Help Operators move from “Coping” to beyond “Optimizing”

This is a great blog from Stan DeVries, really opening some of the challenge thinking.

"A recent meeting with a customer discussed the best practices for centralized control rooms and integrated operations centers.  They summarized 4 levels of operator performance:

•         Coping
•          Aligning
•          Optimizing
•          Stretching

While the focus of the meeting was on optimizing, the customer pointed out that we must enable the newer operators who begin by “coping”.  It is worthwhile to consider the differences between these 4 levels:

•         Coping requires high concentration on operations activity and events, where the operator has little flexibility to adapt to teamwork with other operators.  The operator has been qualified to work in a centralized control room or integrated operations center, but they have difficulty to maintain pace.
•   Aligning requires moderate concentration, where the operator can safely and reliably adapt to most of the teamwork activity, but reaching team targets is still difficult, such as value chain efficiency or throughput.
•   Optimizing requires a different type of concentration, where the operator has learned how to cope and how to align, but now the operator focuses on achieving the team targets, and the targets change periodically – in some industries (e.g. power generation and natural gas liquids processing) the targets change every 15 minutes.
•   Stretching is achieved by “error free” operators who have learned how to beat the optimization targets.

The key question is how can operators achieve and sustain best performance?  A quick answer is more training, but too often the training paradigm isn’t adequate.  Best practices have shown that the effective method is treating the targets like a game, and applying newer visualization to support it.  Before we look at any example of a “game” or possible visualization, we need to consider the innovation in the training approach:

•          Training becomes holistic – the students learn about how to perform in team settings
•          Training moves beyond the classroom – classroom training is essential, but structured on-         the-job training becomes very important
•          Operator performance becomes less “private” – team performance is visible and shared.

So what can the new training experience feel like?  Consider an example which has been published in regional industry conferences, where the initial focus was optimizing energy across multiple sites and all operating shifts:

The dark blue diamonds is hourly efficiency performance over a wide range of throughput, across all sites and all shifts.  The magenta squares are the result of one month of teamwork, and the yellow triangles are the results after two months.  Please observe a few key characteristics of this experience:

• Very dynamic operating conditions
• “Blind” presentation – operator names are not shown
• Graphical context – instead of bar or gauge displays, operators see how their performance compares with others.

The operator is given other detailed displays both during training and for normal operation, but the exercise is focused on teamwork.  Consider the significant improvement in the above displays."

Mastering Variety in Industrial Production, Issues a Challenge for Industrial Architectures and Drives the Requirement for Platform Strategies

For many businesses, variety (or choice) is core to the strategy where its effect cascades down to the execution level (as well as upstream in the B2B value chain.) The operational challenge of variety (or variability) is that it can create waste and inhibit velocity. The challenge and opportunity is with companies, especially as they move to unified value chains (multi plant manufacturing). “How do you manage this Variability, so that production consistency, agility and increased production output are achieved?”

“Standardization is not a business goal – it is a means to an end.
The goal of business is to make a profit.”

                                                             - Continuous Improvement Leader

Thus, any standardization effort must distinguish between the different types of variety in a way that maximizes profit without constraining the business strategy. Thus, the business challenge can be summed up (using the Food & Beverage example illustrated on the above) as follows:

• Mastering necessary variety: More brand choices drive the number of order line items (SKUs) and master recipes, which in turn drive the resulting plant-level recipes that must accommodate the variations in process equipment as well as ingredients. This type of variety is necessary and must be mastered in order to survive and succeed against the competition. Other “necessary variability” are material composition variance from different suppliers or regions, raw materials will vary. Location delivery in skus due to language, for example, the same product will have to be delivered to different countries in different language or different quality requirements. All must be mastered to optimized production.

• Accommodating unavoidable variety: Situations like M&A make it difficult to standardize on any single automation vendor, where “rip-and-replace” isn’t economically viable despite engineering’s desire for a more homogeneous environment. The growing one in this area is the “changing workforce” how do have a system that can accommodate a changing, (rotating) workforce while maintaining timely decisions and consistency in actions.

• Eliminating unnecessary variety: Anything other than the above two scenarios would be eligible for standardization.

This challenge is driving companies to adopting “platform strategies” that abstract the variability and can absorb variability while provide a platform of services that enable standards to be built on. Providing the architecture for “sustainable innovation” through managed standards that can evolve over time. The word of standards can be operational models in supervisory for alignment of context and structure, as well as operational actions to guide users through tasks in a consistent way. Also, configuration of control strategies should be over multiple vendors, where common control standards for process can be deployed over multiple controllers but managed in structured way.

Does this mean one platform? NO, not for the industrial landscape different layers of the industrial operations landscape have different roles. Providing different services and different ability to absorb variety, but the common services between these platforms must enable them to “tightly aligned but loosely coupled”.

 As we have pointed out the key to success in this dynamic but changing world is the ability to “Master Necessary Variety” in your business, while “Accommodating Unavoidable Variation”, eliminating all other variation for efficiency.

Food for thought!

Operations Innovation & Transformation – the 4 Types a Series

Over the last couple of years Stan   DeVries and I have looked a 100s of projects by leading companies across many industries, analyzing industry trends. Much of what I discussed in this blog over the last year has come from these investigations. But Stan and I thought it was time to talk through these "Operational Innovations" and Stan has put a series of 5 blogs on the topics that I will post over the next 2 weeks. Building on the ideas and concepts.

 High Level Review of the 4 Types Operational Innovation:

There has been much marketing on the innovations in supply chain and customer relationship management during the last 7+ years.  During this time, manufacturing and industrial operations has begun a less publicized transformation on their own.  This transformation goes beyond lean and total quality management principles.  In the 1980’s, we saw the impact of Japanese quality strategies; in the 1990’s, the consumer globalization fundamentally changed where facilities are built, how frequently new products are introduced, and in the 21^stcentury, industrial operations focus on how they create value for their customers, often focused on reliability.  These strategies might seem to be dreams without understanding the innovations that make these sustainable and the new risks can be practically managed.

These innovations are focused on unlocking the value of groups of physical and human assets:

1.       Physical Assets: the move to unifying the industrial enterprise over multiple sites (in groups or as a whole), with a more holistic view in terms of operating strategy and performance management.

2.       Human Assets: the shift to operational teams that spread across the multiple sites (in groups or as a whole), central, and Subject Matter Experts (SME’s) to make a rapid and dynamic decision support system in a dynamic operational world.

The following table published by ARC describes a spectrum of coordination or collaboration across assets, both physical and human:

The innovations are essential and prominent in the Integrated and Optimized portions of the above table.  So physical or human assets become 2 parts of one of the dimensions:

So far, no innovation is immediately apparent.  The other attribute of creating value of these groups is improving consistency or efficiency, either by seeking and maintaining a constant “sweet spot” or by enabling profitable agility.

One way that value can be unlocked from a group of people or physical assets is by improving the consistency of the group’s output.  This is very different from the hope of “the best worker on their best day, every day” or the physical asset’s equivalent.  Instead, the innovation achieves a “new normal” which understands and manages to a repeatable performance or “the new average worker on their average day, every day”.  This focuses on reducing the range of performance in output, whether measured as sales value of production, yield, efficiency, throughput etc.

Another way that value can be unlocked from a group of people or physical assets is by improving the effectiveness of the group’s output – the “synergy”.  This focus might seem to be a cliche, but it has produced significant and sustainable improvements.

So consistency and effectiveness become 2 parts of the second dimension, and now we have 4 quadrants:

Now we have some hints of innovation – how is it possible and practical to achieve significant and sustainable improvement from a group of physical and human assets instead of the “sweat the assets” focus which has been in place for 100 years?  The changes come from using physical and human assets differently when they are required to perform to a group objective.  The 4 quadrants are summarized as follows:

In the lower left quadrant, a group of similar industrial operations (2 or more) adapt their performance objectives, business processes and accompanying hiring and information strategies to optimize the “fleet”.  This innovation can be limited by the distribution flexibility among the locations, but several corporations have achieved success with this.  One example is keeping most of the locations operating at a constant or “base” portion of the combined market demand, and using the more agile locations to deliver the “swing” or variable portion of the demand.  Other examples and methods are described in a following article which focuses on this quadrant.

In the upper left quadrant, a group of complementary industrial operations (2 or more) adapt their performance objectives, business processes and accompanying hiring and information strategies to optimize the “chain”.  This innovation can be limited by the dynamic and range flexibility of some of the operations, but several corporations have also achieved success with this.  One example is seasonal competitiveness, where the “chain” collaborates to achieve maximum throughput during the high demand season and maximum efficiency during the low demand season (efficiency and throughput interact differently across different groups of industries).  Other examples and methods are described in a following article which focuses on this quadrant.

In the lower right quadrant, teams of specialists are grouped to provide value improvement to a group of physical assets, and the group of physical assets can be used as a “fleet” or as a “chain”.  This is much more than a passive “help desk”.  One example is where specialists use real-time bench-marking and other tools, working with new business processes with the physical assets and the dedicated workers, to unlock value of themselves and the physical assets.  Other examples and methods are described in a following article which focuses on this quadrant.

In the upper right hand quadrant, managers and supervisors use consistent measures and business processes to adjust targets for specialists and other workers, using the industrial automation concept of a “control loop”.  One example is where managers negotiate the next day’s production targets each day using the same business process for all specialists and industrial locations.  Other examples and methods are described in a following article which focuses on this quadrant.

The results have been spectacular, including double-digit improvements in efficiency, first-quarterly industry performance, and more.