The Problem:
The orange curve is the production norm for most coal mines, whereas the blue curve is the goal for any coal mine. With such unstable performance, it is no wonder mines do not meet their designed capacity. Operational instability intensifies day-to-day management challenges.
1. Executives have little confidence in the mine meeting agreed targets.
2. The short-term plan has a short shelf life, resulting in continual replanning and shuffling of resources. This affects the planning and operational relationship but also increases risk related to safety.
3. Micromanagement results as managers attempt to coordinate activities amidst high uncertainty and surprises.
4. Individual departments focus on meeting their KPIs at the expense of the overall company goal.
5. Low morale and reduced engagement of middle management, specialists and operators.
6. Resulting in a high-pressure environment with a high turnover of personnel.
Traditional management techniques will not turn the situation around, resulting in requests for capital to increase capacity or a reduced budget target: neither is beneficial. A reduced target often leads to a new paradigm of production well below the latest target.
The Root Cause
The unstable production rate results from seeking a balanced capacity production chain. In general, when the gap between installed capacity and actual performance is >25%, the mine has balanced capacity. Balanced capacity results in a moving constraint, causing chaos reflected in extreme fluctuations in performance.
The Solution: Aligned Flow and Superflow
The good news is that this can be quickly turned into an “Aligned Flow” chain using the principles of the Theory of Constraints and adjusting the way operational activities are coordinated. These principles include “Productivity Platform” and “Flow Room”.
Phase 1: Aligned Flow
Identify and ensure the bottleneck operates without interruptions, leading to stable performance (blue curve)
Phase 2: Superflow
Engage the collective genius of management and operators to exceed targets.
In this example, the target was too high for the system's capability. Now, with an identified and stable bottleneck, performance has increased, and the ROI calculation for increased capex is straightforward to justify.
Conclusion: Why reduce the budget target when an optimized production chain creates efficient flow? Implementing a “Productivity Platform” and “Flow Room” approach guarantees budget targets are met and unit costs are reduced. This also ensures peace of mind, knowing the operation runs safely and optimally.
Comments