Improve manufacturing operations and cut costs by setting operational efficiency KPIs.
In the last 3 months the global economy has been turned on it’s head due to the Covid-19 pandemic. In light of this, manufacturers are faced with the pressures of producing more high-quality goods, with less money, time and resources. Regulations are becoming more stringent and competition is growing in a smaller market.
To achieve the goals of lean operation, industrial manufacturers need to constantly monitor, benchmark and improve.
KPIs can prove a valuable gauge of progress, helping manufacturers to set and achieve their business goals and maintain critical business resiliency.
1. Optimise maintenance schedules
Many manufacturers still operate preventative maintenance schedules. Preventative maintenance is costly because only 15% to 20% of all components fail after a predictable time. Reducing operational costs means approaching maintenance in a new way.
A predictive maintenance program – servicing machines based on need-based early stage notifications – is much more efficient than a Fixed Time Maintenance (FTM) Preventative Program.
This allows manufacturers to be proactive, rather than reactive when it comes to equipment repairs and operational downtime. They can make informed decisions, based on transparency and a pattern that is most suitable to their business.
Reduced costs and eliminated outages should be demonstrable when manufacturers transition to a predictive maintenance mode and track overall downtime.
2. Improve true downtime cost (TDC) and downtime percentage
Consider the true cost of unplanned downtime. Do you know what the cost of downtime is to your business? Decreasing downtime and improving operational efficiencies can save manufacturers millions of dollars.
By calculating your True Downtime Cost and showing measured improvements in this realm, you can illustrate saved time and money, as well as reduced waste and create a data-driven, quantifiable resiliency plan.
Understanding true costs can also help you to make cost justification within day-to-day management decisions.
3. Improve Rolled Throughput Yield (RTY)
RTY is the probability that a single unit can pass through a series of process steps free of defects. Acceptable Rolled Throughput Yield is dependent upon a very high individual first time yield for each process. It is the sum of the parts measurement that is most critical to overall operational efficiency.
RTY is a great operational efficiency KPI to track as it alerts manufacturers to the health of their entire operation, rolling all processes into a single measurement.
4. Maximizing capacity utilisation
Diminish the cost of owning and maintaining equipment by using equipment to its full capacity.
By measuring the output that is actually produced and comparing it to its potential maximum output, manufacturers can understand the efficiency of their operation. Increasing capacity utilisation increases overall efficiency.
An OEE score presents “an accurate picture of how effectively your manufacturing process is running. And, it makes it easy to track improvements in that process over time.”
Conclusion
These Operational Efficiency KPIs will give you an indication of the overall efficiency of your operation and a real sense of your resiliency needs.
Any downward trends in performance will require deeper analysis. Manufacturers should also look at processes, systems, and the performance of equipment.
With improved visibility and intelligent use of smart technologies throughout the plant, manufacturers can take a leap forward when boosting operational efficiency throughout the business. Using real-time data allows you to plan, in a quantifiable way, the need for a backup plan.
Talk to us to learn more about how energy insights can drive your energy and resilience strategy.
If you don’t know precisely how, when and where energy is being used across your business, how can you understand where your energy costs really lie, or the best opportunities to improve energy and operational performance?
Working together with Centrica Business Solutions, Total Utilities is the exclusive partner delivering the Energy Insight product solution to the New Zealand market. Using Centrica’s wireless sensor technology, you can monitor energy usage in real-time – right down to device and equipment level. When this information is relayed to our PowerRadarTM analysis platform, you can access the intelligence you need to develop a data-driven energy strategy.
The Power of IoT
Our Internet of Things (IoT) technology is providing the deep energy insights that uncover flexibility and value in your operations and generation assets. This is a ‘game changer’ in raising energy performance across all types of organisations – from manufacturing and leisure – to healthcare and education.
Energy Insight technology provides full visibility of energy usage across your site, or multiple sites – right down to individual device level. We attach self-powered, wireless sensors to equipment and processes, such as conveyor belts, lighting circuits, chillers, or any other energy consuming assets.
This instantly transmits real-time data to our cloud-based PowerRadar analytics and reporting platform. You can then access this intelligence to inform your decision making and improve efficiencies.
Deep energy insights
Hundreds of sensors, which can measure both heat and power consumption, can be installed within a few hours and won’t cause disruption to operations. Data provided by our IoT technology enables organisations to quickly identify and resolve energy waste. It can also pinpoint opportunities to reduce high peak-time energy costs by moderating consumption in these periods.
The biggest gains of IoT energy insights are often seen in improved operational efficiency and business resilience. By ensuring that critical equipment is operating optimally and preventing costly disruption, or even breakdown, large operational cost savings can be achieved. Continuity of operations is also assured, which is particularly beneficial in manufacturing environments.
The results of IoT energy optimisation
We’re seeing the positive results of our IoT enabled energy optimisation across all business sectors, including Progressive Enterprises New Zealand.
Only half of new New Zealand businesses survive longer than ten years and even then, only 5 per cent of those ever reach a turnover of $1 million. That is bad news.
The good news is that of the 5 per cent of businesses that reach $1 million turnover, one in four grow to $10 million turnover.
As a start-up, finding the right strategies, tactics and culture to grow profitably and sustainably will put you into an elite group of businesses – the long term winners. Below is some advice to help you get started and survive.
A bird in hand is worth two in the bush
How many times have you heard stories about companies offering special pricing and better products to win new customers, yet they continue to overcharge loyal customers for older products and services? It costs five times as much to win a new client as it does to keep an existing one.
Value your staff
Keeping good people is about respect and values. A friend recently recounted a tale of a boss who took him for granted. One day this boss asked, on a whim, for him to change then redo a job that he had spent weeks working on. This is what the worker had to say: “That was the day I mentally left that company. It was a year before I found the right job to go to, but the decision had been taken twelve months before. They offered me better money and benefits to stay but it was way too late for that.”
Avoid profitless prosperity
Just because a deal is big it doesn’t make it worth doing. It’s okay to walk away from any bad business. Handing these kinds of duds over to your competitor can be good for your business. It frees you up to provide awesome, profitable products and services to clients who value them.
Don’t be a bank
A quarter of all debts that go past ninety days overdue are never paid. This rises to over half at 120 days overdue. Look at this another way. an unpaid debt of $1 means you will need to generate $10 in new revenues just to make up for it if your net profit is 10%.
If you have tried all reasonable ways to collect debts to no avail, then send a final warning in writing. If this fails, then using a reputable debt collection agency is a perfectly valid option. If this seems drastic, then remember it is your money and your company. Only you get to choose who keeps both.
Get good advice
Developing the skills and contacts to ensure you can reach out to the right expert at the right time is an essential craft in helping your business succeed. Getting good advice may seem expensive on occasions but can save you a world of pain in the long run. EMA offers fantastic advice to members in several key areas, at very reasonable or even no charges.
Plan for the Future
Many great businesses end up on the market having reached the stage where age or ill health have forced the owner to sell. Having a mix of ages, skills and personalities within the leadership of your company is a must. The energy, enthusiasm and contemporary relevance of youth is a potent partnership when combined with the hard-won experience of age.
My business partner Richard and I look forward to when we get to sit in the balcony seats of Total Utilities, cantankerously muttering and critiquing our new generation of leaders just as Statler and Waldorf do on the Muppet Show. The trouble is, of course, that no one will be listening.
All the best for 2020. May you live long and prosper.
