Machine Monitoring and MEMEX's Financial OEE - Financial Overall Equipment Effectiveness

Mark Albert, Editorial Director of Modern Machine Shop, wrote an article titled: 3 Perspectives on Machine Monitoring in the November 2017 edition of Modern Machine Shop.

Mark is a true thought leader in manufacturing, afirst class individual and a long time friend who I always learn a great deal from whenever we speak.  Thanks Mark for another great article!

This article was based on the Top Shops event  that was held in Indianapolis in September and it was the first ever Top Shops put on by Modern Machine Shop. .   I blogged about the Top Shops event here:

Financial Overall Equipment Effectiveness (FOEE) at Data Driven Manufacturing Panel at Top Shops

The section of the article wrote has a section titled: A Financial Angle on OEE

Below are some of the points Mark brings out in his great article:

"Because OEE is an essential measurement of how well a manufacturing unit is doing, it is one of the most prominent “readings” of machine performance provided by almost all machine-monitoring systems. Mr. Edstrom provided another angle on OEE: financial OEE (FOEE). In fact, Financial OEE is a trademarked name for a feature Memex plans to release in early 2018 as an additional solution for those customers who have the MERLIN Tempus Enterprise Edition (EE), a scalable, extensible and open manufacturing execution system platform.

Mr. Edstrom is the CEO/CTO for Virtual Photons Electrons. In 2006, while at Sun Microsystems, he helped create the vision and framework for MTConnect, the set of interoperability standards for translating machine data into a common, internet-based language. He served as president and chairman of the board for the MTConnect Institute from 2010 to 2014 and was the CTO for Memex for three years.

Mr. Edstrom was asked to talk about how OEE could be linked to information about financial results, because the concept of FOEE shows that machine performance data has value to decision-makers in the front office from a business management perspective. Analyzing FOEE helps a shop understand how machine performance is helping (or hurting) profitability. This insight keeps the focus on the most appropriate productivity improvement efforts.

Mr. Edstrom began by defining OEE as a simple mathematical formula. It multiplies the percentages of availability, performance and quality to yield a single percentage. This result enables similar units (one machine, one department, one plant or an entire enterprise) to be compared to or rated against a target such as a plant’s best record or a benchmark of world-class performance. However, shops and plants must also focus on profitability. Managers have to balance decisions about maximizing the part-making capability of their equipment with decisions about the money-making potential of this equipment. OEE ratings alone provide an incomplete picture.

FOEE answers the question, “What is the value of improving OEE on this particular machine for this particular product?” More to the point, it answers “How much profit is being left on the table by not performing at company-best or industry-best levels for that specific part?” FOEE requires three key financial input values for each product and machine. These inputs are unit sales price, unit material cost and the hourly operational expense (OPEX) of the machine. FOEE is the current-state hourly profit divided by a value representing a world-class level of profit. This ratio tells a company what profit it made compared to what profit could have been made at factory-best or world-class levels.

With FOEE, managers can look at jobs scheduled for a machine and make decisions based not just on utilization, but also on utilization and profit. This enables managers to compare machines capable of running a certain job and determine which machine would yield the highest hourly profit. Just as the OEE figure related to each project or job is a key tool in prioritizing and evaluating continuous improvement projects, FOEE provides a quick view of the profitability opportunity for these projects. FOEE is a tool to make better business decisions for scheduling products, guiding continuous improvement efforts, and driving sales and marketing efforts."

As I have previously written, the first "killer app" I ever saw was VisiCalc. For those of you too young to remember VisiCalc, it was the world's first "visible calculator" or electronic spreadsheet and it came out in 1979. I remember demoing it in 1979 and the concept was so different, that it took a little while for people to truly appreciate what was going on, but when they did, they would push me aside and take over the keyboard. At that point, I would start writing up the order :-)

I believe the MEMEX's MERLIN Financial Overall Equipment Effectiveness  (Financial OEE™ - trademark by MEMEX) will be the killer metric for manufacturing, as VisiCalc was the killer app for the entire business world.

Bob Hansen, of OEE College and R.C. Hansen Consulting, LLC, is the creator and the thought leader who coined the term, Financial Overall Equipment Effectiveness (FOEE).

Here is a link to the blog on Top Shops where I included all of my slides from the Tops Shops event.

God Bless Dick Morley - PLC God and Manufacturing Thought Leader

As I think about the many things I am grateful for today on Thanksgiving, I think about people who I had the privilege to know that have passed away this year.   On October 17th, Dick Morley passed away at the age of 84.  Dick would certainly be on the Mount Rushmore of manufacturing thought leaders.

Here are my memories of Dick.  Some of these are from my blog post when I went I up to see Dick in 2014 which I called:  Spending The Afternoon With Dick Morley - Priceless

In 2000, Dick Morley and I gave talks at AMT's Annual Meeting in Puerto Rico. I was speaking on the Internet and Dick was giving one of his incredible talks on manufacturing. Dick and I had lunch in Puerto Rico and we discussed open source and manufacturing. When I got back to the DC area, I sent Dick a copy of Eric Raymond's book, The Cathedral and the Bazaar.

Fast Forward 14 years.  Dick was a Director at Memex Automation (now just called MEMEX). When I asked how we were asking Dick to help Memex Automation, outside of the duties of being a Director, we were not working with Dick as closely as I would have thought.  I told Dave McPhail, our CEO, that I would like to reach out to Dick.  Thomas Smeenk, our VP of BD at Memex Automation at the time, reached out to Dick.  Dick was very generous and said he would enjoy it if I made the trip up to New Hampshire to visit him.  So I made the trip up there, and what a thrill that was!

When I was up there, we discussed mostly physics - which was fascinating for me.  We then went into a variety of topics and then discussed Memex Automation and where we should take the technology.  We spent some time talking about his many foster children and his wife - who had passed away.

The first topic Dick brought up was that he dropped out of MIT and did I know other famous people who dropped out of college.  When I rattled off Steve Jobs, Bill Gates, Mark Zuckerberg to name just a few, he quickly understood that I knew Dick was in an important category of those who left college early to pursue their passion.

Above is Dick and I having lunch at a GREAT restaurant near his house called, Parkers Maple Barn.  Dick drew out on the back of the placemat how he invented the PLC.  Below is a photo of that placemat. That was a lunch I will never forget.

 

Below is from Dick's homepage at TheBarn.org:

"Dick Morley is best known as the father of the programmable controller and is the leading visionary in the field of advanced technological development. He is also an entrepreneur whose consistent successes in the founding of high technology companies has been demonstrated through more than three decades of revolutionary achievements. Mr. Morley is the recipient of the Franklin Institute's prestigious Howard N. Potts Award and is an inductee of the Automation Hall of Fame. He holds more than twenty US and foreign patents, including those for the parallel inference machine, the hand-held terminal, the programmable logic controller and magnetic thin film. Currently, he is the Chairman of the Board of National Center of Manufacturing Sciences (NCMS), Director at Large for the Society Manufacturing Engineers (SME) and a member of the Manufacturing Advisory Board for Worcester Polytechnic Institute (WPI).

Using his studies in physics at the Massachusetts Institute of Technology as a springboard, Dick Morley has become an internationally recognized pioneer in the fields of computer design, artificial intelligence, automation and technology trend forecasting. As an inventor, author, consultant and engineer Dick Morley has provided the Research and Development community with world changing innovations.

For many years, Dick Morley was a contributing columnist to Manufacturing Systems Magazine. He has also written articles for magazines and journals worldwide including Manufacturing Automation Magazine. In recognition for his ground breaking contributions, Mr. Morley has received numerous awards and honors from such diverse groups as Inc. Magazine (Entrepreneur of the Year), Society of Manufacturing Engineers (Albert M. Sargent Progress Award)"

 Above is Dick in The Barn after we got back from lunch.  I gave him a copy of my book (on the table) MTConnect: To Measure Is To Know, since MTConnect is very important to Memex Automation and manufacturing.  It was a GREAT day and was extremely glad that Dick wants to work closely with me and Memex Automation!

Below is from wikipedia on Dick:

• 2016 Inducted into the Measurement, Control & Automation Hall of Fame by the Measurement, Control & Automation Association (MCAA)
• 2016 Control System Integrators Association (CSIA) Lifetime Achievement Award
• 2007–2008 SME Manufacturing Enterprise Council Member
• 2006–2008 NH Judge - Hi Tech Council Product of the Year
• 2006 Process Automation Hall of Fame (Control magazine)
• 2005 SME Board of Directors
• 1996 Automation Hall of Fame Prometheus Award
• 1995 SME Fellow
• 1993 Parallel Processor Design — Flavors
• 1991 Howard N. Potts Medal
• 1990 Entrepreneur of the Year
• 1981 Gould Science & Engineering Fellow
• Boeing Technical Excellence Award

God bless you Dick Morley - you were one of a kind!

Wonderful Time in CA - John and Janet's New Home

Our oldest son, John and his wife Janet, purchased a wonderful home in Redwood City.  We went out there to visit for a few days and then Tim, my youngest son, and I did some of the items on the to-do list for five days.  I also picked up tools for John that will be needed for his first home. 

Here are photos of some of the days and nights we took a break from the work.

Above we stopped by to see my cousin Lynn and his wife Jane in Glen Ellen during the first Saturday we were out there.  Lynn and Jane have and are redoing Lynn's mom's, Dorothy - my aunt and godmother who passed away in 2016, house and doing a fantastic job.  We had lunch in Sonoma and our goto Cheese Factory Restaurant and hit a few wineries on the way back.

 Above was a photo of the six of us at Jacuzzi Winery on the way back into the city before we had dinner at Scoma's on the water that evening.

Monday for lunch we ate our our favorite pizza place in the city Tony's Pizza.

We enjoyed a beer at a local pub as we walked to have dinner (below) at one of our favorite restaurants - Caffe Sport.  Janet had to work that Monday and John was able to take off.

We took one night to play basketball near Facebook at a great gym, no charge with free use of basketballs.  I had to prove I could still (barely at age 58) palm a basketball -  John and Tim can easily palm a basketball!

Michael, Tim, John and Janet at a local winery in Sonoma.  Tim is below getting ready to enjoy a nice meal at The Fish Market after one of our many hard days of work :-) 

We spent our last day at Half Moon Bay having a wonderful lunch and then going down to the water.  It was a lot of fun spending 8 days in CA, first vacationing with John, Janet as well as Julie, Michael, and Tim.   Tim and I accomplished a lot at John and Janet's house (not that it needed anything major) and I think Tim and John learned a few things regarding home maintenance along the way as well :-)

Veterans Day 2017

Thanks to my father John Kenneth Edstrom who did two tours of duty in Vietnam as an officer in the Air Force.  My father is also in the very unique category in that he was awarded TWO BRONZE STARS for the two tours of duty for his countless acts of bravery in his two years in Vietnam.  The Bronze Star Medal is a United States Armed Forces military decoration that may be awarded for bravery, acts of merit, or meritorious service.  

Thanks to my cousin Chris Edstrom who has done two tours of duty in Iraq and three in Afghanistan and who did work in both countries now as a contractor.  Thanks to Dr. Harry Foxwell, Brad Kirley, Bruce Adams and Paul Warndorf for their service to our country.

History of Veterans Day as stated at TimeAndDate.com

On the 11th hour of the 11th day of the 11th month of 1918 an armistice between Germany and the Allied nations came into effect. On November 11, 1919, Armistice Day was commemorated for the first time. In 1919, President Wilson proclaimed the day should be "filled with solemn pride in the heroism of those who died in the country’s service and with gratitude for the victory". There were plans for parades, public meetings and a brief suspension of business activities at 11am.


In 1926, the United States Congress officially recognized the end of World War I and declared that the anniversary of the armistice should be commemorated with prayer and thanksgiving. The Congress also requested that the president should "issue a proclamation calling upon the officials to display the flag of the United States on all Government buildings on November 11 and inviting the people of the United States to observe the day in schools and churches, or other suitable places, with appropriate ceremonies of friendly relations with all other peoples."

An Act (52 Stat. 351; 5 U. S. Code, Sec. 87a) was approved on May 13, 1938, which made November 11 in each year a legal holiday, known as Armistice Day. This day was originally intended to honor veterans of World War I. A few years later, World War II required the largest mobilization of service men in the history of the United States and the American forces fought in Korea. In 1954, the veterans service organizations urged Congress to change the word "Armistice" to "Veterans". Congress approved this change and on June 1, 1954, November 11 became a day to honor all American veterans, where ever and whenever they had served.

In 1968 the Uniforms Holiday Bill (Public Law 90-363 (82 Stat. 250)) made an attempt to move Veterans Day to the fourth Monday of October. The bill took effect in 1971. However, this caused a lot of confusion as many states disagreed with this decision and continued to hold Veterans Day activities on November 11. In 1975, President Gerald R. Ford signed Public Law 94-97 (89 Stat. 479), which stated that Veterans Day would again be observed on November 11 from 1978 onwards. Veterans Day is still observed on November 11.

Harry Foxwell always would send out a nice email to Sun employees (and I imagine others).  Two years ago, he asked the question: Do you know where your veterans are?

Tomb of the Unknowns at Arlington National Cemetery:
http://www.arlingtoncemetery.org/visitor_information/tomb_of_the_unknowns.html
National World War II Memorial: http://www.wwiimemorial.com/
Marine Corps Memorial: http://www.nps.gov/archive/gwmp/usmc.htm
US Navy Memorial: http://www.navymemorial.org/
Air Force Memorial: http://www.airforcememorial.org/
Korean War Veterans Memorial: http://www.nps.gov/kowa//index.htm
Vietnam Veterans Memorial: http://www.nps.gov/vive/index.htm
Vietnam Women's Memorial: http://www.visitingdc.com/memorial/vietnam-women%27s-memorial.htm
Iraq Veterans Memorial: http://iraqmemorial.org/

Department of Veterans Affairs: http://www.va.gov/

Bill Joy's Tech Breakthrough Article In Washington Post

Bill Joy, Sun co-founder and the "Edison of the Internet", has written an article in yesterday's Washington Post titled"

Three tech breakthroughs that will help transform the world

 Bill writes,  "Information technology has rapidly transformed our economy but not areas such as energy, materials and food, where we desperately need sustainability. We need to change our course."

 He expands on these topics, "Using a target list of 25 clean-tech “grand challenges,” I worked for over a decade to find, fund and commercialize big breakthroughs. One such challenge was radically cheaper batteries."

 I blogged about this six weeks ago in a post  Bill Joy's Investment In The "Jesus Battery" 

It is also interesting when Bill writes about the grid:

"But electric vehicles won’t be truly emissions-free unless we decarbonize the grid. Rechargeable alkaline batteries can be made so cheaply that we can imagine a grid where we can store a kilowatt-hour of electricity for less than a cent, saving wind and solar energy so it is available when we need it. This could be a grid that runs entirely on renewables; a grid that can move energy 24 hours a day from producers to and between storage locations; a grid where utilities can be not just providers of power but provide a marketplace for energy; a grid where fossil fuel and other existing generation capacity is used only for backup in extreme cases."

Bill Joy is a genius and it is fascinating to watch what big problems he is trying to solve now.  Long ago he established himself as a legend in the computer industry going back to UCB and then with Sun Microsystems.  He ends with the "grand challenge" that has defined his professional life since leaving Sun.

"We sought “grand challenge” breakthroughs because they can lead to a cascade of positive effects and transformations far beyond their initial applications. The grand challenge approach works — dramatic improvements reducing energy, materials and food impact are possible. If we widely deploy such breakthrough innovations, we will take big steps toward a sustainable future."