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where (x%) = Target _y% = Actual where (x%) = Target _y% = Actual

Figure 8.8 The value stream and the OEE

(ease of use), maintainability (ease of maintaining), reliability and safety. This includes labour and other operational resources which do not reduce when consumed (in the short term). These resources when released also have the potential to add value and improve competitive capability.

Transformation losses

Energy costs do not vary directly with output. In some businesses, 80 per cent of energy costs are fixed. As a result, such costs can be volume-driven. It is not just a case of switching lights off. Reducing minor stops through improved asset care will reduce energy losses while idling. Leaking air lines, once refurbished, will reduce electricity costs. Tooling care and design can also have a major impact on energy costs.

Maintenance materials also do not vary directly with volume. This is affected by factors such as levels of contamination, stop/start production, corrosion and brittleness as well as training, variation in production methods and, of course, human error. These costs reduce when not consumed.

Material losses

Often equivalent to 50 per cent of sales value, product design, improving process capability and improved working practices can all impact levels of material loss.

Management losses

The remaining value chain losses influencing this cover the company response to customer expectations (see Figure 8.9). For example, if current OEE results in a cost of £2.10 per unit as shown in Figure 8.10, the potential cost per unit at 10 per cent improved OEE is £2.00.

If the additional capacity cannot be sold, management will need to restructure overheads to compete with this achievable unit cost. Labour reduction, even

Drive the business

Necessary company responses

To satisfy/exceed expectations

To satisfy/exceed expectations

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