Six Sigma Green Belt Demo Presentation

16 Big Losses Manufacturing and Services1The School of Continuous Improvement

(c) The School of Continuous Improvement 16 Big Losses v1.0

Lean Six Sigma Green Belt Training and Certification1

ForewordThis presentation on 16 Big Losses has been prepared by C. Vishwanathan with reference to original literature from TPM (Total Productive Maintenance).

Any reference to any companies is purely coincidental, with the purpose of illustration only. To protect confidentiality, company names are masked.

This module should be used only for purposes of learning and implementation. Selling this module/ re-selling/ reproducing in any form is punishable.(c) The School of Continuous Improvement 16 Big Losses v1.02

What is 16 Big Losses?Toyota follows a strict protocol in their operating systems known as Total Productive Maintenance. As per Total Productive Maintenance, factors that combine to impact productivity in an organization are tagged under 16 various points. These are known as 16 Big Losses.

Names of these losses could be different in organizations, but broadly you would find these categories existing in any organization.

These 16 losses add up to produce a negative impact on productivity and quality of the products produced by the organization.

Although TPM has strict manufacturing contexts, a variant of TPM known as TSM (Total Service Management) has been introduced in this module.

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16 Big Losses The Big 3(c) The School of Continuous Improvement 16 Big Losses v1.0416 Big LossesLabour effectiveness lossesResource consumption lossesEquipment losses

Labour Effectiveness Losses(c) The School of Continuous Improvement 16 Big Losses v1.05Labour Effectiveness LossesManagement lossLine Organization LossInternal Logistics LossMotion LossMeasurement and adjustment loss

Labour Effectiveness Losses (c) The School of Continuous Improvement 16 Big Losses v1.06Management Loss in Manufacturing

MeetingSetting up reportsReportingWaiting for materialsWaiting for instructionsManagement Loss in Services

Team meetingsQuality Assurance FeedbackDelay in On the Job trainingDelay in moving associate to operational role from training (Learning curve)Management loss highlights the productive hours lost by an organization due to waiting for instructions and materials.

Labour Effectiveness Losses (c) The School of Continuous Improvement 16 Big Losses v1.07Motion Loss in Manufacturing

Equipment shutdownEquipment maintenanceInadequate calibration of equipmentSlow machinesIncorrect maintenance procedure/ Inadequate maintenance staffMotion Loss in Services

IT DowntimeLack of SOPs/ Inaccurate adherence to SOPs/ Uncontrolled SOPs

Motion loss highlights the productive hours lost by an organization due to equipment performance, methods and procedures and skill gaps.

Labour Effectiveness Losses (c) The School of Continuous Improvement 16 Big Losses v1.08Line Organization Loss in Manufacturing

Manual data collection for reportsLack of automated downtime/ defect flagging mechanismOffline training for operators

Motion Loss in Services

Data entryCumbersome procedures to capture information flowHigh training time

Line organization loss highlights the productive hours lost by an organization due to lack of automation/ failure to automate and poor organizational practices.

Labour Effectiveness Losses (c) The School of Continuous Improvement 16 Big Losses v1.09Internal Logistics Loss in Manufacturing

Wasteful movement of goods in the factoryWasteful work in progress inventoryUnnecessary forklift movementWaste due to excessive container/ pack sizesInternal Logistics Loss in Services

Unnecessary information flowResources moving from one place to another seeking approvalsTransactions moving from one place to another in form of departmental hand-offs.

Internal Logistics loss highlights the productive hours lost by an organization due to inefficient methods of movement of material through the organization.

Labour Effectiveness Losses (c) The School of Continuous Improvement 16 Big Losses v1.010Measurement and adjustment Loss in Manufacturing

Inaccurate and not precise measurement systemsData recording errorsBad calibration of measurement systems.Excessive inspectionMeasurement and adjustment loss in Services

Lack of reports.Data entry errors.Insufficient capture of information by existing reports.

Measurement and adjustment loss highlights the productive hours lost by an organization due to frequent measurement and adjustment done by the organization.

Labour Effectiveness An ExampleTotal shift time = 540 minutes Working HoursMeeting times + Lunch Breaks = 90 minutes Operating hoursIdle time + Waiting time = 60 minutes Net working hours = 540 minutes 90 minutes 60 minutes = 390 minutesLogistics + People movement time = 10 minutesEffective working hours = 390 minutes 10 minutes = 380 minutesMeasurement errors adjustment = 20 minutesValue added production hours = 380 minutes 20 minutes = 360 minutes

Labour effectiveness = 360 minutes/ 540 minutes = 66.67% or 360 minutes/ 480 minutes = 75%.

Thus, the organization loses approximately 33% of its time due to ineffectiveness in the way how its workforce operates.

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Resource consumption losses(c) The School of Continuous Improvement 16 Big Losses v1.012Resource consumption lossesEnergy lossConsumables lossYield Loss

Resource consumption losses (c) The School of Continuous Improvement 16 Big Losses v1.013Resource Consumption Loss in Manufacturing

Startup heating of furnace to reach ambient temperature.Thermal dissipation as a natural propertyOverloading of equipment causing breakdown/ energy lossEnergy Loss in Services

Loss due to accumulation of files in server space resulting in slow working of systems.Overtime in organizations resulting in intellectual burnouts in resources.Energy loss highlights the productive hours lost by an organization due to startup, overload or any other mechanical characteristics of an equipment.

Resource consumption losses (c) The School of Continuous Improvement 16 Big Losses v1.014Consumable Loss in Manufacturing

Cost of spare partsCost of producing spare partsCost of replacing spare partsConsumable Loss in Services

Cost of bad attritionCost of training associatesCost of IT systems maintenanceConsumable loss highlights the cost incurred by the organization by consumption of spare parts as part of the endeavour to keep machines running.

Resource consumption losses (c) The School of Continuous Improvement 16 Big Losses v1.015Yield Loss in Manufacturing

Loss due to over-packingLoss due to in-progress scrapLoss due to inefficient methods of dealing with materialYield Loss in Services

Inefficient people performance as against benchmarked performance.Inefficient system performance as against designYield loss is the loss in dollars due to difference in input provided to the production line and the output of the finished goods.

Resource Consumption Loss An exampleStandard cost of operations is $10 per unit.Furnace heated for 15 minutes extra - $3 per unit.Thermal dissipation losses - $1 per unit.Cost of spare parts - $9 per unit.Bad quality loss - $3 per unit.Revised cost of operations - $26 per unit

As you can see, the resource consumption losses often contribute to increase the cost incurred by the operations to make the product. This is by far spoken about as the Hidden component to calculating cost of operations. Not a lot of factories pay attention to resource consumption loss.

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Equipment Losses(c) The School of Continuous Improvement 16 Big Losses v1.017Labour Effectiveness LossesBreakdown lossCutting Blade replacement lossDefect and Rework lossSetup and adjustment lossStartup lossIdling and minor stoppages lossShutdown lossSpeed reduction loss

Equipment Losses (c) The School of Continuous Improvement 16 Big Losses v1.018Breakdown Loss in Manufacturing

Electrical faultFailure causing machine to be stopped completelyPneumatic failuresBreakdown Loss in Services

CRM systems downtime or failurePower shutdown impacting working on the systemsBreakdown loss is the loss of time in hours due to equipment shutdown/ systems shutdown, resulting in complete failure of operations.

Equipment Losses (c) The School of Continuous Improvement 16 Big Losses v1.019Setup Loss in Manufacturing

Changing packagingDie and Knife changesFeeder Belt rate changes

Setup Loss in Services

CRM systems downtime or failurePower shutdown impacting working on the systemsSetup or adjustment loss is the loss due to changeover of products which results in changing the machine settings to make it ready for the next production run.

Equipment Losses (c) The School of Continuous Improvement 16 Big Losses v1.020Cutting Blade Replacement Loss in Manufacturing

Machine components wear out

Cutting Blade Replacement Loss in Services

Replacing old IT systems.

Cutting blade replacement loss is the time loss incurred by the company when a worn out component from the machine is replaced

Equipment Losses (c) The School of Continuous Improvement 16 Big Losses v1.021Start-up Loss in Manufacturing

Start of the day machine setup

Start-up Loss in Services

Preparing a new trainee for production after training.

Start-up loss is the time loss incurred by the organization needed to setup their equipment to a steady state so that manufacturing commences.

Equipment Losses (c) The School of Continuous Improvement 16 Big Losses v1.022Idling Loss in Manufacturing

Machine indexingMould emptyingSensor faults

Idling Loss in Services

Feedback sessions with Quality DepartmentSystem stoppages for less than 5 minutes fixed usually by rebooting or restarting.

Idling loss is the time loss incurred by the organization due to minor stoppages to work due to certain machine faults/ service breaks etc.

Equipment Losses (c) The School of Continuous Improvement 16 Big Losses v1.023Speed reduction Loss in Manufacturing

Poor quality beltsLack of maintenance of machine components

Speed reduction Loss in Services

Low rate of procurement.Increased turnaround time for processing a transaction.

Speed reduction loss is the production capacity loss incurred due to machines running less than their design speeds.

Equipment Losses (c) The School of Continuous Improvement 16 Big Losses v1.024Defect and Rework Loss in Manufacturing

Out of specifications productsPoor surface finishIncorrect labeling

Defect and Rework Loss in Services

Transactions not meeting customer requirements.Errors in transactionsMultiple work needed on same transactions.Transactions looping back and forth in the value stream.

Defect and Rework loss is the production capacity loss due to products that are made either out of specifications or products that needed rework.

Equipment Losses (c) The School of Continuous Improvement 16 Big Losses v1.025Shutdown Loss in Manufacturing

Preventive maintenance schedulesOiling periodsPeriodic overhaul of machinesShutdown Loss in Services

Townhall meetings for all employeesComplete system shutdown due to network failuresShutdown loss is the loss of production time by completely shutting the equipment down to carry out periodic maintenance activities.

Equipment Losses - Clarification(c) The School of Continuous Improvement 16 Big Losses v1.026There is a very fine line of difference between Breakdown and Shutdown loss and this needs to be understood clearly.

Shutdown loss happens as a planned activity, whereas Breakdown loss doesnt happen due to planned activities.

Most of the times, factories plan their production targets around Shutdown losses. Example, if a factory invests 4 hours in a week as preventive maintenance schedules, these 4 hours will contribute to shutdown losses, but in essence, may consider beneficial for the factory.

Eliminating these losses should never be the target as factories may face one or the other issues. What every organization must do is to try and reduce these losses.

16 Big Losses A Summary(c) The School of Continuous Improvement 16 Big Losses v1.027Every organization should decide to collate losses measured under each of the categories discussed here.

Reports should be collected. For bits of data that are not available, a manual data collection mechanism should be set forth.

An organization should consider all modes of failure that have and can impact the organization in the future.

Each of these losses will have a contributing root cause. The organization must use tools like 5 WHY Analysis with Cause and Effect Diagrams to simplistically arrive at the root cause.