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论老子

道,领导也。领导必需要不断呼唤,教导下属以及以身作则。下属的过和错皆因领导懒惰。

 
 
 

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Chapter 21: Operating Equipment Efficiency  

2012-06-24 11:53:09|  分类: Buffer Mentality |  标签: |举报 |字号 订阅

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In accordance with phase 2 of the HOS standard implementation framework, there is a need to collect baseline data of the existing operations. Gurmit Singh requested me to collect the Operating Equipment Efficiency (abbreviation, OEE) for all the equipment. There are 19 production cells and in each cell there are more than 10 pieces of equipment. Minimally, there are more than 190 pieces of equipment.

I said, “I am not worried I would not be able to collect all these data. The management team in Bintan is very supportive. But what I am afraid is at the end of the data collection, I could not make use of these data and thereby, I’ll be a big let-down to my fellow management team.

Why do I say so?

Operating Equipment Efficiency is a topic that is hotly debated. How do you derive the final OEE number? This number is crucial in the determination of the factory capacity and thus, in its profitability. A number that is too low will automatically result in very much lower profitability for the company. A number that is slightly on the high side will put a lot of pressure on the management team to work harder.

If a management team wants to have more buffers, it will opt for a much lower OEE number than it could achieve without the need to put in too much effort.

If the management team wants to have a lower level of buffers, it will opt for a slightly higher number and this means it has to work harder to drive its employees to work harder as well.

Having said these, the basic underlying message is buffer mentality.”

Gurmit ignored my reply and said, “No, Eric. I am a certified lean master. In order for me to carry out a lean project, I must collect the baseline data. OEE is one of the crucial baseline data. Do you want to put up a road block with this excuse?”

I explained, “It is too early to say I am putting up obstacle in front of you. First and foremost, to different people OEE just means different thing. You explain to me what OEE means to you. Define it clearly if you can. Otherwise, I will collect the wrong information for you. It will be a complete waste of time then.”

Gurmit pulled up a file from his laptop. He flashed it onto the over-head projector screen. “Here is what I learnt from the lean expert master workshop,” he said.

 

Figure 21-1: Another view of OEE

Chapter 21: Operating Equipment Efficiency - 浪里行舟 - 论老子
  

I asked, “Which are the metrics to be tracked? There are quite a few of them.”

Gurmit explained, “Of course, all the metrics such as: downtime losses, speed losses and quality losses.”

“Do you want me track the above 3 metrics for all the 190 plus pieces of equipment?”

“Yes. Why not? Without these three metrics, I cannot compute the OEE as defined in the formula. This formula is very neat and easy to understand, doesn’t it?” said Gurmit.

“By the way, I am not going to debate over what these three metrics, downtime losses, speed losses and quality losses are. You must be a little crazy to expect me to collect all these metrics for all 190 plus pieces of equipment.

First and foremost, do you see a difference between 100% OEE entitlement and the OEE as defined in the formula?” I asked.

Gurmit explained, “100% OEE entitlement is straight forward. It is the total available time scheduled. Usually, it minuses off the weekends, public holidays, lunches, breaks and excess capacity which is usually in the form of the remaining useable time as a result of running a one or two shift operations per day.

OEE is the net percentage after deducting the above downtime losses, speed losses and quality losses. It is slightly more complicated. But we have to do it. It is a better reflection of the actual operating capacity of the equipment.”

I pushed forward my argument. I asked, “If a production planner were to use the 100% entitlement number to load the production volume for the day, what will happen at the end of the day?”

Gurmit replied, “Of course, the factory will never be able to meet the planned output for the day. Downtime losses, speed losses and quality losses would have eaten into a considerable amount of the output losses.

In this example, it can only meet 76.7% of the planned output. The remaining 23.3% will be lost to downtime losses, speed losses and quality losses.”

“Do you think it is wise to use the 100% OEE entitlement to plan for the day’s production loading and assume the production folks have to stay back over-time to make up for the 23.3% losses?” I asked.

“Hey! Eric,” exclaimed Gurmit, “Nobody does that. You are killing yourself. You will be running your people on overtime non-stop everyday to clear backlogs arising out of these three losses. That is unwise.”

“Are you suggesting the production planner to use the OEE as defined in this example to plan for the day’s output?” I asked.

“Yes, this is the reason why the professor taught us in the workshop. Use this OEE formula. It cannot be wrong,” said Gurmit.

“I respect the professor who came out with this wonderfully neat OEE formula,” I lamented, “But I am afraid this professor never had a hands-on experience running a production operations.

Neither does he understand the basic principle of the Toyota Production System. I mean, the lean production system is supposed to mimic the true soul and spirit of the Toyota Production System.”

“Hey! Wait a minute. How can you say that? A professor knows a lot more than you do,” Gurmit stopped me.

I asked, “Assuming the production planner use the OEE number computed based on this formula to plan for the day’s loading. What do you think the scenario is at the end of the day?”

“Half the time, the planned output will be produced at the end of the shift. Half the time, the production folks have to work over time to complete the remaining quantity that might spill beyond the end of the shift. That is how the average number works,” explained Gurmit.

“Let me give you all the benefit of doubts. Everyday, the planned output was met by the end of the day without incurring any over time. Do you want to give your management team a pad on their back for doing a fine job? And give all the managers a big fat bonus at the end of the year?” I asked.

“Yes, that should be the case. Indeed they had met the production planned quantity 100% of the time and that is 100% on-time delivery, assuming there is no cock-up at the shipping end,” said Gurmit.

“If this management team is hitting 100% on-time delivery at the OEE rating computed by this formula everyday and giving themselves hefty bonus at the end of the year annually for achieving this glorious 100% on-time delivery performance, it will not need to do anything else and it would not do anything else. Am I right?

What can be better than achieving 100% on-time delivery performance? It is simply a case of one blinding himself with its own glorifying successes,” I lamented.

“Hey! Eric. What’s wrong with that? Don’t you think the management had done a great job? Meeting 100% on-time delivery everyday is excellent performance,” asked a baffled Gurmit.

“In my opinion, this management team had done a great job in putting an eye-mask over everybody’s eyes and sleeps until one fine day when some of the team members woke up and realized they had completed lost out to their competitors,” I said.

“No. No. No. I don’t get you, Eric. What is an eye-mask?” said Gurmit.

I asked a prodding question, “Had the management team done anything to reduce the downtime losses, the speed losses and the quality losses?”

“Hm! I guess so. They must be working on these losses,” replied Gurmit.

“What do you mean by ‘I guess so’? Are they passionately working on these three losses or not?” I asked.

“Will they be passionately working on these three losses? I don’t think so,” said Gurmit.

“If the answer is ‘No’ and while its competitors are, what do you think the relative performance of these two companies is?

Who will bring its costs down faster? Who will enjoy a bigger profit margin? Who has a bigger profit margin to play with if there is a need to cut the selling price to increase market share? When a price war is started by the more efficient competitor, who will win eventually?” I asked.

Gurmit was dumb-folded. He could not utter a word.

I reiterated, “The philosophy behind the Toyota Production System is to surface problems and makes everybody works on the problems immediately. What you had learnt about lean production from the lean master workshop perhaps, is merely about the lean production tools. You have yet to learn the true spirit of the Toyota Production System.

The Toyota Production System has one and only one aim. That is, to set up a production system that surfaces problems immediately to draw the attention of the employees to take immediately action to resolve a problem as and when it arises and not to provide any kind of buffer to cushion it from being surfaced for immediate attention.

Using the OEE formula that deducts away the downtime losses, speed losses and quality losses before finally arriving at the capacity available for the production planning department to plan for the day’s loading is as good as telling everyone, it is alright to operate at the current level of downtime losses, speed losses or quality losses. This is what I called, the eye-mask. It effectively removes the need or an urgency to reduce these losses.”

Gurmit shook his head and said, “Eric, you got a point. But everyone who goes through the lean master workshop studied the same OEE formula and everybody is using it. If you were to insist using the 100% OEE entitlement to plan for the day’s production loading and assume the production folks have to stay back over-time to make up for the 23.3% losses, you will be thrown out of the office. This is a serious contention that you cannot beat into the site leaders who run the operations.”

I lamented, “This is the key reason that explains why no other company in the world ever could emulate Toyota Motor Corporation’s success. All these companies cannot break free from their buffer mentality. No other words explain better than this phase that describes why no other companies ever can emulate Toyota success. It is ‘buffer mentality’, ‘buffer mentality’ and ‘buffer mentality’.”

“No! No! No! I don’t agree with you. There are so many companies that had achieved sterling successes. Other than the Toyota Production System that started in 1945, there are a few American organizations that are very successful. See the Figure below,” Gurmit flashed onto the screen a Powerpoint slide he extracted from his workshop materials.

 

 Figure 21-2: Some successful lean production systems

Chapter 21: Operating Equipment Efficiency - 浪里行舟 - 论老子
  

I said, “Gurmit, I am not interested to engage with you in this kind of debate. If I were to be given a chance to visit any of these American organizations that claimed it had successfully implemented the lean production system, I would want to diagnose the organization for the presence of one simple thing. That is, buffer mentality.

I will examine all its management reports and walk down the production floor. All that I want to find out are two things. One, I will look out for the presence of obvious tangible buffer inventory in the form of work-in-progress (abbreviation WIP). Two, I will interview the employees at several levels to figure out an intangible thing that resides in their minds called, ‘buffer mentality’.”

“Why buffer mentality again?” asked Gurmit.

“Very few people in this world truly understand that the insurmountable obstacle laying in the way of implementing the lean production system (or for that matter, in whatever acronyms) is not the lack of knowledge in the lean production techniques. The most crucial mental block lies in the form of buffer mentality.

And a truly great sinseh must first identify exactly what is the buffer mentality that lies in the minds of each division or department manager. He then tailors his lean project in accordance with the buffer mentality he had observed.

I cannot lead you on this discussion any further. You must learn to appreciate the presence of buffer mentality in everyone’s mind. The OEE is the first buffer mentality that you must look out for. This is because the use of the OEE formula that you have learnt in your lean master workshop will forever condemn the company to mediocre performance.”   

 


 

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