Determine the goal of the maintenance section and explore the causes of maintenance undesirable effects (UDE) as well as addressing the perceived issue needed to complete a conflict cloud.
Business Process Management (BPM) is a field of study in operations management that explains the various techniques used to identify, measure, improve, model, analyze, optimize and automate business processes. Managing the business process mainly keeps its focus in the improvement of the corporate performance of any organization (Costas, Pino, & Puche, 2015). This essay is going to discuss the production constrains in the provided case study and how maintenance practice might support this constrain. This paper is also going to determine the goal of the maintenance section and explore the causes of maintenance undesirable effects (UDE) as well as addressing the perceived issue needed to complete a conflict cloud. Business process management is very crucial to ensure that a certain business is operating smoothly and meets its target objectives.
Constraints in production refer to the several limiting factors that determine the nature and quantity of output that a producer can produce within a given period of time. There are internal and external constrains in production with the extent of market being the main external constraint (Goldratt, 2017). Producing on large scale which is possible for large market has the resultant effect of reduction of unit cost. There also several internal constraints that determine the quantity and nature of the output produced. According to the provided case study of XYZ Limited, a heap leach copper mine located in the Atacama Desert in Chile, the internal production constrains include the training, skills and availability of labor force, the capacity and existing scale of the machinery used, the finance status, the time available and the access to adequate raw materials and supply of parts.
The existing scale and capacity of the machinery available in the company is a hindrance to the production process. The process of converting mined ore to copper cathode involves mining the ore and waste from an open pit using a fleet of drill rigs (15) dump trucks (25) and (4) loaders. The task assigned to the new manager to improve the production of saleable copper by 15 % is going to be very hard to achieve due to the available machinery and their production capacity. Time is also another factor that will limit the copper mine from achieving its target production. The time taken from mining the ore and process it to saleable copper has to be planned appropriately for efficient resource utilization and enable the production process meet the expectations of the customers. Finance is a major production constrain in the company according to the company statistics more than fifty percent of the company production cost is spent on maintenance of machinery. In order for the company to achieve its production targets it has to be able to improve its finance mechanism and establish a healthy cash flow to ensure that resources are fully utilized (?im?it & Vayvay, 2014). The company is also required to have several skilled workers to operate the special machinery to boost the quantity of saleable copper. The intended increase in production may require an increase in the machinery and the availability and skills of the machine operators will pose as a limiting factor to the company.
How Maintenance Practices and Asset Management can Support the Constraints
Application of different maintenance approaches in Mining Industry
It is necessary to align the maintenance practice and asset management with the organization strategy and this is applies to several industries and very relevant to the mining industry to be specific. The proper maintenance and asset management can really help the company to maneuver around the constraints they are facing in their production process.
Maintenance and asset management can support the constraints the company is facing since the company statistics show that half of their operation cost is mainly maintenance cost. Failure cannot be avoided in this mining process but proper maintenance and asset management can drastically reduce the rate at which failure occurs (Golmohammadi, 2015). The truth about all equipment is that they will fail eventually. It’s not clear what particular component will fail or when it will fail, but it can be guaranteed with certainty that one day the equipment, will stop working. The primary activity of maintenance therefore is to preserve or return an item of equipment to its original design capability and sometimes includes a need use the term activity to describe the actions taken. This is different from the purpose and necessary conditions of maintenance. Identify where modifications could be applied where the capability is considered inadequate.
However, when a business decides to maintain equipment, it is making an assumption that the economic benefits of maintenance outweigh the alternative of not repairing and simply replacing it. For numerous items of equipment this assumption is entirely valid but for others it is not. What is missing is a clear and unambiguous guideline on when and where to repair and when and where to replace. This is in no small way, influenced by the causes of equipment failure. The company should identify certain failures that they can maintain and those that it would be less economical to maintain to maintain they should opt to replacing. If a certain machinery breakdowns frequently and the maintenance cost is more compared to procurement of a new one then the company should opt purchasing a new one and avoid the maintenance cost.
Proper maintenance and asset management will also reduce the time wastage in the production process. When a machine breakdown it may take time for maintenance repairs to be done and this wastes a lot of precious time schedule for production. Maintenance practice and asset management requires regular maintenance check for the machines and this will reduce the frequency at which the mining machinery at the company fails.
The purpose of the company is to make profit by ensuing that the production process is improved significantly to reduce operation costs and increase the revenue earned. A CEO has been appointed and given an ambitious target to simultaneously achieve a 15% improvement in production of saleable product (copper cathode), a 20+% reduction in operating costs and a 20% reduction in inventory/investments. For this goal to be achieved there several critical factors and necessary conditions that have to fulfilled. The production process of the company has to be improved to optimize the quantity and quality of the copper cathode produced. This goal has to consider that the ore to waste ratio is 3:1. Recovery rates are in the order of 75% The process of converting mined ore to copper cathode involves mining the ore and waste from an open pit using a fleet of drill rigs (15) dump trucks (25) and (4)loaders. Overburden is stockpiled for future rehabilitation purposes. In- situ waste is relocated to a sterilized site within the mine and the ore is trucked to a ROM (Run of mine) stockpile located within close proximity of the primary crusher (Witten, Hall, & Pal, 2016).. The ore is progressively crushed using both jaw and cone style crushing equipment and screened to achieve a predefined particle size that facilitates an optimal surface area prior to agglomeration.
There are several conditions that are critical to the success of the company in attaining its goals and these conditions have to be achieved. The necessary conditions include reduce the maintenance cost, reduce the personnel wages, eliminate the number of faulty machines and also improve the Return on Asset Metric. The Return on Asset Metric refers to the measure of how productive a given asset is in relation to the cost involved to purchase it.
The Goal Tree for XYZ Limited located in the Atacama Desert in Chile.
The Current Reality Tree (CRT) is among the most common Thinking Processes logical tools. Starting from a few critical root causes or Undesirable Effects (UDEs) down to one, the Current Reality Tree depicts the current reality in a series of dependent logical cause-and-effect relationships (Sommer& Mabin, 2016). The Theory of Constraints outlines that any system, workshop, process, company or organization can be considered to be a chain that is made up of various interconnected links such as the departments in a company (Groop, Ketokivi, & Holmstrom, 2015). It is very important to focus on the weakest link in a company in order to ensure good performance and success of an organization. The Undesirable effects (UDEs) are most commonly referred to as the problems we have to cope with, suffer or people perceive in a business organization. However, the undesirable effects are mainly symptoms of problems that are laying deeper in the system. The CRT is problem solving technique that is used in the solving of multi-factor, complex and system-wide problems.
Despite its reputation it is hard to identify a function that has equal or greater breadth and depth of influence over the financial performance of a mining operation than maintenance. Its main influences can be summarized as follows:
Large scale operations require large scale mining equipment to economically extract the minerals from ore. Therefore the logic that prevails is that all equipment requires more uptime in order to enable the higher production targets. Effective maintenance occurs when the amount of time that each item of equipment is available to carry out its intended purpose is maximized.
Due to the nature of how finance treats direct and indirect maintenance costs, it is often difficult to determine the real total cost of maintenance as a % of total operating expenditure. When the effort is applied however, it soon becomes apparent that maintenance can represent between 35-65% of total annual operating costs.
Capital investment
The type of equipment used in mining is both large scale and expensive. For example replacing just one dump truck in a fleet (~25 units) could cost between US$2- 5m and a front end loader U$1-3m. Consequently, most operations are keen to extract as much value as possible from their existing capital equipment and by doing so, defer the significant cost of replacement which directly hits the denominator (investments in plant and equipment) and causes downward pressure on the Return on Asset (ROA) metric
All mining operations are subject to both formal and informal obligations to perform within acceptable parameters. Example of these obligations include initial and ongoing regulatory compliance of personnel safety & health, federal, state and municipal laws, environmental protection, industrial relations, community engagement, indigenous employment and heritage area protection. Many of these obligations impact on the maintenance function in the following ways such as routine and regular maintenance on all statutory equipment, preparation of a full risk assessment and use of job safety analysis prior to conducting all maintenance activities and limiting the amount of CO2 emissions generated to within specific limits
The Current Reality Tree for XYZ Limited located in the Atacama Desert in Chile
The evaporating cloud (EC) is among the mostly used Theory of Constraints tools used currently and it is mainly used in the addressing of a dilemma or a conflict by systematically scrutinizing the assumptions behind the logic and diagramming the logic behind the dilemma. The conflict normally is a representation of trade-off situations that do not accept any compromise. Below is the Evaporating Cloud (EC) diagram that arises after we carefully scrutinized our Current Reality Tree of the company.
Evaporating Cloud for XYZ Limited located in the Atacama Desert in Chile
Conclusion
The Theory of Constraints (TOC) is a paradigm in management field that portrays any manageably system that it a very small number of constraints limit the system from achieving its goals (Woeppel, 2016). There are several TOC tools that can be used to analyze the condition of a given business organization or a production process. In this case study we have used the Goal Tree tool, the Current Reality Tree tool and the Evaporating Cloud tool to analyze the situation of the XYZ Limited located in the Atacama Desert in Chile as given in the case study. These tools are very important in identifying the root cause of the constraints a given process, system or organization is facing.
References
Costas, J., Ponte, B., de la Fuente, D., Pino, R., & Puche, J. (2015). Applying Goldratt’s Theory of Constraints to reduce the Bullwhip Effect through agent-based modeling. Expert Systems with Applications, 42(4), 2049-2060.
Goldratt, E. M. (2017). Necessary but not sufficient: a theory of constraints business novel. Routledge.
Golmohammadi, D. (2015). A study of scheduling under the theory of constraints. International Journal of Production Economics, 165, 38-50.
Groop, J., Ketokivi, M., Gupta, M., & Holmstrom, J. (2015). Theory of Constraints as Design Science: The Case of Improving Home Care. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 11237). Briarcliff Manor, NY 10510: Academy of Management.
Puche, J., Ponte, B., Costas, J., Pino, R., & De la Fuente, D. (2016). Systemic approach to supply chain management through the viable system model and the theory of constraints. Production planning & control, 27(5), 421-430.
?im?it, Z. T., Günay, N. S., & Vayvay, Ö. (2014). Theory of constraints: A literature review. Procedia-Social and Behavioral Sciences, 150, 930-936.
Sommer, K. A., & Mabin, V. J. (2016). Insights into the eldercare conundrum through complementary lenses of Boardman’s SSM and TOC’s Evaporating Cloud. European Journal of Operational Research, 248(1), 286-300.
Witten, I. H., Frank, E., Hall, M. A., & Pal, C. J. (2016). Data Mining: Practical machine learning tools and techniques. Morgan Kaufmann.
Woeppel, M. (2016). Manufacturer’s guide to implementing the theory of constraints. CRC Press.
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