Establishing Stable Operations through Continuous Improvement, a lesson learnt

19 January 2015
The largest nickel mining company in Indonesia, part of a global mining company has been running continuous improvement program using TPM principles. Commencing in 2010, the program called Operation and Maintenance Improvement Program, has delivered enormous savings and benefits both tangible and intangible. Up to 2014, it has directly been involving more than 150 employees, completed 24 significant improvement projects whilst other 15 improvement projects are still on-going. Many other improvement initiatives will be commenced soon as awareness of the importance of continuous improvement and improvement skills have spread out company wide.

The company is one of the world’s premier producers of nickel, a versatile metal which is important to improved living standards and economic growth. The company produces nickel in matte, an intermediate product, from lateritic ores at its integrated mining and processing facilities. During its operation, Processing Plant often experienced delays thus interrupting production activity that resulted in unachieved production target. Further, this will affect revenue and profit margin. This condition was even worse when, mineral mining industry faced unfavorable situation. Nickel price considerably plunged thus reducing profit margin. Exposed to this situation, the company is required to change.

Continuous Improvement is one best option. In order to carry out continuous improvement program, top management established a small new department charged with the responsibility to identify a new approach or methodology that would enable sustainable improvement culture among employees and manage improvement projects in new business circumstances the company now faces. The department then established Operation and Maintenance Program (abbreviated as OMIP).

Its purpose is to grow production by making the operation continuous which will lead to increased production and decreased maintenance delay. OMIP’s theme in its first establishment is to stop the stops. Fix the simple things that cause equipment to stop (delay-offs) – a major cause of lost production (>20m lbs.) and variation (process efficiencies). Unplanned equipment stop has to become priority because every stop increases the risk of an accident (safety), every stop of the bottleneck is production lost (USD 30,000 /hr. for each line), every stop causes a loss of process control (energy efficiency, extra stops), every stop causes refractory and equipment damage (cost, extra stops), and some stops cause spillage of material (environment, health, cost, production)

This program didn’t work as expected. As change starts from the top, its implementation in the shop floor faced many obstacles thus decelerating its progress. In this search for a suitable improvement methodology and to ensure sustainable of continuous program, the company approached Relogica and asked for assistance in performing their business improvement.

Selecting the suitable methodology

Relogica offered a simple improvement method, easy to apply even by the lowest level employees. This method will be carried by a particular team for each theme. Each project becomes a part time activity for team members. Each of these teams consists of 4-8 members from different departments and expertise as required. Team members have to allocate only 2 hours meeting in a week and another 2 hours for doing their work out of meeting hours. Improvement team members will still be in their normal position and responsibility during improvement activity. In this method, role and relationship in each team is clearly defined. The roles and relationship between each function in the improvement program like improvement facilitator, improvement coordinator, sponsor, team leader, and team member.

The method is based on PDCA principle which systematically forces the team to take a step by step move and prevents team from jumping to solution without proper analyses. It limits the improvement activity in 12 weeks cycle. It would maintain teams in their best momentum and avoid frustration caused by a never ending project. Teams should manage their improvement scope properly so they could realistically achieve their goals in 12 weeks cycle.

OMIP Principles:

1.       Standardize and follow operational procedures

2.       Focus on the ‘important and easy’ opportunities (build momentum)

3.       Eliminate root causes – ensure the issue goes away

4.       Decisions based on data

5.       Team approach

6.       Cross Functional project teams (production, maintenance and services as required)

7.       First continuity, then speed

The company agreed to apply the 9-steps improvement methodology offered by Relogica


Performing the improvement

Several projects aiming on establishing stable operations were underway in 2012 under the operational and maintenance improvement program (OMIP) involving employees from Dryer, Kiln, Furnace and Converter in Process Plant; Process Plant Maintenance, Maintenance System Engineering, Utilities, and Reliability in Maintenance & Utilities Department, and Strategic Procurement in SCM Department afterward.  Most of these projects are facilitated by Relogica’s consultant and led by the company’s employee.

Although the majority of the projects implemented by the OMIP project teams addressed unplanned STOPS in production, several projects were also undertaken to address process variability and spare parts management.  With the completion of several projects in 2012, including DKP Size Control, Kiln Chunk Reduction, Air Pipe Trips, Electrode Cylinder Slipping, Contact Unit Trips, and Acceleration Stock-Out Part for Conveyor Systems, and Belt Conveyors System Improvement, it has provided contribution to the reduction of operational instability.

Each of these projects was started by an official “kick-off” agenda attended by management (General Manager from regarding area), OMIP Consultant as facilitator, and the company’s employees as team leader and members. Leader and members are appointed by management referring to approved projects.  Prior to this event, Relogica’s consultant collected and analyzed operation and maintenance data to develop a short list of possible improvement themes. This list is then presented to related GM and Senior GM. They will then select themes that will be carried out as particular OMIP Project.

In the “kick-off” agenda, project charter was presented. Project charter encompasses project title, project background, project objective, project scope and boundaries, and project target. Meeting schedule and team norms are also discussed and agreed in this event.

Once team is formed, regular meeting is conducted mostly once in every week. As mentioned, the projects use 9-steps improvement methodology. Stages of the methodology are as follow:

1.       Confirm Mandate & Boundaries

2.       Form Team & Scope Activities

3.       Analyze Current Situation

4.       Develop Vision for Improvement

5.       Identify Root Cause and Solution

6.       Pilot Proposed Solution

7.       Refine & Implement Successful Solution

8.       Measure Progress & Hold Gains

9.       Communicate result & Celebrate Success

During its active period, each team is required to deliver 2 presentation sessions to the top management: mid-term presentation and final presentation. It will effectively put top management engagement with the teams and also effectively show the top management supports the improvement team. The presentation ensures the sustainability of the improvement results by ensuring process owner involvement and proper project closing.

In areas where improvements proposed by OMIP projects had been successfully implemented, particular standards are developed to hold the gain. Those standards are Standard Operating Procedure, Training Material, or Logic Setting in the system. This standard is then communicated and handed over to related department.

Up to November 2014, the program has completed 17 projects whilst 15 projects are still on going. So far, the program has delivered large potential extra production benefit. Many other projects will be commenced soon as awareness of the importance of continuous improvement and 9-steps methodology skill has spread out company wide.

These accomplishments marked the beginning of OMIP’s journey in establishing stable operations.

Sustaining continuous improvement

As per its name, continuous improvement, it’s a continuous activity that’s systemized and involves everyone to improve business performance. In order to achieve the systemic continuous improvement, enabler, which is a set of system and environment, should be established. Those enablers are strategic management (including performance measurement and deployment), leadership and management commitment, operational management (including communication of results, recognition & incentives, formalization & structure, and program coordination), training for methodology and tools, and change adoption. Thus, following phase of OMIP Implementation will focus on the widespread implementation of formal continuous improvement across the company and the establishment of supporting mechanism for improvement activities. Part of this will be to establish internal capability to manage improvement program and taking over consultant roles.