33 Overall equipment effectiveness versus the six big losses

The analogies above illustrate important common-sense dimensions of TPM philosophy. These combine to provide a powerful driver to improve OEE by reducing hidden losses.

In Figure 3.14 the tip of the iceberg represents the direct costs of maintenance. These are obvious and easy to measure because they appear on a budget and, unfortunately, suffer from some random reductions from time to time. This is a little like the overweight person who looks in the mirror, says he needs to lose weight and does so by cutting off his leg. It is a quick way of losing weight, but not a sensible one! Better to slim down at the waist and under the chin and become leaner and fitter as a result.

The indirect costs or lost opportunity costs of ineffective and inadequate maintenance tend to be harder to measure because they are less obvious at first sight - they are the hidden part of the iceberg. Yet they all work against and negate the principles of achieving world-class levels of overall equipment effectiveness.

In our iceberg example, the impact on profitability is in inverse proportion to the ease of measurement. Quite often we find that a 10 per cent reduction in the direct costs of maintenance (a commendable and worthwhile objective) is equivalent to a 1 per cent improvement in the overall effectiveness of equipment, which comes about from attacking the losses that currently lurk below the surface. Sometimes this is correctly referred to as the 'hidden factory' or 'cost of non-conformity'. The tip of the iceberg is about maintenance efficiency; the large part below the surface is about maintenance effectiveness. One is no

Figure 3.14 True cost of manufacturing: seven-eighths hidden

good without the other. Fortunately, the measurement of cost/benefit and value for money are central to the TPM philosophy.

In most manufacturing and process environments these indirect or lost opportunity costs include the following, which we call the six big losses:

• Breakdowns and unplanned plant shutdown losses

• Excessive set-ups, changeovers and adjustments (because 'we are not organized')

• Idling and minor stoppages (not breakdowns, but requiring the attention of the operator)

• Running at reduced speed (because the equipment 'is not quite right')

• Start-up losses (due to breakdowns and minor stoppages before the process stabilizes)

• Quality defects, scrap and rework (because the equipment 'is not quite right')

In Figure 3.15, we show the six big losses and how they impact on equipment effectiveness. The first two categories affect availability; the second two affect performance rate when running; and the final two affect the quality rate of the product. What is certain is that all six losses act against the achievement of a high overall equipment effectiveness.

In promoting the TPM equipment improvement activities you need to establish the OEE as the measure of improvement. The OEE formula is simple but effective:

OEE = availability x performance rate x quality rate

Availability x rate

Performance rate

Quality rate

Availability x rate

Performance rate

Quality rate

Figure 3.15 Six big losses

You will also need to determine your ultimate world-class goal or benchmark on the OEE measure. This should not be an idle dream: rather, it should be realistic, exacting, demanding and better than your competitors. Take each of the three elements in turn and set your ultimate goal. There may be a strong argument for your saying that the performance rate of the plant should be nothing less than 100 per cent, but be realistic. Figure 3.16 shows an example

0 0

Post a comment