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NINE HABITS OF HIGHLY EFFECTIVE CONTINUOUS IMPROVEMENT TEAMS

Driving Continuous Improvement and Enabling Operational Excellence

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Parsec Automation Corp.


Phone: +1 714 996-5302 Fax: +1 714 996-1845 www.parsec-corp.com

Parsec Automation Corp 2012. All rights reserved. Parsec Automation Corp., Parsec logo, and Parsec product names are trademarks of Parsec Automation Corp. References to other companies and their products use trademarks owned by the respective companies and are for reference purposes only.

TABLE OF CONTENTS
HABIT 1: DONT FALL INTO THE HIGH EFFICIENCIES TRAP ................................................................................... 1 HABIT 2: ASSEMBLE CROSS-FUNCTIONAL IMPROVEMENT TEAMS ......................................................................... 1 HABIT 3: DEFINE FOCUSED AND ACHIEVABLE GOALS ............................................................................................. 1 HABIT 4: USE AUTOMATED KPI-BASED METRICS .................................................................................................... 2 HABIT 5: SELECTIVELY INVOLVE OPERATORS IN THE DATA COLLECTION ................................................................ 2 HABIT 6: ROOT CAUSE ANALYSIS OF THE PRODUCTION LOSSES ............................................................................. 3 HABIT 7: RECOMMEND AND IMPLEMENT CHANGES THAT DELIVER SUSTAINABLE PRODUCTION IMPROVEMENT 3 HABIT 8: CONSIDER INCENTIVE PROGRAMS TO INCREASE MOTIVATION ............................................................... 4 HABIT 9: BENCHMARK WITH OTHERS IN YOUR INDUSTRY ..................................................................................... 4 ABOUT PARSEC ...................................................................................................................................................... 5 TERMS AND CONDITIONS OF USE .......................................................................................................................... 6

Nine Habits of Highly Effective Continuous Improvement Teams


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Continuous improvement is a journey, not a destination. It is more than a set of steps to


followit is a culture that, when embraced by the entire company, results in significant business value. Effective use of programs such as Lean Manufacturing, Six Sigma, and OEE yields results that are too valuable to ignore. But where do you start? Here, we have compiled our Nine Habits of Highly Effective Continuous Improvement Teams to help you get started.

Habit 1: Dont Fall into the High Efficiencies Trap


This may sound contrary to the popular opinion, but you may be stifling your continuous improvement team with the metrics you are using. Businesses inherently want to see high efficiency numbers reported for their annual reports, however, using these same metrics on the factory floor may be hiding areas for improvement. Oftentimes these metrics do not consider Availability Losses such as changeover, sanitation, or preventative maintenance in the calculation. Instead, they are considered an unavoidable but necessary cost of doing business. In order to improve efficiency, you have to measure it correctly without avoiding the factors that would make the numbers look bad! You have to adopt a methodology that provides unbiased, consistent, and real measurement. For example, you could consider OEE as a proven metric for productivity improvement: it measures inefficiencies related not only to equipment but also consumables, infrastructure, and personnel in one comprehensive metric.

Habit 2: Assemble Cross-Functional Improvement Teams


There is no doubt that operations, engineering, production, quality assurance, or maintenance departments can each assemble a continuous improvement team that produces results. However, manufacturers exponentially receive more value when the continuous improvement team members are from cross-functional disciplines. These teams regularly meet to discuss issues and opportunities, prioritize them, and recommend solutions. This way the members of the team agree on the solutions to the issues before they are implemented, thereby minimizing any negative effects that the change might have on another department. This is a missing ingredient in many continuous improvement programs today.

Habit 3: Define Focused and Achievable Goals


You do not have to tackle the entire factory at once. You can begin with those areas, systems, lines, or disciplines that will result in the most dramatic improvement in overall productivity. You can do this by evaluating ways to improve the constraint or ways to reduce production losses on the most profitable products. It is paramount to have a clear understanding of the current performance level so you can set challenging, yet realistic, improvement goals. Consider a system that is currently running at 30 percent OEE. Management wants to increase
Nine Habits of Highly Effective Continuous Improvement Teams
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OEE, so they institute a 10 percentage-point improvement goal for the year. It must be understood that improving OEE from 30, to 40 percent is the equivalent of asking production to increase output by one-third in a year. Depending on the industry, state of current assets, resources, and infrastructure, this may not be reasonable in that time frame. A better way is to set specific goals for each of the OEE Components (Availability, Performance, and Quality) based on the starting point. For example, the above manufacturer may consider improving Availability by 5 points from 50 percent, Performance by 3 from 66 percent, and Quality by 0.5 from 97 percent. Achieving these goals would improve OEE by 5 percent and provide the ability to either increase the output, or reduce production time, by over 15.5 percent. While challenging, its an achievable goal that would result in a significant return on investment.

Habit 4: Use Automated KPI-Based Metrics


Providing your line-of-business managers and operators with real-time and accurate information about performance is crucial to their effectiveness. Consider the value of one OEE percentage-point improvement to your company. Many manufacturers using real-time performance management software have improved OEE consistently and significantly by collecting, analyzing, and reporting the right KPIs. Armed with the right information at the right time, team members can effectively respond to events that affect performance, and eliminate the root causes of inefficiency. Using a manual production event monitoring system (e.g., clip-board and stopwatch) allows you to only capture some of your production loss events. Manufacturers that have migrated to automated systems have discovered that there were many more loss events than previously captured by their manual techniques. The significantly enhanced and consistent information about the various production loss events will lead to the identification of areas for improvement. By analyzing the root causes of these loss events, you will find effective ways to correct and minimize them. One of the most overlooked areas for improvements highlighted by the OEE metric is Availability Losses. This is an area that yields rapid rewards for many manufacturers through the systematic review of the automated event monitoring and analysis. Some ripe-for-the-picking opportunities include operator training, changeovers, sanitation, preventative maintenance, and starvation due to bad planning.

Habit 5: Selectively Involve Operators in the Data Collection


The line operators have the firsthand look at what is occurring on their equipment and can provide valuable insight in identifying and reporting efficiency losses. However, their main task is operating the line rather than collecting detailed performance information (i.e.,
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recording/acknowledging/categorizing events and performing root-cause analysis) during production. Continuous improvement teams MUST have the ability to non-intrusively ask their operators for the vital information that will help to improve or eliminate production losses. This is what is meant by selective involvement. Typical process automation alarm systems are often ignored, but a system that requires minimal, yet effective involvement will be more readily accepted and used. When you use a real-time performance management system that selectively involves the operator, it shows that you are serious about your continuous improvement program, and that you value the positive role operators may play in its success. Many manufacturers have realized significant percentage-point improvements for this very reason.

Habit 6: Root Cause Analysis of the Production Losses


Your critical production system is down. Do you know the real reason? Is it caused by an upstream or downstream event? Is it due to a machine failure, or perhaps caused by running out of needed parts/supplies? To be able to analyze and understand the root causes of your production losses, your continuous improvement team must have timely access to accurate reports and analysis that are typically only available from a real-time performance management system. The in-depth analysis and the availability of various reports make it possible to both quickly and effectively identify the root causes of loss events, and help devise solutions to eliminate them.

Habit 7: Recommend and Implement Changes That Deliver Sustainable Production Improvement
You must use cross-functional teams to analyze the root causes of production losses, prioritize the issues to be addressed, and establish a consensus before implementing changes in order to improve your chances of success. But how do you do this? Some companies have weekly meetings for their cross-functional improvement teams. During the week, they enter the issues and suggestions into a database, which are then reviewed during the weekly meeting. Consensus is achieved before changes are implemented. Others have developed Intranet sites where they record the issues that they would like the Continuous Improvement Team to address. These methods are very effective because they keep the teams focused on those priority issues that will yield the most valuable results. Once changes are made, it is important to continually measure the performance to confirm that the changes resulted in a sustainable improvement. Remember, continuous improvement effort is just that: CONTINUOUS!

Nine Habits of Highly Effective Continuous Improvement Teams


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Habit 8: Consider Incentive Programs to Increase Motivation


Your people are the key to your improvement speed. By using proven methods, your continuous improvement program will yield significant results for your company. In many instances, it is advisable to establish metrics-based incentive programs that will help motivate your employees and team members to achieve measurable and sustainable performance improvement. For example, companies have told Parsec that their operators were motivated by a bonus for achieving a significant reduction in a routine availability loss. We regularly witness significant reduction in productivity losses when the operators embrace a productivity-centric culture that rewards them for their efforts to improve their performance. Its nothing short of amazing! You can be creative with the incentives; they do not always have to be monetary. Some companies hold parties or have their managers cook lunch for them, or have a team outing when they achieve their goals. Get to know what would motivate your team. You may be surprised.

Habit 9: Benchmark with Others in Your Industry


What are the efficiency metrics for others in your industry? How do you compare to world-class OEE in your industry? How many companies are running at world class? What are truly worldclass companies doing to achieve and maintain their success? Is the textbook world-class OEE of 85 percent achievable in your industry? For example, textbook OEE may be achievable for the food and beverage industry, but it may be unreasonable for the pharmaceutical industry due to its complex regulations and constraints. It is important to know where you stand. For example, if you are running in a track race and you improve your time from a previous personal best of 5.5 minutes per mile to 5 minutes, you have done very well. But how well have you really done if everyone else in the race is running a sub 4-minute mile? Parsec offers annual industry specific symposiums that allow executives to present their successes, discuss their continuous improvement journeys, and participate in roundtable discussions about relevant industry topics. The attendees have the opportunity to network with each other and take away practical ideas that can readily be employed. They have commented how they have gone from skeptics to believers in real-time performance management and metrics such as OEE, and how valuable it has been to learn about what others in the industry were doing. Attending this type of benchmarking event for your industry is of great value.

By applying these Nine Habits of Highly Effective Continuous Improvement Teams, you will lay a solid foundation for success. Put together a cross-functional team, use accurate, real-time performance information to support these teams, monitor, implement, and control your corrective solutions, and you will take your continuous improvement program to new heightsguaranteed!

Nine Habits of Highly Effective Continuous Improvement Teams


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ABOUT PARSEC
Parsec Automation Corp. (Parsec) is the developer of TrakSYS, the leading real-time operations and performance management software. Manufacturing companies worldwide rely on Parsec for flexible and configurable tools to execute manufacturing operations across the value stream more effectively. Without production disruption, TrakSYS helps manufacturers to significantly improve asset utilization and efficiency, increase capacity with no new capital equipment, reduce production costs, decrease lead time, and improve profitability. With measureable ROI, TrakSYS delivers the bottom-line results that manufacturing companies are looking for. For more information about Parsec, please visit the corporate Web site at www.parsec-corp.com.

2012 Parsec Automation Corp. All rights reserved. TrakSYS, LOGICTrak, MODELTrak, INTELLITrak, GLOBALTrak, EVENTTrak, ALERTTrak, SENSORTrak, LEANTrak, PRODUCTTrak, WEBTrak, HISTORITrak, AUDITTrak, IMPROVETrak, SPCTrak, BATCHTrak, and any other Parsec products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Parsec Automation Corp. All other products and service names mentioned are the trademarks of their respective companies. Data contained in this document serve informational purposes only. Nine Habits of Highly Effective Continuous Improvement Teams
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TERMS AND CONDITIONS OF USE


Upon receipt of this electronic publication, it is understood that the user will and must fully comply with the terms and conditions of use as stipulated herein. This publication is protected by United States copyright laws and international treaties. Unless otherwise noted, the entire contents of this publication are copyrighted by Parsec Automation Corp., and may not be reproduced, stored in another retrieval system, posted on any Website, or transmitted in any form or by any means without prior written consent of Parsec Automation Corp. Unauthorized reproduction or distribution of this publication, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent necessary to protect the rights of Parsec Automation Corp. The trademarks and registered trademarks of the corporations mentioned in this publication are the property of their respective holders. All information contained in this report is current as of publication date. Information contained in this publication has been obtained from sources Parsec Automation Corp. believes to be reliable, but is not warranted by the publisher. Opinions in this publication reflect judgment at the time of publication and are subject to change without notice. THIS DOCUMENT IS FOR ELECTRONIC DELIVERY ONLY The following are prohibited: Transmittal via the Internet Reproduction for Sale Posting on any Website

Nine Habits of Highly Effective Continuous Improvement Teams


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