JababekaBusiness.Com: November 2008

Friday, 28 November 2008

Power Loom Edmund Cartwright

Power Loom

In 1784 Edmund Cartwright visited a factory owned by Richard Arkwright. Inspired by what he saw, he began working on a machine that would improve the speed and quality of weaving. Employing a blacksmith and a carpenter to help him, Cartwright managed to produce what he called a power loom. He took out a patent for his machine in 1785, but at this stage it performed poorly.

In 1787 Cartwright opened a weaving mill in Doncaster and two years later began using steam engines produced by James Watt and Matthew Boulton, to drive his looms. All operations that had been previously been done by the weaver's hands and feet, could now be performed mechanically. The main task of the weavers employed by Cartwright was repairing broken threads on the machine. Although these power looms were now performing well, Cartwright was a poor businessman and he eventually went bankrupt.

In 1802 William Horrocks, a Stockport cotton manufacturer, patented an improved power-loom. It featured a more effective way of winding the woven cloth onto a beam at the back of the loom. Over the next twenty years further improvements took place and by 1823 Richard Guest was able to claim that "a boy or girl aged fourteen or fifteen could manage two power-looms and could produce three and a half times as much as the best handloom weaver". By 1850 there were 250,000 cotton power-looms in Britain, of which nearly 177,000 were in Lancashire.

Listrik dengan Energi Terbarukan

Belakangan ini, kisah blue energy mengernyitkan dahi banyak petinggi bangsa. Presiden Susilo Bambang Yudhoyono pun ikut angkat bicara.

Perdebatan tentang blue energy yang terus menghangat menunjukkan betapa harapan akan sumber energi alternatif menjadi dambaan bangsa. Kenaikan harga minyak mentah- yang menjadi sumber energi utama Indonesia- sangat menyulitkan bangsa ini. Minyak pernah mengibarkan kejayaan Indonesia setinggi-tingginya. Namun, minyak juga telah menjatuhkan bangsa ini ke jurang kemiskinan.

Uang subsidi yang dihabiskan pemerintah untuk menghasilkan polusi udara ini cukup fantastis. Total anggaran subsidi bidang energi mencapai Rp187,1 triliun. Angka ini setara dengan 79,8 persen beban subsidi di Anggaran Penerimaan dan Belanja Negara Perubahan (APBN-P) 2008 yang mencapai Rp234,4 triliun. Dari besaran tersebut, subsidi untuk bahan bakar minyak (BBM) mencapai Rp126,8 triliun, sedangkan subsidi listrik Rp60,2 triliun. Subsidi untuk sektor nonenergi dialokasikan hanya Rp47,2 triliun. Harga BBM pun terpaksa dinaikkan sebesar 28,7 persen.

Presiden juga menyatakan kesiapan untuk "mengorbankan" karier politiknya. Ketergantungan tinggi Indonesia terhadap energi yang bersumber dari BBM tidak terbantahkan. Pembangunan pembangkit listrik adalah salah satu bidang yang merasakan masalah ini. Biaya operasional pembangkit yang tinggi karena menggunakan BBM membuat langkah pemerintah membangun pembangkit listrik di daerah terpencil dan penambahan kapasitas di daerah padat menjadi pilihan nomor sekian.

Program itu bisa semakin menyengsarakan APBN Indonesia yang sudah penuh sesak dengan defisit. Data PT PLN (Persero) pada 2006 menyebutkan hanya 58 persen penduduk Indonesia yang mendapatkan aliran listrik. Untuk DKI Jakarta saja bahkan rasio elektrifikasi hanya mencapai 86,36 persen. Di tengah ketidakmampuan itu, permintaan akan listrik terus meningkat. Data Departemen Energi dan Sumber Daya Mineral (ESDM), pertumbuhan permintaan listrik mencapai 6,8 persen per tahun.

Pemerintah pun akhirnya memilih jalan lain, yaitu menggalakkan penghematan penggunaan energi. Ketidak mampuan menanggung pertumbuhan permintaan daya membuat beberapa kali PLN melakukan pemadaman bergilir. Akhirnya, pemerintah sadar bahwa Indonesia memang harus mengurangi ketergantungannya terhadap BBM. Rencana itu tertuang dalam revisi Peraturan Presiden (Perpres) No 5/2006 tentang Energi Mix Nasional.

Perpres memproyeksikan pada 2025, energi baru dan terbarukan akan memiliki porsi yang cukup signifikan dalam konsumsi energi Indonesia. Biofuel ditarget berkontribusi sebesar 5 persen, panas bumi 5 persen, bahan batubara cair 2 persen, dan kumpulan energi baru serta sumber terbarukan lainnya sebesar 5 persen (biomassa, air, tenaga surya, angin, dan nuklir). Kesadaran tersebut juga diikuti niatan pemerintah untuk mengembangkan sektor energi terbarukan ini. Tantangan pemerintah pada awal minggu lalu kepada menteri riset dan teknologi, para rektor, serta ilmuwan-ilmuwan energi menjadi bukti.

Fokus dan Riset

Seperti yang terpampang di infografis, potensi yang ada sangat besar. Namun, pemanfaatannya sendiri masih sangat minim. Sangat memungkinkan energi terbarukan menjadi penyelamat krisis energi bangsa ini. Berdasarkan laporan tahunan PLN 2006, kapasitas terpasang pembangkit PLN sebesar 24,84 Gigawatt (GW). Kalau merujuk perandaian pada hasil hitung-hitungan potensi pembangkitan dari Kementerian Negara Riset danTeknologi (Kemenristek), jelas kita akan sedikit lega.

Dari tenaga air saja, masyarakat di Tanah Air baru memanfaatkan 4,2GW atau 5,55 persen dari total potensi Indonesia yang mencapai 75,67 GW. Apalagi sektor panas bumi. Sektor yang digadang-gadang akan menjadi primadona untuk mengurangi beban konsumsi BBM dalam pembangkitan listrik ini baru dimanfaatkan 2,96 persen dari potensinya yang mencapai 27 GW. Indonesia juga punya potensi energi surya yang melimpah. Rata-rata wilayah Nusantara mampu menghasilkan 4,8 KWH per hari per meter perseginya.

Saat ini, PLN juga tengah menggalakkan pembangunan pembangkit listrik tenaga hibrid (surya, angin, dan BBM) untuk daerah terpencil. Pengaplikasiannya, PLN mengundang Kemenristek untuk memanfaatkan pembangkit dari energi terbarukan yang sesuai dengan kondisi tiap daerah. Beberapa pembangkit hibrid telah dibangun di daerah seperti NTT, Gorontalo, dan Sumatra Selatan. Pola pembangkitan ini digunakan untuk mengurangi beban BBM sekaligus mengejar proyek 75-100 pembangkit yang dicanangkan PLN.

Pada proyek itu, PLN menargetkan pada 2020 yang merupakan ulang tahun ke-75 kemerdekaan Indonesia, seluruh anak bangsa sudah menikmati listrik. Riset dan fokus pengembangan jelas tidak bisa ditawar lagi. Ini karena sifat energi terbarukan adalah site spesific. Ciri ini menjadi kelebihan sekaligus kelemahannya. Artinya, tiap daerah mempunyai potensi sumber energi terbarukan yang berbeda-beda.

Mungkin yang bisa digarap pemerintah saat ini adalah melakukan penelitian mendalam mengenai kemungkinan aplikasi energi terbarukan pada tiap daerah. Pemerintah melalui Departemen ESDM dan Kemenristek mungkin bisa mengaplikasikannya dalam bentuk peta penyebaran potensi energi terbarukan Indonesia (Indonesian Renewable Energy Potential Map). Selama ini, ketiadaan penelitian menyeluruh inilah yang mungkin menjadi masalah.

Potensi yang tidak tersosialisasi dengan lengkap membuat energi terbarukan menjadi hal yang tidak terjangkau para elite, apalagi masyarakat umum. Penelitian tersebut tentu akan membuat berbagai angka potensi pembangkitan itu menjadi lebih konkret. Nantinya, para kepala daerah juga yang akan punya bayangan dan konsep pengembangan energi terbarukan di tiap wilayahnya. Masyarakat pun akan lebih peduli untuk mendukung program pengembangannya.

Pengembangan energi terbarukan yang didukung pemerintah serta sektor industri akan membuat biaya pembangkitan menggunakan energi terbarukan mencapai skala ideal. Akhirnya, niatan pemerintah untuk mengembangkan energi yang ramah lingkungan serta bisa melepaskan diri dari jeratan ketergantungan terhadap sumber energi fosil dapat tercapai.

Wednesday, 26 November 2008

Industri Kreatif dan Kompetisi Penguasaan Teknologi

DALAM perjalanan untuk bangkit menjadi negara maju, kesadaran tentang arti penting penguasaan teknologi sesungguhnya telah ada pada kita.

Berkali-kali kita telah menyatakan bahwa teknologi merupakan salah satu sumber utama peningkatan produktivitas yang pada ujungnya akan menentukan tingkat kemakmuran masyarakat. Sedemikian pentingnya teknologi, sampai-sampai ada masa ketika kita ingin melakukan lompatan teknologi dengan memberi prioritas pada pengembangan industri pesawat terbang. Banyak upaya telah dilakukan untuk mengembangkan industri yang di pasar dunia ini hanya dikuasai negara atau konsorsium negara-negara maju.

Seiring perjalanan waktu, kita tidak lagi mendengar gegap gempita karya anak bangsa dalam industri ini. Bahkan pernah diberitakan, pabrik pesawat terbang kita justru mengekspor panci. Pesawat terbang mungkin terlalu tinggi untuk dijangkau, maka harapan kita turunkan pada industri mobil. Negara yang mampu membesarkan industri, yang oleh Peter Drucker (1946) disebut sebagai "the industry of the industry", biasanya akan unggul dalam banyak industri lainnya, mengingat kaitan hulu-hilir industri ini sangat tinggi.

Keinginan besar kita tuangkan dalam rangkaian peraturan sejak 1976, seperti peraturan tentang program penanggalan (deletion program), insentif pajak berdasarkan capaian lokalisasi komponen, dan puncaknya pada Inpres Nomor 2/1996 tentang Mobil Nasional (Mobnas). Apa yang terjadi kemudian? Puluhan perusahaan yang berpredikat sebagai ATPM (agen tunggal pemegang merek) ternyata hanya sibuk bersaing sebagai pedagang mobil.

Perusahaan terbesar dalam industri ini, PT Astra Internasional, secara perlahan bahkan dipaksa principal utamanya, Toyota Motor, untuk bergerak di sektor hulu (penjualan, pembiayaan, asuransi, dan layanan purnajual), sementara sektor hilir (rancang bangun dan pabrikasi) tetap dikuasai principal.

Mungkin membuat mobil terlalu berat. Harapan kita turunkan lagi, yaitu pada industri sepeda motor, subsektor industri automotif yang luas pasarnya di Indonesia memadai untuk mencapai produksi pada skala ekonomi yang menguntungkan. Dengan permintaan pasar jutaan unit per tahunnya, pada industri ini kita bisa memperoleh keunggulan yang lebih solid.

Ketika optimisme merebak, penguasaan kita pada industri ini tiba-tiba terlepas saat terjadi krisis ekonomi hebat 1997/1998, karena ATPM yang bergerak pada industri ini satu per satu kembali jatuh ke tangan principalnya. Kita kembali kecewa karena gagal membangun industri domestik yang kuat, seperti yang terjadi di India dan China. Apakah sepeda motor juga terlalu berat bagi kita? Jika demikian, target kita turunkan lagi, yaitu industri sepeda.

Pada industri ini, kita memiliki sejumlah pemain nasional, bahkan ada yang memiliki merek kuat seperti Polygon. Kita butuh waktu untuk membuktikan apakah pada industri ini pun kita harus menuai kegagalan lagi. Akhir-akhir ini banyak kalangan berbicara tentang bangkitnya industri kreatif di Indonesia.

Industri kreatif didefinisikan sebagai: "Industries which have their origin in individual creativity, skill and talent, and which have a potential for wealth and job creation through the generation and exploitation of intellectual property."

Yang termasuk dalam industri ini antara lain industri entertainment, periklanan dan promosi, penerbitan, kemasan, media, rumah produksi, perangkat lunak, fesyen, dan kerajinan. Data Departemen Perdagangan menunjukkan, industri kreatif memberi kontribusi sekitar 6,3% terhadap GDP nasional. Untuk mendukung kebangkitan lanjut industri ini, baru-baru ini diselenggarakan Pekan Produk Budaya Indonesia (4-8 Juni 2008).

Tidak dimungkiri, geliat industri kreatif memang sangat terasa belakangan ini. Jenis-jenis profesi baru bermunculan, seperti penata panggung, presenter, event organizer, disk jockey, mentalis, penari latar, komedian. Media massa, cetak maupun elektronik, dijejali informasi seputar selebriti. Berbagai ajang pemberian penghargaan untuk berbagai karya, dari film ke iklan, dari fotografi ke musik, dari tata rias ke kontes kecantikan, ada di mana-mana.

Sukses film Ayat-Ayat Cinta merupakan pertanda kebangkitan industri kreatif ini. Persaingan seru pada pentas industri musik, bahkan membuat kita sulit mengingat nama grup-grup pemusik dan lagu yang dibawakannya. Kita juga sulit membedakan secara jelas judul dan isi berbagai sinetron dalam tayangan televisi kita. Siapa yang menduga, bisnis nada dering dan ramal-meramal ala paranormal secara online begitu menjamur seperti sekarang.

Salah satu tantangan terbesar kita adalah merevitalisasi produk-produk budaya lokal agar mampu bersaing dengan hasil kreasi bangsa-bangsa lain. Bayangkan, betapa akan semarak industri batik nasional apabila batik dinyatakan sebagai busana resmi nasional menggantikan jas dalam berbagai acara formal. Betapa luar biasa bila lagu-lagu daerah menjadi bagian paket-paket pertunjukan di mal dan hotel-hotel berbintang.

Bayangkan, betapa menggairahkan menyaksikan pertunjukan wayang kulit yang bisa dikemas dalam cerita-cerita pendek, berdurasi pendek dengan barisan pendukung acara yang jumlahnya lebih ekonomis, sehingga mampu bersaing dengan pertunjukan solo organ yang sering tampil pada acara pernikahan atau peresmian-peresmian. Betapa semarak apabila musik dangdut dikemas dalam pola pertunjukkan yang bernuansa jazzy dan lebih formal.

Albert Einstein pernah menulis, "imagination is more important than knowledge". Imajinasi merupakan bahan bakar kreativitas. Kreativitas merupakan penggerak utama industri kreatif. Kebinekaan sumber daya dan latar belakang budaya kita merupakan ladang kondusif bertumbuhnya industri ini, karena pengembangan kreativitas tidak hanya membutuhkan lingkungan yang menjamin kebebasan berekspresi, tetapi juga varietas genetika yang beraneka. (*)

Hendrawan Supratikno
Guru Besar FE-UKSW Salatiga
Alumnus Tinbergen Institute, Belanda (//mbs)

Operations management

Operations management is an area of business that is concerned with the production of goods and services, and involves the responsibility of ensuring that business operations are efficient and effective. It is the management of resources, the distribution of goods and services to customers, and the analysis of queue systems.

APICS The Association for Operations Management also defines operations management as "the field of study that focuses on the effectively planning, scheduling, use, and control of a manufacturing or service organization through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, inventory management, accounting, and other functions as they affect the organization".

Operations also refers to the production of goods and services, the set of value-added activities that transform inputs into many outputs.Fundamentally, these value-adding creative activities should be aligned with market opportunity for optimal enterprise performance.

Origins

The origins of Operations Management can be traced back to the Industrial Revolution, the same as Scientific Management and Operations Research. Adam Smith treats the topic of the division of labor when opening his 1776 book: An Inquiry into the Nature and Causes of the Wealth of Nations also commonly known as The Wealth of Nations. The first documented effort to solve operation management issues comes from Eli Whitney back in 1798, leading to the birth of the American System of Manufacturers (ASM) by the mid-1800s. It was not until the late 1950's that the scholars noted the importance of viewing production operations as systems.
Historically, the body of knowledge stemming from industrial engineering formed the basis of the first MBA programs, and is central to operations management as used across diverse business sectors, industry, consulting and non-profit organizations.

Operations Management Planning Criteria

The task of production and operations management is to manage the efforts and activities of people, capital, and equipment resources in changing raw materials into finished goods and services.

Monday, 24 November 2008

Condensed History Of Lean Manufacturing

To help increase company profits U.S. manufacturing companies have always searched for efficient strategies that will help improve their output, reduce costs and establish a competitive position to increase their market share. Early attempts can be traced to Eli Whitney and Henry Ford.

Japanese manufacturers re-building after the World War 2 had a difficult time. for one, they had a limited amount of people, a limited amount of raw material and money. These problems, born out of necessity led to the development of lean manufacturing practices, which they called on just in time manufacturing.

Japanese manufacturing leaders like the Toyota Motor Company's Eiji Toyoda, Taiichi Ohno, and Shingeo Shingo developed a smart disciplined and process focused production system now known as the Toyota Production System, or lean production. Which incorporated The Ford production, Statistical Process Control and other techniques into a system that minimized the expenditure of resources that added no value to the product.

In 1990 James Womack wrote a book called "The Machine That Changed The World". Womack's book was a straightforward account of the history of automobile manufacturing combined with a study of Japanese, American, and European automotive assembly plants. The "lean manufacturing" theory was made popular in American factories in large part by the Massachusetts Institute of Technology study of the process from mass production toward production as written and described in Womack's book.

A new phrase was coined, as to which is now commonly referred to as "Lean Manufacturing."

Lean manufacturing

Lean manufacturing or lean production, which is often known simply as "Lean", is the practice of a theory of production that considers the expenditure of resources for any means other than the creation of value for the presumed customer to be wasteful, and thus a target for elimination. In a more basic term, More value with less work.
Lean manufacturing is a generic process management philosophy derived mostly from the Toyota Production System (TPS) and identified as "Lean" only in the 1990s. It is renowned for its focus on reduction of the original Toyota seven wastes in order to improve overall customer value, but there are varying perspectives on how this is best achieved.

The steady growth of Toyota, from a small company to the world's largest automaker,has focused attention on how it has achieved this.

Overview

Lean principles come from the Japanese manufacturing industry. The term was first coined by Professor James P. Womack and consultant Daniel T. Jones who spent years analysing the success of Japanese companies after WWII and summarising their learning in a book called ‘Lean Thinking’ (1989).

For many, Lean is the set of "tools" that assist in the identification and steady elimination of waste (muda). As waste is eliminated quality improves while production time and cost are reduced. Examples of such "tools" are Value Stream Mapping, Five S, Kanban (pull systems), and poka-yoke (error-proofing).

There is a second approach to Lean Manufacturing, which is promoted by Toyota, in which the focus is upon improving the "flow" or smoothness of work, thereby steadily eliminating mura ("unevenness") through the system and not upon 'waste reduction' per se. Techniques to improve flow include production leveling, "pull" production (by means of kanban) and the Heijunka box. This is a fundamentally different approach to most improvement methodologies which may partially account for its lack of popularity.

The difference between these two approaches is not the goal but the prime approach to achieving it. The implementation of smooth flow exposes quality problems which already existed and thus waste reduction naturally happens as a consequence. The advantage claimed for this approach is that it naturally takes a system-wide perspective whereas a waste focus has this perspective, sometimes wrongly, assumed. Some Toyota staff have expressed some surprise at the tool-based approach as they see the tools as work-arounds made necessary where flow could not be fully implemented and not as aims in themselves.

Both Lean and TPS can be seen as a loosely connected set of potentially competing principles whose goal is cost reduction by the elimination of waste.These principles include: Pull processing, Perfect first-time quality, Waste minimization, Continuous improvement, Flexibility, Building and maintaining a long term relationship with suppliers, Autonomation, Load leveling and Production flow and Visual control. The disconnected nature of some of these principles perhaps springs from the fact that the TPS has grown pragmatically since 1948 as it responded to the problems it saw within its own production facilities. Thus what one sees today is the result of a 'need' driven learning to improve where each step has built on previous ideas and not something based upon a theoretical framework.

Toyota's view is that the main method of Lean is not the tools, but the reduction of three types of waste: muda ("non-value-adding work"), muri ("overburden"), and mura ("unevenness"), to expose problems systematically and to use the tools where the ideal cannot be achieved. Thus the tools are, in their view, workarounds adapted to different situations, which explains any apparent incoherence of the principles above.

Origins

The TPS has two pillar concepts: Just-in-time (JIT) or "flow", and "autonomation"(smartautomation).
Adherents of the Toyota approach would say that the smooth flowing delivery of value achieves all the other improvements as side-effects. If production flows perfectly then there is no inventory; if customer valued features are the only ones produced then product design is simplified and effort is only expended on features the customer values. The other of the two TPS pillars is the very human aspect of autonomation, whereby automation is achieved with a human touch.The "human touch" here meaning to automate so that the machines/systems are designed to aid humans in focussing on what the humans do best. This aims, for example, to give the machines enough intelligence to recognise when they are working abnormally and flag this for human attention.

Thus, in this case, humans would not have to monitor normal production and only have to focus on abnormal, or fault, conditions. A reduction in human workload that is probably much desired by all involved since it removes much routine and repetitive activity that humans often do not enjoy and where they are therefore not at their most effective.

Lean implementation is therefore focused on getting the right things, to the right place, at the right time, in the right quantity to achieve perfect work flow while minimizing waste and being flexible and able to change. These concepts of flexibility and change are principally required to allow production leveling, using tools like SMED, but have their analogues in other processes such as research and development (R&D). The flexibility and ability to change are within bounds and not open-ended, and therefore often not expensive capability requirements.

More importantly, all of these concepts have to be understood, appreciated, and embraced by the actual employees who build the products and therefore own the processes that deliver the value. The cultural and managerial aspects of Lean are just as important as, and possibly more important than, the actual tools or methodologies of production itself. There are many examples of Lean tool implementation without sustained benefit and these are often blamed on weak understanding of Lean in the organization.

Lean aims to make the work simple enough to understand, to do and to manage. To achieve these three at once there is a belief held by some that Toyota's mentoring process (loosely called Senpai and Kohai), is one of the best ways to foster Lean Thinking up and down the organizational structure. This is the process undertaken by Toyota as it helps its suppliers to improve their own production.

The closest equivalent to Toyota's mentoring process is the concept of "Lean Sensei", which encourages companies, organizations, and teams to seek out outside, third-party experts, who can provide unbiased advice and coaching, (see Womack et al, Lean Thinking, 1998).

There have been recent attempts to link Lean to Service Management, perhaps one of the most recent and spectacular of which was London Heathrow Airport's Terminal 5.

This particular case provides a graphic example of how care should be taken in translating successful practices from one context (production) to another (services), expecting the same results. In this case the public perception is more of a spectacular failure, than a spectacular success, resulting in potenitally, an unfair tainting of the lean manufacturing philosophies.

A brief History of waste reduction thinking

The avoidance and then latterly removal of waste has a long history and as such is not the history of Lean but is its motivator. In fact many of the concepts now seen a key to lean have been discovered and rediscovered over the years by others in their search to reduce waste. Lean has developed as an approach and style that has been demonstrated to be effective.

Pre-20th century

The printer Benjamin Franklin contributed greatly to waste reduction thinking
The printer Benjamin Franklin contributed greatly to waste reduction thinking

Most of the basic goals of lean manufacturing are common sense and documented examples can be seen back to at least Benjamin Franklin. Poor Richard's Almanac says of wasted time, "He that idly loses 5s. worth of time, loses 5s., and might as prudently throw 5s. into the river." He added that avoiding unnecessary costs could be more profitable than increasing sales: "A penny saved is two pence clear. A pin a-day is a groat a-year. Save and have."

Again Franklin's The Way to Wealth says the following about carrying unnecessary inventory. "You call them goods; but, if you do not take care, they will prove evils to some of you. You expect they will be sold cheap, and, perhaps, they may [be bought] for less than they cost; but, if you have no occasion for them, they must be dear to you. Remember what Poor Richard says, 'Buy what thou hast no need of, and ere long thou shalt sell thy necessaries.' In another place he says, 'Many have been ruined by buying good penny worths'." Henry Ford cited Franklin as a major influence on his own business practices, which included Just-in-time manufacturing.

The concept of waste being built into jobs and then taken for granted was noticed by motion efficiency expert Frank Gilbreth, who saw that masons bent over to pick up bricks from the ground. The bricklayer was therefore lowering and raising his entire upper body to pick up a 2.3 kg (5 lb.) brick, and this inefficiency had been built into the job through long practice. Introduction of a non-stooping scaffold, which delivered the bricks at waist level, allowed masons to work about three times as quickly, and with less effort.

20th century

Frederick Winslow Taylor, the father of scientific management, introduced what are now called standardization and best practice deployment. In his Principles of Scientific Management, (1911), Taylor said: "And whenever a workman proposes an improvement, it should be the policy of the management to make a careful analysis of the new method, and if necessary conduct a series of experiments to determine accurately the relative merit of the new suggestion and of the old standard. And whenever the new method is found to be markedly superior to the old, it should be adopted as the standard for the whole establishment."

Taylor also warned explicitly against cutting piece rates (or, by implication, cutting wages or discharging workers) when efficiency improvements reduce the need for raw labor: "…after a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely entirely to lose sight of his employer's side of the case and become imbued with a grim determination to have no more cuts if soldiering [marking time, just doing what he is told] can prevent it."

Shigeo Shingo, the best-known exponent of single minute exchange of die (SMED) and error-proofing or poka-yoke, cites Principles of Scientific Management as his inspiration.

American industrialists recognized the threat of cheap offshore labor to American workers during the 1910s, and explicitly stated the goal of what is now called lean manufacturing as a countermeasure. Henry Towne, past President of the American Society of Mechanical Engineers, wrote in the Foreword to Frederick Winslow Taylor's Shop Management (1911), "We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labor of other countries.
To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes."

Ford starts the ball rolling

Henry Ford continued this focus on waste while developing his mass assembly manufacturing system. Charles Buxton Going wrote in 1915:

Ford's success has startled the country, almost the world, financially, industrially, mechanically. It exhibits in higher degree than most persons would have thought possible the seemingly contradictory requirements of true efficiency, which are: constant increase of quality, great increase of pay to the workers, repeated reduction in cost to the consumer. And with these appears, as at once cause and effect, an absolutely incredible enlargement of output reaching something like one hundredfold in less than ten years, and an enormous profit to the manufacturer.

Ford, in My Life and Work (1922), provided a single-paragraph description that encompasses the entire concept of waste:

I believe that the average farmer puts to a really useful purpose only about 5%. of the energy he expends.... Not only is everything done by hand, but seldom is a thought given to a logical arrangement. A farmer doing his chores will walk up and down a rickety ladder a dozen times. He will carry water for years instead of putting in a few lengths of pipe. His whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense.... It is waste motion— waste effort— that makes farm prices high and profits low.

Poor arrangement of the workplace—a major focus of the modern kaizen—and doing a job inefficiently out of habit—are major forms of waste even in modern workplaces.

Ford also pointed out how easy it was to overlook material waste. A former employee, Harry Bennett, wrote:

One day when Mr. Ford and I were together he spotted some rust in the slag that ballasted the right of way of the D. T. & I [railroad]. This slag had been dumped there from our own furnaces. 'You know,' Mr. Ford said to me, 'there's iron in that slag. You make the crane crews who put it out there sort it over, and take it back to the plant.'

In other words, Ford saw the rust and realized that the steel plant was not recovering all of the iron.

Design for Manufacture (DFM) also is a Ford concept. Ford said (in My Life and Work)

...entirely useless parts [may be]—a shoe, a dress, a house, a piece of machinery, a railroad, a steamship, an airplane. As we cut out useless parts and simplify necessary ones, we also cut down the cost of making. ... But also it is to be remembered that all the parts are designed so that they can be most easily made.

The same reference describes just in time manufacturing very explicitly.

While Ford is renowned for his production line it is often not recognized how much effort he put into removing the fitters' work in order to make the production line possible. Until Ford, a car's components always had to be fitted or reshaped by a skilled engineer at the point of use, so that they would connect properly. By enforcing very strict specification and quality criteria on component manufacture, he eliminated this work almost entirely, reducing manufacturing effort by between 60-90%.However, Ford's mass production system failed to incorporate the notion of "pull production" and thus often suffered from over-production.

Toyota develops TPS

Toyota's development of ideas that later became Lean may have started at the turn of the 20th century with Sakichi Toyoda, in a textile factory with looms that stopped themselves when a thread broke, this became the seed of autonomation and Jidoka. Toyota's journey with JIT may have started back in 1934 when it moved from textiles to produce its first car. Kiichiro Toyoda, founder of Toyota, directed the engine casting work and discovered many problems in their manufacture. He decided he must stop the repairing of poor quality by intense study of each stage of the process. In 1936, when Toyota won its first truck contract with the Japanese government, his processes hit new problems and he developed the "Kaizen" improvement teams.

Levels of demand in the Post War economy of Japan were low and the focus of mass production on lowest cost per item via economies of scale therefore had little application. Having visited and seen supermarkets in the USA, Taiichi Ohno recognised the scheduling of work should not be driven by sales or production targets but by actual sales. Given the financial situation during this period over-production had to be avoided and thus the notion of Pull (build to order rather than target driven Push) came to underpin production scheduling.

It was with Taiichi Ohno at Toyota that these themes came together. He built on the already existing internal schools of thought and spread their breadth and use into what has now become the Toyota Production System (TPS). It is principally from the TPS, but now including many other sources, that Lean production is developing.

Norman Bodek wrote the following in his foreword to a reprint of Ford's Today and Tomorrow:

I was first introduced to the concepts of just-in-time (JIT) and the Toyota production system in 1980. Subsequently I had the opportunity to witness its actual application at Toyota on one of our numerous Japanese study missions. There I met Mr. Taiichi Ohno, the system's creator. When bombarded with questions from our group on what inspired his thinking, he just laughed and said he learned it all from Henry Ford's book." It is the scale, rigour and continuous learning aspects of the TPS which have made it a core of Lean.

Types of wastes

While the elimination of waste may seem like a simple and clear subject it is noticeable that waste is often very conservatively identified. This then hugely reduces the potential of such an aim. The elimination of waste is the goal of Lean, and Toyota defined three broad types of waste: muda, muri and mura; it should be noted that for many Lean implementations this list shrinks to the last waste type only with corresponding benefits decrease.

To illustrate the state of this thinking Shigeo Shingo observed that only the last turn of a bolt tightens it—the rest is just movement. This ever finer clarification of waste is key to establishing distinctions between value-adding activity, waste and non-value-adding work.Non-value adding work is waste that must be done under the present work conditions. One key is to measure, or estimate, the size of these wastes, in order to demonstrate the effect of the changes achieved and therefore the movement towards the goal.

The "flow" (or smoothness) based approach aims to achieve JIT, by removing the variation caused by work scheduling and thereby provide a driver, rationale or target and priorities for implementation, using a variety of techniques. The effort to achieve JIT exposes many quality problems that are hidden by buffer stocks; by forcing smooth flow of only value-adding steps, these problems become visible and must be dealt with explicitly.

Muri is all the unreasonable work that management imposes on workers and machines because of poor organization, such as carrying heavy weights, moving things around, dangerous tasks, even working significantly faster than usual. It is pushing a person or a machine beyond its natural limits. This may simply be asking a greater level of performance from a process than it can handle without taking shortcuts and informally modifying decision criteria. Unreasonable work is almost always a cause of multiple variations.

To link these three concepts is simple in TPS and thus Lean. Firstly, muri focuses on the preparation and planning of the process, or what work can be avoided proactively by design. Next, mura then focuses on how the work design is implemented and the elimination of fluctuation at the scheduling or operations level, such as quality and volume. Muda is then discovered after the process is in place and is dealt with reactively. It is seen through variation in output. It is the role of management to examine the muda, in the processes and eliminate the deeper causes by considering the connections to the muri and mura of the system. The muda and mura inconsistencies must be fed back to the muri, or planning, stage for the next project.

A typical example of the interplay of these wastes is the corporate behaviour of "making the numbers" as the end of a reporting period approaches. Demand is raised in order to 'make plan', increasing (mura), when the "numbers" are low which causes production to try to squeeze extra capacity from the process which causes routines and standards to be modified or stretched. This stretch and improvisation leads to muri-style waste which leads to downtime, mistakes and backflows and waiting, thus the muda of waiting, correction and movement.

The original seven muda are:

* Transportation (moving products that is not actually required to perform the processing)
* Inventory (all components, work-in-progress and finished product not being processed)
* Motion (people or equipment moving or walking more than is required to perform the processing)
* Waiting (waiting for the next production step)
* Overproduction (production ahead of demand)
* Over Processing (due to poor tool or product design creating activity)
* Defects (the effort involved in inspecting for and fixing defects)

Some of these definitions may seem rather idealistic, but this tough definition is seen as important and they drove the success of TPS. The clear identification of non-value-adding work, as distinct from wasted work, is critical to identifying the assumptions behind the current work process and to challenging them in due course.Breakthroughs in SMED and other process changing techniques rely upon clear identification of where untapped opportunities may lie if the processing assumptions are challenged.

Lean implementation develops from TPS

The discipline required to implement Lean and the disciplines it seems to require are so often counter-cultural that thay have made successful implementation of Lean a major challenge. Some would say that it was a major challenge in its manufacturing 'heartland' as well. Implementations under the Lean label are numerous and whether they are Lean and whether any success or failure can be lain at Lean's door is often debatable. Individual examples of success and failure exist in almost all sphere's of business and activity and therefore cannot be taken as indications of whether Lean is particularly applicable to a specific sector of activity. It seems clear from the "successes" that no sector is immune from beneficial possibility.

System engineering

Lean is about more than just cutting costs in the factory. One crucial insight is that most costs are assigned when a product is designed, (see Genichi Taguchi). Often an engineer will specify familiar, safe materials and processes rather than inexpensive, efficient ones. This reduces project risk, that is, the cost to the engineer, while increasing financial risks, and decreasing profits. Good organizations develop and review checklists to review product designs.

Companies must often look beyond the shop-floor to find opportunities for improving overall company cost and performance. At the system engineering level, requirements are reviewed with marketing and customer representatives to eliminate those requirements which are costly. Shared modules may be developed, such as multipurpose power supplies or shared mechanical components or fasteners. Requirements are assigned to the cheapest discipline. For example, adjustments may be moved into software, and measurements away from a mechanical solution to an electronic solution. Another approach is to choose connection or power-transport methods that are cheap or that used standardized components that become available in a competitive market.

An example program

In summary, an example of a lean implementation program could be:-
With a tools based approach

* Senior management to agree and discuss their lean vision
* Management brainstorm to identify project leader and set objectives
* Communicate plan and vision to the workforce
* Ask for volunteers to form the Lean Implementation team (5-7 works best,
all from different departments)
* Appoint members of the Lean Manufacturing Implementation Team
* Train the Implementation Team in the various lean tools - make a point of
trying to visit other non competing businesses which have implemented lean
* Select a Pilot Project to implement – 5S is a good place to start
* Run the pilot for 2-3 months - evaluate, review and learn from your
mistakes
* Roll out pilot to other factory areas
* Evaluate results, encourage feedback
* Stabilize the positive results by teaching supervisors how to train the
new standards you've developed with TWI methodology (Training Within
Industry)
* Once you are satisfied that you have a habitual program, consider
introducing the next lean tool. Select the one which will give you the
biggest return for your business.

With a muri or flow based approach (as used in the TPS with suppliers).

* Sort out as many of the visible quality problems as you can, as well as
downtime and other instability problems, and get the internal scrap
acknowledged and its management started.
* Make the flow of parts through the system/process as continuous as
possible using workcells and market locations where necessary and avoiding
variations in the operators work cycle
* Introduce standard work and stabilise the work pace through the system
* Start pulling work through the system, look at the production scheduling
and move towards daily orders with kanban cards
* Even out the production flow by reducing batch sizes, increase delivery
frequency internally and if possible externally, level internal demand
* Improve exposed quality issues using the tools
* Remove some people and go through this work again (the Oh No !! moment)

Lean leadership

The role of the leaders within the organization is the fundamental element of sustaining the progress of lean thinking. Experienced kaizen members at Toyota, for example, often bring up the concepts of Senpai, Kohai, and Sensei, because they strongly feel that transferring of Toyota culture down and across the Toyota can only happen when more experienced Toyota Sensei continuously coach and guide the less experienced lean champions. Unfortunately, most lean practitioners in North America focus on the tools and methodologies of lean, versus the philosophy and culture of lean. Some exceptions include Shingijitsu Consulting out of Japan, which is made up of ex-Toyota managers, and Lean Sensei International based in North America, which coaches lean through Toyota-style cultural experience.

One of the dislocative effects of Lean is in the area of key performance indicators (KPI). The KPIs by which a plant/facility are judged will often be driving behaviour, because the KPIs themselves assume a particular approach to the work being done. This can be an issue where, for example a truly Lean, Fixed Repeating Schedule (FRS) and JIT approach is adopted, because these KPIs will no longer reflect performance, as the assumptions on which they are based become invalid. It is a key leadership challenge to manage the impact of this KPI chaos within the organization. A set of performance metrics which is considered to fit well in a Lean environment is Overall Equipment Effectiveness, or OEE.

Similarly, commonly-used accounting systems developed to support mass production are no longer appropriate for companies pursuing Lean. Lean Accounting provides truly Lean approaches to business management and financial reporting.

Key focus areas for leaders are

* PDCA thinking
* Genchi Genbutsu "go and see" philosophy
* Process confirmation

Differences from TPS

Whilst Lean is seen by many as a generalization of the Toyota Production System into other industries and contexts there are some acknowledged differences that seem to have developed in implementation.

1. Seeking profit is a relentless focus for Toyota exemplified by the profit maximization principle (Price – Cost = Profit) and the need, therefore, to practice systematic cost reduction (through TPS or otherwise) in order to realize benefit. Lean implementations can tend to de-emphasise this key measure and thus become fixated with the implementation of improvement concepts of “flow” or “pull”.

2. Tool orientation is a tendency in many programs to elevate mere tools (standardized work, value stream mapping, visual control, etc.) to an unhealthy status beyond their pragmatic intent. The tools are just different ways to workaround certain types of problems but they don’t solve them for you or always highlight the underlying cause of many types of problems. The tools employed at Toyota are often used to expose particular problems that are then dealt with, as each tool's limitations or blindspots are perhaps better understood.
So, for example, Value Stream Mapping focuses upon material and information flow problems (a title built into the Toyota title for this activity) but is not strong on Metrics, Man or Method. Internally they well know the limits of the tool and understood that it was never intended as the best way to see and analyze every waste or every problem related to quality, downtime, personnel development, cross training related issues, capacity bottlenecks, or anything to do with profits, safety, metrics or morale, etc. No one tool can do all of that. For surfacing these issues other tools are much more widely and effectively used.

3. Management technique rather than Change agents has been a principle in Toyota from the early 1950’s when they started emphasizing the development of the production manager's and supervisor’s skills set in guiding natural work teams and did not rely upon staff level change agents to drive improvements. This can manifest itself as a "Push" implementation of Lean rather than "Pull" by the team itself. This area of skills development is not that of the change agent specialist, but that of the natural operations work team leader.
Although less prestigious than the TPS specialists, development of work team supervisors in Toyota is considered an equally, if not more important, topic merely because there are tens of thousands of these individuals. Specifically, it is these manufacturing leaders that are the main focus of training efforts in Toyota since they lead the daily work areas, and they directly and dramatically affect quality, cost, productivity, safety, and morale of the team environment. In many companies implementing Lean the reverse set of priorities is true. Emphasis is put on developing the specialist, while the supervisor skill level is expected to somehow develop over time on its own.

Lean services

Lean, as a concept or brand, has captured the imagination of many in different spheres of activity. Examples of these from many sectors are listed below.

Lean principles have been successfully applied to call center services to improve live agent call handling. By combining Agent-assisted Voice Solutions and Lean's waste reduction practices, a company reduced handle time, reduced between agent variability, reduced accent bariers, and attained near perfect process adherence.

A study conducted on behalf of the Scottish Executive, by Warwick University, in 2005/06 found that Lean methods were applicable to the public sector, but that most results had been achieved using a much more restricted range of techniques than Lean provides.

The challenge in moving Lean to services is the lack of widely available reference implementations to allow people to see how it can work and the impact it does have. This makes it more difficult to build the level of belief seen as necessary for strong implementation. It is also the case that the manufacturing examples of 'techniques' or 'tools' need to be 'translated' into a service context which has not yet received the level of work or publicity that would give starting points for implementors.

The upshot of this is that each implementation often 'feels its way' along as must the early industrial engineers of Toyota. This places huge importance upon sponsorship to encourage and protect these experimental developments.

Friday, 21 November 2008

Industrial engineering

Industrial engineering is also operations management, systems engineering, production engineering, manufacturing engineering or manufacturing systems engineering; a distinction that seems to depend on the viewpoint or motives of the user. Recruiters or educational establishments use the names to differentiate themselves from others. In health care, industrial engineers are more commonly known as management engineers or health systems engineers.

Where as most engineering disciplines apply skills to very specific areas, industrial engineering is applied in virtually every industry. Examples of where industrial engineering might be used include shortening lines (or queues) at a theme park, streamlining an operating room, distributing products worldwide (also referred to as Supply Chain Management), and manufacturing cheaper and more reliable automobiles. Industrial engineers typically use computer simulation, especially discrete event simulation, for system analysis and evaluation.

The name "industrial engineer" can be misleading. While the term originally applied to manufacturing, it has grown to encompass services and other industries as well. Similar fields include Operations Research, Management Science, Financial Engineering, Supply Chain, Manufacturing Engineering, Engineering Management, Overall Equipment Effectiveness, Systems Engineering, Ergonomics, Process Engineering, Value Engineering and Quality Engineering.

There are a number of things industrial engineers do in their work to make processes more efficient, to make products more manufacturable and consistent in their quality, and to increase productivity.

History

Industrial engineering courses had been taught by multiple universities in the late 1800s along Europe, especially in very developed countries such as Germany, France and United Kingdom, but also in Spain in the Technical University of Madrid. In the United States,the first department of industrial engineering was established in 1908 at the Pennsylvania State University by Alex Kaserman.

The first doctoral degree in industrial engineering was awarded in the 1930s by Cornell University.

Postgraduate curriculum

The postgraduate programmes in industrial engineering have long been held as probably the most diversified programme across industries. The usual postgraduate degree earned is the Master of Science in Industrial Engineering/Industrial Engineering & Management/Industrial Engineering & Operations Research. The typical MS in IE/IE&M/IE & OR curriculum includes :

* Operations Research/Optimization Techniques
* Operations Management
* Supply Chain Mgmt & Logistics
* Simulation & Stochastic Models
* Manufacturing Systems
* Engineering Economics
* Corporate Planning
* Human Factors Engineering/Ergonomics
* Productivity Improvement
* Production Planning and Control
* Computer Aided Manufacturing
* Material Management
* Facilities Design and/or Work Space Design
* Statistical process control|Statistical Process Control or Quality Control
* Time and Motion Study

What is Manufacturing Waste

Waste is a big part of any discussion of lean manufacturing. Often waste will be referred to as the seven or eight manufacturing wastes.

Waste is any action or operation which fails to make the final product more valuable. Every process and operation should be examined in light of its contribution to the bigger picture.
Wastes must be carefully identified, as they are often interrelated.

There are many websites which discuss manufacturing wastes in great detail. The under utilization of human resources is often considered the eighth waste, and is one of the most interesting forms of waste. Most people will agree that the most valuable asset of any corporation is its people. Your human resources are the ones who will attack a problem with thought and creativity. There is no way you could get the same level of innovation from a computer. It is also the people in your organization who are capable of capturing your customer’s emotions. Given that there are so many benefits that only your human resources can give you, it is amazing that they are so commonly underutilized in organizations.

You will find that humans both inside and outside your organizations are valuable resources that you can use. Of course, they will only be valuable when used correctly. The value of a human comes not just from those who are creative or flexible, but also from those who complain or are frustrated. People who are upset provide a great deal of information about your organization which you could not receive from any other source. Often the most frustrated people you will meet are also the most creative. Their frustration is often a result of the fact that they view things differently from others. Managers who are not looking to improve the organization will often desire to remove these frustrated people as quickly as possible since they so not want to listen to new ideas or be challenged to change.

People that are often perceived as troublemakers are instead a real asset to an organization; it is just a matter of how they are viewed. The definition of waste is a useful thing in the wrong place in the wrong form. When people are placed in the right job within an organization you will surprised at what a valuable asset they can be.

Thursday, 20 November 2008

HOW TO BUILD FACTORIES

Eng. Valentin Kanchev and his colleague Plamen Panchev are the owners of Sienit,the Plovdiv building company, established in 1992. They both are a bit over forty.

Valentin Kanchev is a building engineer in the University of Architecture, Civil engineering and Geodesy. He has started a private business with a small building company.

Plamen Panchev has graduated the University of Forestry as layer-out of build-up areas. During the last years, Sienit has implemented mainly industrial projects – the factories of Liebherr, Socotab, Mirolio and others.
The owners of Sienit, the Plovdiv building company have been together for long time and that is why their business goes well, so those who do not know them think they are brothers. The truth is different.

Fifteen years ago, Valentin Kanchev and Plamen Panchev met like partners and started to build a common house. They have built a three-floor home, started living together and decided that they could build houses with common efforts for other people too.

Thereby they started with a house building. Correctness in the quality of implementation, good prices and schedules have brought along the customers during the years and in 1996 their first big opportunity for going into the industrial building has appeared. It was the construction of one of the first green-field projects – the factory for cherry processing for sweets of Agri Bulgaria Co. with an investor Ferrero - Italian Company.

"It has happened by chance – the company was looking for a terrain and we have provided it in Radinovo village near by the city of Plovdiv. We took the building and realized the project which was very proper for Bulgaria because it about buying of agricultural products – cherries - which had to be exported for Germany for production of Mon Sherry sweets.

"That was the perfect option for a foreign investment", says Valentin Kanchev.
What was coming next was the constructing of Mirolio factory in the city of Elin Pelin. On the place of the old building Sienit has built a new one. After the first investor in Radinovo, with the assistance of Municipality of Maritca many others come – Liebherr with their refrigerator factory, then Socotab.

Sienit has take part in the construction of Metro-Plovdiv and in the Turkish tailoring factory Santineli. What came after were the extension of Mirolio in Nova Zagora and one more extension in Elin Pelin.

If you ask them how they get in touch with the foreign investors, they will tell you simply and clearly – they choose us! The mechanism of contracting of clients that has been functioning in the house building is repeating in the industrial building too. The satisfied ones bring new ones.

"When Fererro contacted us, we were constructing 25 buildings at the same time", Plamen Panchev reminds and explains that Fererro and Mirolio are the two biggest companies from the Italian city Alba. He affirms that for the western companies the price is not the most important thing but the recommendation. After Sienit have built the factory of Fererro and they were satisfied, it was natural that their fellow-citizen Mirolio will refer to Sienit too, although other companies could offer a lower price. "The recommendation has always been the major point in our projects. We have never won a tender with the lowest price. These are private investments in which people choose the offer for a complex service" Kanchev explains.

Big companies like Liebherr or Socotab have no problem in settling their intentions for investing. They will be welcomed by every mayors, every institution, every company could help them to realize things quickly. The big problem is with the small companies. For example: many Italian companies come and want to build a factory with 100-200 working places. Then a projecting starts, they have passed through the common bureaucratic way which is slow. The fastest way for an investment takes a year for preparation. For the big companies this is a planned date. However, for that period a small company from Western Europe will bankrupt.
That is why we came to the conclusion to create a place where all this will be done in advance".

Thereby the two partners found out that they could make the next step. Exactly a year ago near by Striama village the first sod of the one and only Industrial Zone in the country was turned.

With the co-operation of the mayor of Municipality of Rakovski, Mr. Franz Kokov, they bought 815 000 square meters of terrain and started the development of the Zone. The Zone ensures perfect facilities – labour force, built infrastructure, nearness to the City of Plovdiv and Trakia highway, near the Gas-main. The first investor is the UK Company William Hughes, a producer of springs and auto-parts have started working before Christmas. Now Sienit is building there a logistic center of Kaufland, which is 50 000 square meters of built-up area. The company is building the two hypermarkets of the chain – in Plovdiv and in Haskovo cities.

The owners of Sienit are together when they take decisions and implement them, they live in a common house. Moreover, they rest together. This summer once again the two families were together at the seaside.

Overall equipment effectiveness

Overall equipment effectiveness (OEE) is a hierarchy of metrics which focus on how effectively a manufacturing operation is utilized. The results are stated in a generic form which allows comparison between manufacturing units in differing industries.

OEE measurement is also commonly used as a key performance indicator (KPI) in conjunction with lean manufacturing efforts to provide an indicator of success.

OEE can be best illustrated by a brief discussion of the six metrics that comprise the system. The hierarchy consists of two top-level measures and four underlying measures.
The two top-level metrics

Overall equipment effectiveness (OEE) and total effective equipment performance (TEEP) are two closely related measurements that report the overall utilization of facilities, time and material for manufacturing operations.

These top view metrics directly indicate the gap between actual and ideal performance.

* Overall equipment effectiveness quantifies how well a manufacturing unit performs relative to its designed capacity, during the periods when it is scheduled to run.
* Total effective equipment performance (TEEP) measures OEE effectiveness against calendar hours, i.e.: 24 hours per day, 365 days per year.

The four underlying metrics

In addition to the above measures, there are four underlying metrics that provide understanding as to why and where the OEE and TEEP performance gaps exist.

The measurements are described below:

* Loading: The portion of the TEEP Metric that represents the percentage of total calendar time that is actually scheduled for operation.
* Availability: The portion of the OEE Metric represents the percentage of scheduled time that the operation is available to operate. Often referred to as Uptime.
* Performance: The portion of the OEE Metric represents the speed at which the Work Center runs as a percentage of its designed speed.
* Quality: The portion of the OEE Metric represents the Good Units produced as a percentage of the Total Units Started. Commonly referred to as First Pass Yield.

Calculations for OEE and TEEP

What follows is a detailed presentation of each of the six OEE / TEEP Metrics and examples of how to perform calculations. The calculations are not particularly complicated, but care must be taken as to standards that are used as the basis. Additionally, these calculations are valid at the work center or part number level but become more complicated if rolling up to aggregate levels.

Overall equipment effectiveness

OEE breaks the performance of a manufacturing unit into three separate but measurable components: Availability, Performance, and Quality. Each component points to an aspect of the process that can be targeted for improvement. OEE may be applied to any individual Work Center, or rolled up to Department or Plant levels. This tool also allows for drilling down for very specific analysis, such as a particular Part Number, Shift, or any of several other parameters. It is unlikely that any manufacturing process can run at 100% OEE. Many manufacturers benchmark their industry to set a challenging target, 85% is not uncommon.

Calculation: OEE = Availability x Performance x Quality

Example:

A given Work Center experiences...

Availability of 86.7%.

The Work Center Performance is 93.0%.

Work Center Quality is 95.0%.

OEE = 86.7% Availability x 93.0% Performance x 95.0% Quality = 76.6%

Total effective equipment performance

Where OEE measures effectiveness based on scheduled hours, TEEP measures effectiveness against calendar hours, i.e.: 24 hours per day, 365 days per year.

TEEP, therefore, reports the 'bottom line' utilization of assets.

Calculation: TEEP = Loading x OEE

Example:

A given Work Center experiences...

OEE of 76.67%

Work Center Loading is 71.4%

TEEP = 71.4% Loading x 76.7% OEE = 54.8%

Stated another way, TEEP adds a fourth metric 'Loading', Therefore TEEP = Loading x Availability x Performance x Quality

Loading

The Loading portion of the TEEP Metric represents the percentage of time that an operation is scheduled to operate compared to the total Calendar Time that is available. The Loading Metric is a pure measurement of Schedule Effectiveness and is designed to exclude the effects how well that operation may perform.

Calculation: Loading = Scheduled Time / Calendar Time

Example:

A given Work Center is scheduled to run 5 Days per Week, 24 Hours per Day.

For a given week, the Total Calendar Time is 7 Days at 24 Hours.

Loading = (5 days x 24 hours) / (7 days x 24 hours) = 71.4%

Availability

The Availability portion of the OEE Metric represents the percentage of scheduled time that the operation is available to operate. The Availability Metric is a pure measurement of Uptime that is designed to exclude the effects of Quality, Performance, and Scheduled Downtime Events.

Calculation: Availability = Available Time / Scheduled Time

Example:

A given Work Center is scheduled to run for an 8 hour (480 minute) shift.

The normal shift includes a scheduled 30 minute break when the Work Center is expected to be down.

The Work Center experiences 60 minutes of unscheduled downtime.

Scheduled Time = 480 min - 30 min break = 450 Min

Available Time = 450 min Scheduled - 60 min Unscheduled Downtime = 390 Min

Availability = 390 Avail Min / 450 Scheduled Min = 86.7%

Performance

The Performance portion of the OEE Metric represents the speed at which the Work Center runs as a percentage of its designed speed. The Performance Metric is a pure measurement of speed that is designed to exclude the effects of Quality and Availability.

Calculation: Performance = Actual Rate / Standard Rate

Example:

A given Work Center is scheduled to run for an 8 hour (480 minute) shift with a 30 minute scheduled break.

Available Time = 450 Min Sched - 60 Min Unsched Downtime = 390 Minutes

The Standard Rate for the part being produced is 40 Units/Hour

The Work Center produces 242 Total Units during the shift. Note: The basis is Total Units, not Good Units. The Performance metric does not penalize for Quality.

Actual Rate = 242 Units / (390 Avail min / 60 min/hr) = 37.2 Units/Hour

Performance = 37.2 Units/Hour / 40 Units/Hour = 93.0%

Quality

The Quality portion of the OEE Metric represents the Good Units produced as a percentage of the Total Units Started. The Quality Metric is a pure measurement of Process Yield that is designed to exclude the effects of Availability and Performance.

Calculation: Quality = Good Units / Units Started

Example:

A given Work Center produces 230 Good Units during a shift.

242 Units were started in order to produce the 230 Good Units.

Quality = 230 Good Units / 242 Units Started = 95.0%

Wednesday, 19 November 2008

Designing eco-friendly products and technologies with green engineering

Designing for Energy Efficiency (DfEE) crosses the supply chain, from generating energy more efficiently to decreasing energy usage on a large scale to reducing the impact of energy usage on the environment. The techniques required to achieve these efficiencies are becoming more available and easier to use with tools like graphical system design that put the power of DfEE into the hands of engineers.

Everywhere one looks, green has become a primary focus of attention. From prime-time television ads to presidential debates to main selling points for consumer products, reducing environmental impact and energy consumption is rapidly becoming a top priority for consumers, companies, and governments from all regions of the world.

While this focus may seem sudden, numerous reasons explain its rapid acceleration, including global concerns about climate change, the seemingly never-ending escalation of oil and energy prices, and increased government legislation and mandates.

To create differentiated products, adhere to new regulations, decrease environmental impact and energy consumption, not to mention save money, small companies and multinational corporations are scrambling to not only create products and technologies that address these new priorities but also change the processes through which they are developed and manufactured.

Engineers and scientists are leading the charge to address this challenge, and they have the unique opportunity to make a bigger impact on the environment than any government policy. Green engineering provides the tools, techniques, and technologies to foster this needed innovation.

What is green engineering?

Engineers who want to create products requiring less energy to operate, develop new technologies that generate clean power, reduce emissions of fossil fuel-based engines, and better understand the global ecosystem need green engineering. Green engineering uses measurement and control techniques to design, develop, and improve products, technologies, and processes that result in environmental and economic benefits.

While green is the focus today, green engineering is fundamentally no different than any other type of engineering innovation in that designers must first measure and understand real-world data and then correct or fix the problem by designing the next generation of products and technologies that achieve the desired goal.

Today, many of these goals are centered on improved efficiency and reduced environmental impact. Some of the common measurements include power quality and consumption; emissions from vehicles and factories, such as mercury and nitrogen oxides; and environmental data, including carbon, temperature, and water quality.

Tools and technology advancements

In a recent article in The Economist, Linda Fisher, chief sustainability officer at DuPont, emphasized the importance of the first step in the engineering innovation process. "We find with energy and greenhouse gases, if you start to measure, people reduce the usage," Fisher said. "Measuring is not a simple task, but once a company has a proper baseline, it can see what can be changed."

While this latter statement highlights a considerable challenge, there is good news. Significant innovations in measurement, automation, and design tools, the technology components required for green engineering, are more accessible, easier to use, and available at lower prices than ever before.

Key technologies that enable green engineering include:

* High-speed and high-resolution measurements
* Domain-specific analysis libraries
* FPGAs for advanced control
* Graphical programming to measure and implement control

Some of these new technologies have resulted from growth in the semiconductor industry, which has led to major advancements in the capabilities of analog-to-digital converters while also decreasing costs associated with the mass adoption of consumer electronics. Other technologies have been around for some time, but new improvements to design and engineering tools such as graphical programming have made them more usable by domain experts rather than solely technology experts.

This innovation in engineering tools puts the necessary technology directly into the hands of those who are closest to the problems, empowering them to develop systems faster and with more success than in the past.

Application areas

Green engineering applications range from monitoring forest health so ecologists can understand the effects of climate change (see Figure 1) to developing renewable power-generation technologies. While green engineering often conjures up images of solar power and windmills, the application areas it could impact the most today are nontraditional green industries, such as oil and gas, power generation, and heavy manufacturing. These markets can benefit and better compete in the global economy by implementing more efficient, optimized systems and technologies.

The following examples demonstrate green engineering in these two aspects: renewable power generation with wind turbines and machine and process optimization for steel recycling.

Renewable power generation

One of the biggest areas of focus for green engineering is renewable power generation, which covers a diverse range of technologies including wind, solar (photovoltaic and thermal), biofuels, hydro, wave harvesting, geothermal, and even high-energy physics. Engineering innovation in these areas is exploding around the world, driven in large part by ever-increasing government legislation aimed at protecting the environment.

Today, more than 50 countries from all ranges of political, geographical, and economic situations have set aggressive targets for the amount of energy generated from renewable sources (see Table 1).

As society's environmental and energy challenges become more acute, innovative engineers and scientists must step up to measure and fix the world around them.

As aggressive government mandates require up to 60 percent of electricity to come from renewable sources with deadlines as early as 2010, these goals pose a significant engineering challenge. To put this into perspective, only 3 percent of the energy consumed worldwide in 2007 was from renewable sources.

While this task may seem daunting, efforts made during the last two years have shown significant progress toward achieving these goals.

During his keynote address at last yearճ Embedded Systems Conference, former Vice President Al Gore declared who he thought would be able to provide solutions to this global crisis. "The earth has a fever. We all need to take care of it now, and science and engineering must lead the way," he asserted. "Engineers have a vision and put it into a real working system to fix problems they are required to fix." Engineers and scientists have historically risen to meet seemingly far-fetched goals, such as putting man on the moon. What makes todayճ situation even more hopeful is the global scope.

Modern windmills, now called wind turbines, are significantly different from their ancient ancestors that were attached to barns and used to grind grain or pump water. Today, they are the largest source of renewable energy generation (excluding hydro) and are significantly more complex to develop, manufacture, and maintain.

A big challenge for engineers working on wind power technology is integrating wind turbines with the electrical grid. Faults on the grid can produce voltage dips that traditionally caused wind turbines to drop out or trip out of the system. However, it is now considered advantageous for wind turbines to stay online and connected during disturbances, which requires equipment to be tested for low-voltage ride-through capability. To do this, a mobile test system must generate short circuits on-site through circuit breakers at voltages up to 36 KV, requiring significant user safety precautions.

Energy To Quality S.L., based in Madrid, Spain, has been testing wind farms according to European and American grid codes for the past two years with a mobile voltage dip generator (Figure 2) controlled by a National Instruments (NI) PXI data acquisition system. The system measures secondary voltages at 110 VAC while controlling relays connected to tripping coils. This hardware communicates test results to a remote computer via TCP/IP for user safety. With a test time of under a minute, operators know immediately if the wind turbine complies with the requirements, enabling new wind farms to come online more quickly.

Machine and process optimization

Nucor Steel, one of the largest steel companies in the world and Americaճ largest recycler, provides another example of how green engineering is being used to enhance old processes and technologies.

When Nucor Steel acquired the Marion Steel Company in 2005, one of the first projects the company initiated was adding automation systems throughout the newly acquired Marion, Ohio mini mill plant to increase efficiency and safety (Figure 3). The process of melting and recasting steel requires a large amount of electricity, and even small increases in efficiency throughout this process result in huge energy and economic savings.

Dave Brandt, an electrical engineer at Nucor Marion, was charged with the task of implementing the automation systems. Brandt used NI tools, including programmable automation controllers and LabVIEW to develop a variety of automation systems, including a scale and weighing system, an online reactor in series with the furnace, and a remote switching station. These systems have greatly reduced electricity usage, eliminated potential safety issues, and contributed to Nucorճ pioneering commitment to environmental stewardship.

Brandt used LabVIEW and Compact FieldPoint hardware to create a scale and weighing system that determines the exact amount of steel and therefore the exact amount of energy needed to heat its electricity-powered furnace.

Before Nucor implemented this system, the company estimated the amount of steel in each burn, which resulted in hit-or-miss results and oftentimes overheated the steel, wasting electricity and producing unacceptable quality cast steel. As a result, the steel had to be reheated, which used a significant amount of energy and cost Nucor a great deal of money.

Since implementing this weighing system, Nucor has drastically decreased the amount of reheats it performs, reducing the 2007 total number to 10 out of more than 6,000 batches.

Improving the world

As societyճ environmental and energy challenges become more acute, innovative engineers and scientists must step up to measure and fix the world around them.

It is apparent that green applications will be the engineering and technology focus for the next 5-10 years. Advances in green engineering technology will continue to empower engineers and scientists to solve complex environmental issues while encouraging them to improve their products and processes.

About the Author:

Joel Shapiro is the industrial measurements and control group manager at National Instruments (NI), based in Austin, Texas. Joel is the strategic lead for NIճ green engineering initiative focusing on external and internal marketing efforts, fostering industry partnerships, and product strategy development. During his six years at NI, Joel also has served as an Applications Engineer (AE), AE team manager, and industrial communications product manager. Joel holds a bachelorճ degree in Computer Science from the University of Tennessee.

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