Enterprise Loss Prevention / Production Loss Analysis

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A New Approach to Enterprise Loss Prevention / Production Loss Analysis

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.

Operational Risk Management - Maturity Roadmap graphic

Enterprise Loss Prevention

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.

ELP Maturity Roadmap that shows the 4 phases of maturity. Phase 1 - Basic ELP; Phase 2 - Intermediate ELP; Phase 3: Advanced ELP; Phase 4: Mature ELP

  • Basic ELP addresses the privilege to operate. While compliance is critical, the focus needs to be on eliminating waste or improving profitability.
  • Intermediate ELP enables a foundation for classifying, analyzing, and following through on failures including a Pareto analysis.
  • Advanced ELP ushers in the ability for sensors and data historians to be leveraged for production information.
  • Mature ELP enables companies to realize further value by proactively reducing losses in a variety of areas.

The Hidden Plant

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

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:

  • Determining nameplate
  • Capturing production events and recording daily production, by unit
  • Determination of demonstrated rate
  • Accounting for losses
  • Classifying losses
  • Publishing and Trending of KPIs
    • Overall Equipment Effectiveness (OEE)
    • Losses by Category

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.

Graphic that shows the 7 steps in a PLA Framework

OESuite™ Business Benefits for Enterprise Loss Prevention / Production Loss Analysis

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.

ELP Benefits graphic

Bottom line: Better decisions will be made, with the full interests of the organization in mind rather than individual functions.

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