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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Also, set up an ICM program. This is critical for changing from time-based to condition/risk-based maintenance. ICM involves routine scheduled inspections using a broad range of techniques, e.g., to check vibration, motor current draw, emissions, material thickness and machinery alignment. In addition, a program of operator asset care involving multiple visual inspections is needed to provide the reliability engineer with comprehensive information on the condition of all major equipment. This information is then used to estimate the remaining life of critical equipment.

Maintenance-materials quality assurance. Impose new levels of quality assurance on suppliers through tightly drawn specifications. Also, have plant personnel verify the quality of materials on-site using techniques such as those described above.

Raw materials and utilities. Again, use a two-pronged approach involving tighter specification and better inspection, along with demands for RCA each time an incident occurs, and offering technical help to the suppliers.

Design. Design defects come in three basic categories:

1. major conceptual ones that this program cannot address;
2. those created by obsolescence; and
3. those that onsite individuals can tackle.

Typically, as problem-solving teams develop, the 80/20 rule starts to apply; that is, 80% of the problems get solved for 20% of the cost.

Operational discipline. While it is responsible for the largest number of defects and problems (45%), operational discipline is usually the last area addressed by engineers and managers who were once engineers. Is this because it requires people skills as opposed to pure engineering?

Most plants suffer process upsets on an irregular, but persistent, basis (Figure 3). These often go unreported unless they cause major equipment damage or product loss. However, each one in some way reduces the life of the unit. Based on published research and our experience, such upsets are most likely due to some lack of operational discipline, i.e., a failure to stay inside the operating envelope or to accurately follow procedures. They do not represent an intentional act or some malevolent behavior, but instead stem from errors caused by the use of deficient operating procedures, poor training, conflicting priorities, inadequate labeling of equipment and instruments, or lack of effective administrative controls.

A crucial move
Launch a program to develop simplified standard operating procedures with individually assigned checklists to be used during starts/stops and emergencies. This effort is front-loaded and should involve an improved method for compiling clear instructions on how to operate and troubleshoot the plant under all conditions. (Because of its simplified architecture and easy references, the “T” bar or two-column procedure format with simple markers to indicate critical steps, the consequences of deviation, etc., often works well.) Procedure writing is an activity that should be well engineered and involve cross-functional teams. The documents should identify the consequences of deviation and the corrective action, and should be easy to read.

The effort needed to achieve the maximum operating rate and product quality while maintaining, if not improving, safety and boosting reliability, of course, goes well beyond better procedures. It also should focus on early detection of impending “upset steps” and rehearsed responses for each individual on the operating team. Comprehensive training and routine drills are essential. The safest plants have regular safety drills. Why not have drills for predictable emergency operating conditions that can lead to product loss?
Insist upon a “process deviation report” every time a deviation occurs. They should be discussed at the next morning meeting, with a monthly review assessing failure patterns and actions needed to prevent a recurrence.

Time and cost
Each of the techniques and processes described requires an initial team of three to six people for a few hours each week. Most teams exist for only six months; teams focused on solving specific problems are created and retired continually. The only external resource is a project facilitator/consultant. That person works on an almost full-time basis for the first six months; afterward, the time gradually reduces, commonly by 50% each six months.

Typically, plants show a financial return on investment of 50:1 during the transition from “reactive” to “improved precision” and 30:1 from there upward. The improvement processes can take from three to five years depending upon the plant’s initial condition, the innate abilities of the group, the amount of money invested, and the level of understanding and commitment of senior management.

If the “China price” currently threatens your facility, survival might well depend upon achieving improved precision, if not world-class, performance. However, even without such pressures, programs to boost OEE make strong financial sense.

Bernie Price is CEO for Polaris Veritas Inc., a Houston consulting group, and has extensive experience in efficiency improvement of plants. E-mail him at

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