Organizational Performance Part 21: Process Optimization

A necessary condition of transitioning to a high performing organization is a continuous improvement culture. This means applying the right techniques in the right area to improve the overall process performance that will lead to a jump in operational performance.

“Sub-optimization is when everyone is for himself. Optimization is when everyone is working to help the company.” – W. Edwards Deming

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In this session, we're going to talk about process optimization. Once you assess the new normal, you need to look at your system again and understand where you can make additional improvements to improve the overall performance of the company. This session, we want to talk about how to go in and optimize that process. We're going to go a little bit more in depth in our last session, and we really want to focus on overall equipment effectiveness. Once, we define the process that's bottle-necking our operation, we want to go in and start assessing that process and understand where is the potential to make improvement. I'm a huge proponent that every process can be improved and improved significantly. If We look at the details, there're significant opportunities for making improvements to any process. Of course the OEE overall equipment effectiveness measures, how well the process is utilized compared to its full potential and the period when it's scheduled to run.
If it's not scheduled to run, we don't want to take that total 24/7 measurement. We want to look at when is that process scheduled to run and how effective is it when it's scheduled to run? Okay. There's three elements that include factors that we want to look at for moving effectiveness. The first one is quality. It's a measure of process outputs to see if they're sufficient to what the customer requirements are. Performance, that's a measure of our process efficiency. Availability, which is our measure process utilization. To optimize the process, first we need to understand is a current process have an issue with quality, does it have an issue with performance, does it have an issue with availability or a combination of all three. The measures that we look at our utilization. That's the actual process time that the process is actually working compared to when it's scheduled to work. Improving the utilization increases the process uptime. Efficiency is the actual output against some expected standard, usually expressed in some unit of time.
Again, before we measure this, we need to make sure that the standard is correct. We don't want to measure against an outdated standard or a standard that's incorrect. Improving efficiency will increase the output when the process is functioning. Our third measure is our quality measures. Our quality measures, looking at the actual good pieces off the process, that's according to the customer requirements against the total process outputs. This is usually measured in first time, right, or first past quality and improving. This will improve the first time right.
Now let's look at the big losses. We categorize the losses in terms of quality, performance and availability, they can be subdivided into what's known as the big six losses. The big six losses, there's two in each category, from a quality perspective who I look at defects or rework that are causing the process to deviate from normal and unnecessary output. For producing things that aren't needed for the customer, stop doing those things. From the performance perspective, I'll look at minor stoppages. This is typically where I see the biggest opportunity. There's minor stoppages throughout the process while it's running. I got to adjust this, I got to fix that, or I need to attend to this. Those minor stoppages create huge disruptions in the performance.
Next is speed loss. We're looking at again, against the standard. For what is the standard and are we producing to the standard or have we slowed the process down for some reason? Again, I see a lot of things in terms of slowing down because I don't have a pile of work in front of me or the work expanding to the time available, for example, Parkinson's law, right? Work expands the time available.
Third is the availability, which is unplanned downtime. We have breakdowns that happen, or if we have planned downtime that is taking time off the equipment. These are the big six losses.
Once we get that data, now we want to apply the Pareto Principles. What's the Pareto Principle? We can take these categories and we can look at these categories, identify countermeasures that we need to apply to reduce a loss, to improve the overall effectiveness of the process. How do we determine that? We want to use the Pareto Principle.