Episode 8: How Root Cause Analysis and Asset Performance Management Transform Operations and Empower People

Jeremy Boren: Welcome to the Empower Up podcast from Gray Matter. I'm your host, Jeremy Boren, Gray Matter's brand manager. And at Gray Matter, we believe in transforming operations and empowering people. Pretty much everything we do serves one or both of those objectives.

So be thinking about that during today's discussion, which is going to be all about asset performance management, root cause analysis, and other strategies that we use all the time to help companies get more out of their equipment and to understand exactly what happened when things do go wrong. If you've been listening to the podcast, we really appreciate it. If you could go ahead and rate and review us on Apple Podcasts or anywhere you find podcasts, we'd appreciate that too. So with that, I'd like to welcome Ken and Bob Latino to Gray Matters Empower Up podcast.

Bob Latino is the CEO of the Reliability Center and Ken Latino is a senior APM consultant here at Gray Matter. I spoke to Ken and Bob, who yes, are brothers, a few months ago during Gray Matters Industrial Intelligence Conference Transform 2019. My first question for Ken and Bob was how they got their start in APM root cause analysis and reliability. You'll hear from Bob first.

Bob Latino: Ken It's an interesting background for us because the Reliability Center was actually formed in 1972 as a research and development arm of a company called Allied Chemical Corporation, which today is more commonly known as Honeywell. And it was actually our father, Charles Latino, who had founded and directed that group in Allied Corporation. And he wanted to take the principles of reliability engineering from aviation. And because he says, you know, planes are so reliable in the air.

And he says, I'm the head of a manufacturing plant, a chemical plant. He says, I just can't get that kind of reliability. So he took the principles from aviation and applied them into equipment process and human reliability within the Allied Corporation. And he continued to lead that effort from 1972 to 1985, setting up reliability departments around the world and their plants.

And in 1985 he decided to retire and he bought his group out of the corporation. So then we were just independently owned. We were a family-owned business and we were able to take those principles and apply them to any industry that we wanted to. And we really, it's a broad swath of, because the principles apply anywhere from healthcare to continuous process, discrete products.

Even in my daughter's school, I deal with teaching them the root causes of bullying. We work with Homeland Security on the root causes of terrorism. So we're really what we specialize in and the root cause side is is the common denominator is the human being we teach we teach how to think through why anything goes wrong and get down into systems contributions. I'll let Ken say why he was departed from the company because sometimes some people just can't cut it so they got to go.

Ken Latino: I always say I didn't like the people I worked with.

Jeremy Boren: Or they go on to bigger and better things. Or they go on to bigger, thank you. It just depends on how you do it. Thank you.

Ken Latino: I started with Reliability Center in right around 1985 and I worked there for about 15 years and one of the big things we did was root cause analysis that was something that you know a lot of people in industry and even like Bob said outside industry really struggle with they have a lot of failures they have problems and in a lot of cases they don't know what causes them. One thing I maybe will talk about in a little bit is, you know, in most industries, you'll find out that a lot of the equipment continues to fail over and over again, and a lot of time for the same reason. We tend to put band-aids on things, and we're really not getting to the true root of the problem and really solving the problem. We're just kind of masking it with our efforts.

Jeremy Boren: So the new fifth edition of your book, Root Cause Analysis, Improving Performance for bottom line results. It just came out. It's available on Amazon. People can check it out.

What's new that people should know about in this edition?

Bob Latino: Well, just volume-wise, there's about 40% more new material on this. But from the summary standpoint, people outside of our industry tend to have a very narrow view of what RCA is. It's really become a useless term. It's a commodity that no matter who is solving a problem, they'll call it RCA.

That could be from simple brainstorming to a five whys, quick type of analysis. So many people associate RCA with being that simple of a technique. And here we wanted to broaden it very much so that it's a system. RCA is not a task, but it's a system.

And it involves doing RCA on the right stuff so that you're getting your returns, so prioritizing things. It's about the collection of evidence, the unbiasedness of teams, developing and selling your reports so that you can do the recommendations, and then tracking that something got better. But we also tie that role of RCA in any organization to correlate it to how does that help reliability overall? How does that correlate to safety?

How does that correlate to APM? I don't know if you want to expand anything on the APM side.

Ken Latino: Yeah, we expanded the APM part quite a bit. And, you know, APM is also like RCA. It's kind of been commoditized, and a lot of people say APM, and, you know, you say, what does that mean? So we have a very specific definition of what we think APM is, and I tried to elaborate on that in the book a little bit more detail than what I put in the fourth edition.

And, by the way, at Transform, we're going to talk about what APM is. So I'm excited if you guys, you know, I'm sure there will be some proceedings that come from this. But, you know, just kind of talking about what actually is APM. Is it this little narrow thing or is it something a little bit more broad?

So we're going to talk about that. Now, one thing I do want to say about the book that I'm very proud of is, you know, most people who have read it have said it's a very practical book. It's a very practical, hands-on, you can read the book and actually go out and start to apply this stuff out in the field. So it's not a, I mean, there's some theory in it, but it's very practical.

It's a lot of step-by-step to kind of make sure that you get all the concepts in a way that's actionable.

Bob Latino: And then it concludes with case studies of clients that went out there and proved it. They said, here's the ROI, which is a big deal for us because when you get client case studies and, you know, it's not you bragging about anything, it's their success.

Jeremy Boren: Ken, do you have some examples or takeaways from a case study involving building a reliability process? I think when we were talking earlier, you mentioned a case involving a paper mill where you worked.

Ken Latino: At that mill, we were, a small group of us were embarking on trying to build a reliability process within a, and it was a very, very large, one of the biggest mills in the United States. And we just had trouble kind of getting buy-in from everybody. everybody. So we said, you know, what's a problem that, you know, what's a big hairy problem that you've got?

And they came and said, well, you know, we've got these thick stock pumps and, you know, they cost $150,000 every time they fail. You know, they could potentially shut a paper machine down if they're down for too long. So we said, you know, we're going to go after that. We're going to do an RCA on that.

And we blew their minds because, you know, we found all kinds of things. They said, you know, these things have been in process for 50 years. There's nothing nothing more you can do to them, make them more reliable. And this team, and it took a while because not everybody was bought in.

We went from six-month meantime between failure to nearly three years. So, you know, we had dramatically changed people's vision of what you can do if you get to the root cause of the problem. So that really got us, that was really the catalyst that got us started on reliability at that mill.

Jeremy Boren: So staying on the book for a minute, tell me about the origins of the cover, which shows a young child learning to crawl, stand, and then walk. What's kind of the family story there?

Bob Latino: Well, this is a memorial to our father who passed away in 2007. So we wanted to make it special, and we actually went back to his, you know, people today still strive to start reliability efforts, but they were doing it in 1972. I mean, it's 50, almost 50 years ago. and we actually went and tracked down several members of his original team of engineers and got them to do reflections on how that changed their career by doing that so early so that in the front end of the book those reflections are in there but the the cover of our book represents the reliability DNA because that's was on the cover of his book so our book matches his cover from his his Strive for Excellence book in 1980.

Yep. Nice. It's really awesome.

Ken Latino: Bob,

Jeremy Boren: could you tell us a bit about root cause analysis and some of the lessons you try to impart when you provide training on this topic?

Bob Latino: You know, if you're doing RCA right, then it's a self-sustaining effort. It's a self-funding because you're just going to be funding off of the savings from your first one. want. So if we encourage people and you know, and we also encourage people to bring an actual data related to something actually going on.

Because in that case is, you know, it's real. It's not, you know, we're showing that it's not canned, that you're, you're bringing something I have no idea what you're bringing to the table, but I'm going to show you how what I just taught you is going to work. And then that way that they go away with the confidence and you know, I'm not going to blow it blow smoke and make it look like they're going going to solve it in the room because they more than likely will not have enough data. They'll realize how much data they don't have.

Jeremy Boren: But it'll start them on the path.

Bob Latino: Yeah, yes. They will have a blueprint to go back and be able to finish that. And we'll help them when they, you know, they call us. You know, it doesn't end in the classroom.

We do online support all the time.

Ken Latino: You know, if you look on the news, you'll see, you know, there's a, you know, oil leak, you know, a big catastrophe or this airplane crash. It's a big sporadic event, right? And that tends to be be what people do RCAs on in plants, right? They have a big catastrophic failure and it takes them down production for two days or three.

And so it's a big event that tends to be what people focus on. But what we found over the, you know, 30, 40 years doing this is that, yeah, those are important, but those do, those get analyzed. You know, somebody is going to make sure you analyze those. What you find is it's the repetitive failures that people miss, right?

The $5,000 here and and the $10,000 there, when you add them up, they're much, much more significant than the one-time sporadic event. So we focus quite a bit in the training and in the book around chronic failures, focusing on the repetitive failures that sometimes don't bubble up as this huge thing until you aggregate them.

Bob Latino: Unfortunately, oftentimes we focus on the urgent and not on the important. Right. And RCA is always viewed as a reactive tool of which 90% of the time it is applied reactively because you need a trigger to do it. But there's also, most people don't consider that if you're just, if you're in the business of understanding how people think and reason, then, you know, we say that you can do RCA proactively.

There's no reason I can't do a failure modes and effects analysis or any risk assessment and be able to identify high risks and then apply an RCA as to why the risks are high because now you're dealing at the risk stage and not the consequence stage but you know you have to be a sophisticated company to understand that and you say my RCA s are getting so good that my reactiveness is going down quite a bit and I can focus on opportunities of doing that with risk but the the thought process is what you leave from here and you're you know it's not that said, we deal with the physical sciences and the social sciences. All RCA's are going to have a physical component about something that broke. But inevitably, you're going to get to a decision maker that made an error of omission or commission by their decision or choice of what they were going to do. And it's not a blame tool.

A lot of people associate RCA with blame. If you're blaming, it's not RCA, not in our book. But what the meat of of what we do on the human performance side and the understanding of human reasoning is to understand why good people on that day thought it was the right thing to do. And what that's going to uncover are systems that, you know, it's not the oftentimes we think that the poor decision maker was the cause of the failure.

They're really the victim because they're a victim of bad systems because maybe they're using procedures that are obsolete that we never updated. Maybe they're using tools that are worn or inappropriate. They're drained in. Yeah, and we talk about defect elimination, and you know, you find out that we're getting defective parts into the operation because we're giving purchasing incentives to buy cheaper parts.

They're getting a bonus, and production's taking a hit, and nobody's drawing on the correlation. So what we, the go-to, the end-all in a true RCA is going to be that you're going to understand the system's contribution to, that impacts decision-making. And that's when you're doing RCA right. If you're stopping at replacing broken parts, you're not doing RCA.

If you're stopping at blaming people, you're not doing RCA. Only when you understand the reasoning of why people thought it was the right thing to do, do we consider that RCA.

Ken Latino: It takes organizational courage too, right? Because now you're getting into management systems, and in some cases your boss might have made that system, and unintentionally it's causing problems. So it takes a lot of courage.

Bob Latino: But that's a leadership issue. I don't blame people who do poor analyses as much as I do the people that accept them. So if you're just doing it as a checklist to meet some regulatory minimal requirement, then you're doing it for the wrong reasons. You're not going to get the benefit from it.

So it has to be the leadership that demands, turn them away. Say when they do this and you know how to critique an analysis and you say it's not done properly, you don't have evidence to support this or you didn't go deep enough, turn them away. They'll be better prepared next time. But, you know, you have to demand that level of precision in these things or it's not going to happen.

Everybody's just going to turn in with what they can get by with.

Ken Latino: Now, I'll give you a tip for any managers or executives who might listen to this is, you know, a lot of times when something, you have a big failure, your natural question is, when are we going to be running again? When are we going to be up and running again? What, you know, maybe add to that is, you know, why did this happen and what are we doing about it? You know, do we understand what caused this and what actions are we taking to make sure this doesn't happen again?

Sometimes those questions don't get asked or they get asked way too late in the process. Right.

Jeremy Boren: Not at all or way too late.

Ken Latino: So if there's not an expectation to get to the root cause, people are not going to do it.

Jeremy Boren: Ken, since we're at Transform and I know you're going to be presenting about it, could you talk a little bit about what APM is and what you're going to discuss?

Ken Latino: Yeah, like I mentioned earlier, you know, if you look up APM on the Internet now, there's tons of companies who are doing APM, and, you know, they tend to be all across the map. map, what we tend to think of as APM is more of a work process, tools to essentially build a strategy for your assets. In other words, what risks do I have with these assets and what actions do I need to put in place to make sure that I can mitigate those risks? And then we have to implement them.

So now we have to go out and actually do the work. We have to do the maintenance, PMs and predictive maintenance. We need to go out and do operator rounds. So there's a number of activities that actually have to be executed to get the value.

And then on the tail end, that's where a lot of technology comes into play is, you know, is it working? Are we actually getting the benefits? Are we extending the life of the assets the way we intended? And there's so much technology we can use now for smart assets that are giving us data, telling us that they're sick.

We have things like rounds that allows us to walk out and collect data digitally so we understand the health of the equipment. A lot of data is collected still on clipboards and check sheets. And I worked at a large paper company, and sometimes those check sheets would come in. And paper, inherently, you're not going to summarize it very well.

It takes a lot more effort to take action on the data. I'm not saying everybody doesn't follow up on those things, But it's just very easy just to take that check sheet and say, okay, they did it today, and you stick it in the folder. And, you know, nothing ever happens where if it's digital, you know, there's a natural follow-up that can take place, right? We can alert people that if nobody followed up on it, we can send an email to somebody and say, hey, this, you know, we've got this issue.

Somebody needs to work it. So you just have so much more control over taking action and, you know, trending and actually analyzing that data. And I make this point all the time. I love technology, and I wish we had smart assets in every plant, but the mill I worked in was almost 120 years old.

So we still had a lot of equipment that was 50, 60, 70 years old, and it just did not have the sensors and the automation that monitored the health. So we had to go to the asset, look at the asset, collect the data, and we collected it in a digital way because that helped us understand the asset and I still personally think that, you know, collecting it digitally and having a human being actually out there looking at it. I mean, my car could tell me the engine, it's got an engine light on, but I still need someone who's, you know, has some knowledge of what, what does that mean? What is it telling me?

What do I need to, how do I need to take action on that? So same in the field.

Jeremy Boren: I really want to thank Bob Latino of the Reliability Center and Ken Latino, Gray Matters Senior APM Consultant, who I think summarized one of the key takeaways you should have gotten from our discussion today about asset performance management and root cause analysis. He gave a little advice to all the operational technology managers and leaders listening out there.

Ken Latino: A lot of times when something, you have a big failure, your natural question is, when are we going to be running again? When are we going to be up and running again? What, you know, maybe add to that is, you know, why did this happen and what are we doing about it? You know, do we understand what caused this and what actions are we taking to make sure or this doesn't happen again.

Sometimes those questions don't get asked or they get asked way too late in the process.

Jeremy Boren: That's what I'm talking about when I say gray matter is transforming operations and empowering people. You can have the right technology in place, but if you don't have a plan for how you're going to use it and you're not asking the right questions like the one Ken posed, it's not going to work for you. So if you want to learn more about Ken's work at gray matter and how we might be able to help you, visit graymattersystems.com and check out the intelligent assets section of our site where you can take an APM demo for a test drive. And don't forget, rate and review us on Apple Podcasts.

And if you have ideas for topics we should cover or industry leaders like Bob and Ken that we should talk to, you can email us at empowerupatgreymattersystems.com. you