Reduce maintenance costs? yes please – immediately | Wiegand’s Watch

Bodo WiegandThis is a translation of the bulk of Bodo Wiegand’s latest newsletter, about Lean in Germany, followed by my comments:

At the beginning of  this year I was at a company with a high level of Lean in Manufacturing and went into a discussion with the Board about how to go further the realize the full potential .

They did not want to get into the administrative areas, since there the world bosses were allowed to have their say — even though there was real potential there . But life in a matrix organization, as has been frequently noted , is very pleasant.  Before doubly protected kingdoms can be torn down, it takes usually a crisis or a new boss. You know my motto: “Give a slave of two masters and he is a free man . ”

Well then, what? We talked about opportunities in Manufacturing and, on our tour of the facilities, spent a bit more time on Maintenance. They were quite proud of the TPM plans they showed me, with a regular preventive maintenance plan, and involvement of production operators in routine maintenance. The whole range of tools set up and implemented was classic. Their pride was a new conveyor system, to which a maintenance technician was dedicated for inspections, routine maintenance, and troubleshooting . It sounded to me like: “With such investments, we must be able to afford this, to avoid the risk of failure .”

In another area , there were identical machines;  in the next hall several different presses. With the exception of heat treatment (3 shifts ) all areas were still working in 2 shifts. Of course, Maintenance is an area where you can see what happens inside just by looking from the outside. But my gut was telling me not to scream “wonderful” about the perfect organization. Instead, alarm bells went off and immediately came the question “What does the value stream look like?”  Proudly, the manager led me to the team leader room.  There hung the map. And I immediately saw  the date on which it was drawn. It was three years ago. Well, I expressed my concern: ” Is the new system taken into account ? ”

“No ”

This is a mistake we encounter often. Value streams change with the actions we perform and should be revised especially after new investments or major changes. Bottlenecks migrate and thereby change the production system. Back in the office, we discussed again his question of why the value stream is important to Maintenance.  I told him about Lean Maintenance. He asked “Should Maintenance be organized according to the value stream? – Why? ”

” In the value stream,” I answered, “bottlenecks are detected, critical facilities are identified from a customer perspective and process stability is visible. Priorities given to equipment are the basis for  maintenance and spare parts stocking strategies.”

That was too high-level for him.

So – I tried again. Equipment that is  the bottleneck or is in close proximity to customers is prioritized because it is important for delivery, and the bottleneck caps the production volume. If the bottleneck stops, so does the whole production system. If the last machine stops, which is important for  delivery, the safety stock increases .

Maintenance and stocks ? – The Board id not understand. ” What does Maintenance have to do with working capital ? ”

“Well, safety stocks are usually based on the worst-case  interruption time for repairs and mostly with people-related impact to it. ” In this case, it was three weeks.

It is usually two to three weeks – no one knows why.

“Can the maintenance strategy reduce working capital? ”

“Sure,” I answered. ” By prioritizing the facilities you identify the ones that are important for delivery . There you focus your maintenance activities and develop your spare part strategy. This is the only place where it is important whether this system fails. Failure analysis identifies the components that may be responsible. Then individual maintenance strategies must be developed for these components .

This starts with wear-dependent important components that are not predictable with sensor monitoring, and goes as far as the maintenance strategy of  “creating redundancy.”  The aim is to increase the process stability and to allow no loss. This reduces the need for safety stock . From that we get a feel for what would be the biggest shutdown and can estimate this time .

The next step is to optimize the maintenance time, ie to reduce the repair times to a minimum . If it is possible to organize the maintenance response to a quasi Formula 1 – standard, and you also develop a maintenance strategy adapted to it , you can make the maintenance times as short as possible. The safety stocks can then be lowered furthe . Gut feel no longer prevails. Instead, you have clear maintenance strategies based on numbers , facts, and figures. ”

” But isn’t that more effort? ”

“Perhaps on the facilities with high priorities. But why do you inspect machines that you take out of production for entire shifts? You have many working only 2 shifts. If a machine fails, it can be replaced by others. And why are you dedicating one person to your new conveyor system , which is certainly not a bottleneck?  Why do you thoroughly inspect your presses and have not considered how the failure of one could be compensated by the use of another. On such equipment “farms,” you do not need preventive maintenance in the classical sense, only a maintenance strategy that is appropriate for this case. ”

It is important to deliver and therefore you need a stable process. For this, you should evaluate the maintenance person, and not by cost. With a Lean Maintenance approach you will go from  failure-driven maintenance to  largely planned and predictable maintenance, requiring  less effort, providing higher process stability and reducing  costs for emergency response .

The result: we have reduced the worst-case repair time from 2.5 days to 8 hours, and safety stocks to two to three days, while reducing the costs of  external maintenance services by 80%.

The necessary investments in the sensors, redundancy or spare parts have been more than covered by the reduction in working capital. The annual reductions amount to a low seven-figure sum . The greatest gain was that the production and the maintenance staff are now working towards a common goal and are understood as a team . It culminated in this statement of the initially reluctant maintenance manager : “We want to be measured by the manufacturing productivity and working capital. “

Michel Baudin‘s comments:

What I read in Wiegand’s words is the focus of improvement in Maintenance should not be on structures and tools but on purpose. We maintain production facilities not to comply with a mandate or fulfill formal requirements but because it allows us to deliver goods to customers without large safety stocks. You might add that, if your products are custom, or even if you just have high variety, there is no way you can hold stocks large enough to deliver promptly.

In most companies, “Lean Maintenance” is taken to mean TPM and, within TPM, the only component that is implemented in the most basic, autonomous maintenance.  The headings for the higher levels of TPM include equipment improvementquality maintenance, and maintenance prevention but, even in Japan, you often hear managers say “We looked into implementing these, but decided they were not worth the cost.”

When you stick with autonomous maintenance, you have an approach to how the work is done but not what it is. This is a whole other topic. Wiegand states as the goal of maintenance to make interruptions of service less frequent and shorter. This is exactly what United Airlines focused on in the late 1960s when the Boeing 747 was introduced, and they called in “Reliability-Centered Maintenance” (RCM).

As part of this effort, they discovered that the “bathtub curve” of failure rates — that staple of reliability textbooks — only applies to about 4% of the aircraft components. In particular, many exhibited no tendency to fail more when aging, which made policies of periodic replacement pointless. They also developed the technique of Failure-Mode-Effect-Analysis (FMEA), on the basis of which they set policies for systematic replacement and spare parts stocks, and selected some items for targeted redundancies.

RCM was later adopted in nuclear power and process industries, and some RCM thinking has found its way into machine-shops, for example in the form of redundant tools in machining center pockets.

The criticism of RCM that I have heard is that it is a workaround to the limitations of the equipment rather than an improvement of it. It is better to have a cutting tool that lasts twice as long than to put a redundant tool on standby in the machine but then, you have to find such a tool.

Wiegand also seems to think that failures are not a problem when you have multiple, interchangeable machines with overcapacity. Technically, that’s unquestionable, but it is another story from the human point of view. It won’t be a problem next week, but what happens over time when overcapacity in an area allows you to have 25% of your equipment down? Your performance will eventually settle at a point where you actually have one machine in four down at any time. Why bother keeping all of them up all the time when they are not needed? Settling for this low availability, however, turns this process into a bottleneck.

Shortage of skills, not yet – but very soon – a wake up call (part 2) | Wiegand’s Watch

This is a translation of the bulk of Bodo Wiegand’s latest newsletter, about Lean in Germany, followed by my comments:

“In Part 1, we discussed the possibility of becoming more effective in your own work environment by stemming the flood of email and reducing the extent of meetings. In Part 2 , we want to focus on how you can optimize cooperation between employees and departments.

In production, there are precise procedures and instructions , on how a product is to be made. There, the processes are stable , documented and visual. We have not considered this to be necessary in support departments. Everyone works as he sees fit , then delivers when he is ready and at the quality he is capable of.

Sorry – in administration, we produce nothing .

We don’t! Or do we?

In any case, work is not done according to a plan or delivered just in time at a precisely defined quality. Don’t we need to? We do! We need to gradually start to handle administrative processes like production processes – because we need more effectiveness and efficiency on our office floors to reduce skill shortages and remain competitive .

It is not about takt in administration but about flow and on-time delivery. Run time, interfaces, and flexibility are the principles. I can already hear the staff complain in Development or in Construction: “For us no project is like any other – so you can’t define processes , let alone standardize. And yet 7o% to 80 % of the activities are routine and repetitive, consisting of foolishly long meetings and secretarial or travel agency work that is unrelated to project content.

Defining and standardizing the processes of development and construction saves employees valuable time , while proceeding with fixed rules and checkpoints prevents errors or detects them faster, improves the quality and timeliness of the work, and avoids interface problems, for example in making prototypes or starting up manufacturing.

I can already hear the complaints of managers in Human Resources ,  Information Technology, or Accounting : “We produce nothing – we can’t optimize anything.” The most beautiful expression I frequently hear from this faction is “Mr. Wiegand, without us, nothing runs here .” And then when I ask , what products do you make or what services do you render ? Then I see usually only blank stares.

Hello! Is hiring, challenging, and coaching employees not a service? Are indicators that show facts, or figures that support decisions not defined products? Or implementing software , delivering training, and other support functions? Of course, these are products and services.  Can we describe these products, deliver them more efficiently, standardize them, define quality requirements, and visualize their processes?

Yes, we can !

So what is the difference between the production of goods and the products in the so-called indirect areas?

None – except for the fact that the first are visible, tangible, and palpable, while the product of Administration is information – to interpret,  invisible and intangible. If it is possible, therefore, to make the information visible and to define it , then you can treat it like a product and make the processes more effective and efficient. And why do we not  do it?

We had the same problem in production 20 to 30 years ago. Processes were previously under the responsibility of  master craftsmen who delivered as they saw fit. We had to define the processes, specify interfaces, and establish quality, formulate work orders and convert from the functional organization of workshops and production areas to an organization along manufacturing processes.

I remember vividly how the Craftsmen, Workshop Supervisors , and Production Area Managers fought and defended their kingdoms. It was a long, hard struggle. Today, however,  less than 10% of companies are still aligned functionally in production. They all fought to the end, against better judgment, against the greater economic performance, and for their kingdoms.

This is what we face today every day on our office floors. The same arguments are repeated. As an acccountant said, “If we move to a process-oriented organization, the specific know-how goes down the drain.” By the way – the last major innovation in accounting — breakeven analysis —  is more than half a century old. So what kind of know-how must be centrally held, promoted, and protected ?

Do not get me wrong — we need accounting to measure our success , but not in an ivory tower, but on the spot, so you know what you need to measure and therefore can support the decision makers , thus giving guidelines to your trade (see also my article in the Book: The accountant as in-house consultant).

So we anchor the controls in the process , where  needed , and not in a functional department. If we want to raise the potential in the indirect areas , we must not look at the individual functions , but at processes across functions and optimize the functions themselves. Now you know now why it is so hard to find support for Lean Administration. But, as 12 years of Lean Administration consulting have shown , it pays. Here are a few examples :

  • Today, 900 employees in Development and Administration are doing work that used to require 1,300.
  • Capital goods are shipped six months earlier.
  • A service center saves €17M.
  • A pharmaceutical company handle 20% in sales without adding employees.
  • A government office reduced processing time from three weeks to two days .

Now how is this done? It starts with process mapping, defining products , analyzing the task structure and the job  structure,  and then optimizing the value streams . Quite simple – or not?

Unfortunately,  not quite that simple. You can make many mistakes. I have seen many process maps. Some were created from an IT perspective, others from the organization’s point of view — but why not from a customer perspective?

Others avoid analyzing the structure of the activity usually with the argument “Not acceptable to the Works Council.”

What a joke!

We have been implementing Lean administration in companies for 12 years and have never had problems with the Works Councils due to an activity structure analysis. Mostly we were rather supported with the motto: “Finally in this area something is happening.”

Often the products are not defined from a customer perspective. The optimized value streams are contradictory and  watered down by compromise at the interfaces and turned into overcomplex processes.

Why ?

Out of consideration to individuals and functions. Lean Administration projects rarely succeed from the inside out , but require external coaches to bring to light self-interests and put the process in the foreground.

You should however not be deterred by these difficulties . Especially with projects in Administration, the five success factors I so often stress  are:

  • Planning
  • Leadership commitment
  • Holistic approach
  • Resolute implementation /change in mindset
  • Measurement

The potential is large and success easy to achieve. You and your colleagues just have to really want it and, of course, start properly.

Michel Baudin‘s comments:

As many discussions of the “Lean office” do, Wiegand’s lumps together all activities other than production. Much of his letter is devoted to the standardization of office work, which he presents as essential to avoiding a skill shortage by increasing productivity. While a case can be made for the value of following documented procedures in transaction processing  like rental car issue and return, it is far-fetched for creative knowledge work like R&D.

In product development, it helps to have some discipline in managing the flow of projects through phases, with appropriate validation at various checkpoints, but there is little evidence that it is essential. The history of product development is replete with cases where all the procedures were in place but the products failed, and, on the contrary, of cases of product developers who broke the rules and succeeded.

Wiegand describes the transition from craft control to controlled, documented processes in production as a battle fought won in the past 20 to 30 years. I view it instead as a struggle that started with the industrial revolution about 1750 and is still going on, with the Lean approach to it being only the last of a long list. And it does not involve standardizing everything. If you have machines with controls that are visually obvious and mistake-proof, you don’t need instructions.

Another theme of Wiegand’s letter is the change from organization by function, where employees are in departments focused on one operation, to organization by process, where they are in teams in charge of all the operations needed to generate a finished output. It is like the change from a machining job-shop with departments for turning, milling, heat treatment, grinding, etc. to a flow shop with lines or cells that machine blanks from start to finish.

Wiegand asserts that only 10% of companies still have functional organizations in production. It is a number I have a hard time believing. I don’t believe it’s true even in Japan. In fact, the functional, or job-shop, organization is not wrong for everything. Once you have done your Runner/Repeater/Stranger analysis, it is actually what you need for Strangers. And it is not always wrong in office work either. Product development at Toyota, for example, is done by functional departments.

I am also puzzled by his description of “break-even analysis” as the last great innovation in accounting. It does not strike me as particularly advanced. What about discounted cash flows, internal rates of return, activity-based costing, and other concepts that shine a light on different aspects of operations than just break-even points?

One last comment is that Wiegand mentions “optimization” six times and “improvement” never. One of my pet peeves is that, in Lean, you always improve but never optimize, because it is, by definition, the end of improvement. I have been assured both in Germany and France, that they mean “improvement” when they say “optimization,” which begs the question of what they use when they actually mean “optimization.”

He who doesn’t hear, sees nothing | Bodo Wiegand’s Watch

Bodo Wiegand heads the Lean Management Institute, which is the German affiliate of the Lean Enterprise Institute. The following is a translation from German of  the June, 2013 issue of his newsletter,  Wiegand’s Watch:

When I was 12, my grandfather used to take me along on his “rounds,” as he called it.

We then had a foundry, where he did his “rounds” every day. Following my grandfather’s instructions to stay together, we walked hand in hand through the foundry operation itself, through mold and sand preparation, through the basement, etc. It took 1 ½ hours. Whenever something was wrong, he called Mr. Meier, Schmitz, or Schulte and asked “Why are there so many boxes?”, “Why is  the cigarette  there?” “Why is the aisle blocked?” “Why is the machine stopped?” “Why do we have a problem when casting?”  When employees ran around without glasses or helmets, there was real trouble.

But even when something that should have been finished was not,  or the clock was wrong, he intervened. At that time, I thought it capricious. Now I know how important personal protection gear is, and how important clocks and punctuality are.

His motto has always been: “If the clocks are wrong, no one can expect the people to be on time when you need them.With him there was absolutely no excuse for being late – but no one came late.

Back to the tour. He spoke with each supervisor, but only about problems – business but also human. Sometimes he stayed by a machine and listened. Then he called the head of maintenance, who usually said: “Yes, I’ve heard. We’ll take a look this week-end.”  I was always deeply impressed and tried to listen . Yet I could hear nothing. I could hear any difference until my grandfather told me what I should hear and the difference  with a machine that was working fine. Then I “heard” for the first and only time.

When became production manager in the forge, I remembered these tours and tried to think back to the individual details to hear and see. It took me a while before I could do this successfully.

The greatest praise I received in that position was from our maintenance manager, Mr. Hensing. When I called his attention to a noise that struck me as funny, he said: “It’s been a long time since anybody noticed.”

Well, why am I writing this? I have the feeling that we have forgotten how to hear and see, and to walk properly through the shop floor. I have a feeling that our supervisors and young managers have not learned to see, let alone hear or correctly make their rounds through operations, which implies seeing things and responding appropriately.

If I pass a cigarette butt on the ground or walk past a box with something in it that should not be there, then, as the saying goes: “What the boss tolerates or does not criticize is allowed”.

But if I want to change the mindset in my business and I am not an example, for example by tolerating waste, then I cannot expect employees to recognize and eliminate waste in their daily hard work. Therefore, I will not let this topic rest, and, to help, will make a virtual “Waste Walks” a centerpiece at the German Lean Summit of 24 to 26 October in Berlin to illustrate this topic from different angles.

Bodo Wiegand