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During a visit to a factory, world-renowned production systems expert and one of the founders of the Toyota Production System, Shigeo Shingo, objected to a banner in the production area. The banner read, “Eliminate losses.”
Initially, the factory management accompanying Shingo could not understand the reason for the objection, but Shingo later explained why he objected. He stated that in order to eliminate losses, we must first know them, and the correct slogan should be “Find the losses.”
So, how do we find the losses? How big is our iceberg? Along with the problems we see, how many are unseen? Where are our problems?
To find the answers to these questions, we must first measure the effectiveness of our machines accurately. The accuracy of the data we use becomes important for this. The accuracy of our data collection method plays a key role in an accurate effectiveness measurement. This data collection method can be a traditional form-filling method or an advanced technological system like Trex, which has the infrastructure to collect data. Incorrect data measurements will not lead to the right conclusions; they will only waste time and money.
“To eliminate losses, one must first know them.” Shigeo Shingo Trex: A data collection system that allows real-time data collection from the production area and integrates with other ERP systems.
“To eliminate losses, one must first know them.” Shigeo Shingo
Trex: A data collection system that allows real-time data collection from the production area and integrates with other ERP systems.
In the 1960s, Seiichi Nakajima, who also developed the TPM (Total Productive Maintenance) method, created OEE (Overall Equipment Effectiveness), one of the most important performance indicators focused on losses in Japanese management systems. OEE is a mathematical method developed to measure and monitor machine downtimes, performance, and quality losses with a single parameter. OEE shows us how well and effectively we use our machines. This indicator can be tracked for a single machine or for a line or section. OEE, with a clear calculation method, is one of the most widely calculated and used indicators for the same purpose worldwide. With this indicator, companies can:
When the machine usage performance of companies worldwide is measured using the OEE method, the result is around 50%. This means that you are unable to use the remaining 50% of your machines’ available time.
Increasing your OEE rate to 60% through KAIZEN activities to reduce your losses can provide you with a 20% capacity increase without spending any extra money.
The best achievable OEE value is considered to be 85%, and companies that reach this level are referred to as “World Class” manufacturers. Companies at the world-class level aim to meet their capacity needs by improving their OEE performance. This way, they protect themselves from additional investments, increased space usage, additional labor, excess stock, excess energy usage, poor quality, and financing costs.
OEE focuses on reducing losses. It prioritizes losses and ensures that KAIZEN efforts are made in the right areas. While showing the performance of your machine, it also shows what losses contribute to the gap from 100%. The classification of equipment losses that reduce the OEE value is shown in the graphic.
In order for KAIZEN activities to be effective, it is essential that the losses are correctly identified and understood. The shutdown loss is used when calculating TEEP (Total Equipment Effectiveness Performance). The other 7 major losses are clearly shown in the OEE graphs, and after analysis, priorities are set, and KAIZEN activities are planned. Not all of these losses may be present in every business area. Therefore, what we need to know here is how to identify our losses with the right perspective and under the correct loss category. For example, setup and adjustment time, replenishment and refilling time, and machine preparation times (warm-up) are times that are targeted to be reduced to a minimum even if they cannot be completely eliminated. Therefore, they should be considered as unscheduled downtime and included in the OEE calculation.
KAIZEN: The philosophy of continuous improvement, derived from the Japanese words “Kai” meaning “change” and “Zen” meaning “for the better.”