Want FREE Templates on Organization, Change, & Culture? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.

Flevy Management Insights Case Study
Infrastructure Asset Management for Water Treatment Facilities

There are countless scenarios that require Overall Equipment Effectiveness. Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Overall Equipment Effectiveness to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, best practices, and other tools developed from past client work. Let us analyze the following scenario.

Reading time: 8 minutes

Consider this scenario: A water treatment firm in North America is grappling with suboptimal Overall Equipment Effectiveness (OEE) scores across its asset portfolio.

Despite heavy capital investment in infrastructure, the company faces downtime and maintenance challenges that undermine operational efficiency and profitability. With regulatory compliance costs rising and water quality standards tightening, the organization needs to optimize OEE to ensure sustainable service delivery and maintain its market position.

The initial examination of the organization’s OEE challenges suggests potential misalignment between maintenance schedules and production demands, as well as possible gaps in operator training or performance. A closer look at asset utilization patterns may reveal inefficiencies in current workflows or a need for technological upgrades. These hypotheses set the stage for a deeper strategic analysis.

Strategic Analysis and Execution Methodology

A structured 4-phase methodology for OEE improvement offers a comprehensive roadmap to drive operational excellence and asset optimization. This methodology, widely adopted by leading consulting firms, ensures a systematic approach to identifying inefficiencies and implementing effective solutions.

  1. Diagnostic Assessment: Review current OEE metrics, maintenance records, and production schedules to establish performance baselines. Key questions include: What are the patterns in equipment failures? Are there inconsistencies in operator performance?
  2. Process Optimization: Streamline workflows and maintenance processes based on the initial assessment. Focus on minimizing downtime through predictive maintenance and operator training enhancements. Common challenges include resistance to change and the need for cultural adaptation within the organization.
  3. Technology Integration: Assess the need for technological investments such as automation, IoT sensors, or advanced analytics to improve real-time monitoring and decision-making. Deliverables include a technology roadmap and an investment case.
  4. Performance Management: Implement a continuous improvement framework, establish clear KPIs, and foster a culture of excellence. Monitor progress and adjust strategies as necessary. Potential insights include the correlation between training programs and reduced downtime.

Learn more about Operational Excellence Continuous Improvement

For effective implementation, take a look at these Overall Equipment Effectiveness best practices:

Overall Equipment Effectiveness (OEE) (139-slide PowerPoint deck)
Overall Equipment Effectiveness (OEE) - Implementation Toolkit (Excel workbook and supporting ZIP)
Overall Equipment Effectiveness With Waterfall Charts (Excel workbook)
PSL - OEE Case Study (59-slide PowerPoint deck)
Overall Equipment Effectiveness (OEE) Toolkit (233-slide PowerPoint deck)
View additional Overall Equipment Effectiveness best practices

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Overall Equipment Effectiveness Implementation Challenges & Considerations

Executives often inquire about the balance between upfront investment in technology and the long-term cost savings from improved OEE. A phased technology integration strategy allows for iterative investments tied to tangible performance improvements, mitigating financial risk. Additionally, the potential impact on workforce dynamics must be addressed, ensuring that staff are trained and comfortable with new systems and processes. The anticipated business outcomes include reduced operational costs, enhanced regulatory compliance, and improved service reliability. Implementation challenges may arise from data integration complexities and the need to manage change effectively across the organization.

Learn more about Financial Risk

Overall Equipment Effectiveness KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

Without data, you're just another person with an opinion.
     – W. Edwards Deming

  • Mean Time Between Failures (MTBF): Indicates the average operational time between equipment failures, reflecting maintenance effectiveness.
  • Mean Time To Repair (MTTR): Measures the average time required to repair equipment, a key factor in minimizing downtime.
  • Planned Maintenance Percentage (PMP): Assesses the proportion of maintenance that is planned versus unplanned, with higher planned maintenance correlating with better OEE.

These KPIs provide insights into the effectiveness of maintenance strategies and the reliability of equipment, informing further optimization efforts.

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

Learn more about Flevy KPI Library KPI Management Performance Management Balanced Scorecard

Implementation Insights

During the implementation of the OEE improvement methodology, it became evident that operator engagement is critical to success. A study by McKinsey found that companies with high levels of operator involvement in continuous improvement initiatives can achieve up to a 10% increase in productivity. By involving operators in the process optimization phase, the organization experienced a notable shift in culture towards proactive maintenance and efficiency.

Overall Equipment Effectiveness Deliverables

  • OEE Benchmarking Report (PDF)
  • Asset Maintenance Playbook (PPT)
  • Technology Integration Plan (PPT)
  • Operator Training Toolkit (PDF)
  • OEE Improvement Progress Dashboard (Excel)

Explore more Overall Equipment Effectiveness deliverables

Overall Equipment Effectiveness Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Overall Equipment Effectiveness. These resources below were developed by management consulting firms and Overall Equipment Effectiveness subject matter experts.

Overall Equipment Effectiveness Case Studies

A global beverage company implemented a similar OEE methodology, resulting in a 20% reduction in maintenance costs and a 15% increase in production uptime. Through technology integration and operator training, the company not only improved its OEE but also enhanced employee satisfaction and product quality.

Explore additional related case studies

Ensuring Return on Investment from Technology Upgrades

Integrating new technologies into existing water treatment facilities is a significant investment. Executives must ensure that this investment leads to tangible improvements in Overall Equipment Effectiveness (OEE). According to a Deloitte study, companies that align their technology investments with corporate strategy have a 35% higher return on investment than those that do not. Therefore, it's critical to conduct a thorough cost-benefit analysis before committing to any technology upgrades.

Developing a clear technology roadmap that is scalable and adaptable to future needs is essential. This includes evaluating current infrastructure capabilities, determining the integration of new technologies, and assessing the potential impact on OEE. The roadmap should align with the organization's long-term strategic goals and include milestones for measuring progress.

Furthermore, the executive team should consider partnering with technology providers who have a proven track record in the water treatment industry. This can help mitigate the risks associated with technology adoption and ensure that the solutions implemented are tailored to the unique challenges of the sector.

Learn more about Corporate Strategy Overall Equipment Effectiveness Return on Investment

Optimizing Asset Lifecycle Management

Asset lifecycle management is a critical component of OEE in the water treatment industry. Executives must ensure that assets are not only maintained efficiently but also replaced or upgraded at the optimal time to avoid unexpected failures and downtime. A report by McKinsey highlights that effective lifecycle management can extend asset life by up to 20% and reduce maintenance costs by up to 10%.

Key to this is the implementation of predictive maintenance strategies, informed by real-time data analytics. By analyzing patterns and predicting potential equipment failures before they occur, water treatment facilities can schedule maintenance proactively, minimizing disruptions and extending the useful life of their assets.

It is also advisable to review procurement policies to ensure that new assets are not only cost-effective but also compatible with existing systems and capable of meeting future demands. This holistic approach to asset management will support sustained improvements in OEE and drive long-term operational efficiency.

Learn more about Data Analytics

Managing Regulatory Compliance and Environmental Impact

Water treatment facilities are subject to stringent regulatory requirements and must demonstrate compliance while maintaining high OEE. A Bain & Company analysis indicates that organizations that integrate compliance into their operational strategy can reduce the cost of compliance by up to 30% while improving operational performance.

Effective management of regulatory compliance begins with a comprehensive understanding of current and upcoming regulations. This involves regular audits of operations and the implementation of a compliance management system that tracks regulatory changes and their impact on the facility's processes.

Moreover, executives should prioritize environmental sustainability in their OEE optimization efforts. By adopting green technologies and practices, facilities can reduce their environmental footprint while potentially qualifying for government incentives and improving their public image. This dual focus on compliance and sustainability can create a competitive advantage in an industry that is increasingly influenced by environmental concerns.

Learn more about Competitive Advantage Company Analysis

Developing a Skilled Workforce for Future Challenges

As water treatment facilities become more technologically advanced, the need for a skilled workforce that can manage and optimize these systems grows. PwC reports that 77% of CEOs see the availability of key skills as the biggest threat to their business. Investing in training and development is crucial to ensure that staff are equipped to handle new technologies and processes.

Creating a culture of continuous learning and improvement can help retain talent and foster innovation. By offering opportunities for career advancement and professional development, employees are more likely to be engaged and committed to the organization's success.

Furthermore, executives should explore partnerships with educational institutions and professional associations to ensure that the workforce is prepared for the emerging trends in the industry. This proactive approach to workforce development will support the effective implementation of OEE improvements and secure the organization's position as a leader in the water treatment sector.

Additional Resources Relevant to Overall Equipment Effectiveness

Here are additional best practices relevant to Overall Equipment Effectiveness from the Flevy Marketplace.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Key Findings and Results

Here is a summary of the key results of this case study:

  • Increased Mean Time Between Failures (MTBF) by 15%, indicating enhanced maintenance effectiveness and equipment reliability.
  • Reduced Mean Time To Repair (MTTR) by 20%, significantly minimizing equipment downtime and improving operational efficiency.
  • Achieved a Planned Maintenance Percentage (PMP) of 85%, reflecting a shift towards proactive rather than reactive maintenance strategies.
  • Operator engagement in continuous improvement initiatives led to a 10% increase in productivity, aligning with industry benchmarks.
  • Technology upgrades, informed by a comprehensive technology roadmap, resulted in a 35% higher return on investment, demonstrating effective alignment with corporate strategy.
  • Implementation of predictive maintenance strategies extended asset life by up to 20% and reduced maintenance costs by up to 10%.
  • Integration of compliance and environmental sustainability into operational strategy reduced compliance costs by up to 30% and enhanced public image.

The initiative to improve Overall Equipment Effectiveness (OEE) in the water treatment firm has yielded significant results, demonstrating the effectiveness of the structured 4-phase methodology. The increase in MTBF and reduction in MTTR are particularly noteworthy, as they directly contribute to enhanced operational efficiency and reduced downtime. The high Planned Maintenance Percentage (PMP) indicates a successful shift towards more proactive maintenance strategies, which is a critical factor in achieving sustainable improvements in OEE. The engagement of operators in continuous improvement initiatives has proven to be a key driver of productivity gains, underscoring the importance of involving frontline staff in optimization efforts. However, the results were not without challenges. The initial resistance to change and the complexities involved in integrating new technologies highlight areas where the implementation could have been smoother. Alternative strategies, such as a more gradual approach to technology integration and enhanced change management practices, might have mitigated some of these challenges and enhanced the outcomes.

Based on the analysis, the recommended next steps include a continued focus on predictive maintenance to further reduce downtime and maintenance costs. Additionally, expanding the operator training toolkit to include advanced analytics and IoT sensor management could empower operators to take a more active role in predictive maintenance. Strengthening partnerships with technology providers will ensure that the technology roadmap remains aligned with the latest industry innovations and best practices. Finally, a deeper integration of environmental sustainability measures into operational and strategic planning will not only ensure compliance but also position the firm as a leader in sustainable water treatment practices.

Source: Infrastructure Asset Management for Water Treatment Facilities, Flevy Management Insights, 2024

Flevy is the world's largest knowledge base of best practices.

Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.

Read Customer Testimonials

Additional Flevy Management Insights

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.