Chemical industry: Competing with the "China price"

Chinese producers are consistently offering materials that are cheaper than most American and European producers. This influx of lower cost supplies is threatening the welfare of some domestic plants. How are these American plants dealing with the issue? Voice your opinion on how you'd deal with it with our online poll inside the story.

By Bernie Price, Polaris Veritas Inc.

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Benchmarking a plant against those that are world-class establishes the “as is” performance, which is then compared with the “to be” or desired performance, allowing progress to be measured. For simplicity, it makes sense to consider the four possible, stable operating states from reactive to world class, as defined in the “Manufacturing Game,” by Ledet Enterprises (Figure 2). Four key indicators are used to describe these states:

• process reliability percentage;
• current operating rate as a percentage of design or “best-ever demonstrated rate;”
• percentage of salable first-quality product (i.e., right-first-time material); and
• plant repair cost as a percentage of plant replacement value (PRV).

Let’s look at how the program can be implemented at a typical plant now operating in the reactive mode, that is, with an OEE of 65% or less.

Essential steps and decisions
Carefully choose an approach that matches the individual plant’s technical and managerial capabilities. Realistically consider current strengths and weaknesses and the nature of the workforce. For instance, culture change and broad employee participation might take more time to develop at a plant with union workers. Likewise, if an organization has technical shortcomings but needs immediate results, avoid techniques like reliability centered maintenance (RCM) or failure mode, effects and criticality analysis (FMECA) that require major technical input and can take years to implement. Then, perform the following to help sell the proposal to senior management.

• Calculate the financial cost of the lack of manufacturing efficiency and develop a realistic timetable to get to where is needed to survive. Multiply the value of current production by the difference in OEE after the expected improvement has been made.
• Place a complete financial value on the solution to each individual problem (operating rate, reliability and quality, as well as safety, environmental, etc.) and work on those with the greatest financial impact first.
• Write a “reliability strategy” for each manufacturing unit and follow it.
• Concentrate most on the short-term, but don’t ignore the medium- and long-term. Short-range initiatives should include root-cause analysis (RCA), integrated condition monitoring (ICM) and maintenance work planning and scheduling that should produce early and significant wins. Medium range, work on improving operational discipline and introducing operator asset care (which involves having operators visually inspect equipment regularly). Medium- and long-range, you could consider projects such as the installation of a well-documented mechanical integrity program, RCM or FMECA, and Six Sigma.
• Become familiar with standard change-management techniques. This will clarify the amount of time and effort needed to achieve the goal, as well as the size and complexity of the project ahead. It will help all parties concerned establish reasonable expectations.
• Set up cross-functional teams under a leader or champion charged with implementing each of the improvement processes or techniques.

Sources of defects
Based on our experience and research by a number of organizations, but distilled by Dupont and Ledet Enterprises, defects or problems in most chemical plants stem from five main sources. Typical levels for each source are:

1. maintenance practices, 18%;
2. maintenance materials, 7%;
3. raw materials, 5%;
4. design, 25%; and
5. operational discipline, 45%.

Depending upon the depth of the crisis, the sorting can involve a grading process based on payback time. Major problems are investigated by RCA teams, mid-size problems are allocated to individual experts creating medium-size RCAs, while the smaller problems are handled by self-directed “action teams” of hourly workers.

Formalize and improve communications by holding a 10-min. to 15-min. daily meeting about an hour after normal starting time. Discuss scheduled maintenance and project activities, and production plans for the day, along with current quality-control data.

To increase meeting efficiency, have the required data updated early in the day and posted on electronic bulletin boards on the plant intranet for review by all parties before convening. At the meeting, limit the discussion to that day’s report and immediate decision-making. Subgroups should get together after the main meeting for detailed discussions.

In addition, hold formal monthly reviews to go over the issues that caused losses and prevented the attainment of operational excellence.

Midway into the program, write best practices to capture the new and improved methods, techniques, policies and strategies. They will form the basis for institutionalizing the changes. The system thus created will provide executive management with a means of directing and changing the organization. 

To sustain system discipline while passing ownership and responsibility for maintaining world-class operations to the local management team, periodic progress auditing is needed. This involves an appropriately trained, plant-based audit group conducting formal progress reviews every six months and issuing a follow-up list of the defects found and actions needed. These early audits are in addition to twice-yearly measurement of performance against the benchmarks.

The detailed plan of attack
Take the following steps to address the five major sources of defects.

Maintenance planning and scheduling. Establish detailed, daily work plans and schedules with operations. The primary purpose is to both increase the productivity of the maintenance group and reduce the time the unit is offline during repairs or modifications. Every job of four hours or more should have a detailed job plan to ensure that staff, tools, parts and permits are ready when needed. Publish a daily work schedule, detailing individuals’ names, tasks and estimated duration at least 48 hours beforehand. Also, prepare a series of “opportunistic maintenance plans” to fully exploit any possibilities for doing work on other equipment when the unit is down for another reason. A productivity improvement of 50% and a 20%-or-better reduction in downtime is typically achieved by eliminating delays of all types. Because each craftsman is able to do twice as much work after eliminating delays, this allows time for often-needed additional skills training.

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