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Manufacturing Processes—Production and Business: Operational Effectiveness, Part 1

Manufacturing Processes—Production and Business: Operational Effectiveness, Part 1

By Bob Sproull

This is Part 1 of a new series of posts on a subject known in manufacturing as operational effectiveness. Much of what I will be presenting in this series is adapted from my second book, entitled [1] The Ultimate Improvement Cycle – Maximizing Profits Through the Integration of Lean, Six Sigma and the Theory of Constraints.

Are we looking objectively enough at equipment effectiveness?

Throughout my blog posts, a central theme has been optimizing the capacity of the operation that is limiting throughput—the system constraint. One of the keys to optimizing throughput is that the constraint operation can never be left idle. Every minute lost at the constraint is a minute of lost throughput that can never be regained, and revenue and profit losses that can never be recovered.

If your constraint operation involves equipment, the implication is that your equipment is available 100 percent of the time. But is this realistic? Probably not, but it is realistic to expect that your equipment is available most of the time, thus limiting throughput losses. What we are really saying is that we want to maximize effectiveness of the equipment in the constraint operation and in the equipment directly feeding the constraint.

If your constraint operation involves equipment, the implication is that your equipment is available 100 percent of the time. But is this realistic? Probably not, but it is realistic to expect that your equipment is available most of the time, thus limiting throughput losses. What we are really saying is that we want to maximize effectiveness of the equipment in the constraint operation and in the equipment directly feeding the constraint.

To gauge equipment effectiveness, we need one truly objective metric

One way to gauge the consistency of our equipment is by measuring the amount of downtime we experience. But equipment downtime doesn’t tell us the whole story relative to equipment effectiveness, simply because there are reasons unrelated to the equipment that cause downtime. Factors including quality issues or material shortages totally unrelated to our equipment can also cause equipment to stop functioning. And what about the speeds at which our equipment runs? Isn’t speed another vital measure of equipment effectiveness?

What if one single performance metric could tell us how effective our equipment is performing? Fortunately, such a metric is available to us. Overall Equipment Effectiveness (OEE) is a metric that takes into account the availability, speed, and quality of parts being produced.

Overall Equipment Effectiveness (OEE) is the metric, but how do we calculate it?

[2] Nakajima provides the following formula:

Overall Equipment Effectiveness (OEE) = Availability x Performance Rate x Quality Rate

Or

OEE = A x P x Q

As you can see, this single metric ties together the impact of the three important components: availability, speed, and quality.

One of “Six big losses” is always the culprit to limited equipment effectiveness

Equipment effectiveness is limited by what Nakajima refers to as the “six big losses.” These six losses can be fundamentally categorized as follows:

Downtime

  1. Breakdown losses
  2. Setup and adjustment losses

Speed losses

  1. Reduced speed (difference between designed and actual equipment speed)
  2. Idling and minor stoppage losses

Defects

  1. Quality defect and rework losses
  2. Startup (yield) losses

Let’s examine each of these six losses in a bit more detail.

Breakdown losses break down into sporadic or frequent time and quantity losses

There are two types of losses caused by breakdowns: time losses, when productivity is reduced, and quantity losses, caused by defective product. When equipment breaks down, the malfunction is either sporadic or frequent (chronic).

Sporadic breakdowns are typically sudden, dramatic, or unexpected. They are usually obvious and easy to correct through simple problem-solving methods. Typically, sporadic breakdowns are traced back to changes that have occurred such as a broken part or improper setup.

Chronic breakdowns, on the other hand, are eventually ignored or neglected because they remain even after numerous unsuccessful attempts to correct them. So we tend to give up and try to forget about them. Chronic breakdowns require a thorough investigation and inventive corrective action.

Make a zero tolerance pledge

In order to maximize equipment effectiveness, all breakdowns must be attacked and reduced to zero! That’s right, I said zero! It is entirely possible to eliminate losses due to breakdowns by effectively implementing Total Productive Maintenance (TPM), which I will explore in this series. For now, knowing that TPM is available as a course of action, you can be confident in pledging zero tolerance for breakdowns.

Coming in the next post

I began discussing the first of the “six big losses” in this post. In the next post, I will describe the remaining five losses with examples of what they might look like in your facility. Until next time.

Bob Sproull

Post References:

[1] Bob Sproull, The Ultimate Improvement Cycle – Maximizing Profits Through the Integration of Lean, Six Sigma and the Theory of Constraints, CRC Press, Taylor & Francis Group, 2009

[2] Seiichi Nakajima, TPM Development Program – Implementing Total Productive Maintenance, Productivity Press, 1989

Bob Sproull

About the author

Bob Sproull has helped businesses across the manufacturing spectrum improve their operations for more than 40 years.

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