Operational Excellence

Essential for Success in the 21st Century

John S. Mitchell
johnsmitchell2@gmail.com

Operational Excellence

Stated as a primary objective by many operating enterprises committed to achieving and sustaining best in field Great cachet at the highest executive levels What does it mean, how is it implemented, what are benefits?
An operating enterprise; one that utilizes some physical means to produce and / or deliver a product; comply with a mission. Applies to a broad range of industrial enterprises: Process, production, power generation and distribution, continuous and discrete manufacturing, mining, food processing, transportation, marine, etc. Equally applicable to service industries, public transportation, municipalities (fresh and waste water treatment), military, financial institutions, not for profits, schools and other types of organizations where mission effectiveness and customer satisfaction, rather than profit, may be the primary objective

Operational

Excellence
Objective that must be achieved and sustained for continuing success
2

Defined by three global industry leaders

A critical driver for business success. the systematic management of safety, health, environment, reliability and efficiency to achieve world class performance.
Chevron Operational Excellence Management System

Ensuring the safety and reliability of our operations is fundamental to our business success and a critical challenge that ExxonMobil takes on every day.
ExxonMobil 2008 Annual Report

we seek to maximize value and improve efficiency.

ExxonMobil 2011 Annual Report

an integrated management system that drives business productivity by applying proven practices and procedures in three foundation blocks:
Asset Productivity Capital Effectiveness Operations Risk Management
DuPont: Delivering Operational Excellence to the Global Market, 2005 3

A simpler definition Safely Create Greatest Sustainable Value

Safety excellence above all

Includes health and environmentally sound operation (SHE) Operational Excellence not possible without SHE excellence

Value defined for the specific business / mission

Drives business / mission requirements into operating objectives
Maximizes value delivered Profitability and shareholder value Optimum mission effectiveness Results in effective operations / mission compliance Customer satisfaction

Sustainable (permanent) strategic, operational, mission and business success

Physical plant not degraded for temporary gain (reducing costs below sustaining)

Characteristics

Strategic; enterprise wide imperative

Integrates business, technology, process and practice to attain greatest value

Much more than a management system

Overall, holistic, continuing master program of excellence High performance, cooperative, success oriented work culture Elevates mindset, actions and activities to safely creating and sustaining greatest value

Applies broadly to all processes, practices, activities and tasks

Includes, governs and coordinates all enterprises functional improvement programs to achieve a common set of business / mission value objectives Drives cooperation, mutually reinforcing teamwork throughout all operational and support functions:
Operations, maintenance, engineering, IT, human relations, finance, etc. Empowered, multi function, high performance teams, Engaged employees: initiative, commitment to excellence, ownership, accountability

Creates positive work culture, organization and human relationships Gains greatest results from proven procedures, practices and technologies

Lean, Six Sigma, RCM, PM, CBM, etc.

Opportunity driven
Value prioritized improvements based on history (data, information) and risk

Continually improving Sustaining

5

Governing principles

of the improvement initiative communicated and advocated by a committed, engaged senior executive actively supporting the Operational Excellence program

Vivid vision a clear, compelling description of the necessity and benefits

Total understanding of requirements; commitment to excellence in all activities, continual improvement to performance and effectiveness
throughout the enterprise

Identifying and eliminating deficiencies is the only way to permanently improve performance reducing costs without eliminating the need for spending
results in inefficiency and ultimately increased costs to SHE / EHS (Safety Health Environment), mission, business, operating performance and efficiency; reduced cost Strong management and operating leadership enthusiastic, supportive, committed to success Ownership and empowerment at all levels of the organization Responsibility at the working level for identifying, valuing, developing, implementing improvement initiatives; accountability for success Linked, layered results metrics demonstrating value contribution to business / mission objectives Complete data and information accurate, secure, easily accessible and understood

Ambitious, optimistic, and achievable improvement objectives

The program

Demands commitment to and ownership for excellence

Mutually supporting, cooperative, partnership relationships minimize adversarial silos Transformation of the work culture to value directed, initiative, ownership, responsibility

Emphasizes risk and reliability

Minimize failures / incidentsincrease safe operating lifetime

Moves from a task and activity oriented cost center to

results driven, profit center mentality Work elevated from status quo / restoration to eliminating defects; continuous improvement Safely reduce requirements for work permanently and sustainably reduce costs

Extends definition of reliability across all activities and the entire organization Positive attitudes and behaviors are the key essentials to gaining success
Dr. Peter G. Martin, Vice President; Invensys

How implemented

Begins with a visionary, engaged senior executive totally committed to success

Establishes vision, business / mission objectives

Directed strategically and facilitated by a facility / site Steering Team

Define program Establish mission / business value prioritized improvement strategy Appoint Program Leader / Champion

Led by Operating Leadership Team(s)

Headed by Program Leader Develop program objectives and strategy Identify opportunities for improvement

Implemented at the working level by multi-function, high performance Improvement Action Teams
Empowered members Refine opportunities, develop and implement improvement action plans, identify, report and correct deficiencies, direct continuous improvement
8

Requirements for success

Total commitment to objectives for excellence; intolerant of deviations

Ambitious, clearly stated objectives

Culture of excellence established and sustained

Importance, necessity and benefits fully understood by everyone in the organization
Essential nature of organizational and individual conformance Empowerment initiative, ownership and accountability for success

Robust, reliable management and administrative systems

Clearly stated organizational objectives and individual responsibilities

Full adherence to practices and procedures

Identify, report and correct deficiencies, continuously improve
Learn from activities, successes, mistakes and near misses

Continuing learning, training and improvement

Concentrate on identifying opportunities for improvement; correcting deficiencies, strengthening weaknesses

Do these characteristics and requirements remind you of something that exists today in your organization?
9

Safety!

The Operational Excellence program

Program Highlights

Enterprise wide, value driven improvement initiative Equivalent to safety in terms of imperative and ownership for excellence; organizational and individual commitment
Demands initiative and accountability at all levels

Sponsored and driven by a motivated, involved top executive

Responsible to establish, implement, nurture programdemand results

Operational leadership preferably by production / operations Recommended implementation in a circular progression DIPICI
Similar to PDCA (Shewart Deming), DMAIC (Six Sigma), OODA (Boyd) Iterative process

Prime responsibility for improvement initiatives at working level

Detailed analysis, value prioritization, development and implementation of improvement plans Essential for full ownership, commitment to success

Includes assessment, feedback, improvement and follow up mechanisms to assure compliance with objectives
Formal assessment process

Tangible rewards for successfully meeting objectives Produces real, sustainable value
12

Descriptive elements Operational Excellence Program

Typically begins with a directive from a top executive

States vision, necessity, business and financial objectives Requires continuing visible engagement, drive and support

Opportunity driven, master programcontinuing journey

Identification and exploitation of opportunities to safely and sustainably increase business value, reduce risk and lost opportunity
Improvement opportunities prioritized by financial value and return Direct link from Operational Excellence program KPIs to business and financial objectives demonstrate program contribution

Starts from where you are (not where you might think you are) Gets you where you need to go
Comprehensive commencement assessment utilized to identify:
Current conditions and strengths to build on Utilize institutional knowledge and ownership to greatest advantage Opportunities for improvement Weaknesses to strengthen; barriers to overcome Progress to success

Optimizes balance between reliability, risk and value

Increase reliabilityImprove availability and effectiveness; reduce spending Opportunity is the positive aspect of risk
13

Descriptive elements Operational Excellence Program

Working level improvement action teams responsible for identifying and valuing opportunities; planning and driving results
Strategy, analysis, discovery all team developed
Value and risk driven solutions

Creates energy, ownership, commitment and responsibility

Opportunistic, value oriented implementation not sequential

Imaginative exploitation of opportunities

Solid change (improvement) management essential

Master the soft work culture and organizational issues: values, behavior, initiative, motivation, ownership

Constructed on accurate data and information

Accurate, reliable, information system

Gains greatest value from proven best practices: Lean, Six Sigma, RCA, PM, CBM, TPM, RCM, etc.
Prioritized implementation

Demands excellence at the basics

Operations / Production efficiency Work management and execution Logistics management
14

Gains greatest value from proven processes and practices

Lean optimize work flow, minimize waste Six Sigma rigorous process; statistics applied to reduce performance deviations; control phase to assure sustainability Reliability Centered Maintenance (RCM) establish maintenance requirements to address potential failure modes
Failure Modes and Effects (Criticality) Analysis FME(C)A

Total Productive Maintenance (TPM) improve organization, teamwork

Maintenance / Production partnership, small group activities, orderliness

Asset Integrity expanded to require meeting all requirements for safe operation Root Cause Analysis (RCA) identification of failure cause for elimination Condition Monitoring (CM) define current performance and condition
vibration measurement and condition assessment operating performance fluid (lubricating oil) monitoring Thermography motor impedance, current analysis ultrasonic's; active and passive

Condition Based Maintenance (CBM) maintain on need Time Based Preventive Maintenance, PM maintain on time
Based on statistical and historical lifetime

Proactive Maintenance pre operation action to reduce failure Computerized Work Management Systems (CMMS)
Planning and Scheduling optimize work management Materials MRO stores, repair parts management

Build from reliability

Definition: Probability that a system, equipment or product will perform its required functions in a safe, satisfactory manner for a given period of time when used under specified operating conditions.
Physical Asset Management Handbook

Achievement of predictable results with as little variation as specific David L. Stringer, Brig Gen USAF; Keynote at RCM / EAM 2006 circumstances permit.

Definition and requirements extend and apply to the entire organization and all activities:
Performance safely meet requirements, predictable, minimum variation Organization completely defined (RASCI or equivalent), consistent decision process, empowered employees Work Culture commitment to and ownership for excellence, highest quality work and continuous improvement Skills requirements totally defined, training provided, qualifications up to date Processes and practices fully defined, totally repeatable, high quality results Systems fully capable of meeting all operational demands Equipment safe, cost effective conformance to operational requirements Data accurate, secure, up to date and accessible

16

Gain greatest effectiveness

Efficiency:
Performing a given task well activity and task oriented.

Effectiveness:
Performing the correct task efficiently results oriented. Path to maximum effectiveness
Performing tasks well

Poor Prioritization:
Low value tasks performed well

Poor Quality:

Correct tasks performed poorly

Performing the right tasks

17

Seek maximum value

Value defined for specific enterprise, business unit, facility, area / plant / unit
All unique

Sources of value
Improve Safety, Health, Environmental performance Achieve consistently greater business performance / mission compliance
Increase throughput, availability, utilization Improve qualityreduce rework, scrap (waste) Reduce variation, interruptions, penalties, loss of good will

Improve efficiency
Reduce operating cost

Reduce maintenance cost

Increase reliability; reduce failures

Improve capital effectiveness

Adopt profit centered mentality

Invest for value rather than control costs to budget

Minimize and control risk

18

Sources of business value

Business Effectiveness ROCE, RONA, EBIT
Administration,
Business Systems, IT, HR

Production Operations Maintenance Operational Excellence

Finance, Capital Management

Safety, Health, Environment, Risk Management and Control Production Effectiveness Availability Reliability Production Rate Quality Production Planning Process Control Information Technology Purchasing Training Administration System & Operating Improvements O&M Cost Optimization Maintenance Management Spare Parts Management

Capital Effectiveness RONA

19

Establishing value

Published benchmarks for overall guidance Operating history

Benefits of utilizing site / facility data
Every business unit, facility, site different Identifies real opportunities / deficiencies Creates enthusiasm, ownership

Base improvements by percentage increase in historical performance

Analytical methodology
Production Weibull Pareto

Riskthe future
Failure Modes and Effects Analysis (FMEA)

Business model
Accurate valuation of opportunities, results

Dilemmawhen excellence and value are mutually exclusive

20

Risk make the future better than the past

History and Pareto look at the past; risk adds future threats Risk considers likelihood, vulnerability and impact probability times consequences
Probability (how likely is an event?)
Threat analysis to anticipate the future Historyhas it happened before Current condition (mechanical and operating performance) Means and likelihood of detection defect / fault identification

Consequences (what happens when the event occurs?)

Safety, environmental Business interruption, lost production, quality Operating and restoration cost, waste, penalties

Identify and assess future operational requirements

Regulations; safety, environmental Operating intensity Raw materials External threats, market requirements, business and supply Sustaining cost (investment) and decapitalization
21

Risk Ranking Matrix

Chronic 5 Happens all the time Probability of Occurrence High Risk; 15% - 20%

Very Rare 1 But Could Happen

1 2 3 4

Medium Risk; 30% - 50%

5

Minor

Consequences / Severity

Avoidance Imperative

Low Risk

22

Failure Modes and Affects Analysis

Proactive analytical methodology from Reliability Centered Maintenance:

Identify and evaluate potential failure modes and effects of a system or component In depth, risk prioritized, comprehensive understanding of the cause, probability, consequences and detectability of each potential failure Means to develop effective countermeasures Full, auditable documentation of the process including engineering logic utilized

Definitions:
Functional failure: The inability to deliver a defined standard of performance:
Full / partial Partial loss reduced performance, efficiency Observable / hidden Hidden failure not observable until a second failure occurs

Mode: Any potential occurrence (event) that could cause a functional failure Effect: What happens when a failure occurs Risk: How often a given failure occurs (probability); how serious if it does occur (consequences) Detection: How are the symptoms of a failure observed; time available to manage a failure
How recognized Interval from recognition to action required

Controls: Actions placed in effect to extend life, prevent / counter failure and / or identify a defect for mitigating corrective action prior to failure
23

FMEA Template
Chevron Shipping Modes and Effects Analysis (FMEA) Template FailureCompany Modes Failure and Effects Analysis Template
System: Sub-System: Equipment: Function:

Cargo Transfer Date Created: Vessel: Team Members: Pumping Date Revised: FMEA Facilitator Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks
Severity / Consequences Failure Mode RPN Classification Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Failure Component Cause

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Implement vibration monitoring, quarterly interval

Dave Smith

Leak (controllable)

1. Gasket failed

Cargo transfer slowed

24

1. Assure proper make up at reassembly 2. Assure proper assembly

Visual inspection; hourly while in operation

2. Seal failing

24

Coupling fractured

1. Misalignment

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

2. Defective coupling

Vibration monitoring might identify crack precursors

Shaft fractured

1. Defective shaft

None

Vibration monitoring

24

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Implement vibration monitoring, quarterly interval

Dave Smith

Leak (controllable)

1. Gasket failed

Cargo transfer slowed

24

1. Assure proper make up at reassembly 2. Assure proper assembly

Visual inspection; hourly while in operation

2. Seal failing

24

Coupling fractured

1. Misalignment

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

25

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Component

Pump stopped

Pump High vibration

Vessel Failing bearing; caused by: Date 1. Unbalance 2. Shaft misalignment FMEA Team System Leak (controllable) 1. Gasket failed Subsystem Equipment 2. Seal failing Function
Coupling fractured 1. Misalignment

FMEA Descriptive Cause Information

3 2

Detection

Failure Effect

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Implement vibration monitoring, quarterly interval

Dave Smith

Cargo transfer slowed

24

1. Assure proper make up at reassembly 2. Assure proper assembly

Visual inspection; hourly while in operation

24

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

26

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Description of system or Leak (controllable) 1. Gasket failed 3 equipment inability to deliver required performance 3 functional failure 2. Seal failing
Coupling fractured 1. Misalignment 2

Failure

Implement vibration monitoring, quarterly interval

Dave Smith

Cargo transfer slowed

24

1. Assure proper make up at reassembly 2. Assure proper assembly

Visual inspection; hourly while in operation

24

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

27

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Leak (controllable)

Any potential 1. Gasket failed 3 2 occurrence (event) that could cause a 2. Seal failing 3 2 functional failure.
1. Misalignment 2 1

Failure Mode

Implement vibration monitoring, quarterly interval

Dave Smith

Cargo transfer slowed

24

1. Assure proper make up at reassembly 2. Assure proper assembly

Visual inspection; hourly while in operation

24

Coupling fractured

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

28

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Leak (controllable)

1. Gasket failed

Weakness or defect the 3 2 Cargo transfer 4 24 1. Assure proper slowed consequence of which is a up at make reassembly Failure Mode. 2. Assure proper
3 2 4 24 assembly

Cause

Implement vibration monitoring, quarterly interval

Dave Smith

Visual inspection; hourly while in operation

2. Seal failing

Coupling fractured

1. Misalignment

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

29

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Implement vibration monitoring, quarterly interval

Dave Smith

Leak (controllable)

1. Gasket failed

2. Seal failing

2 Cargo transfer 4 24 a 1. Assure proper Visual Probability that specific inspection; slowed make up at hourly while in Cause/Mechanism reassembly will occur; operation 2. Assure proper ranked 1 54 24 assembly 2

Likelihood / Probability

Coupling fractured

1. Misalignment

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

30

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Implement vibration monitoring, quarterly interval

Dave Smith

Leak (controllable)

1. Gasket failed

2. Seal failing

Cargo transfer 4 24 1. Assure proper Visual How the specific failure inspection; slowed make up at hourly while in reassembly mode is detected; operation 2. Assure proper assembly ranked 1 -4 5. 24

Detection

Coupling fractured

1. Misalignment

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

31

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Leak (controllable)

1. Gasket failed

Cargo transfer slowed

Results of the Failure 4 24 1. Assure proper Visual inspection; Mode on the makefunction, up at hourly while in reassembly operation observed by the user 2. Assure proper
4 24 assembly

Failure Effect

Implement vibration monitoring, quarterly interval

Dave Smith

2. Seal failing

Coupling fractured

1. Misalignment

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

32

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Leak (controllable)

1. Gasket failed

Cargo transfer slowed

2. Seal failing

inspection; make up at The impact of hourlythe while in reassembly operation specific Failure Effect, 2. Assure proper assembly 24 ranked 15

24

Severity / Consequences
1. Assure proper Visual

Implement vibration monitoring, quarterly interval

Dave Smith

Coupling fractured

1. Misalignment

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

33

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Implement vibration monitoring, quarterly interval

Dave Smith

Leak (controllable)

1. Gasket failed

Cargo transfer slowed

24

2. Seal failing

24

Likelihood (1 5) times 1. Assure proper Visual inspection; make up at Detection (1 while 5) times hourly in reassembly operation 2. Assure proper (1 5) Severity assembly
1. Assure shaft alignment at assembly 2. Inspect coupling during assembly Vibration monitoring might identify crack precursors

RPN Classification

Coupling fractured

1. Misalignment

10

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

34

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Leak (controllable)

Improvements to 2operating, 1. Gasket failed 3 Cargo transfer 4 slowed preventive and/or repair procedures that prevent the 2. Seal failing 3 2 Cause/Mechanism or Failure 4 Mode/Effect from occurring, Coupling fractured 1. Misalignment 1 5 reduce the rate2 of occurrence and/or Severity 1 1 5 2. Defective
coupling

Controls Prevention

Implement vibration monitoring, quarterly interval

Dave Smith

24

1. Assure proper make up at reassembly 2. Assure proper assembly

Visual inspection; hourly while in operation

24

10

1. Assure shaft alignment at assembly 2. Inspect coupling during assembly

Vibration monitoring might identify crack precursors

Shaft fractured

1. Defective shaft

None

Vibration monitoring

35

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Leak (controllable)

Coupling fractured

Improved physical 3 2 Cargo transfer 4 24 1. Assure proper up at surveillanceslowed or analytical make reassembly 2. Assure proper methods to detect the assembly 2. Seal failing 3 2 24 Cause/Mechanism or4 Failure Mode before a defect 1. Misalignment 1. Assure shaft 2 1 5 10 alignment at reaches a state where action assembly 2. Inspect must be taken (minimize 1 1 5 5 2. Defective coupling coupling during consequences). assembly
1. Gasket failed 1. Defective shaft 1 1 5 5 None

Controls Detection

Implement vibration monitoring, quarterly interval

Dave Smith

Visual inspection; hourly while in operation

Vibration monitoring might identify crack precursors

Shaft fractured

Vibration monitoring

36

FMEA Template
Chevron Shipping Company Failure and Effects Analysis (FMEA) Template Failure Modes and Modes Effects Analysis Template
System: Sub-System: Equipment: Function: Date Created: Vessel: Team Members: Cargo Transfer Date Revised: FMEA Facilitator Pumping Cargo Pump 1 Transfer cargo from tanks off the vessel at rated flow and pressure without leaks RPN Classification Severity / Consequences Failure Mode Failure Component Cause Controls / Counter Actions Responsibility Prevention Detection Due Date

Occurrence / Probability

Detection

Failure Effect

Pump stopped

Pump High vibration

Failing bearing; caused by: 1. Unbalance 2. Shaft misalignment

Cargo transfer slowed

24

1. Assure rotor balanced at reassembly 2. Assure shafts aligned at reassembly

Leak (controllable)

1. Gasket failed

2. Seal failing

Individual, by name, with 2 Cargo transfer 4 24 1. Assure proper Visual inspection; slowed responsibility for the / makecontrol up at hourly while in reassembly counter strategy for a proper operation 2. Assure assembly 3 specified 2 4 24 Mode Failure
3 2 1 5 10 1. Assure shaft alignment at assembly 2. Inspect coupling during assembly Vibration monitoring might identify crack precursors

Responsibility

Implement vibration monitoring, quarterly interval

Dave Smith

Coupling fractured

1. Misalignment

2. Defective coupling

Shaft fractured

1. Defective shaft

None

Vibration monitoring

37

Program Implementation

Brief description ImplementationDIPICI Organization Exploiting opportunities Matrix implementation Assuring results Assessment process Benefits

Operational Excellence Program

An essential concept
Gain the effectiveness and sustainable performance necessary to succeed in an intense operating environment

Emphasizes the human, work culture and organizational issues that are essential for success
Organization wide commitment to excellence, initiative, ownership, support and participation mandatory to gain real success

Evolves from controlling costs to profit centered mentality

Invest for increases to mission / business value and success

Deviations from performance objectives identified, prioritized and corrected based on business value and risk
Performance assessments, benchmarking, statistical and risk analysis utilized to identify and prioritize opportunities for improvement:

Safe, sustainable improvement Not a command but rather the result of doing the right things

39

Programin brief

Define mission / business and operating objectives Appoint leadership Establish the organizational and administrative systems
Consider facilitation during program development and implementation
Accelerate learning, gain results faster

Identify requirements for training

Identify and value prioritize improvement opportunities

Based on actual conditions opportunities, strengths, weaknesses, barriers In-depth analysis of causes of deviations from requirements and spending
Relies on cause and correction data Gathers institutional knowledge

Creates excitement, energy, commitment and ownership

Formulate and implement improvement action plans

Provide training as required Introduce programs, practice and technology in a prioritized, opportunistic sequence to gain greatest value quickly

Measure and monitor results; adjust plans as required Institutionalize and sustain results; continuously improve

If you dont know where you are going any road will do!
40

Typical implementing methodology

Shewhart (Deming) PDCA

Plan what to accomplish Do initiate strategy and plan Check evaluate results Act on what has been accomplished

Six Sigma DMAIC

Define improvement projects based on business objectives, customer needs and feedback, Critical To Quality (CTQ) characteristics Measure key processes, current performance and defects within the processes Analyze deficiencies (opportunities for improvement) defined by history, risk and lost opportunity gaps between current and objective performance; establish why defects are generated Improve the process to stay within required ranges, implement optimized practices and technology, prioritized by value and risk criteria Control monitor, improve and sustain results to assure variables remain within acceptable ranges

Boyd OODA
Observe opportunities Orient take advantage of opportunities Do take action to capitalize on opportunities Adjust corrective action if required
41

Operational Excellence implementing methodology DICIPI

Definethe program
Business and program objectives Leadership, organizational and administrative requirements Governing policy and strategy, business plan Methodology for vital procedures such as risk assessment and business value model

Identifyopportunities for improvement

Analyzeidentify improvement opportunities by comparison to best performance, performance benchmarks Prioritizepotential improvements based on value opportunity, cost, time to implement and probability of success

Planimprovements to create maximum value

Develop detailed action plans including resources and time required, responsibility and expected results Gain approval

Implementimprovement action plans

Deploy resources and technology Execute improvement action plans

Checkmeasure and manage results

Adjust actions as required to meet objectives

Improve and institutionalizeinitiate continuous improvement

Sustain gains and success

42

Operational Excellence Program

Initiate Continuous Improvement

Define
(need to do) Establish Business Requirements Collect Facts

Improve
Measure Results

Identify
(opportunities for improvement) Based on Value Potential

Check
(what you did)

Plan
(going to do) Increase Business Value Formulate Improvement Actions

Implement
(improvement action plans)

43

Operational Excellence Program

Maintain continuous improvement, Institute Continuous institutionalize / sustain success, Improvement assure satisfaction

Define
(need to do) Establish ambitious, prioritized Establish Business Requirements objectives, develop mission statement, Collect Facts financial model, business plan

Improve
Manage results, conform to KPIs, assure meeting expectations and satisfaction, Measure Results add/modify organization and improvement initiatives, continue training

Identify
(opportunities for improvement) Expand leadership team, conduct FMEA Based on risk, value analysis, value prioritize Value Potential opportunities for improvement

Check
(what you did)

Plan
Deploy global best practices: technology, methodology and processes, continue Increase training, strengthen and support, Businessownership Value conduct RCA (going to do) Formulate opportunity Formulate based tactical action plan prioritized by potential return, commence Improvement Actions training, identify applicable best practices
44

Implement
(improvement action plans)

Define the program

Executive champion
Provides compelling vision, necessity and benefits, business / mission objectives Visibly engaged, continuing support and drive

Appoint program leadership

Steering Team
Strategic direction, guidance, support, facilitation and review

Program Leader
Operational leadership

Communications team

Establish program mission, objectives, principles, policy, strategy

Define value

Formulate program charter

Business Plan

Define organization, management and administrative systems Validate procedures for risk assessment and business value
Establish business and risk models Value normalization

Form Operating Leadership Team

45

Program organization

Site / Facility with multiple, dissimilar areas / units

Executive Champion Steering Team Program Champion / Leader Operating Leadership Team Communications Team

Area Operating Leadership Team

Area Operating Leadership Team

Area Operating Leadership Team

Improvement Action Team Executive Champion Steering Team Operating Leadership Team Improvement Action Teams

Improvement Action Team

Improvement Action Team

Senior Corporate or Site Executive Plant and Business Managers, Site Production and Maintenance Superintendents Initiative Leader, Department Heads Initiative Leader, Production and Maintenance Managers, Technical Professionals, First Line Supervisors, Multi Function Crafts Improvement Champion, Technical Professionals, Multi-Function Working-Level Specialists as required

46

Begins withenergized executive

States compelling vision, business objectives Identifies necessity for improvement and benefits motivates participants Outlines overall program requirements Appoints respected operational leaders committed to success
Steering Team

Provides visible engagement and continuing drivefully committed to success Removes institutional and organizational barriers

47

Strategic leadershipSteering Team

Composed of senior business and operating executives and functional managers with ownership for the program and committed to success
Operations / Production, Maintenance, Engineering, Finance, HR, IT Preferably chaired by production executive Appoints program leaderchampion
Program leader a member

Provides strategic leadership and direction

Champion, drive, actively lead / facilitate the program; assure results
Energize implementation; serve as a facilitating resource Decision authority to provide resources

Involved in tactics only when reviewing results and acting to eliminate organizational barriers

Defines program mission, overall strategy

Translate business objectives into program objectives; results required

Approves plans to gain objective results

Validate the potential business value of proposed improvement initiatives Review and approve; priorities and improvement initiatives Review the function, progress and results of the various improvement action teams Surmount challenges, remove barriers to success

Monitor results, progress to objectives; oversee improvements

48

Key individual Program Leader / Champion

Appointed by and reports to the Steering Team

Individual with position and respectat the superintendent level
Credible within the organization Possess knowledge, initiative, enthusiasm and drive necessary to achieve success Excellent leadership, organizational and people skills

Full time position, sole duty, not a collateral

Working level responsibility, authority and accountability for program development, objectives, plans, implementation and results including:
Assure that program strategy and plan are consistent with and contribute value to organizational policy, strategy and objectives Appoint members of Operating Leadership Team and subject matter experts; augment teams where necessary as improvement plans develop Direct and facilitate the process of identifying, value prioritizing and developing improvement initiatives Identify resource requirements Assure that improvement plans are consistent and supportive with other organizational activities; resolve inconsistencies Monitor progress and results, compliance with strategy and objectives; assure sustainability
49

Operating Leadership Team

Established for each site / facility business unit, area, plant Appointed by Program Leader with agreement of Steering Team Multi level, function, discipline
Highly respected top people with direct knowledge and experience in areas of potential improvement
Engineering, Operations, Maintenance augmented by IT, finance, safety as required Technical professionals, working level supervisors, technicians, crafts and operators

Commence with introductory, kick off workshop Initial task: review and validate / modify program mission, principles, policy, strategy and business plan
Essential for full commitment and ownership

Identify and develop potential opportunities for improvement Augmented as initiatives are identified and refined Spin off Improvement Action Teams
Opportunity discovery process, developing and implementing improvement initiatives are essentials to gain the ownership, commitment and responsibility necessary for sustainable success
50

Conduct kick off workshop

Delivered to Operating Leadership Teams Detail program objectives, organization, function and process to participants Three to four days duration in two phases:
Program description and process
Mission, strategy, principles, policy and business plan Improvement discovery, prioritization and implementing process

Working sessions to identify and develop preliminary improvement plans

Identify opportunity for improvement Describe future state; objectives Define the value gained Describe the step by step process to achieve the improvement; action plan Identify strengths to build on; challenges and barriers to overcome Define activity and results metrics to measure progress and success with objective time lines List resources, people and funding required Define potential risks that might impede the plans success

Present results of working sessions to all participants

Highly beneficial for Executive Champion and Steering Team to participate in final presentations

51

Roll out the program

Communicate necessity and value of improvement

Meet changing business / mission / market conditions

Identify major benefits for employees

Includes improved job security and satisfaction

Summarize major principles including:

Excellence and value in all activities Broad participation Commitment equivalent to safety Continuous sustainable improvement

Describe inefficiency, cost and personal impact

Unnecessary / low value work and preventable disruptions to operations

State program implementation will be fair, open and honest

Communications; feedback Meet potential concerns head on; e.g. reduction in force
Rumors always worse than reality

Every effort to understand and respond quickly to questions and concerns

Define transition plan

How to get from here to there!

52

Identifyopportunities for improvement

Validate systems Establish sources of mission / business value

Increase throughput / mission compliance Reduce costs

Identify opportunities for improvement

Industry benchmarks Advantages of utilizing site / facility / unit specific data
Site daily productionProduction Weibull Historical costsPareto

Align with program objectives

Conduct risk assessment

Failure Modes and Effects Analysis (FMEA)

Normalize financial value

Throughput / cost value equivalency

Estimate probability of success Prioritize by adjusted value

Considering probability of success
53

Identifying potential improvements begins with information

Weibull Plot of Daily Production
99 98 95 90

Probability of NOT Making Daily Production %

80

= 515.4 63.2 % Daily Production Data

= 552.5

50

20

10

= 24.4
18.410 M Units per Year

= 11.89

16.996 M Units per Year

10

Production (1,000 Units / Day)

100

1000

54

Pareto production losses by unit

55

Consider all data to derive potential value gain

56

Improvement requires identifying cause

57

PlanImprovements

Form Improvement Action Teams

Prime responsibility for improvement initiatives Champion(s) / team leader(s) from Operational Leadership Team

Validate value prioritized potential improvements

Augment action teams with specific knowledge and experience

Develop improvement action plans for highest value improvements

Refine improvement opportunity including value justification Define specific objectives, future state, preliminary KPIs, Validate value delivered; contribution to business / mission objectives Develop detailed improvement action plan, specific activities and tasks to achieve objectives, including completion timelines Identify strengths to build on, potential barriers, weaknesses; actions to overcome barriers and weaknesses Identify resources (financial, technology, people, processes, systems, practices) and training necessary for implementation Define final measures of performance; activity and result KPIs with timelines Detail continuous improvement and sustaining plans Estimate probability of success; detail actions and activities to maximize probability; minimize barriers and risk Determine value delivered; adjusted by probability of success Identify responsibility, by name for implementation and results
58

Improvement Action Teams deliver success

Small collaborative, multi-function teams

5 to 7 members
Too small can be intimidating; too large, difficult to gain consensus

Led by champions from Operating Leadership Team Multi-function members

Knowledge, skills, institutional knowledge and experience necessary to develop and implement improvement initiatives Operations / production, maintenance and reliability Professional, supervisory, hourly crafts Multi-role and specialists (Subject Matter Experts) Computer expertise, literacy Data access, mining, analysis and reporting Credibility and respect within the organization

Willing to accept ownership, responsibility, accountability Ability to work together teamwork

Functional organizations provide assistance as necessary

Engineering, Safety, Finance, IT, HR, QA

Knowledge, skills and resources made available as needed

Specialty tasks, expertise; subject matter experts

Experienced facilitation and coaching to keep on track

59

Improvement Action Teams deliver success

Identify, develop and implement detailed improvement action plans

Review and refine improvement opportunity validate conclusions
Value/risk Objective end state, applicable strengths, weaknesses and barriers Time to reach interim and final objectives Resources required

Formulate optimum solutions; specific action plans to capitalize on the opportunity

Multiple initiatives with direct link to objective

Directed toward quick results create visibility, gain enthusiasm, support and momentum
Short action horizon 3 to 6 months from formation through implementation Divide large populations into improved and unimproved

Establish activity and results metrics

Assure improvements are implemented on schedule (activity metrics) Demonstrate contribution to mission / business objectives (results metrics)

Track and publicize gains create visibility, gain support and momentum

60

PlanImprovements II

Assemble set of improvements to meet program objectives

Valuation adjusted by probability of success Demonstrate contribution

Consider pilot implementation for large scale improvements

Minimize risk Work out any wrinkles on a small scale Recognize any compromises that may be required due to infrastructure, old processes outside the pilot

Develop transition plans where necessary

Transition between current and future conditions

Select four to six initiatives totaling approximately 125% of overall objective for submission to Steering Team Finalize and submit action plans obtain approval Publish improvement plan

Employee led leadership teams do unbelievably good strategic and tactical planning if you give them the opportunity. Most important, they gain total buy-in for the plan, Fortune 250 company CEO its implementation and results.

61

Matrix Implementation
Vivid Vision Communicated; High Level Agreement on the Need For Improvement; Commitment to Successful Implementation of OE Program
Designate Executive Champion, Appoint Corporate and Site Leadership, Steering Team, Program Leader Translate Corporate Business Objectives Into Overall OE Vision and Objectives, Business Drivers and Value Opportunities Develop OE Business and Mission Objectives; Compliance (SHE), Operating Effectiveness (Production Availability, Cost, LOE) Establish Business Aligned Overall Measures of Performance; Metrics, KPI's Develop the Site Overall Policy and Strategy Develop Business Model Form Communications Team; Develop Communications Strategy Initiate Consensus Development Within the Organization; Publicize Necessity for Improvement Design the Planning, Implementation and Sustainability Process Select OE Champions, Establish Improvement Action Team, Commence the OE Improvement Process Validate the OE Program Mission Statement
Risk Rank Systems and Equipment Categorize Areas for Improvement Establish Current Conditions Benchmark to Refine OE Objectives Highest Priority Value Opportunities History Culture, Values Strengths Results Expected Results / Value Probability Organization Weaknesses Value Potential Time Consequences Processes / Procedures Barriers Probability of Success Risk Future Material Opportunities Metrics Responsibility

Define
Organize

Identify
Analyze Prioritize

Identify Gaps to OE Performance Objectives; Value Prioritize Opportunities for Improvement Based on Value, Probability of Success Develop Value and Risk Prioritized OE Tactical Improvement Action Plans; Establish Measures of Performance; Control / Sustainability Plans Build and Train Organization; Expand Action Teams; Select OE Implementing Practices, Systems and Technology Practice Systems Methodology Technology Develop Competencies Deploy Risk / Value Prioritized OE Improvement Action Plans
Values, Culture, Relationships Basic Documentation Foundation Processes Organization and Administration Information and Data Management Risk Management and Mitigation Systems Reliability Improvement / Optimization Maintenance Optimization Integrity Assurance Incident, Test and Inspection Management Quality Assurance Reporting Programs Skills Management -- Training Communicate and Promote Results Measure and Manage Results Implement Continuous Improvement Review Program Assumptions, Envelope Emphasis on Continuous Improvement Reliability Culture P&ID'S Risk / Value Prioritization Champions Integrity Risk Determination Process IT Infrastructure Performance Based RCM / FMEA SIS Lifecycle Management Calibration Management Skills Management -- Training Automated Calculation Safety Wins Actual Results Production / Maintenance Partnership Asset Register Asset Hierarchy Work Management Materials Management Leadership Organizational Alignment Accuracy Availability / Security Reviewed and Validated High Risk Mitigation Process CMMS Recommendation Management Defect Based -- RCA Design Improvements Time Based PM Condition Based Electrical Distribution Integrity Thickness Measurement PRV Test Records RBI / Inspection Management Work Quality Reviews Configuration / Document Control Posted Published Team Professional / Craft Lessons People Metrics Gap Technology Risk Publicize Change Management Equipment History Lubrication RASCI Revision Control

Plan

Risk Optimized OE Strategy

Mobile Computing Lifecycle Analysis & Optimization Proactive Corrosion Prevention Incident Management Data Security Checked Certification / Records Continuing Work Corrective Action? Organization Compliance Promote

Implement

Measure, Monitor and Review Results Adjust and Improve Action Plans; Improve and Maintain the OE Program Evergreen
Process Practice Operating Raw Materials Extend Ownership; Institutionalize and Sustain Success Control Plan Communicate

Check Improve
Sustain

Safely Achieve Optimized Business and Market Value Return From Operations

62

ImplementImprovement plans

Conduct training
Awareness; program necessity, principles, values, objectives Details; technology, systems, processes and best practices

Implement improvement action plans Apply resources

People Technology, systems processes and best practices
Deploy new Improve existing

Deploy / optimize supporting processes

Information systems
If adequate information structure is not in place at the beginning of implementation, it must be installed at commencement so improvements create history Assure all changes are fully documented

Recognize that improvement initiatives will move at different paces

63

Checkmeasure and manage results

Measure and monitor activity (task) KPIs to assure good start

Improve training, resource insertion as required to maintain expectations Act promptly to eliminate deficiencies, remove barriers Identify and resolve concerns

Shift to results KPIs as soon as initial tasks / activities are completed

Confirm that improvements are succeeding
Producing the expected increase in mission / business results; value gained Divide large populations into improved and unimproved

Assure improvement initiatives are delivering objective results

Adjust, refine, modify, improve and extend improvement action plans and activities as necessary to gain objective, sustainable performance Identify and eliminate deficiencies
Improve sub-standard performance as soon as practicable

Identify additional high value areas for improvement

Value prioritize and address as soon as practicable

64

Communicatewidely

Report progress and success to Steering Team; executive and business management
Financial results demonstrating contribution to business / mission objectives Compliance with timeline

Publicize progress, results and successes to entire enterprise

Create visibility, elevate enthusiasm, support and momentum
Improvements accomplished / value created Compliance with results timeline Expectations Identify and publicize team and individual successes

Continue to build ownership, support and consensus

Conduct regular two-way communications

Make certain vision, action and results required are understood
Correct misunderstandings immediately

Consider employee survey Overcome resistance

Emphasize the necessity to understand and live by new roles and responsibilities Utilize rewards and peer pressure to assist achieving compliance with objectives Eliminate adversarial conflicts Provide counseling and additional training for underperformers

65

Improvecontinuously

Conduct formal performance assessments

Intervals determined by maturity; changes in factors that determine objectives and / or performance
Utilize formal template Maximize objectivity, consistency

Strategy
Validate all factors that influence the business / mission objectives, strategy and successful implementation of the program

Program
Producing continuing contribution to business / mission objectives Employ financially based measurements wherever possible Assure plans to reduce risk, gain optimum sustainable effectiveness and value remain effective and consistent with the strategy and objectives Identify and value prioritize continuing improvement opportunities

Continually reexamine results, opportunities

Identify deficiencies in execution; improve action plans

Improve active action plans; identify and develop additional improvements

66

Keep the Operational Excellence strategy current

Changing business / mission conditions elevate requirements for enterprise performance and effectiveness
Continuing pressure on performance (mission effectiveness, profit margins) results in corresponding pressure to reduce cost Operational Excellence must conclusively demonstrate greater benefits from improved effectiveness Provide continuing assurance that expenditures are being allocated correctly at the right time to gain optimum effectiveness
Infuse business / mission objectives into day to day management decisions

Make certain the 2nd and 3rd order effects (unintended consequences) associated with a change are fully identified and understood

Best benchmark enterprises are continually improving their performance

What was excellent last year may be average next year!

Periodically review and update Operational Excellence strategic objectives

67

Sustain gains

Review effectiveness of the sustaining control plan

Actions and activities to maintain, build on and sustain improvements
Continued monitoring of results; responsibility for action

Institutionalize gains and success

Assure sustaining plan followed Extend enthusiasm, ownership and commitment
Assure suggestions are considered; action reported Fair, open and honest relations and communications Create new institutional memory

Everyone thoroughly understands the personal and organizational benefits of increased efficiency and objective performance

Validate demobilization plan

Major pitfall prematurely declaring victory; demobilizing efforts
Must have continued effort until totally confident that improvements are sustainably institutionalized

The new way must be accepted as the only way!

Optimum way is the only way No remaining memory of the old way
68

Assessmentan essential process

Learning exercise Accomplished by a team

Composed of Subject Matter Experts in areas to be evaluated Led by an experienced individual Should have participated in multiple assessments as a team member Team fully trained in the assessment process and grading

Conducted in accordance with a template / scorecard

Covers all areas to be assessed Lists best practices; elements necessary for compliance Suggests questions to evaluate level of excellence Guidance to assure assessment and scoring are as objective and consistent as possible Four quartilesReactive Unawareness to Strategic Excellence

Accomplished in a series of interviews

Begins with a kick-off meeting Conducted in accordance with a detailed schedule Lists subject matter, knowledge, data and records to be evaluated Discussions recommended in interviewees office Scored individually by assessment team

Scores compiled by assessment team leader

Close out meeting conducted before departing site Summary, strengths, areas for improvement Final assessment report includes recommendations for improvements prepared by team membersmore important than scores
69

Typical assessment template

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Organized in logical domains

Facility performance, 0 to 4; 4 being industry best, in the areas of:

Performance, Results, Effectiveness Leadership, Vision and Organization; Work Culture and Institutional Values Business Strategy, Policy, Objectives and Plans Program; Legal Requirements, Description and Implementation Risk Identification, Assessment and Control Reliability Improvement Processes: RCM / FMEA Asset Integrity; Proof Tests and Inspections Optimization Programs, Practices and Procedures: PM, CBM Failure and Incident Analysis and Prevention: RCA Work and Stores Effectiveness Sustainability, Continuous Improvement Information Technology; Reporting, Data and Information Management Skills and Document Management Organizational Improvement and Transformation; Change Management Monitoring Results; Periodic Assessments: Audit
70

Starts from where you are

The Assessment Template

Asset Operational Excellence Program Evaluation Master Scorecard
Compiled by: John S Mitchell; johnsmitchell2@gmail.com
March 2010

Site or Facility Description

Name: Location: Industry: Year Commissioned: Capacity: Design: Average: Best achieved during: 24 Hours:

72 Hours:

Domains of Asset Operational Excellence

First Quartile Strategic Excellence 1. Performance, Results, Effectiveness: 2. Leadership, Vision and Organization; Work Culture and institutional Values: 3. Business Strategy, Policy, Objectives and Plans: 4. Program; Legal Requirements, Description and Implementation: 5. Risk Identification, Assessment and Control: 6. Reliability Improvement Processes: RCM / FMEA 7. Asset Integrity; Proof Tests and Inspections: 8. Optimization Programs, Practices and Procedures: PM, CBM 9. Failure and Incident Analysis and Prevention: RCA 10. Work and Stores Effectiveness: 11. Sustainability, Continuous Improvement: 12. Information Technology; Reporting, Data and Information Management: 13. Skills and Document Management: 14. Organizational Improvement and Transformation; Change Management: 15. Monitoring Results; Periodic Assessments: Audit

Best Practice; Levels of Excellence

Continuous Improvement Proactive Competence Managed Improvement Fourth Quartile Reactive Unawareness
Few or no performance objectives established beyond HSE Leadership and commitment not apparent, cooperative, ownership lacking Little or no stated vision, ineffective organization, inconsistent work culture No defined improvement program "World class" performance objectives, including HSE and asset operational effectiveness established, published and understood throughout the organization; site compliance demonstrated by KPI's Strong, visible, committed leadership, effective organizational structure, decision process and work culture; initiative, commitment and ownership throughout the organization Strong vision, policy and mission statement for Operational Excellence, published, understood and shared; solid, consensus strategy and detailed action plans linked to gaining organizational objectives Operational Excellence program well defined and documented; implementing processes defined and documented; all reviewed periodically, updated as necessary

Risk identification, assessment and control process documented and in place; governs application and implementation of asset integrity, Little or no knowledge or use of risk analysis reliability optimization, equipment management and surveillance programs; improvement and repair priorities or optimization Strategic, proactive reliability plan documented, fully utilized, periodically reviewed and updated; unexpected events "surprises", deviations from strategic plan, expectations rare All statutory, regulatory and site requirements for tests and inspections fully identified and documented; compliance assured by automated reporting variations from normal, out of limit measurements and test intervals Predictive (condition based: operating performance, mechanical condition) preventive and proactive programs fully documented including application, implementation, reporting and follow up requirements to assure effectiveness Robust Failure Analysis (RCA), tracking and prevention program fully defined, in place and effective; failures treated as a learning experience, opportunity to improve, eliminate recurrence Work and stores managed and conducted effectively in accordance with written, understood and utilized procedures; activities primarily determined by strategic plan; minimal ad hoc response to unexpected events required Continuous improvement program documented, in place and functioning effectively; capital replacement process documented and followed; Change Management process established, in-place and functioning Robust data and information infrastructure and management system; fast, accessible network, solid graduated security procedures; ready access; simplified, effective reporting Document and skills management system; written procedure in place, fully functional, easy to use and access including configuration control of all documentation, drawings, manuals, plans, etc; skills matrix in place with training, certification and succession plans Formalized program for organizational improvement and transformation documented. Individual appointed to lead and develop support for change throughout the organization, identifying opinion leaders, and establishing ambassador network. Periodic assessments conducted to evaluate performance, effectiveness and results to objectives. Assessment reports include recommendations for improvements No formal evaluations Little or no strategy; activities largely ad hoc response to events Statutory and regulatory requirements not fully defined; no reliable reporting system Support programs uncoordinated, little or no assurance of consistency or effectiveness Failure analysis accomplished inconsistently or not at all; ineffective follow up Work and stores management system non existent or ineffective No formal program for improvement; change management Poor IT infrastructure, data and information inconsistent, ineffective controls Inconsistent training; little or no document and skills management system in place

Scoring
1. Performance, Results, Effectiveness: HSE Compliance, Asset Effectiveness
Compliance Safety Health Environmental (HSE) objectives and requirements Full compliance with all legislative and statutory requirements for a safe, environmentally benign operation meeting all local expectations for good corporate citizenship. Clear objectives established, understood and reinforced.
Safety: OSHA Recordables or equivalent - Sites OSHA recordable rate over the last year; Five years. Objectives posted and stressed. Environmental incidents and/or local limits exceeded over the last year. Five years .

3.5 - 4.0

2.1 - 3.4

0.5 - 2.0

0 - 0.5

Focus on eliminating / minimizing potential event sources. Minimizing probability and / or consequences of events by continuing, comprehensive risk analysis and mitigation.

Continuing emphasis on learning and avoidance action from "near misses." Cultural commitment to HSE compliance.

Emphasis on HSE compliance; safety message and lessons learned discussed at every employee meeting. Performance to HSE metrics publicized and prominently displayed.

Low cultural commitment to HSE compliance. Compliance by directive; inconsistent adherence Environmental or safety incidents with significant consequences have occurred.

TRR <.8

TRR >.8 <1.8

TRR >1.8 <2.5

TRR >2.5

No significant incidents.

Minor incidents have occurred, without significant release of any kind. Action taken to prevent recurrence

Moderate-scale releases, events have occurred. Action taken to prevent recurrence.

Large-scale release event or fire have occurred resulting in property damage and / or injury.

71

Overall results
ASSET OPTIMIZATION PERFORMANCE EVAULATION
RESULTS, EFFECTIVENESS
10.00

Average Best Worst

MATERIALS MANAGEMENT, STORES EFFECTIVENESS

9.00 8.00 7.00 6.00

DEFINITION, BUSINESS OBJECTIVES, STRATEGY, TACTICAL & SUSTAINABILITY PLANS

WORK MANAGEMENT CONTROL & EXECUTION

5.00 4.00 3.00 2.00 1.00 0.00

INSTITUTIONAL VALUES, CULTURE, RELATIONSHIPS, COMMUNICATIONS

PMENT MANAGEMENT PROCESSES; LUBRICATION, PM, CBM, PROACTIVE

ORGANIZATIONAL EFFECTIVENESS, KNOWLEDGE, CHANG SKILLS MANAGEMENT

MAINTENANCE REQUIREMENTS ANALYSIS, PROGRAM ANALYSIS; RCM, FMEA

RELIABILITY ENGINEERING, RISK MANAGEMENT, RCA, CONTINUOUS IMPROVEMENT

OPERATING PERFORMANCE MEASUREMENT, MANAGEMENT & OPTIMIZATION

RELIABILITY MODELING, LIFE CYCLE ANALYSIS

RELIABILITY / MAINTABILITY FOR NEW EQUIPMENT

72

In Closing: Operational Excellence:

Requires essential characteristics Produces major benefits

Creates maximum value Promotes effectiveness in all activities Extends reliability Minimizes risk

Essentials for success

Clear vision stated, understood and accepted Solid values established, communicated and adopted by all in the organization
Initiative, ownership, commitment to excellence, responsibility and proactive continuous improvement throughout the organization

Effective operational leadership and organization; constructive work culture Ambitious, optimistic, and achievable operational objectives
Full compliance with business, mission and organizational objectives Established and owned by implementation action teams

Optimally applied; value driven risk and reliability optimizing strategy and programs Energized, empowered and motivated champions
Real ownership, initiative, responsibility and accountability by all program participants

Value and opportunity driven improvement initiatives

Formulated at the working level for maximum commitment and ownership Contribution to business objectives / mission compliance compellingly demonstrated
Increased profitability / mission compliance, availability, production output, quality, and reduced cost

Detailed improvement plans

Developed and owned by the action teams Prioritized and implemented in value order

Array of layered results oriented metrics and KPIs

Linked to overall business and organizational objectives Interim and final program operational objectives Measure to assure compliance, demonstrate value produced

74

Essentials for success

Financial system in place to accurately assess real costs and value produced Effective training
Initiated at launch, and continued throughout Skills matrix established and maintained current

Robust, accurate and accessible support programs, practices and procedures, technology
Deployed to address specific requirements

Complete, accurate data and information structure

Identify opportunities for improvement Monitor and display performance; communicate results Full document, configuration and data control

Effective management of change, personnel skills and certification Full commitment to continuous review, improvement and sustainability
Identification of additional opportunities for improvement Results institutionalized

Periodic assessments to measure performance; identify additional opportunities for improvement Tangible rewards for results and value created

75

Major benefits

Achieves highest safety and environmental (SHE) performance

Concentrates efforts on highest priority opportunities for improvement

Delivers maximum overall business / mission value and operating effectiveness

Maximizes business / mission value delivered Permanent improvements in availability, efficiency and reduced spending Success regardless of economic conditions! Demand driven (availability) and excess capacity (costs) Improves operational / mission effectiveness Gaps to objective performance identified, defined and closed Greater predictability reduced variation Minimal surprises Lost Opportunity (unplanned) Events (LOE) Identifies and eliminates defects improves operation, maintenance and design Safely reduce requirements for work only way to safely, permanently and sustainably reduce costs Increase reliability, extend operating life Minimize low value and unnecessary work Demands optimum operating surveillance leads to effective preventive, predictive and proactive tasks Deficiencies identified and corrected prior to failure; minimize unexpected interruptions Results demonstrated in credible business and financial terms Gains greatest credibility and organizational support

Gains optimum balance between risk, reliability and cost effectiveness

Identification, management and improvement prioritized by potential value / return Only path to safe, sustainable improvements

76

Major benefits

Gains effective institutional culture and resource utilization

Totally defined organization; roles and responsibilities Optimal resource effectiveness People, material and financial Maximum contribution from engaged, energetic work culture committed to excellence Gained from inclusion, motivation, enthusiasm, commitment, ownership and responsibility

Assures best processes, practices and technology

Established and sustained in a most effective, risk / value prioritized sequence

Delivers maximum value and return from improvements

Identified, prioritized and implemented based on business / mission objectives; value delivered: Attainment of objective / expected / required performance Reduced risk Resources required; cost and time Potential value gain Includes the probability that improvement initiatives will produce expected results

Increases capital effectiveness

Extend operating lifetime Operate safely for longer intervals at lower costs Minimizes requirement for additional capacity Improve logistics Reduce work in process (WIP) Reduce stocked spare parts

Sustaining
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A few quotes
From the Physical Asset Management Handbook Employee knowledge of the business environment, its ramifications for company success and job preservation through participation in the improvement process has promoted ownership and a desire to maximize opportunities. Ownership and commitment is essential to successful change and takes time and effort to gain. Employees resist change. They will typically ride out management directed changes because experience indicates the change will be forgotten in six months or the change itself will be changed. Employee involvement and ownership must be part of the overall strategy. Employees must know and believe why they must change and improve. A clear strategy paves the way to the necessity for changes. When a manager inquired why no one had ever mentioned the huge waste and inefficiencies within the old system, workers replied: You never asked!

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Thank You!
Questions, comments?

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