In my earlier column I wrote about the Fox versus the Hedgehog approach. That column was also published in an electronic newsletter and included in the weekly poll. The poll results show that only 16.7% of all respondents thought their company was a hedgehog company. The rest viewed themselves as Fox or a mix of Fox and Hedgehog organizations.
This means that most organizations take a short term approach to cost reduction and savings which in the long term will be very costly. I frequently see examples on this in organizations I work with. One common example is that cost reduction initiatives almost entirely focus on visible cost reductions while waste built into the day to day work system are overlooked or ignored.
Let me give some examples, I hope you do not recognize any of them, but if you do, do not believe you are alone in doing so.
It is not at all uncommon that operations and maintenance shutdown schedules are wide open until the morning of the shut down.
So the following can be a common phenomenon:
A shutdown of an area is preliminary estimated to require ten hours, if all necessary work is to be completed.
First step to save money is to cut the shutdown to eight hours, so some work must be postponed, because to bring in more contractors to complete all work will cost too much visible money.
“Perhaps we can run the three rotary steam joints until next shutdown, they do not yet leak. We know that the carbon rings in these joints only have about 1/8” thickness left but we take the risk” is one suggestion, so these jobs are cancelled along with some other work deemed as not urgently needed.
During the shut down the operations manager added three jobs that had been forgotten and was therefore not put on the maintenance schedule before the shut down. This delayed the start up by three hours.
The coupling for one dryer section drive was to be replaced.
After pulling the coupling off the shaft it was discovered that the coupling was not requested from the store and when it was found it was not prepared to the right shaft diameter, nor did the key way fit.
This was one of the last jobs, so no time was given to prepare coupling properly. The old coupling was put back and welded together to be fixed right later.
At start up the steam system was started too fast resulting in a lot of water hammer in pipe systems.
A consequence was that two of the three carbon rings in the rotary steam joints cracked and the joints started to leak. They could be shut off but this would result in a 10% slowdown of production speed.
Also the cost of repairing the joints went up by 10 times because of the damaged seal surfaces. The coupling lasted through the startup, but was forgotten and three months and three shutdowns later, the bearings in both motor and gearbox failed. The welded coupling was too stiff and also misaligned.
This caused six hours of unscheduled lost production and additional maintenance costs.
The root of the above examples of waste is poor disciplines in prioritization of work, lack of closing time for shut down schedules, too easy to add on a job even during a shut down, lack of planning of work etc.
But it has always been this way in this organization so the waste is known and accepted.
The fix to the problem will take time, because it includes a cultural change. “Right now we have to save what we can in the short term so we do not have time to deal with this now, and on top of that it will cost money to improve our work system” is a common saying in this organization.
The time and cost to improve is visible cost, the existing waste is embedded in the work system and invisible.
So instead of improving long term and saving long term waste, the visible short term cost saving initiatives takes over.
For example: Cancellation of training programs, reduction of number of planners and supervisors, postponing needed maintenance work, reduction of lubricators and handing this important task to operators without training etc.
It is understandable that costs must be reduced, this is needed to survive, but the industry can no longer count on the next big upswing to afford the cost of short term saving initiatives.
So in this new market mills must take long term improvement initiatives. The short term savings will often worsen the situation within a three to five years perspective. A long term cultural change initiative will improve performance substantially in three to five years.