Sometimes moving an entire organization pales in comparison to adjusting the mindset of one manager.
In 2008, I was in an engineering support role and wanted to implement a process reliability approach developed by H. Paul Barringer in the mid-90s (a mentor of mine at the time) to quantify the hidden-opportunity to improve overall reliability, not just equipment reliability in the Oil & Gas Industry. As part of the Six Sigma Greenbelt Project that I used to implement this approach, I was able to quantify 30% of hidden capacity in the company assets while in a sold-out market. The company was considering a $500 million capital project to address this shortfall.
A senior and influential business manager reviewed the results of this project and concluded the results were flawed. He stated that because the business was making a lot of money, he didn’t even believe that the plants were performing this poorly. He further voiced that even if portions of the analysis were correct, the report did not tell them what to work on to extract more capability, and therefore was of no value to the company. Of course, the resistance of this manager made me wonder if the hill was even worth the climb to continuing pursuing the Barringer approach within this company. I started thinking that perhaps he had a problem with the fact that the analysis pointed out certain management issues as contributing factors to hiding this capacity in the first place and therefore he rejected the approach itself.
A few other managers were intrigued with the results and would offer their support if I could also use the approach to define specific improvement projects to release the hidden capacity identified. I contemplated that an integration of simple Monte Carlo analysis combined with Barringer Process Reliability could meet this challenge.
I knew that it was unconventional to use a single Monte Carlo simulation to combine the output from multiple production lines. Everyone told me it wouldn’t work, but I just knew it would if it was given a chance. At the same time, I was apprehensive to blaze a new frontier for fear of overpromising and under delivering that is typical of many production operations with reliability issues. In the end, I met the challenge through a focused execution of Lean, Reliability and Six Sigma tools that delivered a sustainable improvement that yielded a 15% capacity increase, $44 million increase in product sales and allowed a deferral of the $500 million capital project to meet the projected business demand shortfall. I now refer to this problem-solving approach as the “Dollarized Pareto Plan”. As I worked to develop this approach, it became crystal clear that people commonly talked about lack of execution because of a lack of:
- Focused Value-Add Improvements
- Clear Priorities
- Meaningful Vision
I saw the global impact this could have and developed a passion to drive this into the very fabric of my business. Process Reliability as developed by the late H. Paul Barringer is all about driving effectiveness in management. Paul has since passed on and handed the baton to me to carry on the education of Process Reliability. I, like Paul, am developing my organization to bring his dream to reality. I have overcome many pitfalls and resistance over the years. I have learned to address the skepticism by customizing this process according to the specific needs of each business. I’ve developed a holistic approach for a business case for leadership development vs. a perceived blame on management. I call this solution “Profit-Driven Process Reliability”.
TO ACHIEVE World Class Excellence (WCE) REQUIRES THAT AN ORGANIZATION ACHIEVE PROFIT-DRIVEN PROCESS RELIABILITY THROUGH CONTINUOUSLY EXECUTING AND IMPROVING IN ALL SYSTEMS. A HOLISTIC APPROACH OR PLAN MUST INCLUDE A FOCUSED BLEND OF PEOPLE, TECHNOLOGY, AND PROCESS IMPROVEMENT INITIATIVES.
Many companies have embarked on an asset management or continuous improvement journey but have fallen short of achieving world class and high cultural performance. They may never realize or sustain the full potential of having this competitive advantage. Historically, 3X the organic revenue growth in future years is generated through strategic execution of innovation for new processes and product programs. An additional benefit is that it also sends positive signals to the marketplace that the company is executing breakthrough operational excellence technologies that will drive sustainable profitability.
In my 35+ years of global consulting experience with Fortune 500 companies, I have observed these organizations commonly thrive on heroic reactive actions to get business, operational failures back on track. They failed to answer, “Could proactive measures have prevented those failures and elevated the business operation to a higher level in the first place?” In many cases, proactive measures would have created a remarkable benefit, but instead, it went unrealized.
To agree on common terminology we’ll turn to Wikipedia and The Business Dictionary to define several key terms as follows:
A simpler definition of sustainability is a call to action (CTA), a task in progress or journey. To be realistic and achievable involves a political process; clear definitions and vision must govern the common goals and values that are understood by all to achieve the desired levels of sustained profitability.
Finally, The Business Dictionary defines profitability as the state or condition of yielding profit or gain. It is often measured by price to earnings ratio, and the issue becomes how well it is sustained over longer periods of time.
How Will You Know When You Get There?
So how do you know when you have achieved the desired level of execution excellence? Is it gut-feel-as-you-go? Or, do you have other less subjective and equally effective ways of knowing when you have gotten there? Maybe a better question is, have you ever achieved your desired level of execution excellence? If you answer no, perhaps after reading this article, you will have better insight, and we can work together and connect to help you determine and align and execute your measurable strategy to sustainable profits.
If growth is dependent on strategy execution, how can a business proactively deliver the growth if they are not effectively measuring the organizational excellence in leadership agreement and execution of the strategy?
There is a whole host of sustainability strategies out there for using existing resources optimally the achievement of long-term growth in a responsible and balanced way. Within a business context, economic sustainability involves using the many assets of the company efficiently to allow it to continue functioning profitably over longer periods of time.
You Can’t Know If You Don’t Measure
How can you know any of the above if you are not effectively measuring? Traditional six-sigma efforts use statistical tools (most often the bell-shaped Gaussian distribution) to help find root causes of problems, provide mile-marker metrics. Since most production output data is not bell shaped data, we need a more advanced tool to help define the problem-solving indicators.
Weibull analysis of daily production output (using skewed Weibull distributions) helps quantify problems and offer a system for corrective action:
- Quantify and show the business reliability of the production process
- Measure the losses due primarily to facility and equipment issues (special cause)
- Measure the losses from process and human planning problems (common cause)
- Analyze the size of the hidden operations with suggestions for as corrective action commonly thru a corrective action system, (FRACAS) – Failure Reporting, Analysis and Corrective Action System
We have developed a unique execution key performance indicator (KPI) derived from the results of these advanced statistical methods and production output. This KPI moves across the continuum states of excellence from reactive-preventive-predictive-proactive based on the level of leadership focus and intensity of driving improvements.
If you want to effectively execute the “Dollarized Pareto Plan” to achieve sustainable excellence, please review my newly patented brand QMAX$® for driving overall Asset Health & Risk Management Value Delivery.