Tag: #Productivity

Secret of experts: How to recognise HIDDEN LOST OPPORTUNITY?

Years ago I participated in Productivity Audit in a factory of tile stove bricks. The raw materials cost almost nothing (clay, sand, Cornish stone,) bricks formed manually (cheap manual work), only cost were gas for furnace where shaped bricks become final product. Low cost production, people and machines working, demand and prices there – still company on edge of squib! How it is possible?

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  1. First remarked: out of finished product at the end of the oven, average 62% satisfied quality criteria to be sold at full price.

In average 38% of daily production is loaded, baked, unloaded, transported, controlled, ground again to be added to the raw material.

2. The ratio actually was even worst: 54% was OK, additional 8% obtained after dimension- and crack reparation.

There was a small workshop with operators who transported, repaired, sort 25% of the daily production to be recovered 8% at the end.

3. At brick shaping worked 24 persons. The individual score of workers in shaping vary 52 – 90 per shift.

Variation = 90 -52 =38; (variation/2)*24 =19*24 = 456 So, at daily shaping exit at least 456 bricks (more than 25%) more or less, dependently who came on job.

This is the moment, to zoom in, what a production machine is doing during the shift time (planned production time):

  1. A machine is producing at nominal speed
  2. A machine is producing (working slower then nominal)
  3. A machine is stopped (any reason: no work, failure, waiting time)

We would like to have the case 1 all the time, isn’t it? Sure, but happens cases 2 & 3 as well!

In case 3 is obvious: this is a LOST OPPORTUNITY

Case 2 is tricky. If you look at the machine, it is producing. But if you do not measure hourly outcome and do not compare it to nominal value, you do not know is there a HIDDEN LOST OPPORTUNITY, or not!

Factory described above contains plenty of examples of hidden opportunities, to be recognized:

  1. Owen utilization. In average 38 % of the used gas thrown away (wasn’t used to make product)
  2. In order to “gain”  more 8% product, 24% of products worked double (time and money thrown away)
  3. In lack of skilled persons at shaping lost daily at least 25% of production time. (The same amount could be achieved by 18 skilled workers. Why they paid 24?)  

Conclusion:

In order to be able to recognize: is there a lost opportunity in your company, you need figures and daily evaluation of them. Implementation of relevant KPI’s, proper system of evaluation and fine tuning based on KPI value can dramatically improve productivity situation in a short time! And all we know, that profitability is following productivity!

At the end one question remained: how it is at your organization?

To ask specific questions click on CONTACT, write email on robertburu@gmail.com or WhatsApp message at: +40 753 057 303!

Make a Productivity Audit!

Whereas the fluctuation of productivity is followed by fluctuation of profitability (source: Arthur Ha, L. S., W.F.), it matters a lot how much is the productivity, right? That’s why you need a Productivity Audit! You need to know:

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As we told in previous articles, KPI’s in general (Productivity as well) are values that represent short period outcome (period for calculation can be a shift, a week, a month, a year), and they are influenced by our intervention.  It is a high importance to know: what is the value of Productivity (H/Hmax)? Is it 65%; 75%; or 85%? Does the way I manage the unit assure me high profitability, or I still have room for improvement (how much it is?), or I still miss to control important details in daily production?

Most of the companies defined their system of Productivity figures and day by day work on their improvement, while others are still in a process of defining necessary ones. In a both case there is a question: does existing figures give a reliable model of production, or some aspects still remained uncovered? (For example: in a Hungarian metal parts company welders were paid after pieces produced and it was a strong believe this assures high productivity. In reality this resulted in a lot of individual easy doable parts, what couldn’t compose a sellable unit, so production volume remained behind.)

Doing an Audit, you enhance the credibility and reliability of figures you have.  Even more important, you assure that you follow all relevant parameters and cumulative effect of small, everyday changes doesn’t lead to corruption of parameters and values! (For example, an international company from S.M. makes External Productivity Audit over challenging areas each 6 month, to discover anomalies before they become overgrown.)

Audits of course, are very different by area they cover (a machine, workshop, product, company) and of depth in entering into details. Still, they have the general characteristics similar:

  1. VSM (Focuses at certain segment of VSM =Value Stream Map)
  2. Operational studies are used: Efficiency, capacity utilization on bottleneck positions, work instructions)
  3. FE (Floor Experience), TUE (Time Utilization Experience), FMBE (Floor Manager Behavior Experience) – studies that quantifies behavior patterns
  4. MS (Management System) – where information arrives, and what happens upon values
  5. Conclusion, Proposal – Auditor gives his opinion in a percentage of Productivity and proposal how to mobilize currently unused opportunity.

Beyond the scope of Audit:

A Productivity Audit is agreed and planned: over what part of VSM, main focus, duration, but solutions with investment in new technology and machines are not examined.

What prevents me to do it:

  1. “My company is doing well.”

Yes, it is. Are you sure, there is no more room for improvement? For sure doesn’t appeared signs of erosion in MS?

2. “We’re functioning mainly fine, except of … but we are not going to solve that because of  … (to big investment, to much Down Time, to big construction).”

So many times heard this sentence, and in 95% proven: mentioned reason not that size and other, more serious weakness let profit to leak away!

3. “Our production is unique and we have very complicated system. I don’t know, how somebody from outside could …”

Each company (even these ones with the same product) is different and unique. Auditor’s experience lays in recognizing principles beyond surface and calculating how fare is the produced result from ideal.

4. “I don’t want somebody to tell me, what I should do!”

Real Consultant will never tell to Client, what he should do! He is auditing the premise, makes benchmarking and measurement and describes the situation, giving you options as a comment. Customer will decide which option will take!

5. “Installed machines and solutions at our plant represent Top Secret. I don’t want to reveal them.”

There is a Confidentiality Agreement to be signed off. Believe me, Consultant wouldn’t hazard to appear as a source of rumors!

Summary:

To do an External Audit gives an impartial vision about Productivity of units done by a skilled experienced person with unbiased eyes, working exclusively on discovery of further improvement possibilities. At the end you receive the ratio H/Hmax in figures, and options to mobilize possibility what is there and it is not used in a moment.

Ask for details or schedule an Audit clicking at CONTACT or write a mail at robertburu@gmail.com or send a WhatsApp message at +40 753 057 303!

Why this Blog?

Hi, there! My name is Robert, and I’m happy you’re reading my blog!

20 years ago I joined to a global American company IMPAC. Along with colleagues I worked on implementation of KPI (Key Performance Indicator, meaning numeral values of relevant parameters of processes in an organization). In the framework of projects I held trainings, workshops, to users how to define, measure, interpret and control their values.

I had a chance to experience how this method gives results in a meat processing factory in Sweden (where employees spend their 10 min pause resting in arm chairs in a club-room equipped with newspapers, coffee and tea machines) and in a metal foundry factory in Ural (Russia) where operators spent their 10 min pause smoking and drinking while seating on empty cans of oil! To implement measurements were necessary in both companies, and it gave result in Sweden and Russia as well!  

Each company is unique, has his own targets and ways of realization, but they are led by managers, operated by employees and we know: people have their good and bad moments everywhere on the globe! That’s the reason, KPI system functions good as:

  • The relevant parameters of process are found (example: tiles factory – number of produced tiles is relevant, their color not that much)
  • The measurement of KPI is formulated simply and precisely (Simply summarizing of number of tiles is not OK because of different dimension tile. Now we see, that not number, but the produced surface is relevant and we convert number in a surface!)
  • Result are evaluated prompt (not after 2 weeks)
  • Value of figures are used as an entry parameter of corrective actions that are shaping next day production
  • Employees receive feedback based on measured values

In this blog you will found experiences collected working with companies while they improved their productivity figures, and made their processes safer, stabile and employees more engaged.  

What is surprising to me:

  • Managers of well-known companies I met (some of them present on the stock market) all are aware there is room for improvement in their business
  • They decided to use this room mobilizing their inner reserve
  • Gartner-s statistical data says: 80 % of companies already decided to invest in improvement

In this blog I want to share my experiences in this journey, and open possibility to give on-line/on-site support for you, who is taking the same way!

When you read about subject you are interested in, use CONTACT page, write an email or a WhatsApp message (+40 753 057 303) with your question, I respond you with more details of interest!

Please find impression of Managers, I worked with:

“In this period we experienced constant decrease of necessary worked hours for the same production volume, at the end we arrived to more than 25% and in a same time raw material yield showed remarkable increase.”

 – C.C., Production Manager, Wood Processing, B. Mare –

“In conclusion I highly recommend the services of Nopon to those who want to restructure their business and obtain major improvements. Please feel free to contact me…”

 – Marian Cristea, Sales Manager, Au – Hu – Ro Plastic Products, Bucharest – 

   Expecting your questions: Robert Buru

Freedom of KPI

KPI is a measurable value of relevant parameter what shows current status on the road towards target. For example we spend 6,6 People Worked Hour (PWH) to produce one chair => KPI1 = 6,6.

Usually we use a set of KPI-s, to describe a process (we need 0,05m3 wood for the chair =>KPI2 = 0,05; we put 0,15 kg paint on the chair =>KPI3 = 0,15; and so on).

Let’s   review  top  4 ones,  from many of benefits to have KPI’s!

  1. KPI’s gives me a possibility to know: if I continue the same way as I did today, I will arrive to the target or not!

For example: If I planned to spend 0,16 kg paint / chair, as KPI3 = 0,15 => I do O.K., I will make profit.

2. If I make a change in production process, will show me does this change help me to achieve target, or not?

For example: I found a cheaper wood supplier, I received the shipment, and now I spend 0,06m3 wood per chair. Not sure, it is a good business!

3. KPI has their value, and I can compare direct values or calculated values.

a. New KPI2 = 0,06 I spend 1% more wood from new supplier, than earlier.

b. Wood of new supplier is cheaper for 3% /m3. It seems, it’s still profitable for me to buy from the new one!

4. Possibility to compare (bench mark) values.

a. Example: In shift A they spend 6,6 PWH /chair (KPI1=6,6), however in shift B KPI1 = 7,2 (What is happening there?!?)

b. Example: In factory in Arad average value of KPI1 = 6,7; in Sibiu factory KPI1= 6,5. (It seems, factory in Sibiu is better organized!)

Myths about KPI’s:

  1. My business does need KPI’s.

Not true! Each business needs them!

Why: You do not do profit & loss calculation each day, but once (twice) per year. You should know the way how your organization performs will lead to profit, or loss!

2. I know what I’m doing and my people as well. We do not need KPI’s.

Not true!

Why: You know your good intention, and intention of colleagues. You should know the result as well!

3. I do not have time to spend for reviewing KPI’s

Hmm…

The primary task of a manager is to use certain amount of resources to achieve specific target. If you do not measure how much you used, if you don’t know how far is the target…?  

4. My business does not have KPI’s

It has. Every business has.

Can happen, it’s not visible what values should be measured, or the relevant ones it’s hard to measure (Example: customer satisfaction). An experienced Productivity specialist will guide you to establish the right measurement for relevant values of your processes.

Why people avoid to use KPI’s?

  1. Fear from the transparency

What will happen, if John discovers he has better results than Jim, but Jim is the favorite?

People on the workplace should be evaluated based on their work results, not based on sympathy or friendship. Giving appropriate feedback based on measured results will encourage the team to go after performance improvement!

2. Procrastination

As I see KPI1 =7,2 week by week and I know, it should be below 7, in my thoughts I know: I should intervene in process and I do not do, I rather avoid to watch KPI. This strategy certainly leads to loss… In this case better to employ a Productivity Consultant, to found a right solution!

After all … What to do regarding KPI’s?

  1. Have implemented set of KPI’s
  2. Check, do they represent all relevant parameters! (If not sure, ask for an audit. It is better to invest in an audit, than to have a less than optimal KPI’s!)
  3. Learn your organization to evaluate values!
  4. Encourage managers to make adjustment in process to arrive values of KPI’s to desired ones!
  5. Keep process running and enjoy your coffee!

To establish co-operation, click on CONTACT, send a WhatsApp message on +40 753 057 303 or a mail to robertburu@gmail.com !