reliability & operational excellence · correlation of pm & pdm work orders with injury...
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The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 1
Reliability &
Operational Excellence
A Reliable Plant is a
Safe,
Cost Effective,
Environmentally Friendly
Operation
November 2014
Copyright 2014
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014
Reliability and Safety
The Reliability Program
Managing Cultural Change, Leadership,
and Aligning the Organization
Implementation
Contents
2
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014
Reliability and Safety
3
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014
Most all organizations say safety is a
top priority
They have policies, standards,
processes, systems, etc. to support this
They are committed to enforcing these
policies
Safety is a Top Priority
4
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014
Safety Policy Statement
All injuries are preventable
No task is so urgent that it cannot be done safely
Management must provide a safe work place
We are each responsible for preventing injuries
Everyone is empowered to stop unsafe behavior
5
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014
If executives were truly committed to
safety…
They would be committed to reliability,
and would have similar policies,
standards, processes, and systems
They typically are not, and do not
Consider a typical sampling of the data
Reliability and Safety Relationship
6
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 7
Injury Rate v. AU/OEE
over Time - Company A
15
35
55
75
95
115
135
1 5 9 13 17 21 25 28 33 37 41 45 48 53
90
95
100
105
110
115
120
Injury Rate
OEE/AU
Month
OE
E/A
U-
% o
f B
ase
R = 0.80
R2 = 0.64
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 8
Correlation of Corrective & Reactive Work
Orders with Injury Rate – Plant No. 1
R = 0.827
R2 = 0.684
100
150
200
250
300
350
400
6000 8000 10000 12000 14000
To
tal In
juri
es
per
Ye
ar
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 9
Correlation of PM & PdM Work Orders
with Injury Rate – Plant No. 1
R = 0.955
R2 = 0.911
100
150
200
250
300
350
400
4000 6000 8000 10000 12000 14000
To
tal In
juri
es
per
Ye
ar
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 10
The More Disciplined Your Maintenance,
the Fewer Injuries you have
R = 0.95
R2 = 0.90
0
1
2
3
4
5
60 70 80 90 100
Inju
ry R
ate
(n
orm
alized
to
a b
ase n
um
ber)
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 11
And, a Reliable Plant is Environmentally Sound Asset Utilization vs. Environmental Incidents - Plant B
0
1
2
3
4
5
6
7
8
9
10
90 100 110 120 130 140En
vir
on
men
tal In
cid
en
ts/y
r
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 12
And, is More Productive -
AU/OEE vs. Reactive Maintenance
40
50
60
70
80
90
100
10 20 30 40 50 60 70 80 90 100
Reactive Maintenance %
Slope= -0.24
Ass
et U
tiliz
atio
n (
AU
) o
r O
EE
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 13
And, is More Cost Effective -
Reliability Index v. Production Unit Costs
(As reliability increases, costs decrease)
R = 0.632
R2 = 0.40
50
60
70
80
90
100
110
120
30 40 50 60 70 80 90
Pro
du
cti
on
Co
sts
$/U
nit
13
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 14
Further:
DuPont reported that the most likely person to be
injured is*:
a maintenance technician,
with less than two years experience,
doing reactive work
Exxon-Mobil reported that accidents are five (5) times
more likely in maintenance when doing breakdown
work than when doing planned and scheduled work**
In ~66% of companies, ~60% of injuries occur while
doing reactive maintenance***
14
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 15
From the data we should conclude:
Safety is everyone’s responsibility &
Reliability is everyone’s responsibility
15
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 16
Establish a policy linking
Reliability and Safety
If safe behavior is a requirement, for which you have specific standards, then…
Reliability and manufacturing excellence are requirements, and you have specific standards for operations and maintenance!
If you believe in Zero Incidents/Injuries, you must believe in Zero Failures/Unplanned Downtime – Failures induce greater risk of injury
Given this, operations & maintenance training should be on a par with safety training
Getting both reliability and safety requires: tenacious application of best practice
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 17 17
Establish a Policy Linking
Reliability and Safety
All injuries are preventable…
All injuries, and failures, are preventable
No task is so urgent that it cannot be done safely…
No task is so urgent that it cannot be done safely, and reliably
Management must provide a safe workplace…
Management must provide a safe, & reliable, workplace
We are each responsible for preventing injuries…
We are each responsible for preventing injuries, and failures
Everyone is empowered to stop unsafe behavior…
Everyone is empowered to stop unsafe, & unreliable, behavior
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 18
If you truly believe in
Safety, then
Reliability is a MUST
to minimize the risk of injuries,
to minimize costs,
and environmental incidents (Should be given comparable executive attention as any
high-powered consulting recommendations)
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 19
The Reliability Program
A Commitment to Safety Requires
a Co-Commitment to Reliability
and Related Policies and Practices
(examples are provided below)
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 20
Minimum unit cost
of Production
Design Store Operate
Defects Defects Defects
Unneeded Work - $$
Asset Utilization
&
Necessary Work
The Reliability Program
Root Causes Rate Losses & Downtime
Source: In Cooperation with
Andrew Fraser,
Reliable Manufacturing Assoc.
Buy
Defects
Install/
Startup
Defects
Maintain
Defects
(Life Cycle Cost) (Cost of Ownership) (“Like a Store”)
(With Discipline) (With Care) (With Precision)
(note where most defects occur)
Injuries (& Env. Events)
Doing better Mtce will not
contribute much to Reliability
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 21
DESIGN -
For Reliability, Operability,
Availability, and Maintainability
(not just budget and schedule)
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 22
Life Cycle Cost and Cash Flow Considerations
ROI
Lowest installed
Cost Policy
Life Cycle
Cost Policy Cash
Flow
($)
Time
Minimum Life Cycle Costs =>
Maximum Long Term Profits
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 23
BUY/PURCHASE- For Reliability using
Strategic Alliances,
Good Specifications & Standards, and
Focus on Total Cost of Ownership
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 24
Total Cost of Ownership
Total Cost of Ownership- costs include: Price
Drawings, bill of material, manuals, etc.
Selection effort, including company staff, travel, etc.
Procurement transaction, freight, duties
Delivery, assembly, installation, startup
Performance capability, efficiency, operability
Maintenance/PM requirements, maintainability
Energy efficiency
Parts stocking, inventory, warranty
Service levels (or lack thereof)
Other costs…
Only ~25% of total cost of ownership is price!
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 25
STORES –
Assure Reliability and
Availability of Spares
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 26
Stores are an asset, and should be treated so.
Stores should be run “like a store, a business”:
Clean, well-organized, efficient
Minimum stockouts, e.g., 1%
And, minimum inventory - inventory turns of 2
Stock levels related to use histories
Receipt inspection- quantity, quality, part no.
Quantities as indicated
Everything in its place Customer driven-- Run
by a manager
with an understanding
of needs & applications
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 27
INSTALL and STARTUP–
with precision for long life
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 28
Startup and Commissioning-
Critical to Reliability
You’re 7-17 times more likely to introduce defects during startup than normal operation
92% of rotating machinery has defects at startup that result in premature failure
Source: 1) Reliability Magazine, February 2001, and 2) Machinery Reliability
Conference, Phoenix, April, 2001
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 29
OPERATE RELIABLY –
with care and precision,
and within process limits
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 30
Reliability Based Operations
Reliability cannot be driven by the
maintenance organization. It must be
driven by the operating units, …and
led from the top. Charles Bailey, VP of Operations
Eastman Chemicals (Retired)
To expect maintenance to “own” reliability is like
expecting the mechanic at the garage to “own”
the reliability of our cars. Ron Moore
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 31
Of all production losses from ideal (AU/OEE),
~2/3rds are NOT equipment related;
~1/3rd are, but most of these are Ops driven;
Only ~ 10% of losses are Mtce driven JIPM: 70% of eqpt. failures are preventable by operators
Equipment RelatedLosses-Maintenance
Equipment RelatedLosses- Operation
Non EquipmentRelated Losses
Source: Author experience;
Similar findings reported by BASF-UK,
Eastman Chemicals, Whirlpool, and Borg-Warner-US
Changeovers, rate/quality losses,
raw material, market demand,
production planning, etc.
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 32
Overtime
Heroes
No Surprises,
Competitive Parity
Competitive
Advantage
Organizational
Learning-
Industry
Leadership
Regressive
Domain
Reactive
Domain
Planned
Domain
Proactive
Domain
Strategic
Domain
Meet Budget,
Staged decay
Perf
orm
an
ce
Leve
ls
Don’t fix it
Fix it after it breaks; Most Expensive
Fix it before
it breaks;
Least Stable
Eliminate Defects; Lowest Cost
Source: W. Ledet
The Manufacturing Game;
Kingwood, TX
World Class Manufacturing
The Five Manufacturing Domains
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 33
Reliability Based Operations (cont.)
To address these issues, we must have:
Production and maintenance partnership- communication, teamwork, common measures
Consistency of operation across shifts
Process Conformance and Capability - Stability
Good shift handover practices
Operator care/PM, training and skills
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 34
Correlation of Operator Care/PM and
Maintenance Costs (Avg data at each level for 200 plants surveyed)
R = 0.85
R2 = 0.73
0
2
4
6
8
10
12
14
16
0 1 2 3 4 5
Mtc
e C
os
ts a
s a
% o
f
Ori
gin
al E
qu
ipm
en
t C
ost
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 35
Operator Care, Ownership (cont.)
Provide Basic Care- Competently, Safely
Take care of the place where you make your living, so it will take care of you.
Mom
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 36
MAINTAIN –
For Reliability
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 37
Excess Defects Lead to Reactive Behaviors-
Typical Maintenance Practices
0
10
20
30
40
50
60
Reactive Preventive Predictive Proactive
Source: Author’s surveys and The Reliability-based Maintenance Strategy: A Vision for Improving Industrial
Productivity, R. Moore, F. Pardue, A. Pride, J. Wilson, September 1993, CSI Industry Report.
Time-based
Condition-based
Root Cause-based
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 38
Eliminate and/or Manage Defects-
Benchmark Maintenance Practices
Source: Author’s surveys and The Reliability-based Maintenance Strategy: A Vision for Improving Industrial
Productivity, R. Moore, F. Pardue, A. Pride, J. Wilson, September 1993, CSI Industry Report.
Planned and/or Scheduled
0
10
20
30
40
50
60
Reactive Preventive Predictive Proactive
Time-based
Condition-based
Root Cause-based
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 39
Understand Degradation Process (Avoid or Minimize the Consequence of Failure)
Time
Co
nd
itio
n
(Resis
tan
ce t
o F
ailu
re)
Sources: Ivara Corp, Hamilton, Ontario
*R. Baldridge, Cargill
Onset of Failure Detect Potential Failure-
System Meeting All
Requirements
Broken- $$$ Maintenance/
Action Window
“PF Interval"
Functional Failure-
System Not Meeting
All Requirements
Pending Failure
Not Detected (PM- too much, too soon?)
Performance
Losses (too little, too late)
Protective* Predictive* Proactive*
Stop/Delay Onset of Failure*
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 40
Maintenance Costs v. CM/PdM% (Typical Correlation)
Database - minimum of 25 plants; minimum of 5 companies
R2 = 0.96
0
5
10
15
20
0 10 20 30 40 50 60 70 80 90 100
Mtc
e C
osts
, %
AR
V
Note: Work Management and Planning & Scheduling
MUST be excellent to act on findings of PdM; and
a proactive mindset is necessary for defect elimination
Source: John Schultz, Allied Reliability, Inc.;
Charleston, SC
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 41
Maintenance Costs v. % PM
R = 0.984
R2 = 0.969
0
5
10
15
20
0 10 20 30 40 50 60 70 80 90 100
Mtc
e C
os
ts,
%A
RV
Source: John Schultz, Allied Reliability, Inc.;
Charleston, SC
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 42
Asset – Anything that adds value. Asset
management plans must include:
Business requirements over the coming 5-10 years
Production’s role
Design/capital projects’ role
Purchasing/Store’s role
Maintenance’s role
All working collectively to manage the assets,
minimize losses, & add value to the business
All must be aligned to business strategy and goals
In light of this, consider Reliability and
Asset Management - ISO 55000
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 43
Leadership,
Organizational Alignment,
and
Managing Cultural Change
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 44
Leadership
Leadership- the ability to inspire ordinary
people to consistently perform at an
extraordinary level
Leadership begs the question “How do I
get people to genuinely look forward to
coming to work every day?”
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 45
Level 5 Leadership
Leadership - Floats to the person best
qualified to eliminate the source of
defects – nature of the work determines
who is in the lead position (Rank is not = Expertise)
Leaders are willing to learn from others Types of Leadership:
Executive leaders– provide vision and resources
Operational leaders– provide time for worker
improvements
Network leaders– provide the ideas for improvement
– If you want to understand the problems with the
work, ask the workers! Source: Level 5 Leadership at Work,
Winston Ledet, et. al
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 46
Aligning the Organization
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 47
Most Organizations are not Aligned
According to Harris Interactive Research (2006), only:
37% of employees had a clear understanding of what the
organization was trying to achieve
20% were enthusiastic about organizational goals
20% saw a clear connection between their tasks and
organizational goals
15% felt the organization enabled them to achieve their goals
15% felt they were in a high trust environment
10% felt their organization held people accountable
13% felt there was a high-trust, highly cooperative working
relationships with other groups or departments
Consider the consequences of this if you were a coach
and your team’s athletes felt this way
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 48
Align the Organization The process of organizing creates naturally
competing groups- shifts, areas, plants, etc.
With increasing task inter-dependence, collaboration and teamwork are essential for organizational success. (e.g., production and maintenance, between shifts, between marketing and manufacturing)
Alignment requires the creation of superordinate goals that take priority over “group” interests: Remind people often to focus on the higher level goals
Think at a systems level – don’t optimize at the
suboptimal level in your little silo – ask ‘what effect will
this have on the system’?
Develop shared measures between “competing”
groups and partnership agreements Source: Edgar Schein,
Organizational Psychology
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 49
Managing Cultural Change-
A Process Model
“Culture – what people do when the boss isn’t around.”
Ian Fyfe, BP (now w/Ineos)
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 50
The best way to change and sustain an organizational culture is by first changing management behavior
You cannot think your way into a new way of acting. You must act your way into a new way of thinking.
John Shook, Author
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 51
Managing Change
Articulate a compelling reason for change- “positive tension”
Apply Leadership and Management Principles
Facilitate employee implementation of the change process
Measure the results- reinforce good behavior; challenge bad behavior
Stabilize the change/organization in the new order
Repeat these steps, over and over
Communicate your strategy, goals, and roles, repeatedly
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 52
Facilitate Employee Implementation
People don’t want to change?
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 53
Facilitate Employee Implementation People do want to change,
IF given compelling reasons for change
IF there’s something in it for them: More secure future
Better pay or rewards
Less stress and hassle
Less personal risk or fewer injuries
IF they participate in the design of the changes: Set up structured improvement time, e.g., small action teams
Train and apply the appropriate tools for their needs
Remove the obstacles from their success
Routinely solicit, and act on, their ideas for improvement
Show gratitude and appreciation for their contribution
All three IF’s must be addressed, aligning employee interests with corporate interests
“People own what they create” – help them create!
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 54
Stabilize the Changes Update procedures; train people; audit for
compliance; apply succession planning
Assure Management Stability - It’s very difficult to have process stability with frequent management changes
If the change takes longer than executive or organizational “attention span”, then it is doomed to failure.
Constancy of purpose is essential
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 55
Strategy for Implementation
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 56
Strategy for Implementation
Led from the top- executive sponsorship is essential (Permission is not sponsorship, or leadership!
Active engagement is essential)
Production & Maintenance Partnership- Clear goals and expectations must be set, and reasonably achievable
Shared KPI’s for reliability & business results must be in the annual management appraisal and bonus system
Shop floor engagement process, including cross functional teams, structured improvement time, and a support structure
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 57
Implementing Reliability –
Effect on Maintenance Costs (Only)
Implementation
Bow-wave (10-30%)
Break-even
Point
(1-2 years)
Time
Dir
ect
Co
st
of
Main
ten
an
ce
2-5 years
Planned PM
(20-70%)
Reactive
Maintenance
(30-80%)
20-50%
Operator Maintenance
Strive for Zero Downtime
Condition Based
(20-50%)
Proactive/
Planned
50-80%
Source: Taking the Forties Field to 2010, R. L. Thompson, et al.,
BP Exploration, Presented at SPE international Offshore
European Conference, Aberdeen Scotland, Sept. 1993
Profit
Invest
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 58
Manage the Bow-wave using “Mini”
Bow-waves: Small Improvement Teams
Mini-
Bow-waves
Break-even
Point
(1-3 months)
Time
Dir
ect
Co
st
of
Main
ten
an
ce
Profit
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 59
Correlation of AU/OEE with Key Practices
No single practice is dominant
Reacti
ve
M
an
ag
em
en
t
Te
am
wo
rk
Pe
rf. M
sm
t.
Tra
inin
g
Op
era
tio
ns
PM
Pd
M
PA
M
Sto
res
Ove
rha
ul
-0.5
-0.4
-0.3
-0.2
-0.1
0
0.1
0.2
0.3
0.4
0.5
Co
rre
lati
on
Co
eff
icie
nt
We must be tenacious about
doing many things really well
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 60
Engage the entire workforce
0
100
200
300
400
500
1 6 11 16 21 26 31 36 41 46
Busin
ess I
mpact, K
$
Opportunities (> 100)
Sources: 1) David Burns, Reliability Services Ltd. Melbourne, Australia; 2) Similar Results
Reported by Sergio Barreiro of Braskem’s 19 Brazilian Plants
A2 > A1 A1 – Big Opportunities:
Solve using teams applying
RCM, Six Sigma, RCA, KT, etc.
A2- Myriad of Little Opportunities:
Leadership engaging all the workforce,
individually or in very small teams,
applying simple fixes, common sense, 5 Whys
A1 A2
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 61
Eliminating small day to day problems
has a much bigger impact on results than
focusing on the major failures (Study by Los
Alamos National Labs, reported in Spiral Up by Jane Flinder)
Engaged employees are 3X more
productive than average (ISR Research study of 41
companies & 360,000 employees, reported in Spiral Up by Flinder)
Nothing changes until the shop floor
does things differently!
Engage the entire workforce (cont.)
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 62
With all this in mind…
Some 90% of reliability professionals are focused on
making maintenance practices better
So, many launch into:
RCM (but often without Operations’ support)
RCA (when a good dose of 5 Whys & standard work would do)
Six Sigma (before production processes are stable)
Better planning and scheduling (for “un-planable” work)
Developing asset management strategies (that are really just
maintenance strategies re-named to sound better)
Often without eliminating the sources of the defects that
result in the maintenance requirements, e.g., poor design,
poor operation, poor purchasing and parts, etc.
Result: doing more efficiently lots of unnecessary work
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 63
Keeping in mind the reliability process,
are you…
Maintenance and Reliability
Professionals?
Or
Maintenance and Reliability Professionals?
The RM Group, Inc.
Knoxville, TN Copyright 2012 Copyright 2014 64
Appendix - Contact Details Ron Moore
Managing Partner
The RM Group, Inc.
12024 Broadwood Drive
Knoxville, TN 37934
Tel/Fax: 865-675-7647
Email: [email protected]
Ron Moore is the author of Making Common Sense Common Practice-
Models for Operational Excellence, 4th edition; of What Tool? When? A
Management Guide for Selecting the Right Improvement Tools, 2nd edition,
both from MRO-Zone.com; and of Business Fables & Foibles, and Our
Transplant Journey: A Caregiver’s Story, both from Amazon.com, as
well as over 50 journal articles. Ron’s latest book, Where Do We
Start Our Improvement Program? is scheduled for release in
September, 2014.