The six biggest losses in manufacturing

losses

Manufacturing is becoming more competitive than ever, with previously huge margins steadily decreasing and today’s manufacturing businesses having to closely analyse their losses to try and remove them. Being able to identify what is referred to as the six big losses will provide businesses with an equipment-based perspective on lost production time that they can use as part of their improvement program.  

Some manufacturers have implemented programs like Total Productive Maintenance (TPM) and focused on improving Overall Equipment Effectiveness (OEE) with the aim of streamlining manufacturing processes and increasing output. 

While TPM is an equipment maintenance model that aims to achieve perfect production with no breakdowns, slow running or any other machine related problem that affects throughput. OEE is a metric that measures how well the machine is being utilised, otherwise known as uptime, the speed of the machine and the quality of the production. 

In the past, due to legacy Operational Technology (OT) systems, manufacturers had no clear visibility into the manufacturing process and could not always tell where equipment bottlenecks were. OEE supports TPM based initiatives by measuring progress towards the nirvana of perfect production and one of the most effective ways of improving OEE is to identify the six big losses. 

1. Equipment failure 

Equipment defects and failures result in downtime, financial impact, inventory discrepancies and poor quality-control. This situation can occur for several reasons and can be because of unplanned downtime, no available operators and a lack of raw materials.  

When equipment is scheduled for production but is not running for any significant period due to a failure of some sort, it is categorised as equipment failure and is an availability loss. A simpler way to think of equipment failure is as any unplanned stop or downtime. 

Typical reasons for equipment failure include tooling failure, breakdowns and unplanned maintenance. From the broader perspective of unplanned stops, other common reasons include no operators or materials, being starved by upstream equipment or being blocked by downstream equipment. 

2. Setup and adjustments  

As the name suggests this refers to when equipment is scheduled for production but is not running due to a changeover or other equipment adjustments. A more universal way to classify it is as a planned stop and is regarded as an availability loss. 

Examples of common reasons for setup and adjustments include setup, changeovers, major adjustments and tooling adjustments. From the general standpoint of planned stops, other regular reasons include cleaning, warmup time, planned maintenance and quality inspections. 

3. Idling and minor stops 

Idling and minor stops represents time where the equipment stops for a short period of time, typically a minute or two and can usually be resolved by the machine operator. An alternative term for idling and minor stops is small stops and it is regarded as a performance loss. 

Standard reasons for idling and minor stops include misfeeds, material jams, obstructed product flow, incorrect settings, misaligned or blocked sensors, equipment design issues and periodic quick cleaning. 

This category usually includes stops that are well under five minutes and that do not require maintenance teams to intervene, so most companies do not accurately track idling and minor stops. The fundamental issues can ultimately have a damaging result, but because of the small duration of the stops, there is ambivalence as to their impact.  

4. Reduced speed 

Reduced speed accounts for time where equipment runs slower than the ideal cycle time (the theoretical fastest possible time to manufacture one part). Another name for reduced speed is slow cycles and it is regarded as a performance loss. 

Examples of common reasons for reduced speed include dirty or worn-out equipment, poor lubrication, substandard materials, poor environmental conditions, operator inexperience, start-up and shutdown. 

This category includes anything that keeps the process from running at its theoretical maximum speed, or the ideal run rate or nameplate capacity, when the manufacturing process is running. 

5. Process defects 

Process defects account for defective parts produced during stable, steady state production. This includes scrapped parts as well as parts that can be reworked, since OEE measures quality from a first pass yield perspective. Process defects are a quality loss. 

Examples of common reasons for process defects include incorrect equipment settings, operator or equipment handling errors, and lot expiration, for example in pharmaceutical production. 

6. Reduced yield 

Reduced yield accounts for defective parts produced from start-up until stable, steady state production is reached. This includes scrapped parts as well as parts that can be reworked, since OEE measures quality from a first pass yield perspective. Reduced yield can occur after any equipment start-up; however, it is commonly tracked after changeovers. Reduced yield is a quality loss. 

Examples of common reasons for reduced yield include suboptimal changeovers, incorrect settings when a new part is run, equipment that needs warmup cycles, or equipment that inherently creates waste after start-up, for example a web press. 

The role of MOM in reducing these losses 

Now manufacturers have a single source of data and in turn, full visibility of production using a Manufacturing Operations Management (MOM) system. 

While MOM may seem like the obvious next step for manufacturers to optimise operations, many have been reluctant to move away from their traditional legacy systems. The reality is that the industry has reached an inflection point, where digital transformation and the need to fast track to a smarter digital factory is vital to remain competitive in the coming months.  

Manufacturers should ideally consider a MOM solution that adheres to world-class manufacturing standards and is importantly fully integrated into their ERP, to leverage a single platform to monitor and improve factory performance. This will transform how an organisation manages people, equipment and processes to drive better business performance and strategic outcomes.

By Rob Stummer, Asia Pacific CEO at SYSPRO

Register now for the live webinar on Wednesday 15th September at 3pm AEST on Digitising your factory and improving productivity with Manufacturing Operations Management.

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