New material is to be compiled now for 2022 to update the content.
11.5.2016
Material prepared for a lecture for industrial engineering executives of Crompton Greaves.
Motion Study
Work Measurement
Ergonomics
Job Evaluation
Incentives
Wearable Devices Use to improve productivity.
https://www2.deloitte.com/au/en/pages/media-releases/articles/australias-mobile-revolution-continues-170316.html
Product Efficiency Improvement
Production Process Efficiency Improvement
Inspection Process Efficiency Improvement
Maintenance Process Efficiency Improvement
Information - Data Collection, Processing and Dissemination Efficiency Improvement
Optimization
Industrial Engineering Statistics
Industrial Engineering Economics
Work Measurement, Cost Measurement, and Productivity Measurement
System Level Industrial Engineering
Management of Technical Processes
Supply Chain Improvement
Business Process Improvement
Management of Business Processes
Supply Chain Improvement
Energy Efficiency Improvement
Resource Efficiency Improvement
India is ranked 9 in the world. $203 billion is the output for 2013 in 2005 prices and exchange rates. $200 per man is the output per year lowest in the top 20 ranked countries. 13% of the national output is in manufacturing. Becomes 2% of global output.
Indonesia has $500 per man and Brazil has $800 per person.
Motion Study
Now it became part of 5S
Combination tools
Work Measurement
MOST Technique
Ergonomics
Job Evaluation
Incentives
Wearable Devices Use to improve productivity.
Product Efficiency Improvement
Productivity Improvement of Technical Processes
Production Process Efficiency Improvement
Inspection Process Efficiency Improvement
Internet of Test? The Internet of Things for Test and Measurement
http://www.deskeng.com/de/internet-of-test-the-internet-of-things-for-test-and-measurement/
What IoT brings in Test and Measurement
http://electronicsmaker.com/what-iot-brings-in-test-and-measurement
Will National Instruments Lead In The Next Generation Of IoT Tools?
http://www.forbes.com/sites/patrickmoorhead/2014/11/06/national-instruments-to-enable-next-generation-design-and-test-tools-for-the-internet-of-things/#3d82c5153717
http://www.moorinsightsstrategy.com/wp-content/uploads/2014/11/MIS-Software-Designed-Measurement-and-Control-vFINAL.pdf
Maintenance Process Efficiency Improvement
Lean thinking for a maintenance process
Sherif Mostafaa*, Sang-Heon Leeb, Jantanee Dumrakc, Nicholas Chileshea & Hassan Soltand
pages 236-272
Production & Manufacturing Research: An Open Access Journal
Volume 3, Issue 1, 2015
The maintenance process shares significant operating costs in an organisation. Lean thinking can be incorporated into maintenance activities through applying its principles and practices/tools. Lean maintenance (LM) is a prerequisite for lean manufacturing systems. This research proposes a new structure for LM process based on a systematic literature review of a significant number of related articles that were published on LM. The process structure is designed based on the five lean principles to guide and support organisations to pursue maintenance excellence. This study establishes a scheme for LM tools that are structured into 2 level 4 bundles and 26 lean practices/tools and develops a House of Waste (HoW) to demonstrate the association between maintenance wastes and the LM tools. With a successful accomplishment of the proposed scheme, the performance of a maintenance department can create more improvement opportunities over time to reach the maintenance excellence status.
http://www.tandfonline.com/doi/full/10.1080/21693277.2015.1074124
http://www.skf.com/group/services/services-and-solutions/benchmarking/6-steps-to-best-in-class-maintenance-benchmarking.html
http://www.prnewswire.com/news-releases/achieving-excellence--source-to-tap-program-realizes-43-improvement-in-field-maintenance-productivity-for-washington-aqueduct-300230632.html
Information - Data Collection, Processing and Dissemination Efficiency Improvement
Integrating preventive maintenance and production scheduling
Six Sigma
New capital equipment
Replacement equipment
Capital expenditure proposals
Revenue expenditure proposals
Our Capital Productivity group is part of our Operations Practice. Our clients include leading companies worldwide from a wide range of industries. We support and advise their management on strategic and operational questions relating to large construction projects. Capital productivity consultants are thought leaders and expert practitioners with deep experience in delivering very large construction projects.
To strengthen our Capital Productivity group in our office locations in Germany, the UK, Denmark, Sweden, Belgium, and the Netherlands, we are looking for
Consultants in capital productivity/construction projects
At McKinsey, you will have unique opportunities to use your knowledge creatively to influence others. You will apply managerial expertise gained from large construction projects and deep experience in bottom-up design, design optimization, risk management, contracting and procurement, construction management, and the ramp-up of production processes in capital-intensive industries. You will carry out lean construction project implementations and capability building. You will develop short- and long-term capability-building plans for all relevant levels of client leadership and McKinsey client service teams, with anticipated deliverables, outcomes, and required resources. You will introduce new frameworks, tools, or ways of using existing material, identify clients for beta testing, and codify new knowledge in articles. You will provide expertise on project/program management tools such as portfolio management, lifecycle planning, and project tracking. You will perform structured, fact-based diagnoses of systems, processes, and organizations across a broad range of industries.
Desired Skills
You have a proven track record and expertise in delivering large construction projects (larger than USD 100 million) across the entire project lifecycle (design engineering, risk management, procurement and contracting, construction management, commissioning, ramp-up, etc.)
You have professional operations or consulting experience in at least one of the following industry sectors: oil and gas, metals and mining, energy and power generation, chemicals or other process industry, infrastructure, construction and real estate, or manufacturing
You have a progressive career trajectory, including outstanding professional achievement and impact
You hold an excellent university degree, preferably with an engineering focus
You have outstanding analytical and conceptual skills
You show great initiative and creativity, working well both on your own and in a team
You are mobile and excited to take on longer international assignments
You are able to convince others through your written and spoken communication
https://mckinsey.secure.force.com/EP/job_details?jid=a0xA0000005XhND
Work Measurement, Cost Measurement, and Productivity Measurement
OECD analysis shows that the productivity of the most productive firms – those on the “global productivity frontier” in economic terms—grew steadily at an average 3.5% per year in the manufacturing sector, or double the speed of the average manufacturing firm over the same period. This gap was even more extreme in services. Private, non-financial service sector firms on the productivity frontier saw productivity growth of 5%, eclipsing the 0.3% average growth rate. Perhaps more importantly, the gap between the globally most productive firms and the rest has been increasing over time, especially in the services sector. Some firms clearly “get it” and others don’t, and the divide between the two groups is growing over time.
https://hbr.org/2015/08/productivity-is-soaring-at-top-firms-and-sluggish-everywhere-else
http://www.oecd.org/economy/the-future-of-productivity.htm
A global textile, chemical and floor-covering maker, Milliken self-identifies as operationally excellent. In the 10 years since 2006 (when McNulty became finance chief), the company has improved manufacturing productivity by at least 5 percent each year according to McNulty.
http://ww2.cfo.com/benchmarking/2014/04/operations-nirvana-profits-soar-far-beyond-sales-growth/
IIE changed its name to IISE
Total productivity management
Total cost industrial engineering
Understand total cost - Costing Profit and Loss Account
Lean Maintenance
Lean Design and Development
In many areas, productivity of China is only 65% of the productivity elsewhere.
Simply adopting and spreading global best practices in the way companies and government departments in China conduct their operations would capture three-quarters of China’s productivity gap.
http://www.mckinsey.com/mgi/overview/in-the-news/why-china-should-invest-in-productivity-not-in-reproductivity
http://www.mckinsey.com/business-functions/operations/our-insights/brightening-the-black-box-of-r-and-d
Supply Chain Technical Processes Improvement
Extending Lean Thinking
http://www.atkearney.dk/automotive/news-media/news-release/-/asset_publisher/78jRxPc9hKWt/content/future-of-manufacturing-new-productivity-levers-body/10192?_101_INSTANCE_78jRxPc9hKWt_redirect=%2Fautomotive%2Fnews-media%2Fnews-release%3Fp_p_id%3D2_WAR_kaleodesignerportlet%26p_p_lifecycle%3D0
Marketing Analytics
Supply chain management software - Barrier to implementation
Supply chain improvement - Supply Chain Training Programmes - Supply chain partner conferences
The energy and raw materials are important cost drivers. For one LCD-television manufacturer, Mckinsey studied, energy represented 45 percent of total production costs. For many “upstream” manufacturers (such as steel and chemical makers) energy typically accounts for up to 15 percent or more of overall production costs—the largest share after raw materials, which often account for at least 50 percent of the cost base. The experience of Mckinsey suggests that many of these manufacturers could reduce the amount of energy they use in production by as much as 30 percent by applying lean principles and by shifting mind-sets to focus the organization on eliminating anything that doesn’t add value for customers.
The analysis of energy using theoretical energy consumption (ideal value) helped a company to optimize its plants’ production rates to use energy more efficiently. Indeed, the company identified a narrow set of conditions in which the plants’ energy consumption was destroying value—a situation it could now predict and avoid.
A chemical manufacturer used a similar approach to optimize its variable costs associated with both energy use and materials yields. Theoretical-limit analyses identified a series of process-control improvements, as well as opportunities to lower thermodynamic-energy losses and to optimize mechanical equipment. Taken together, these moves helped the company to reduce its energy consumption by 15 percent. Meanwhile, on the raw-material side, the company combined theoretical-limit analysis with advanced statistical techniques using big data to map the profit per hour of a set of activities. This approach helped the company to optimize the use of an important catalyst in production, to discover additional process parameters for fine tuning, and to improve the allocation of its production activities across the company’s different lines. All this, together with a few selected capital investments, ultimately helped to increase yields by 20 percent (or, in lean terms, to cut yield losses by 20 percent—a savings equivalent to a plant’s entire fixed cost for labor).
While all of these examples are impressive on their own, perhaps more impressive is the enduring power of lean principles to generate unexpected savings when companies gain greater levels of insight into their operations—for example, through the use of advanced analytics or profit-per-hour analyses. In the years ahead, as emerging-market growth continues to boost demand for resources and to spur commodity-price volatility, more and more companies should have incentives to experience this power for themselves.
About the Authors
Markus Hammer is a senior expert in McKinsey’s Lisbon office, Paul Rutten is a principal in the Amsterdam office, and Ken Somers is a master expert in the Antwerp office.
http://www.mckinsey.com/business-functions/operations/our-insights/bringing-lean-thinking-to-energy
http://articles.extension.org/pages/70308/reducing-energy-consumption-through-lean-thinking:-presentations
https://www.ncsu.edu/bioresources/BioRes_09/BioRes_09_1_1373_Lyon_Q-PC_Reducing_Elec_Consum_Forest_Prod_Ind_Lean_4479.pdf
https://www.epa.gov/sites/production/files/2013-10/documents/lean-energy-climate-toolkit.pdf
A change in perspective can lead to real breakthroughs in resource productivity or reduction in resource consumption.
Their full range of options includes maximizing the use of raw materials, minimizing harmful emissions, cutting water loss, and reducing or avoiding waste streams through recycling and energy recovery.
The vivid examples in action provided in this article will stir the imaginations of senior leaders about the possibilities for using resources more productively.
The lean idea of "recognize and root out waste" can be applied to energy and materials. This can dramatically improve resource productivity.
In practice, these methods often involve following a product through a factory or service operation. That’s known as value-stream mapping, which can be illustrated by a Sankey diagram that highlights streams of resource waste.
The article gives the example of baking cakes for a school fund-raiser. There are various inputs, such as ingredients and electricity for running the oven, as well as losses, such as heat leakage from the oven. Currently only one loss is recovered, and that too only partially: apple cores are used to feed chickens. Can some more losses be also recovered? Could the oven lose less heat in baking? Could eggshells be added to garden compost? What if the oven ran on gas instead of electricity or the electricity came from a solar panel whose cost has already been paid?
The starting point for most operational-improvement efforts is the existing process and improvements are suggested as involved people know as possible from that point. An aggressive approach to resource productivity takes a different route. It identifies the current theoretical limit for resource use to produce a product or service. The difference between the theoretical limit and actual consumption is labeled as what it truly is: a loss. Most people, and most organizations, are far more motivated to avoid losses than to reduce consumption. Reframing the problem in this way is therefore more likely to produce major improvement opportunities. An iron and steel manufacturer in China, for instance, followed this exercise and increased the power it generated from waste heat by 25 percent.
Determine profits per hour of processing of products.
That sort of comparison can help companies make crucial resource-productivity choices. For example, in the chemical industry, increasing a product’s yield usually reduces environmental waste but requires longer reaction times and leaves less capacity for other products. If, however, the product’s profit per hour increases by running the reaction longer and improving the yield, the decision to do so and reduce production of other products is an easy one.
Advanced analytic techniques can multiply the power of profit per hour, helping companies sort through millions of possible interdependencies among variables such as the quality of raw materials, the configuration of equipment, or process changes.
To understand what was at play, the mining company turned to neural networks to isolate specific days and events when the yield should have been higher. The analysis showed that increasing the concentration of oxygen in the process offsets the yield loss resulting from a decline of ore grades over the previous year. Thanks to the changed process parameter, the company increased yields (and therefore production) by 8 percent in three months.
Resource productivity also requires a comprehensive change-management effort. Success stories, however, change people’s underlying mind-sets so that they “think holistically” . Equally important, exceptional organizations support the new mind-sets with revised metrics and more frequent performance dialogues as part of a new management infrastructure. At these companies, resource productivity informs almost every aspect of operations, ensuring that people keep finding new opportunities to create more value from less.
People have to embrace more sustainable logic: “think circular,” creating new value for companies and society by looping products, components, and materials back into the production process after they have fulfilled their initial use.
Consider, for example, the pharmaceutical company that applied lean manufacturing to a series of processes in its biological reactors, where it grew cell cultures. The combination of loss-mapping techniques along the production chain, deep statistical analysis, and rigorous brainstorming and problem-solving sessions with engineers and operators helped to identify improvements in the productivity of the biological resources. The company expects these improvements to boost yields by over 50 percent—without additional costs. This finding was noteworthy because even though the company was well versed in lean thinking and methods, its production team had initially taken variability in biological materials for granted (a common attitude).
About the Authors
Markus Hammer is an expert in McKinsey’s Vienna office, and Ken Somers is a master expert in the Antwerp office.
http://www.mckinsey.com/business-functions/operations/our-insights/more-from-less-making-resources-more-productive
Report on Resource Efficiency using Lean Principles in UK Food and Drink Supply Chain - 266 pages
http://www.oakdenehollins.co.uk/media/270/11668_20131114RevisedLeanresearchreport-DEFR01270FO0425_from_defra_website.pdf
Australia’s economy is $42.9 billion (2.6% of GDP) larger in 2015 than it would otherwise be, because of the long-term productivity ($34 billion/2.0% of GDP) and workforce participation ($8.9 billion/0.6% of GDP) benefits generated by mobile technology take-up.
https://www2.deloitte.com/au/en/pages/media-releases/articles/australias-mobile-revolution-continues-170316.html
Cloud Computing technology investments raising to expectation of increase in productivity
http://mobile.deloitte.wsj.com/cio/2015/09/17/midmarket-invests-in-it-for-productivity-growth/
Service robots: The next big productivity platform
http://www.pwc.com/us/en/technology-forecast/2015/robotics/features/service-robots-big-productivity-platform.html
Data Analytics and Productivity
https://www.pwc.com/ca/en/power-utilities/publications/pwc-the-productivity-imperative-data-analytics.pdf
The Perform approach - PWC
http://www.pwc.com.au/productivity/perform.html
Organisation effectiveness
Revolutionising how businesses think about organisation design, partnering with clients to design and implement the organisational models, and developing structures that will deliver maximum agility, flexibility and responsiveness
https://www.pwc.in/assets/pdfs/services/people-and-change/organisation-effectiveness.pdf
Analytics Advantage - AT Kearney
http://www.atkearney.tw/paper/-/asset_publisher/dVxv4Hz2h8bS/content/id/5849311
https://hbr.org/2016/01/how-to-boost-your-teams-productivity
Productivity Improvement Trends - 2016 Compilation - Themes
Human Effort Engineering
Motion Study
Work Measurement
Ergonomics
Job Evaluation
Incentives
Wearable Devices Use to improve productivity.
Mobile Technology allowing people to work more and also productively
Australia’s economy is $42.9 billion (2.6% of GDP) larger in 2015 than it would otherwise be, because of the long-term productivity ($34 billion/2.0% of GDP) and workforce participation ($8.9 billion/0.6% of GDP) benefits generated by mobile technology take-up.https://www2.deloitte.com/au/en/pages/media-releases/articles/australias-mobile-revolution-continues-170316.html
System Efficiency Engineering
Product Efficiency Improvement
Production Process Efficiency Improvement
Inspection Process Efficiency Improvement
Maintenance Process Efficiency Improvement
Information - Data Collection, Processing and Dissemination Efficiency Improvement
Optimization
Industrial Engineering Statistics
Industrial Engineering Economics
Work Measurement, Cost Measurement, and Productivity Measurement
System Level Industrial Engineering
Management of Technical Processes
Supply Chain Improvement
Business Process Improvement
Management of Business Processes
Supply Chain Improvement
Energy Efficiency Improvement
Resource Efficiency Improvement
Productivity Improvement Trends - 2016 Compilation - Detailed Information
Manufacturing output per person in IndiaIndia is ranked 9 in the world. $203 billion is the output for 2013 in 2005 prices and exchange rates. $200 per man is the output per year lowest in the top 20 ranked countries. 13% of the national output is in manufacturing. Becomes 2% of global output.
Indonesia has $500 per man and Brazil has $800 per person.
Human Effort Engineering
Motion Study
Now it became part of 5S
Combination tools
Work Measurement
MOST Technique
Ergonomics
Job Evaluation
Incentives
Wearable Devices Use to improve productivity.
System Efficiency Engineering
Product Efficiency Improvement
Productivity Improvement of Technical Processes
Production Process Efficiency Improvement
Inspection Process Efficiency Improvement
Internet of Test? The Internet of Things for Test and Measurement
http://www.deskeng.com/de/internet-of-test-the-internet-of-things-for-test-and-measurement/
What IoT brings in Test and Measurement
http://electronicsmaker.com/what-iot-brings-in-test-and-measurement
Will National Instruments Lead In The Next Generation Of IoT Tools?
http://www.forbes.com/sites/patrickmoorhead/2014/11/06/national-instruments-to-enable-next-generation-design-and-test-tools-for-the-internet-of-things/#3d82c5153717
http://www.moorinsightsstrategy.com/wp-content/uploads/2014/11/MIS-Software-Designed-Measurement-and-Control-vFINAL.pdf
Maintenance Process Efficiency Improvement
Lean thinking for a maintenance process
Sherif Mostafaa*, Sang-Heon Leeb, Jantanee Dumrakc, Nicholas Chileshea & Hassan Soltand
pages 236-272
Production & Manufacturing Research: An Open Access Journal
Volume 3, Issue 1, 2015
The maintenance process shares significant operating costs in an organisation. Lean thinking can be incorporated into maintenance activities through applying its principles and practices/tools. Lean maintenance (LM) is a prerequisite for lean manufacturing systems. This research proposes a new structure for LM process based on a systematic literature review of a significant number of related articles that were published on LM. The process structure is designed based on the five lean principles to guide and support organisations to pursue maintenance excellence. This study establishes a scheme for LM tools that are structured into 2 level 4 bundles and 26 lean practices/tools and develops a House of Waste (HoW) to demonstrate the association between maintenance wastes and the LM tools. With a successful accomplishment of the proposed scheme, the performance of a maintenance department can create more improvement opportunities over time to reach the maintenance excellence status.
http://www.tandfonline.com/doi/full/10.1080/21693277.2015.1074124
http://www.skf.com/group/services/services-and-solutions/benchmarking/6-steps-to-best-in-class-maintenance-benchmarking.html
http://www.prnewswire.com/news-releases/achieving-excellence--source-to-tap-program-realizes-43-improvement-in-field-maintenance-productivity-for-washington-aqueduct-300230632.html
Information - Data Collection, Processing and Dissemination Efficiency Improvement
Optimization
Integrating preventive maintenance and production scheduling
Industrial Engineering Statistics
Six Sigma
Industrial Engineering Economics
ROI caculation for all investmentsNew capital equipment
Replacement equipment
Capital expenditure proposals
Revenue expenditure proposals
Consultants in capital productivity - McKinsey Company
Our Capital Productivity group is part of our Operations Practice. Our clients include leading companies worldwide from a wide range of industries. We support and advise their management on strategic and operational questions relating to large construction projects. Capital productivity consultants are thought leaders and expert practitioners with deep experience in delivering very large construction projects.
To strengthen our Capital Productivity group in our office locations in Germany, the UK, Denmark, Sweden, Belgium, and the Netherlands, we are looking for
Consultants in capital productivity/construction projects
At McKinsey, you will have unique opportunities to use your knowledge creatively to influence others. You will apply managerial expertise gained from large construction projects and deep experience in bottom-up design, design optimization, risk management, contracting and procurement, construction management, and the ramp-up of production processes in capital-intensive industries. You will carry out lean construction project implementations and capability building. You will develop short- and long-term capability-building plans for all relevant levels of client leadership and McKinsey client service teams, with anticipated deliverables, outcomes, and required resources. You will introduce new frameworks, tools, or ways of using existing material, identify clients for beta testing, and codify new knowledge in articles. You will provide expertise on project/program management tools such as portfolio management, lifecycle planning, and project tracking. You will perform structured, fact-based diagnoses of systems, processes, and organizations across a broad range of industries.
Desired Skills
You have a proven track record and expertise in delivering large construction projects (larger than USD 100 million) across the entire project lifecycle (design engineering, risk management, procurement and contracting, construction management, commissioning, ramp-up, etc.)
You have professional operations or consulting experience in at least one of the following industry sectors: oil and gas, metals and mining, energy and power generation, chemicals or other process industry, infrastructure, construction and real estate, or manufacturing
You have a progressive career trajectory, including outstanding professional achievement and impact
You hold an excellent university degree, preferably with an engineering focus
You have outstanding analytical and conceptual skills
You show great initiative and creativity, working well both on your own and in a team
You are mobile and excited to take on longer international assignments
You are able to convince others through your written and spoken communication
https://mckinsey.secure.force.com/EP/job_details?jid=a0xA0000005XhND
Work Measurement, Cost Measurement, and Productivity Measurement
Productivity Measurement
OECD analysis shows that the productivity of the most productive firms – those on the “global productivity frontier” in economic terms—grew steadily at an average 3.5% per year in the manufacturing sector, or double the speed of the average manufacturing firm over the same period. This gap was even more extreme in services. Private, non-financial service sector firms on the productivity frontier saw productivity growth of 5%, eclipsing the 0.3% average growth rate. Perhaps more importantly, the gap between the globally most productive firms and the rest has been increasing over time, especially in the services sector. Some firms clearly “get it” and others don’t, and the divide between the two groups is growing over time.
https://hbr.org/2015/08/productivity-is-soaring-at-top-firms-and-sluggish-everywhere-else
http://www.oecd.org/economy/the-future-of-productivity.htm
A global textile, chemical and floor-covering maker, Milliken self-identifies as operationally excellent. In the 10 years since 2006 (when McNulty became finance chief), the company has improved manufacturing productivity by at least 5 percent each year according to McNulty.
http://ww2.cfo.com/benchmarking/2014/04/operations-nirvana-profits-soar-far-beyond-sales-growth/
System Level Industrial Engineering
IIE changed its name to IISE
Total productivity management
Total cost industrial engineering
Understand total cost - Costing Profit and Loss Account
Management of Technical Processes
Lean ManufacturingLean Maintenance
Lean Design and Development
Benchmarking
In many areas, productivity of China is only 65% of the productivity elsewhere.
Simply adopting and spreading global best practices in the way companies and government departments in China conduct their operations would capture three-quarters of China’s productivity gap.
http://www.mckinsey.com/mgi/overview/in-the-news/why-china-should-invest-in-productivity-not-in-reproductivity
Increasing R & D Productivity
http://www.mckinsey.com/business-functions/operations/our-insights/brightening-the-black-box-of-r-and-d
Supply Chain Technical Processes Improvement
Extending Lean Thinking
http://www.atkearney.dk/automotive/news-media/news-release/-/asset_publisher/78jRxPc9hKWt/content/future-of-manufacturing-new-productivity-levers-body/10192?_101_INSTANCE_78jRxPc9hKWt_redirect=%2Fautomotive%2Fnews-media%2Fnews-release%3Fp_p_id%3D2_WAR_kaleodesignerportlet%26p_p_lifecycle%3D0
Business Process Improvement
Marketing Analytics
Supply chain management software - Barrier to implementation
Management of Business Processes
Supply chain improvement - Supply Chain Training Programmes - Supply chain partner conferences
Energy Efficiency Improvement
Bringing lean thinking to energy
McKinsey 2014The energy and raw materials are important cost drivers. For one LCD-television manufacturer, Mckinsey studied, energy represented 45 percent of total production costs. For many “upstream” manufacturers (such as steel and chemical makers) energy typically accounts for up to 15 percent or more of overall production costs—the largest share after raw materials, which often account for at least 50 percent of the cost base. The experience of Mckinsey suggests that many of these manufacturers could reduce the amount of energy they use in production by as much as 30 percent by applying lean principles and by shifting mind-sets to focus the organization on eliminating anything that doesn’t add value for customers.
The analysis of energy using theoretical energy consumption (ideal value) helped a company to optimize its plants’ production rates to use energy more efficiently. Indeed, the company identified a narrow set of conditions in which the plants’ energy consumption was destroying value—a situation it could now predict and avoid.
A chemical manufacturer used a similar approach to optimize its variable costs associated with both energy use and materials yields. Theoretical-limit analyses identified a series of process-control improvements, as well as opportunities to lower thermodynamic-energy losses and to optimize mechanical equipment. Taken together, these moves helped the company to reduce its energy consumption by 15 percent. Meanwhile, on the raw-material side, the company combined theoretical-limit analysis with advanced statistical techniques using big data to map the profit per hour of a set of activities. This approach helped the company to optimize the use of an important catalyst in production, to discover additional process parameters for fine tuning, and to improve the allocation of its production activities across the company’s different lines. All this, together with a few selected capital investments, ultimately helped to increase yields by 20 percent (or, in lean terms, to cut yield losses by 20 percent—a savings equivalent to a plant’s entire fixed cost for labor).
While all of these examples are impressive on their own, perhaps more impressive is the enduring power of lean principles to generate unexpected savings when companies gain greater levels of insight into their operations—for example, through the use of advanced analytics or profit-per-hour analyses. In the years ahead, as emerging-market growth continues to boost demand for resources and to spur commodity-price volatility, more and more companies should have incentives to experience this power for themselves.
About the Authors
Markus Hammer is a senior expert in McKinsey’s Lisbon office, Paul Rutten is a principal in the Amsterdam office, and Ken Somers is a master expert in the Antwerp office.
http://www.mckinsey.com/business-functions/operations/our-insights/bringing-lean-thinking-to-energy
http://articles.extension.org/pages/70308/reducing-energy-consumption-through-lean-thinking:-presentations
https://www.ncsu.edu/bioresources/BioRes_09/BioRes_09_1_1373_Lyon_Q-PC_Reducing_Elec_Consum_Forest_Prod_Ind_Lean_4479.pdf
https://www.epa.gov/sites/production/files/2013-10/documents/lean-energy-climate-toolkit.pdf
Resource Efficiency Improvement
More from less: Making resources more productive
By Markus Hammer and Ken SomersA change in perspective can lead to real breakthroughs in resource productivity or reduction in resource consumption.
Their full range of options includes maximizing the use of raw materials, minimizing harmful emissions, cutting water loss, and reducing or avoiding waste streams through recycling and energy recovery.
The vivid examples in action provided in this article will stir the imaginations of senior leaders about the possibilities for using resources more productively.
The lean idea of "recognize and root out waste" can be applied to energy and materials. This can dramatically improve resource productivity.
In practice, these methods often involve following a product through a factory or service operation. That’s known as value-stream mapping, which can be illustrated by a Sankey diagram that highlights streams of resource waste.
The article gives the example of baking cakes for a school fund-raiser. There are various inputs, such as ingredients and electricity for running the oven, as well as losses, such as heat leakage from the oven. Currently only one loss is recovered, and that too only partially: apple cores are used to feed chickens. Can some more losses be also recovered? Could the oven lose less heat in baking? Could eggshells be added to garden compost? What if the oven ran on gas instead of electricity or the electricity came from a solar panel whose cost has already been paid?
1. Thinking Base
The starting point for most operational-improvement efforts is the existing process and improvements are suggested as involved people know as possible from that point. An aggressive approach to resource productivity takes a different route. It identifies the current theoretical limit for resource use to produce a product or service. The difference between the theoretical limit and actual consumption is labeled as what it truly is: a loss. Most people, and most organizations, are far more motivated to avoid losses than to reduce consumption. Reframing the problem in this way is therefore more likely to produce major improvement opportunities. An iron and steel manufacturer in China, for instance, followed this exercise and increased the power it generated from waste heat by 25 percent.
2. Think profits per hour
Determine profits per hour of processing of products.
That sort of comparison can help companies make crucial resource-productivity choices. For example, in the chemical industry, increasing a product’s yield usually reduces environmental waste but requires longer reaction times and leaves less capacity for other products. If, however, the product’s profit per hour increases by running the reaction longer and improving the yield, the decision to do so and reduce production of other products is an easy one.
3. Embrace state-of-the-art analytics
Advanced analytic techniques can multiply the power of profit per hour, helping companies sort through millions of possible interdependencies among variables such as the quality of raw materials, the configuration of equipment, or process changes.
To understand what was at play, the mining company turned to neural networks to isolate specific days and events when the yield should have been higher. The analysis showed that increasing the concentration of oxygen in the process offsets the yield loss resulting from a decline of ore grades over the previous year. Thanks to the changed process parameter, the company increased yields (and therefore production) by 8 percent in three months.
4. Change the thinking
Resource productivity also requires a comprehensive change-management effort. Success stories, however, change people’s underlying mind-sets so that they “think holistically” . Equally important, exceptional organizations support the new mind-sets with revised metrics and more frequent performance dialogues as part of a new management infrastructure. At these companies, resource productivity informs almost every aspect of operations, ensuring that people keep finding new opportunities to create more value from less.
People have to embrace more sustainable logic: “think circular,” creating new value for companies and society by looping products, components, and materials back into the production process after they have fulfilled their initial use.
Consider, for example, the pharmaceutical company that applied lean manufacturing to a series of processes in its biological reactors, where it grew cell cultures. The combination of loss-mapping techniques along the production chain, deep statistical analysis, and rigorous brainstorming and problem-solving sessions with engineers and operators helped to identify improvements in the productivity of the biological resources. The company expects these improvements to boost yields by over 50 percent—without additional costs. This finding was noteworthy because even though the company was well versed in lean thinking and methods, its production team had initially taken variability in biological materials for granted (a common attitude).
About the Authors
Markus Hammer is an expert in McKinsey’s Vienna office, and Ken Somers is a master expert in the Antwerp office.
http://www.mckinsey.com/business-functions/operations/our-insights/more-from-less-making-resources-more-productive
Report on Resource Efficiency using Lean Principles in UK Food and Drink Supply Chain - 266 pages
http://www.oakdenehollins.co.uk/media/270/11668_20131114RevisedLeanresearchreport-DEFR01270FO0425_from_defra_website.pdf
Technologies Improving Productivity
Mobile Technology
Australia’s economy is $42.9 billion (2.6% of GDP) larger in 2015 than it would otherwise be, because of the long-term productivity ($34 billion/2.0% of GDP) and workforce participation ($8.9 billion/0.6% of GDP) benefits generated by mobile technology take-up.
https://www2.deloitte.com/au/en/pages/media-releases/articles/australias-mobile-revolution-continues-170316.html
Cloud Computing
Cloud Computing technology investments raising to expectation of increase in productivity
http://mobile.deloitte.wsj.com/cio/2015/09/17/midmarket-invests-in-it-for-productivity-growth/
Service robots: The next big productivity platform
http://www.pwc.com/us/en/technology-forecast/2015/robotics/features/service-robots-big-productivity-platform.html
Management Theories, Methods and Techniques Improving Productivity
Data Analytics and Productivity
https://www.pwc.com/ca/en/power-utilities/publications/pwc-the-productivity-imperative-data-analytics.pdf
The Perform approach - PWC
http://www.pwc.com.au/productivity/perform.html
Organisation effectiveness
Revolutionising how businesses think about organisation design, partnering with clients to design and implement the organisational models, and developing structures that will deliver maximum agility, flexibility and responsiveness
https://www.pwc.in/assets/pdfs/services/people-and-change/organisation-effectiveness.pdf
Analytics Advantage - AT Kearney
http://www.atkearney.tw/paper/-/asset_publisher/dVxv4Hz2h8bS/content/id/5849311
https://hbr.org/2016/01/how-to-boost-your-teams-productivity
Ud. 1.5.2022
Pub: 11.5.2016
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