What gets managed MUST be measured – Including VARIANCE.
It is easy to get excited about the many opportunities that LEAN can bring to your organization. Even more exciting are the results that a well implemented Lean Strategy can bring to your organization.
Achieving improvement objectives implies that some form of measurement process exists – the proof. A clear link should be established to the metric you choose and the activity being managed to support the ongoing improvement initiatives.
Measure with Meaning
Why are you “collecting” OEE data? While OEE can and should be used to measure the effectiveness of your manufacturing operations, OEE on its own does not present a complete solution. It is true that OEE presents a single metric that serves as an indicator of performance, however, it does not provide any insight with respect to VARIANCES that are or may be present in the system.
We have encountered numerous operations where OEE data can be very misleading. OEE data can be calculated using various measurement categories: by machine, part number, shift, employee, supervisor, department, day, month, and so on.
VARIANCE: the leading cause of waste!
Quality professionals are more than familiar with variance. Statistically capable processes are every quality managers dream. Unfortunately, very little attention or focus is applied to variances experienced on the production side of the business.
Some may be reading this and wonder where this is going. The answer is simple, rates of production are subject to variance. Quite simply, if you review the individual OEE results of any machine for each run over an extended period of time, you will notice that the number is not a constant. The performance, availability, and quality factors are all different from one run to the next. One run may experience more downtime than another, a sluggish machine may result in reduced in performance, or material problems may be giving rise to increased quality failures (scrap).
So, while the OEE trend may show improvement over time, it is clear that variances are present in the process. Quality professionals readily understand the link between process variation and product quality. Similarly, variation in process rates and equipment reliability factors affect the OEE for a given machine.
We recommend performing a statistical analysis of variance (ANOVA) for the raw production data, including the OEE data, for individual processes. How much easier would it be if you could schedule a machine to run parts and know that you will get them when you needed them? You can’t skip the process deep dive. You need to understand how each process affects the overall top level OEE index that is performance so you can develop and implement specific improvement actions.
The best demonstration we have seen that illustrates how process variation impacts your operation is presented through a “process simulation” developed from Eli Goldratts book, The Goal. We will share this simulation in a separate post. Experiencing the effect of process variation is much more meaningful and memorable than a spreadsheet full of numbers.
Conflict Management and OEE
In some environments we have encountered, the interpretation of LEAN strategy at the shop floor level is to set minimum performance objectives with punitive consequences.
Cultures like this are becoming rare, however, we have found that they also give rise to the OEE genius. If performance is measured daily, the OEE genius will make sure a high performing job is part of the mix to improve the “overall” result. This is akin to taking an easy course of study to “pull up” the average.
It is clear from this example, that you will miss opportunties to improve your operation if the culture is tainted by conflicting performance objectives. The objective is to reveal sources of variation to eliminate waste and variation in your process, not find better ways to hide it.
Variance in daily output rates are normal. How much are you willing to accept? Do you know what normal is? Understanding process variance and OEE as complementary metrics will surely help to identify more opportunities for improvement.
Feel free to send your questions or comments to LeanExecution@gmail.com
Until next time, stay LEAN!
VERGENCE Analytics 