Procedure Production Incident Reporting-33-020-0001 Name: Production Incident Reporting Category: 33 Manufacturing (Production) Sub Category: 33-020 Incident Management Functional Area: Manufacturing Document ID: 33-020-0001 Site: Corporate – Global Country: All Effective Date: June 16, 2022 Next Review Due: June 16, 2025 Author: Rick Weimer Owner: Manufacturing Excellence Director Procedure Purpose & Scope This procedure defines the reporting and investigation requirements for production incidents that negatively affect production output, capacity, quality, yield, and cost for a manufacturing process. This procedure applies to all Albemarle operated facilities. Responsibilities Corporate Manufacturing Excellence Group: Responsible for establishing and promoting the use of this procedure and periodically assessing compliance. GBU and Site Manufacturing Management: Establishing site procedures for production incident reporting that comply with this corporate procedure. Using the production incident reporting process for continuous improvement. Definitions Factory Cost – All cost required to operate a plant site except for raw materials and assessments. (Run a cost center report for a site using ALB_EXP cost element group. Factory cost is the value from the ****TOTAL CONTROLLABLE EXPENSE row of the report.) MDC – abbreviation for Maximum Demonstrated Capacity. MDC is the best actual demonstrated production rate for five consecutive days. The MDC daily production rate is used as the baseline for OEE calculations. OEE – abbreviation for Overall Equipment Effectiveness as measured by (A)vailability, (P)erformance and (Q)uality. See corporate procedure 33-095-0002 for a complete definition. O-OEE – abbreviation for Operating OEE. O-OEE is similar to OEE except that the impacts of business downtime, planned turnarounds and conversions are removed. O-OEE reflects the performance of a production unit when it is scheduled to run. Trigger Values - Threshold values used to define levels (degrees) of production incident. Details Introduction All hardcopies of this document are considered to be UNCONTROLLED COPY Page 1 of 5 Procedure Production Incident Reporting-33-020-0001 All manufacturing processes experience production incidents that result in lost production or higher cost. Manufacturing teams should work continuously to determine the causes of incidents and take actions to prevent similar incidents from reoccurring. This procedure is designed to ensure that the most serious production incidents are reported, properly investigated, and managed. Categories of Production Incidents Production incidents are separated into two categories: Production Downtime, and Cost. Each category has its own trigger criteria. Production Downtime occurs any time the Operating OEE (O-OEE) for a process is less than 100%, which means that either: a) The process was down and could not operate for some reason, b) The production rate was less than the established MDC rate, and/or c) The product did not meet all quality specifications. Corporate procedure 33-095-0002, Overall Equipment Effectiveness Tracking, outlines best practices for tracking OEE, O-OEE and the causes of production downtime. Cost incidents result in significantly higher manufacturing costs than planned. Examples include: d) An equipment or system failure with high repair cost. e) Repeat equipment failures that result in high repair cost. f) Lower yields/higher utilizations of raw materials that increase raw material costs for a process. g) High cost for certain operating supplies (catalyst, packing, carbon beds), waste disposal, and industrial cleaning. Some incidents involve both production downtime and high cost. In these cases, the incident type with the highest significance shall be assigned. Incident Levels Production incidents are classified into levels (0 to 3) based on the outcome or severity of the incident. Level definitions and trigger values are outlined in the following sections. Since every production site and business is different, each site shall develop incident level definitions and trigger values that fit their situation. It is important to set meaningful trigger values for incident levels. Level 0 and 1 incidents should promote improvement at the unit/area level of a plant site. Level 2 incidents should promote All hardcopies of this document are considered to be UNCONTROLLED COPY Page 2 of 5 Procedure Production Incident Reporting-33-020-0001 improvement at the department and site level. If the corrective actions from all the level 0 to 2 incidents are effective, the most severe (level 3) production incidents should be prevented. Trigger Values for Cost Incidents The trigger values for cost incidents should be based on the size of the plant because a significant cost incident for a small site may not be significant for a larger site. Table 1 contains suggested trigger values for cost incidents based on a site’s monthly factory cost budget. Table 1: Suggested Cost Incident Trigger Values Size Designation Small/Medium Site Large Site Monthly Factory Cost Budget Less Than $5,000,000 Over $5,000,000 Level 1 Incident Level 2 Incident Level 3 Incident 0.5% to 1% of Monthly Factory Cost $25,000 2% to 4% of Monthly Factory Cost $100,000 10% to 20% of Monthly Factory Cost $500,000 $50,000 $200,000 $1,000,000 Level 0 Incident A low severity production incident. Sites can decide if they want to set triggers for and track Level 0 incidents. Level 1 Incident A medium severity production incident that could affect the monthly performance of a site or production unit if the root causes are not corrected. Suggested Level 1 trigger values: Production downtime between 4 hours to 24 hours Cost impact greater 0.5% to 1% of monthly factory cost budget In order to promote continuous improvement, these trigger values should generate two to four Level 1 incidents per month in each production area. Level 2 Incidents A serious production incident that negatively affects the monthly performance of a site or production unit. Examples of negative effects include actual production below S&OP targets, missed or delayed shipments, and unfavorable cost variances. Suggested Level 2 trigger values: Production downtime of 1 to 6 days Cost impact greater 2% to 4% of monthly factory cost budget In order to promote continuous improvement, these trigger values should generate three to four Level 2 incidents per year in each production area. All hardcopies of this document are considered to be UNCONTROLLED COPY Page 3 of 5 Procedure Production Incident Reporting-33-020-0001 Level 3 Incidents A severe production incident that has a material impact on business performance, such as missing a quarterly production target or sales forecast. Suggested Level 3 trigger values: Production downtime of 7 days or more. Cost impact greater than 10% to 20% of monthly factory cost budget Incident Reporting and Investigation An incident report should be entered into the Facilex incident reporting (IR) system for all Level 1, 2, and 3 production incidents. The incident subtype and impact are entered during the additional information task shown below. Figure 1: Additional Information Task Entry Screen Many production incidents will require an investigation and root cause analysis (RCA). Corporate procedure 00-030-0001, Root Cause Analysis, outlines best practices for incident investigation and RCA for all types of incidents. The RCA methodology depends on the incident level. Level 2 and 3 production incidents should require a formal RCA using the Causelink software. Less formal methods of RCA may be used for Level 0 and 1 production incidents. Corrective Actions Corrective actions should address the root and contributing causes identified in the RCA. Sites should track the status of corrective actions using the Facilex Incident Reporting (IR) system. Corrective actions from production incidents should be completed within 12 months of the completion of the investigation. Forms, Records and Attachments a. None. All hardcopies of this document are considered to be UNCONTROLLED COPY Page 4 of 5 Procedure Production Incident Reporting-33-020-0001 Related Policies, Procedures or Other Documents a. Corporate Procedure 33-095-0002, Overall Equipment Effectiveness (OEE) Tracking b. Corporate Procedure 00-030-0001, Root Cause Analysis References a. Not applicable. Document Retention Requirements a. Incident reports shall be maintained for the life of the process. Revision Log Date September 6, 2019 June 16, 2022 Description Initial issue Removed appendices and references that mention the SAP incident reporting system. Incorporated use of the Facilex incident reporting system. All hardcopies of this document are considered to be UNCONTROLLED COPY Page 5 of 5
