It’s time to move on from incident reporting and a primary compliance focus. As industry matures, it’s moving past concentrating only on safety and moving toward managing risk. Operational Risk Management (ORM) provides a maturity model as a foundation for Enterprise Loss Prevention with the ultimate goal of incident-free operations. It’s time for a new approach that prioritizes overall risk management – including the risk of production loss. With this approach, you can deliver efficient, effective, profitable, performance, without sacrificing best in class safety and compliance.
A large portion of losses are due to human error tied to equipment failures. Because of this truth, moving to an ORM-based approach to Enterprise Loss Prevention includes a shift to asset-based loss prevention. Companies struggle with consistency of data due to poorly designed systems and/or training program deficiencies. Without improvements, effective analysis of incidents – and further prevention of losses– is nearly impossible.
The big hidden opportunity is generally on the equipment side of the business. Today, few companies relate the impacts of the incident to total cost. Enter the hidden plant. The analysis of the hidden plant distinguishes efficiency/utilization losses from reliability losses, making it possible to work on both in parallel.
Production Loss Analysis provides an overall framework for understanding true production capacity over time and the sources of deviation – or loss – from that capacity. Understanding actual capacity is a necessary first step in order to systematically make improvements that remove the causes of actual and future losses.
Key Points Include:
Losses can be tied to events, some of which contain a causing asset, allowing for asset bad actor analysis. Sometimes, losses are caused by upstream or downstream events, further contextualizing the analysis. Categorization of events and losses provides good data for metrics, pareto analysis of causes, and focus for RCA teams.
In large part, the ability to improve PLA depends on how we deal with defects – whether caused by equipment failures or human error. In order to reduce human error, the focus needs to be on realigning or designing organizational culture along with reducing human factors. For asset-intensive industries, human error typically causes 60-70% of events that lead to production losses. To reduce production losses over the long term, companies need to move from reactive work to planned work and improved organizational discipline. We can help through our PLA Framework. ELP is a core component of this framework.
Production Loss Analysis as a part of Enterprise Loss Prevention is based on the fact that companies want to maximize their profits by maximizing production capacity and throughput. It requires responding to a defect or limitation by correcting it – since the process creates value by making sure the defect does not come back or never occurs in the first place.
Bottom line: Better decisions will be made, with the full interests of the organization in mind rather than individual functions.