these stakeholders to a set of simple categories:

The categories of “when” and “motivation” enables the architecture governance to consider transformational requirements, such as prevention of undesired situations and optimization of desired situations.  In this context, ISA-95 adds value in Data (what) and Function (how), for all of the stakeholders, but it doesn’t naturally address where, who, when and why.  Furthermore, ISA-95 doesn’t have a governance framework.  In this context, “where” refers to the architecture’s location, not equipment or material location.
TOGAF lacks the rich modeling for operations management, especially for equipment and material, which is provided by ISA-95.  The combination is powerful and it reduces any tendency to produce passive, geographically restricted architectures.

Friday, November 13, 2015

Information Technology/Operations Technology (IT/OT) for the Oil and Gas Industry

Blog from Stan DeVries

Since 2006, some oil & gas companies have attempted to align what has been called IT and OT with different organization approaches.  It is valuable to consider what these two “worlds” are:
The world of IT is focused on corporate functions, such as ERP, e-mail, office tools etc.  The following key characteristics apply:
  •          The dominant verb is “manage”.
  •          Systems design assumes that humans are the “end points” – information flows begin and end with humans.
  •          The focus is on financial aspects – revenue, margins, earning per share, taxes etc.
  •          The focus is also on cross-functional orchestration of the corporate supply chain
  •          The main technique is reporting – across all sites in the corporation.
  •          One of the methods is to enforce a standard interface between enterprise applications (especially ERP) and the plants/oil fields/refineries/terminals.
  •          Policies for managing information are mostly homogenous, and the primary risk is loss of data.

In contrast, the world of OT is focused on plant operations functions.  The following key characteristics apply:
  •          The dominant verb is “control”.
  •          Systems design assumes that “things” (equipment, materials, product specifications etc.) are the “end points” – information flows can begin and end without humans.
  •          The focus is on operational aspects – quality, throughput, efficiency etc.
  •          The focus is also on providing detailed instructions for operations areas – to equipment and to humans
  •          The main technique is controlling – within a related group of sites or a single site.
  •          One of the methods is to accommodate multiple protocols and equipment interfaces.
  •          Policies are usually diverse and asset-specific; risk includes loss of data, loss of life, loss of environment, loss of product and loss of equipment.

These two worlds must be integrated but their requirements and strategies must be kept separate.  The following diagram suggests a strategy to achieve this:

The above diagram recommends the following methods to bridge these two worlds:
  •          Use a “value generation” metric to justify and harmonize the equal importance of these two worlds.  “Value” can be measured both in terms of financial value (more on this below) and in terms of risk.
  •          Reconcile units of measure using thorough activity-based costing, down to senior operators and the technicians which support them.
  •          Correctly aggregate and disaggregate information at the appropriate frequency.  Operators require hourly information (in some industries, every 15 minutes).
  •          Centralize and distribute information with an approach called “holistic consistency” – allow for the diversity of information structures and names for each area of operation, but enforce consistent structure and naming between sites (or in some cases, between operations areas).
  •          Integrate and interoperate with appropriate methods and standards, which must address visualization, mobility, access and other aspects as well as information.
  •          Apply a consistent cybersecurity approach across multiple areas of the IT/OT system, allowing for information to flow “down” and “across”.  An “air gap” approach has been proven to be unsustainable, but a multi-level approach called “defense in depth” has been proven to be effective and practical.

Oil and gas companies have implemented a variety of organization structures for bridging these two worlds.  Some companies divide IT into two areas, called Infrastructure and Transformation.  New technologies which are strongly linked to new ways of working are first managed by the Transformation section of IT, and then as these mature, they are transferred to Infrastructure.  The main functions of OT are closely linked to Transformation, because operations can continue without OT – OT is almost always a value-add.  We observe the following organizational approaches:
  •         IT reporting to Finance, and OT reporting to Engineering/Technical Services or to Operations
  •         OT reporting to Transformational IT, with an operations-background IT executive

Regardless of the organization approach, the objectives are reliable and business-effective improvement, whether in the office or in the sites.