Setup and adjustment loss is defined as the time from the end of production of the current product to the completion of the first defect-free (good) piece of the next different product, which includes changeover, adjustments, and trial processing.

A definition of "setup" in the dictionary is "arranging procedures in advance so that things go smoothly." In other words, improving setup loss means thinking about work procedures so that necessary items are prepared in advance and operations can be performed accurately and quickly in order to reduce these times.

On the shop floor, the trend toward smaller production lots to reduce inventory and shorten lead times will likely continue. As a result, an increase in the number of changeovers is inevitable. Therefore, reducing setup time is an unavoidable challenge.

There are two main ways to reduce setup time: one is "reducing the number of setups," and the other is "reducing the time per setup." As mentioned earlier, reducing the number of setups is difficult given current market trends, so naturally, "reducing the time per setup" will increasingly be essential on the shop floor.

Step-by-Step Deployment of Setup Improvement

Here, we will explain the basic procedures, methods, and points of focus for setup improvement in accordance with the improvement steps (see figure below)

Step 1: Grasping the Current Situation

(1) Selecting the Target for Improvement

➀ Identifying the Setup Bottleneck Equipment

If the target line for setup improvement has multiple pieces of equipment that each require setup work, no results will be achieved unless the equipment that takes the most time and creates a bottleneck is targeted. Therefore, we investigate how setup work is performed on each piece of equipment to find the bottleneck equipment.

Setup work falls into the following two patterns:

• i) One person (or the whole team) performs setup work on multiple pieces of equipment sequentially.
• ii) Dividing the personnel to perform setup work on multiple pieces of equipment simultaneously.

In the case of i), it is a continuous setup operation, so there is no need to look for bottleneck equipment. Setup improvement is initiated targeting the entire continuous operation. In the pattern of ii), it is necessary to investigate which equipment's setup work is taking the most time and causing a bottleneck. 

② Understanding Setup Patterns

If the required actions, such as parts replacement or adjustment items, vary significantly depending on the combination of product models before and after the setup, we analyze the setup patterns and target the most frequent ones for improvement.

(2) Setting Improvement Targets

The changeover itself is a loss that produces no added value. To thoroughly eliminate loss, halfway goals will not inspire innovative ideas. Therefore, we set "Single-Minute Exchange of Die (SMED) / Single-digit setup" as the goal.

"Single-digit setup" means completing the setup time in a single-digit number of minutes, referring to "setup in less than 10 minutes." Here, depending on the content and time of setups at your shopfloor, let's aim for single digits if it takes 10 minutes or more, and aim for 81 seconds if it takes less than 10 minutes.

However, since it is unrealistic to immediately reduce setup time to 10 minutes, let's aim to cut it in half. First, we will cut the current setup time in half. Then, in the next phase, we halve it again--continuing this step-by-step approach until we finally achieve a single-minute setup through repetitive improvement. 

Even if the current changeover takes one hour, repeating the halving process three times can bring it down to a single-digit setup of under 10 minutes (60 minutes → 30 minutes → 15 minutes → 7.5 minutes). 

Once a specific goal is set, we will then brainstorm improvement ideas on what needs to be done to achieve it.

Step 2: Analyzing Setup Work

(1) Investigating Setup Work

To investigate setup time, measure the time required for each step of the operator's work and use a table to visualize and organize the work content.

If a single procedure takes a long time, break it down further into elemental operations to grasp the work content in finer detail. In such cases, we recommend video recording the setup work. Video enables us to check repeatedly, analyze details through slow-motion and frame-by-frame playback, and is also convenient when considering improvement ideas as a team. 

If multiple people perform the setup, it is necessary to grasp the setup work of each individual.

(2) Creating a Flow Line Diagram

A flow line diagram graphically or systematically describes the sequence and positional relationship of the flow of movement from the start to the end of the operation, serving as a tool for discovering waste (Muda) (see figure below)

Here, corresponding to the work procedure numbers (No.) investigated in the setup investigation table, plot where each task is being performed on a floor plan layout, and connect these tasks along the line of movement in a single continuous stroke to examine the path of movement

When you actually draw it, you can discover Muda in movement that are hard to read from the setup investigation table alone, such as going far to fetch items, crossing lines of movement, or making multiple round trips to the same location. It is also effective for gaining inspiration for improvement ideas when combining multi-person tasks or improving layouts.

(3) Dividing Work Content by Setup Classification

To extract improvement issues from the investigated setup work, classify the work content into three categories: "Waste (Muda)," "Internal Setup," and "External Setup" (see figure below).

➀ Finding Muda in Current Work Content

First, let's find Muda in the work content. The key is to focus on the "Muda of searching" and the "Muda of movement and transportation." The Muda of searching is the time spent looking for jigs, tools, parts, condition charts, etc., to prepare during the changeover work. It is Muda because this work is an unnecessary task.

The Muda of movement and transportation occurs in cases such as:

• alongside the Muda of searching

• when transporting jigs, tools, and parts

• during replacement and adjustment work

Check each individual work item in the setup investigation table and flow line diagram. Muda operations discovered here will be thoroughly eliminated in Step 3.

② Dividing Current Work Content into Internal Setup and External Setup

Next, divide the remaining work content into internal setup and external setup. Setup work includes internal setup, which is performed while the equipment or line is stopped (e.g., exchanging jigs/tools, centering/alignment), and external setup, which is performed without stopping the equipment or line (e.g., preparing tools, providing a place to put removed items, preparing stands, partial assembly work, preheating, and other tasks that can be done in advance). 

If shortening line downtime is the top priority, reducing the time for internal setup within the overall setup time will shorten the setup time itself. To achieve this, we must first consider shifting as much of the current internal setup work to external setup as possible. Therefore, current tasks must be clearly separated into internal and external setups.

(4) Dividing Work Content by Work Categories

Further stratifying the setup work content divides it into the following three work categories:

• ➀ Preparation and Cleanup Work
• ② Replacement Work
• ③ Adjustment Work

➀ includes preparation work, cleanup/cleaning work, and various Muda operations noticed during observation in the setup work. ② collects removal and installation work, such as the replacement of dies, jigs, tools, and products. ③ collects alignment, baseline setting, inspection, trial processing, and adjustment work.

The key point here is that even if trial processing or inspection is deemed necessary once, any subsequent occurrences are judged as Muda. Once the setup work content is divided into the three work categories, create a matrix with the setup classifications and summarize the results.

Step 3: Elimination of Muda

In this step, improvements are made regarding the Muda operations discovered in the setup work investigation of Step 2. In particular, we focus on the Muda of searching and the Muda of movement/transportation, which can be eliminated immediately. When making improvements, ECRS serves as a principle for considering improvement ideas.

• E (Eliminate): Can we eliminate it?

• C (Combine): Can we combine it?
• R (Rearrange): Can we rearrange it?
• S (Simplify): Can we simplify it?

When brainstorming ideas for setup improvement, thinking based on this ECRS framework is key, and since it will be utilized in each step, please keep it in mind.

(1) Thoroughly Eliminating Muda of Work

First, for the Muda operations discovered during the changeover investigation, consider improvement ideas from the perspective of "E = Can we eliminate it? (Eliminate)," aiming for thorough elimination (see figure below)

➀ Eliminating the Muda of Searching

The basic concept for eliminating the "Muda of searching" is the "thorough implementation of 2S, 3-Tei (3T), and Visual labeling."

2S stands for "Seiri/Sort (separating what is needed from what is not)" and "Seiton/Set in Order (keeping things in a state that is easy to maintain)," and their strict enforcement is essential. When implementing 2S, the key is to consider and prepare for the following:

• What tasks need to be prepared?
• What jigs and tools are needed?
• What workbenches are needed?
• Where should removed jigs and molds/dies be placed?
• What types and quantities of parts are required?

Next, 3-Tei (3T) stands for Fixed Location (Teii), Fixed Item (Teihin), and Fixed Quantity (Teiryo), which means establishing strict rules regarding how and where items used in setups are placed, ensuring fixed-quantity and fixed-location management. Then, use visual labels so that anyone can understand what the item is

Through 2S, 3-Tei, and Visual labeling, it is crucial to thoroughly create an environment around you that facilitates easy setup work.

② Eliminating the Muda of Movement and Transportation

The Muda of movement and transportation is often paired with the Muda of searching, so by eliminating the Muda of searching, you have likely reduced this to some extent. Rather than moving and transporting jigs, tools, and parts each time, one strategy is to create a dedicated setup cart so that they can be transported in a single trip.

For the Muda of movement and transportation that occurs during replacement and adjustment work, it is advised to review the arrangement of work and items from the perspective of how to enable operations within 5 steps of the equipment once the setup begins.

However, in the case of large equipment or in-line equipment, the time required to walk around them inevitably increases. In such cases, we recommend dividing the setup work among multiple people. Simply put, if two people share the work, the operation time is cut in half.

*In case you have questions/comments to JMAC or the author of this article, please contact us through the inquiry form. Click here to ask JMAC!

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●Author profile

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

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Konica Minolta Technoproduct Co., Ltd.

#Production, Manufacturing, and Quality

#Digital Transformation (DX) and Digital Initiatives

2020.10.27

Konica Minolta Technoproduct successfully utilizes IoT and digital tools for loss prevention in their TPM activities. What are the key success factors? They lie in the "fusion of digital and analog." Let's look at their approach.

Challenges and Missions

01. Inventory and analyze tasks

02. Thoroughly reduce energy loss

03. Eliminate waste and create new value

04. Promote "Ideal Automation"

Achieving our vision--"A Profitable Company! Become the world's No. 1 healthcare manufacturing plant"-- requires a workplace environment where every employee can unleash their creativity and work with energy. Loss reduction through TPM is essential for promoting workstyle reform.

Profit Contribution through Administrative and Office TPM

TPM (Total Productive Maintenance) is a company-wide activity to eliminate and prevent all losses that hinder profit. This company defines TPM as "Total Production Management" to place it at the core of their management strategy. IoT and digital technologies significantly help reduce work hours and "visualize" losses to improve production efficiency. With many affordable digital tools now available, many companies are exploring how to integrate them into improvement activities like TPM.

The key is to have a clear purpose--how to use technology for specific challenges--rather than promoting digitalization by mandate. This mindset significantly influences the progress of TPM. "The goal is to use the time saved through loss reduction for tasks that create new value. Digital tools are partners that help eliminate losses," says Satoshi Honda, Director of the Production Engineering Department.

Front row (left): Satoshi Honda, Director, Production Engineering Dept.; (right): Masami Hasegawa, Manager, Corporate Planning Office, Back row (left): Nobuaki Masumo, Assistant Manager, 3rd Technical Group, Production Engineering Dept.; (center): Teruo Yamada, 3rd Technical Group; (right): Yasushi Imaizumi, Group Leader, 3rd Technical Group

Konica Minolta Technoproduct has effectively introduced digital tools as part of their "developing people" initiative. More importantly, their true goal is to realize the management policy: "Commit to No. 1, develop vibrant talent, and create a workplace where individuals shine." For them, it is never about just using IoT technologies by mandate.

In 2013, the TPM initiative kicked off amid the transition from manual assembly to equipment-based production, while the digitalization of medical devices was accelerating. This company-wide rollout aimed to establish loss-prevention mechanisms and foster an inclusive environment where every employee could easily participate. By promoting TPM simultaneously on the production floor and in administrative departments, Konica Minolta Technoproduct built powerful momentum for collective transformation.

The goal of Office TPM was to strengthen the management foundation by enhancing the information and services provided to the production floor. "I believed that Office TPM held great value and could significantly contribute to the company's profitability," says Masami Hasegawa, Manager of the Corporate Planning Office.

Unlocking RPA Success through Preliminary "Makigami Analysis"

Makigami Analysis = A visual improvement method designed to reduce man-hours and streamline workflows by mapping end-to-end processes on a long roll of paper. By visualizing hidden losses--such as bottlenecks and redundant tasks--it serves as a critical foundation for Digital Transformation (DX). This "process-first" approach ensures that only optimized workflows are digitized, maximizing the ROI of RPA and other digital tools.

A prime example of Office TPM is 'Makigami Analysis.' Circles were formed within departments--such as HR and Accounting--to systematically document tasks and man-hours. The teams organized actual forms and feedback from various members onto large sheets of paper. This process "visualized" wasted effort and information gaps that hadn't been shared even among team members, clarifying which losses to eliminate and how to optimize workflows.

Meanwhile, in 2017, the Konica Minolta Group established a policy to utilize RPA (Robotic Process Automation) as a key tool for its "Work-style Reform" initiative. The fundamental goal of RPA was to eliminate the 'dependency risk' of over-relying on individual experience and to overhaul time-consuming, low-value-added tasks. By doing so, we aimed to reallocate the newly created time to the core tasks where it truly belongs.　(Mr. Honda)

At this stage, Konica Minolta Technoproduct benefited from the fact that their TPM Makigami Analysis had already identified workflows targeted for waste reduction. "The successful integration of the advancing wave of digitalization with the analog approach of Makigami Analysis allowed us to achieve truly significant results." (Mr. Honda)

Beyond merely providing internal training and workshops, the company promoted autonomous implementation, where members in each department discussed and decided how to best utilize RPA themselves. As a result, they established a direction for "Ideal Automation" with a clear sense of purpose, rather than treating it as a mere automation by mandate. Many employees feel that it was precisely the steady TPM Makigami Analysis that allowed RPA to yield such significant gains in productivity.

Let's look at a specific case study from the Accounting Group. First, they defined three core objectives for their "Ideal State":

1) minimizing time spent on data creation

2) ensuring necessary information is automatically shared with stakeholders

3) focusing on the analytical tasks that accounting should inherently perform

An inventory of business man-hours revealed that the most time-consuming task was the creation of "P&L Statements by SBU (Strategic Business Unit)."

Workflows were re-examined to identify specific challenges, followed by an analysis of which tasks required human judgment versus those that could be streamlined through RPA.

As a result, a task that previously required eight hours per month was reduced to just one hour, resulting in an annual saving of 84 hours. This improvement enabled faster reporting and allowed the team to devote more time to high-value tasks, such as further analysis. Furthermore, the standardization of the process ensured that the work could be handled by any team member, reducing dependency on specific individuals.

To further focus on analytical tasks--one of the core objectives for the Accounting Department's "Ideal State"--the department introduced Tableau, a BI (Business Intelligence) tool that enables quick and easy data analysis and visualization. This allowed for multi-faceted "visualization" of manufacturing costs, eliminating manual graph creation across various departments and making data sharing faster and easier. This initiative alone has resulted in an additional reduction of four hours per month, totaling 48 hours annually.

As the driving force behind the Accounting Group's TPM activities, Ms. Yoshie Oshima (Administration Department) shares the process behind these results.

Revitalizing stalled Energy-Saving measures

Uncovering hidden losses through IoT integration

Real-time power usage visualization through the BI tool exposed inefficiencies that were once hidden.

Digitalization also successfully revitalized energy-saving efforts. While Konica Minolta Technoproduct had long implemented standard initiatives -such as installing energy-efficient equipment and shutting down production lines during holidays--, they felt that visible results had stalled in recent years.

As a new approach, the company installed IoT sensors in cleanrooms and air conditioning units to collect data and gain a clear understanding of their operational status. This gathered data was then visualized using "Tableau"--as with their other initiatives--to analyze and identify any potential losses.

As a result, power consumption in the production process and the effects of energy-saving measures--which were previously unknown--could now be captured in real-time. For example, it was discovered that cooling and dehumidification were being performed within the cleanrooms even during the winter, allowing the team to implement measures to eliminate this waste. Despite the belief that every possible energy-saving step had been taken, air conditioning power consumption in the cleanrooms was reduced by approximately 30%. This objective data brought unnoticed "assumptions" to light.

These substantial achievements fostered a mindset that "there is still room for further energy-saving measures". This mindset has reinforced the promotion of energy conservation and boosted employee motivation.

By analyzing the power usage status of the cleanrooms, the company achieved further energy savings.

Advancing "Talent (Asset) Empowerment" through TPM and IoT

The "No. 1" Declaration

By leveraging each individual's unique "No. 1" strengths, Konica Minolta Technoproduct tackles problem-solving with confidence. These achievements in process improvement have earned high acclaim at various internal and external Kaizen Competitions.

The FY2019 management policy outlines the "strengthening of production engineering capabilities" through promoting digital manufacturing, the "efficiency improvement of indirect operations" through utilizing IT tools such as RPA, and "Talent (Asset) empowerment" through promoting "No. 1 Manufacturing."

"No. 1 represents the individual strengths of each member. Some humble people say they don't have any, but they can be No. 1 by combining three of thier own strengths. These strengths create value through problem-solving, which resonates with Konica Minolta's management philosophy: 'The Creation of New Value'." (Mr. Hasegawa)

However, instilling a shared vision across the entire workforce is a long-term journey rather than a quick fix. To this end, the company established a year-by-year roadmap starting in 2018 to drive the 'No. 1' initiative. While 2018 served as the awareness phase, 2019 was designated as the year to understand 'Committing to No. 1' as a way to embody the management philosophy, 'The Creation of New Value,' with each employee making their own 'No. 1 Declaration'. For 2020, the goal is to move toward the stage of application (demonstrating No. 1), action, and internalization.

On the other hand, to improve labor productivity, it is essential for every employee to keep up with changes and continue delivering results. To achieve this, the company focuses not only on providing education but also on supporting those who invest in themselves and take on the challenge of self-transformation. Specifically, a self-improvement support program was established for both staff and management, with the company subsidizing the majority of expenses such as seminar fees.

"Each member makes a self-declaration regarding the area in which they aim to be No. 1 and the kind of person they want to become. We are creating the ground for everyone to invest in their own growth. The collective power of these empowered individuals makes the company realize No.1."  (Mr. Hasegawa)

In 2019, Work-style Reform made steady progress through the establishment of an hourly paid leave system and an increase in the number of annual holidays. Starting from FY2020, the number of annual holidays will increase from the previous 120 days to 125 days.

The driving force behind "Talent (Asset) Empowerment" was the elimination of loss and the generation of time through TPM initiatives. The fact that improvement cases are recognized and awarded at both internal and external conferences has directly contributed to boosting employee motivation.

However, as long as manufacturing operations are ongoing, the battle against loss never truly ends. Konica Minolta Technoproduct will continue its commitment to problem-solving through TPM.

Reprinted from Business Insights Vol.72.

Company names, job titles, and other details are current as of the time of the interview.

JMAC Consultant's Insight:

Digitalization without Purpose is Meaningless

While cost-effective digital tools are more accessible than ever, the focus should never be on "introduction" alone. Instead, it is crucial to rigorously evaluate how to utilize these tools to achieve specific objectives. From this perspective, the initiatives at Konica Minolta Technoproduct serve as an excellent benchmark. They successfully reduced losses not only on the production floor but also across administrative departments. By reallocating talent to high-value, creative tasks and stabilizing their production system through thorough standardization, they have demonstrated the true power of purpose-driven digital transformation.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

Principle-Based Approach: Restoring Manufacturing Excellence through Smart Data Management.

The global manufacturing industry stands at a historical turning point. We face a combination of major challenges: serious labour shortages, the fundamental restructuring of global supply chains, and the crucial need for Green Transformation (GX). In our quest for the next horizon of growth, 'Digital' is everywhere. Yet, as we embark upon 2026, JMAC--having walked the factory floors and shared the sweat of transformation alongside our clients--proposes a stronger, focused resolve.

1. The Philosophy of the Lowercase 'd'

Digital technology has matured; Generative AI is now a key element in our toolkit. However, technology alone is ineffective if the underlying organisational structure remains stuck. In April 2025, JMAC established the 'dX Consulting Business Division'. We intentionally retain the lowercase 'd'. It signifies our strong belief that 'Digital' is merely a catalyst; the true main players are the deeply rooted traditions and the human will to 'Transform' (X). We prioritise the 'Transformation' over the 'Digital'.

2. Data Can Be Poison or Power: Stop Creating 'Digital Waste'.

The pursuit of 'Data-Driven Management' via Big Data and AI agents is often praised as a corporate 'Moonshot'. Many manufacturers are currently racing to become 'AI-Ready'. Whilst this promises accelerated decision-making, it presents a silent, harmful risk: the accumulation of 'Digital Industrial Waste'. Without a sophisticated exit strategy, companies are merely piling up unorganised data debris.

3. The Burden of Data Debris: A Financial Forecast

Research indicates an alarming trajectory. In 2005, data management costs accounted for roughly 10-15% of IT budgets. By 2025, this has increased dramatically twelvefold. If this uncoordinated accumulation continues, by 2030, maintaining legacy data could consume over 50% of IT expenditure. There is an unfavourable scenario where 'defensive costs'--the mere preservation of useless information--*cannibalize the 'offensive investment' required for future innovation. 

4. The Smart Data Management: Trimming the Digital Fat

Unused data is not merely a financial liability; an impact to the environment. The energy consumption of data centres makes inactive/ineffective data a 'Carbon Debt' that threatens ESG ratings. The manufacturers of tomorrow require not just the technology of collection, but the discipline of smart data management.

We advocate for:

●      Identifying and Eliminating Inactive Data: Defining and eliminating information that has remained untouched for over a year and holds no value for AI training. 

●      Lean Life-cycle Management: Ensuring data storage remains efficient/effective  through rigorous rules from creation to disposal.

●       Purpose-Driven Acquisition: Architecting data strategies backwards from the desired 'Transformation' (X).

5. A Manifesto for the Transformed Leader

To navigate this digital era, JMAC proposes: Three Foundational Minds:

●       Prioritise 'X' over 'd': Shift the management dialogue from 'Which tool shall we adopt?' to 'How will this redefine our operations?'

●       Value Vitality over Volume: Invest in high-accuracy, real-time factual data from the shop floor rather than high-volume useless digital debris**.

●       Accelerate Learning through Calculated Failure: Foster a culture where prototypes are a rapid cycle to extract insights from errors.

The JMAC Identity

We are neither IT vendors nor producers of ornamental reports. We are architects of transformation who run alongside you in the actual work place until results are achieved. With the inherent DNA of Kaizen--the continuous pursuit of waste elimination--into the digital era, we shall resurrect a 'Digitally Armed Manufacturing' that continues its global lead. Digital is the catalyst. Transformation (X) is the objective.

Dai Mohri

General Manager of dX Consulting Business Division 

JMA Consultants Inc. (JMAC)

Breakdown loss refers to the loss of equipment downtime involving part replacement, and the loss time is calculated as 'number of downtime × repair time.' While reducing repair time is important, the primary goal here is to prevent the same breakdowns from occurring again. Understanding the cause of the breakdown that has already occurred and eliminating those factors leads to the prevention of breakdowns in the future.

Deployment of Breakdown Loss Improvement Steps

Here is the deployment of the 7 steps for reducing breakdown losses in the following table, along with an explanation of the content of each step.

Step 1: Classification of Historical Breakdown Data

Equipment breakdowns can occur in many different ways, which often makes it difficult to determine where to begin improvement efforts. Therefore, Step 1 starts with the classification and organization of past breakdown data. This process reveals the weak points of the equipment and clarifies the specific breakdown modes that require improvement.

(1) Identifying Weak Points Through Breakdown Analysis

Breakdown analysis is the work of gathering information to select an improvement theme. The process involves classifying historical data on equipment parts' breakdowns and breakdown modes of the target equipment into a matrix (see the figure below).

Example: Breakdown Analysis Matrix 

The objective is to clarify weaknesses in equipment management by analyzing breakdown mode trends, location/parts, and frequency, in order to establish an improvement theme. Furthermore, this analysis provides the basis for achieving the target value by identifying which breakdown modes must be eliminated.

(2) Selection of Improvement Themes

To achieve high-level objectives, such as increasing the operational/equipment availability rate and reducing downtime loss, a specific target must be set for how much breakdown loss will be reduced. Furthermore, to meet the breakdown loss reduction target, it is necessary to clarify which breakdown modes must be reduced to zero. This is defined as a sub-improvement theme (hereafter, "sub-theme").

Sub-themes should be selected from the breakdown analysis matrix by identifying breakdown modes linked to weaknesses and recurring problems. The selection should be made with the objective of "never letting the same breakdown occur twice."

From Step 2 onwards, the process proceeds on a per-sub-theme basis (see the figure)

Figure: Proceeding by Sub-Theme

Step 2: Current Status Analysis

Before starting the current status analysis, here is an explanation of the causes of breakdowns. A breakdown occurs when stress (load) exceeds strength. In other words, factors such as neglected stress, the progression of deterioration, and insufficient strength lead to breakdowns.

The following five factors can be considered the causes that lead to breakdowns (see the figure below):

1. Lack of basic conditions

2. Failure to comply with operating conditions

3. Neglected deterioration

4. Weaknesses in design

5. Lack of skill

Investigating breakdown mode to determine the cause, in step 2.

(1) Clarification of the Phenomenon

For some breakdowns, the cause is immediately apparent, such as operator error or the neglect of temporary countermeasures. In most cases, however, the cause is unclear.

Therefore, it is important to identify the specific breakdown mode, which represents the phenomenon of the breakdown.

Especially in the moments following a breakdown, the actual site and all physical elements (the Genba, Genbutsu) offer a wealth of information. This concept of Genbutsu includes not just the machine itself, but also processed materials, the surrounding environment, and any other physical evidence. It is essential to thoroughly gather all factual data needed to investigate the cause. This includes collecting key details, such as the exact condition of the equipment when it stopped and whether any signs or symptoms appeared beforehand.

Additionally, damaged components/parts often tell a detailed story about the cause of a breakdown.

Through the disassembly and investigation of the physical part (Genbutsu), it is important to clearly identify which component/part failed and the specific type of breakdown mode that occurred.

During the investigation into the cause of a breakdown, multiple breakdown modes may be identified.

In such cases, it is crucial to technically determine which breakdown mode was the initial trigger and to proceed with the root cause investigation from that point.

It is also necessary to investigate whether the failed component was inspected and replaced properly, and to compare its replacement history against its expected lifespan. Understanding the lifespan makes it possible to determine if the breakdown was caused by neglected deterioration, accumulated deterioration, or an inherent design weakness. 

Additionally, it is also possible and important to determine if a skill deficiency was a contributing factor by investigating whether the previous repair was performed correctly and if any operator errors occurred before the stoppage.

When setting countermeasures for past breakdowns, analysis would typically start with stored replacement parts, but in most cases, the actual physical component (Genbutsu) is no longer available. In such situations, the only resource to rely on is the breakdown data. It is important that this data preserves as much situational information as possible, clearly identifying the breakdown mode and including supplementary materials like photographs.

(2) Understanding Equipment Structure and Function

Once the breakdown mode is clarified, you might want to jump directly into a root cause analysis. However, it is critical not to overlook any potential contributing factors. First, it is essential to create mechanical drawings of the equipment and components related to the breakdown, using resources like blueprints and system configuration diagrams. This helps in understanding the function and structure, including actual movements, the transmission of force, how loads/stress are applied, and the relationships between parts.

(3) Creating a List of Inspection Items

To prevent breakdowns, each functional component must be in its correct condition.

Based on the mechanical drawings created for the parts that fail as well as surrounding and related parts, it is necessary to understand their "ideal state" from the perspective of fundamental principles. This understanding is then used to generate a comprehensive list of inspection items, including all sufficient conditions.

At this stage, it is important to exhaustively identify all inspection items, including all sufficient conditions, without yet considering their relationship to the specific breakdown mode.

(4) Shopfloor Investigation

The actual condition of the components is investigated against the list of inspection items that was created based on principles. In other words, a one-by-one investigation on the shop floor is conducted to determine if the basic requirements for related functions are being correctly met and if operating conditions are proper. Any non-conformities are then identified. In many cases, a failure to follow established procedures causes accumulated deterioration, which ultimately leads to a breakdown.

In case a breakdown occurs despite all operating conditions being met and no other problems being found, it is likely that there is an issue with the design.

By this stage of the investigation, it is possible to infer which one of the five breakdown causes applies. However, the cause of a breakdown is not necessarily limited to a single factor. Depending on the non-conformities discovered, multiple causes might be involved. The diagram below illustrates the procedure for Improvement Steps 1 and 2.

Step 3: Mechanism Analysis

The non-conformities identified during the on-site investigation (Genba Genbutsu) are classified by the five breakdown causes to verify if they could be the cause of the current breakdown mode. The relationship between the breakdown mode and the phenomenon (the breakdown itself) is also analyzed by estimating the mechanism (process) of the breakdown. (See Figure 3.1.6).

(1) Identify Acting Stresses

Parts deteriorate because some form of stress (load) is applied to them.

Therefore, it is essential to clarify what stresses are generated by the non-conformities discovered during the on-site investigation (Genba Genbutsu).

For example, if there is a defect related to inadequate basic conditions, such as "insufficient lubrication," the stress is identified in a sequence like: insufficient lubrication leads to a break in the oil film, resulting in an increase in frictional force.

(2) Estimate the Process from Stress Occurrence to the Breakdown Mode

The relationship between the stress identified from the non-conformity and the resulting breakdown mode is examined one by one.

(3) Estimate the Process from the Breakdown Mode to the Occurrence of the Phenomenon (Breakdown)

Next, the process from the breakdown mode to the occurrence of the phenomenon (the breakdown) is estimated. This task becomes crucial when multiple breakdown modes are identified.

Step 4: Implementation of Countermeasures

Countermeasures are implemented for the non-conformities (the five causes) identified during the on-site investigation (Genba Genbutsu).

(1) Restoration of Defects

All locations of defects found through on-site and physical investigation must be fully restored and improved. This is because if defects are left unaddressed, the deterioration will worsen, which can affect other areas and potentially lead to new and different problems. 

(2) Countermeasures for Weaknesses

For any breakdown primarily caused by a design weakness, a deeper investigation into the root cause must be conducted.

Challenges will be resolved by examining whether the equipment is selected to be adapted for the acting stresses and whether sufficient strength is ensured to handle those stresses.

Step 5: Root Cause Analysis

The investigation into the cause of a breakdown is not complete simply by taking countermeasures against its primary cause.

It is essential to investigate the true underlying issues in operation and management, such as why the defect that led to the breakdown mode occurred and why it could not be prevented.

As shown above, it is important to ask the following questions:

In the case of basic or operating conditions, Why were the basic and operating conditions not maintained?

In the case of neglected deterioration, why was restoration not performed?

Why could an inspection not be carried out?

In the case of a design weakness, why was the component selection incorrect?

It is crucial to utilize the "Why-Why Analysis" in this way to thoroughly investigate down to the level of human behavior (see Figure 3.1.7).

In other words, the root cause of a breakdown is human action.

Step 6: Confirmation of Effectiveness

The effectiveness of breakdown countermeasures is not immediately apparent and must be evaluated over the long term. However, confirming the effects after implementing countermeasures is important. Based on the results of these countermeasures and their horizontal deployment, it is necessary to confirm how the occurrence of the breakdown mode has changed for the better.

Step 7: Standardization and Horizontal Deployment

In Step 7, the results from the steps up to Step 6 are standardized to establish a management system for preventing recurrence. Specifically, standards for daily inspections, periodic inspections, periodic maintenance, and the division of roles between Autonomous Maintenance and Planned Maintenance will be created.

It is important to horizontally deploy countermeasures to similar equipment and to those with similar parts. For any issues in design, manufacturing, or installation, these should also be reflected in new equipment by utilizing MP (Maintenance Prevention) information.

*In case you have questions/comments to JMAC or the author of this article, please contact us through the inquiry form. Click here to ask JMAC!

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●Author profile

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

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2026年　新年あけましておめでとうございます！

Happy New Year 2026! / ¡Feliz Año Nuevo 2026! /Feliz Ano Novo 2026! / नव वर्ष की शुभकामनाएँ 2026!

新年快乐 2026! / Selamat tahun baru 2026! / สวัสดีปีใหม่ ครับ/ค่ะ 2026! / Chúc mừng năm mới 2026!

JMAC has officially resumed operations following the holiday season, and our team is fully energized for the year ahead. 

We are eager to dive into new challenges and partner with you to make 2026 a truly exceptional year.

We welcome your questions and inquiries--no matter how simple or complex they may be. Our experts are ready and waiting to provide the profound insights you need to achieve your goals.

We look forward to hearing from you to help kickstart your journey this year.

Let's gallop together toward a highly successful 2026!

Maximizing equipment efficiency means ensuring they operate with their designed functions and peak performance. Any time the equipment fails to operate at its designed function and peak performance evidences the existence of losses that limit its overall effectiveness/efficiency (OEE).

Losses in working hours are classified into three main categories, containing eight losses that cause problems.（The chart shown below)

（1)  Downtime Loss

Downtime loss refers to the various time losses caused by situations in which equipment cannot be operated, even when operation is required. 

"Breakdown Loss" (time loss due to equipment breakdown)

"Setup & Adjustment Loss" (time loss incurred for product changeovers and for adjustment/trial processing)

"Cutting tool replacement Loss"(time loss caused by replacing tools, such as grinding wheels)

"Startup Loss"(time loss during the production startup phase until normal operation is achieved)

These are the visible losses that can be grasped from daily reports recorded by operators. Therefore, accurately defining losses and establishing a culture of measuring losses are crucial.

（2)  Performance Loss

Performance loss is defined as the efficiency degradation losses resulting from the actual productivity falling short of the equipment's designed capacity/performance.

Performance loss includes "minor stops and idling losses", caused by easily recoverable equipment stoppages or idlings that are not usually recorded in daily reports, and "speed losses", resulting from the difference between the equipment's design speed and its actual operating speed.

Performance losses are often hidden and hard to identify; therefore, it is necessary to identify and quantify the loss through calculation.

（3)  Defect Loss

Defect loss is often considered to be only the waste of raw material cost from producing defective product/semi-finished-product (the defects). But in the context of equipment loss, the focus is on the time loss incurred from producing the defects. The loss related to the raw material cost itself is considered material loss.

*In case you have questions/requests to JMAC and the author of this article, please contact us through the inquiry form. Click here to ask JMAC!

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●Author profile

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

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In some companies, the 16 major losses might not fit perfectly. Losses are opportunities to identify problems and implement improvement projects. There is no point applying something that does not work for your company. In those cases, please try to customize the loss definitions matching your work environment.

The same thing applies to Loss improvement. It is not necessary to follow the steps given by someone or from some information sources to improve losses. Once confirming that all key perspectives have been covered, refer to this chapter and proceed the steps, according to your company's loss characteristics.

The 16 major losses is only standard guidance, and there are additional losses on top of the 16 major losses, or less losses reduced from the 16 major losses based on the company characteristics.

How to proceed with Loss Assessment

When proceeding with Improvement activities, grasping the characteristics and the quantity of losses (problems) in your company before considering "what to do" is very important. Without grasping the losses/problems, the need for Improvement will remain unclear. Also, without a clear understanding on the quantity of the loss, it is impossible to evaluate the impact of improvement.

Once the losses are identified, there is no choice but to resolve them. The fundamental approach is to categorize the losses according to the location, loss types, and occurrence mechanisms to clarify "What losses must be resolved".

The improvement process begins with identifying losses. The following shows the procedure to identify losses.

（1）　Considering Loss Definition and Quantatification

Defining losses according to your company characteristics and considering the measurement method. 

（2）　Quantifying Losses

Collecting the loss-data, and analyzing them by processes(company) and equipment. Also, clarify the bottleneck process points.

（3）　Setting a Target

Setting a target value to achieve by each company process. The target could be established from the top management policy or the business target.

（4）　Selecting Improvement subject

Improvement subject selection shall be done with the consideration of contribution to  the target value of the entire improvement initiatives.   

The key point here is to select improvement subjects' contribution to the total targeted loss elimination amount, and the impact needs to be set higher than the targeted amount for loss elimination you are desiring to achieve. 

Should the subject for improvement merely equal the target amount for loss elimination, there is a risk that the total targeted loss elimination amount will fail to meet the goal, even if some subjects are left unsolved or underperforms.

Generally, the target amount for loss elimination is set 30% to 50% higher than the target amount for loss improvement. Improvement subjects are then selected according to this elevated target. (For instance, if the target saving for loss improvement is 10,000USD, the loss elimination target will be set at 13,000USD to 15,000USD, and improvement subjects are selected to match this elevated target.)

 For the next step, select project members for each selected subject, and make sure to indicate by when (=deadline/timeline) and to which level (=Target) you expect them to achieve.

The Definition of Loss

There are two ways of measuring losses. One is by defining losses compared to the standard, and the other one is by comparing the target between goal and current status. Here in this chapter, we define Loss as follows.

The Losses, impeding equipment efficiency

Based on time as a scale; Measuring losses from the gap between the current productive hours and the ideal operation time which the machines continue producing only good products at the machine's maximum rated speed or theoretical output per hour.     

The Losses, impeding labor efficiency

Based on man-hour as a scale; Measuring losses from the gap between the current man-hour spent and the standard (required/desired) man-hour.

The Losses, impeding material efficiency

　Based on the cost as a scale; Measuring losses from the gap between actual material costs and the theoretical material cost. (ie. use the ratio by weight as an indicator)

Now that we visualize losses, let's think about how to improve. This is where the Kaizen steps for each loss comes in.

Loss and the Kaizen Steps

Here is the overview of the Losses and the JMAC recommendation for Kaizen/Improvement steps.

The Losses, impeding equipment efficiency 

1 Breakdown Loss

2 Setup/Changeover and Adjustment Loss

3 Minor stops and idling Loss

4 Speed Loss

5 Defect Loss

The Losses, impeding labor efficiency

6 Motion Loss

7 Line Organization Loss 

8 Skill Loss

The Losses, impeding material efficiency / Other Losses

9 Information processing loss

JMAC is planning to provide details on the losses impeding equipment's efficiency in near future. 

*In case you have questions/comments to JMAC or the author of this article, please contact us through the inquiry form. Click here to ask JMAC!

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.●Author profile

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

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QC STORY: The Universal Problem-Solving Tool

The QC Story is the most widely used problem-solving technique. It's recognized as the standard approach for improvements, making it highly accessible and easy for teams to tackle complex challenges. While initially used for reporting improvements, it quickly proved effective for guiding the actual improvement process and spread as a core methodology.

Click the image to enlarge

DMAIC: a Core Lean Six Sigma Tool

The DMAIC improvement steps--a core Lean Six Sigma tool--are increasingly adopted by many companies. While its focus and approach differ slightly from the QC Story, the fundamental goal remains the same: improving efficiency and reducing Losses.

DMAIC is the key problem-solving framework used in Six Sigma.

D: Define
M: Measure
A: Analyze
I: Improve
C: Control

This involves a series of 5 improvement steps, providing an optimal approach to problem-solving. In DMAIC, clearly defining the problem during the Define phase is especially critical.

If you have questions about making improvements, you can always contact JMAC via our inquiry form. Click here to ask JMAC!

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●Author profile

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

Improvement Step Approach ~Kaizen Steps~

Basic Loss Improvement (Kaizen) 7 step introduction

Step 1: Identifying Improvement subjects and targets

Kaizen begins with understanding the current situation. Analyzing losses, identifying improvement subjects, setting targets, and dividing roles initially leads to a clearer process. For loss analysis, visual aids such as Pareto charts and graphs/charts clarify the situation.

For instance, clarifying the causes of yield loss, along with their size and content, is very impactful. To efficiently select an improvement/Kaizen subject, extract the causes impacting yield loss via loss analysis and prioritize them to identify the most critical subjects. Among the selected subjects, confirm the priority based on factors such as the subject's difficulty, and assign them to improvement project teams according to the difficulty level. This is called role assignment. The improvement project team referred to here means cross functional teams and Small Groups.

Regarding the priority of improvement/kaizen subjects, it is advisable to categorize them based on the following items:

① Magnitude and necessity of improvement effect

② Difficulty  (judged by factors such as the time required to resolve: within 3 months, around 6 months or more)

③ Estimated cost of resolution

It's not simply about deciding whether or not to improve. Even when the necessity for improvement is high, challenging subjects or those requiring significant time are often postponed.In such cases, it's necessary to rebuild the required structure (including acquiring skilled personnel from other departments and providing training) to tackle the improvement subjects effectively. Prioritizing improvement subjects is related to the improvement approach itself (improvement strategy).

Step 2: Drafting an Improvement Plan

Depending on the subject, integrating it into a project schedule can be challenging. However, please create a project schedule by incorporating the improvement steps outlined in this document and the loss-specific improvement steps that JMAC will introduce later.

Furthermore, action items of the improvement plan should be made very concrete. Role assignments are preferably made according to the skills of improvement team members. Human resource development is most desirably achieved through improvement activities

The role assignment according to skills means the division of tasks such as a line leader (small group leader) who has mastered QC methods like Pareto chart creation conducting loss analysis, and an operator who has not yet learned QC methods collecting data for effect confirmation.

Step 3: Phenomenon Observation, Cause Analysis, and Countermeasure Planning/Evaluation

This is the most important stage in the improvement process, which involves direct confirmation of factual details regarding the occurring trouble on-site and with the actual equipment. Utilizing innovative methods such as digital camera video recording or a video camera is highly recommended.

Phenomenon observation involves examining not only the event but also the mechanisms and structures of the equipment and devices involved, along with the processes. The goal is to understand the underlying mechanism of the phenomenon.

In understanding the phenomenon, sometimes there is a tendency to see it as a 'chain reaction' or 'unexpected consequences.' For example, saying things like 'There are a lot of minor stoppages in this lot' is a typical example, but this alone doesn't mean the cause has been pursued. The phenomenon needs to be confirmed in detail, such as 'In what locations are there many minor stoppages?' And at those locations, it is necessary to grasp 'what kind of operations (processing) the equipment and devices are performing.' Also, confirming 'what mechanics are involved in the operations/process' and so on, leads to grasping the mechanism. In this way, grasping and understanding the mechanism becomes the foundation for pursuing the cause.

For cause analysis, utilize techniques such as fishbone diagrams (Ishikawa diagrams), 'Why-Why analysis,' and PM analysis. There are no specific limitations on methods. For cause analysis, fully utilize various techniques such as QC methods and SQC methods to clarify the relationship between the phenomenon and the cause.

For countermeasure planning, several countermeasure proposals should be developed for the problems identified through cause analysis. The effectiveness of these proposals should be compared and verified, and effective countermeasures should be selected.

Step 4: Implementation of Improvements 

This is the stage where improvements are carried out according to the improvement implementation plan. Depending on the content of the improvement, it may be necessary to secure the required budget. It is also important to communicate the details of the improvement implementation to relevant parties in advance and confirm that they are aware. Safety is, and always will be, the top priority during the implementation of improvements.

Step 5: Confirmation of Effectiveness 

Compare the effectiveness of the countermeasures with the target levels set in Step 1. Also, confirm other ripple effects caused by the countermeasures, as well as any new problems or problems that were not anticipated in advance. Of course, it should also be thoroughly confirmed how the operator's workload (man-hours) has increased or decreased due to the implementation of the countermeasures.

Step 6: Standardization 

This is the stage to standardize the measures with confirmed effectiveness and create operational rules to set them in various standards. It is also advisable to include training to transfer knowledge/techniques in the operational rules.

For measures with confirmed effectiveness, the conditions (position, time, temperature, pressure, rotation speed, etc.) should be quantified, and the evidence for those values should be clarified. Why are those values optimal? Up to which values are acceptable? What are the valid reasons for the control range? These details should be made clear. This information is very important for preventing recurrence and for future maintenance management. Think of this as clarifying the 'Know Why,' not just the 'How to'.

Step 7: Horizontal Deployment

Identify the targeted line/equipment for horizontal deployment based on loss analysis and the degree of impact on the target, and then horizontally deploy the countermeasures. This should be done based on the standards set in Step 6. There may also be cases where conditions need to be reset even for the same equipment, so the condition of the application target (e.g., deterioration, worn, differences or the presence of other factors) should be confirmed.

In any case, horizontal deployment will be done with the priority on setting conditions that are easy to manage, aiming to reduce overall losses. Of course, it is also very important to horizontally deploy the necessary skill transfer training.

If you would like to engage in a discussion with JMAC consultants, please reach out through our inquiry form at Contact JMAC!.

●Author profile

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

The basic flow is:

Understand the current situation → Set targets → Analyze factors/causes

→ Implement measures → Verify the effectiveness

This is the flow of the process. Those who have already implemented some improvements can probably imagine this flow.

There are many books and other sources that introduce improvement steps, and  so many different types that it's difficult to say which one is correct.

Also, when you compare each step, even though the order may be a little different, they have many items in common. So, when using improvement steps, choose ones that are easy to understand and use.

The chart below shows the general steps for Focused Improvement.

As you gain experience and gain results from implementing improvements, try creating original steps that suit your workplace.

Below is a summary of the aims of using the improvement steps:

(1) Sharing and common understanding of how to proceed

By proceeding with improvement activities according to the steps, it becomes possible to share the method of proceeding and the direction. For example, rather than simply understanding the implementation items such as grasping the current situation and setting goals, you can understand what needs to be done to achieve them.

(2) Scheduling and progress management

By creating plans and schedules based on the steps, you can get a rough idea of ​​when improvements will be implemented and when the improvement effects will be achieved. By checking the start and completion times of steps, you can use this information to manage the progress of improvement activities (see figure below).

(3) Clarifying role allocation and human resource development

By utilizing the improvement steps, you can select people with the necessary skills depending on the implementation item, or assign roles for the purpose of skill training.

(4) Accumulation and utilization of knowledge

When using improvement cases as knowledge within a company or team, organizing and accumulating the content according to the steps creates commonality and makes the improvement cases easier to refer to. For example, some companies have employees report steps 1 to 7 on a single A3 horizontal sheet of paper, and accumulate improvement information.

(5) Utilization for improvement training

By utilizing the improvement work sheet, you can use the sheet as improvement training content.In rare cases, improvement steps may be created retroactively (after the improvement has been implemented), but even if they are created retroactively, this is fine if organizing them will help with future improvements.

●Author profile

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

Loss must be quantitatively understood (evaluated monetary). Of course, some losses are difficult to evaluate in monetary terms. For example, for man-hour losses in indirect departments and purchase cost losses, even if cost calculation is possible, it is difficult to evaluate the cost of periods to create PL (Profit and Loss Statement). Therefore, a simple and easy-to-understand method for calculating the monetary evaluation of losses will be explained here.

For example, let's assume there was a breakdown loss that caused a 60-minute stop per day. Three operators are working on this line. Some may argue that there is no waste of time because when it stops, they assist other lines or help until the recovery, but in this case  we will calculate assuming it was wasted time.

60 minutes × 3 people × @charge rate (designated value) 

The charge rate (designated value) varies depending on the workplace, so please set it arbitrarily. In this case, let's consider it to be around 30 to 50 USD. For other losses, if actual costs have been incurred, you can simply add that amount separately. For the strictness and accuracy of cost evaluation, please refer to other information sources on Loss and Cost.

Reference: JMAC Consultant Tips

Concept of Loss Improvement #1 ~ What is Loss? ~ Total Productive Maintenance - TPM https://tpm.jmac.co.jp/news/details/6526.html

Concept of Loss Improvement #2 ~ 16 Major Losses (+α) ~ Total Productive Maintenance - TPM https://tpm.jmac.co.jp/news/details/6529.html

Losses are evaluated in terms of monetary value, and there is a management approach called Loss Cost Management for reducing costs. This method focuses on reducing costs across the entire factory.

The steps are as follows:

• Set cost reduction goals

• Identify losses to reduce costs

• Implement loss improvement

• Confirm the contribution of loss improvement

In this example, costs are categorized into fixed costs, variable costs, and logistics costs, and the relationship between losses and costs is represented in a tree structure. Each graph is designed for management purposes to show the improvement targets and achievements. As the improvement of losses is associated with costs, when improving losses in the tree's lower-level, the upper-level cost graphs will change accordingly. It is important to visualize and manage the relationship between losses and costs in a way that contributes to cost reduction.

Productivity evaluation according to the size of losses (Overall Equipment Effectiveness)

There is an efficiency evaluation (productivity evaluation) that has been traditionally used as a loss evaluation.

For equipment, indicators such as equipment utilization rate and overall equipment effectiveness, for labor, labor productivity, and for materials, material yield rate are mentioned. Each of these indicators is an important measure to understand the occurrence ratio of losses even without monetary evaluation.

As a reference, Overall Equipment Effectiveness calculates equipment losses to determine how effectively equipment is being used and assesses the operational status of the equipment.

The calculation method involves multiplying the following three rates together to calculate. Generally, the value often falls between 50% to 60%.

Overall Equipment  Effectiveness = Time Utilization Rate × Performance Utilization Rate × Yield Rate

(1) Time Utilization Rate 

The Time Utilization Rate is expressed by the following formula, which represents the ratio of actual operating time to the loading time (time when the equipment needs to be in operation): 

Time Utilization Rate = (Load Time - Downtime) / Loading Time

The loading  time refers to the available operating time in a day (or month) minus the planned downtime for production scheduling, planned maintenance, and daily management (morning meetings, etc.) Downtime, on the other hand, is the time stopped due to issues like breakdowns, setups, adjustments, and tool changes. For example, if the daily loading time is 460 minutes and there was 60 minutes of downtime due to breakdowns (20 minutes), setups (20 minutes), and adjustments (20 minutes), the daily operational time would be 460 - 60 = 400 minutes. In this case, the Time Utilization Rate would be approximately 87%.

(2) Performance Utilization Rate 

The Performance Utilization Rate consists of Speed Utilization Rate and Net Operating Rate. Speed Utilization Rate indicates the difference in speed, representing the ratio of actual speed to the capacity the equipment inherently possesses (cycle time/strokes). It assesses whether the equipment is operating at the designated speed (reference speed or cycle time). For example, if the reference speed is 0.5 minutes per piece and the actual speed is 0.8 minutes per piece, the Speed Utilization Rate in this case would be 62.5%. It highlights the size of the loss if the equipment is operating at a reduced speed, and it is expressed by the following formula:

Speed Utilization Rate = Reference Cycle Time/Actual Cycle Time

Furthermore, Net Operating Rate reveals whether the equipment is operating at a constant speed within a unit of time. It does not assess whether the equipment is faster or slower than the reference speed. Even if the speed is slow, it evaluates if the equipment can stably operate at that speed for an extended period. For example, if the processed quantity is 400 pieces with 8 defects, the Net Operating Rate in this case would be 80%. This enables the calculation of losses due to minor stops, and losses caused by minor issues that may not be reported in daily logs.

Net Operating Rate = (Actual Cycle Time × Processed Quantity) / Operating Time

And, the Performance Utilization Rate can be calculated by the following formula:

Performance Utilization Rate = Speed Utilization Rate × Net Operating Rate = 0.625 × 0.8 = 50%

(3) Yield Rate 

Yield Rate is the ratio of the actual number of good products produced to the total processed or input quantity (raw materials, materials, etc.). For example, if the processed quantity is 400 pieces and there are 8 defective pieces, the Yield Rate in this case would be 98%. The defective quantity includes not only scrapped defects but also reworked products

Yield Rate = (Processed Quantity - Defective Quantity) / Processed Quantity

Overall Equipment Effectiveness = Time Utilization Rate × Performance Utilization Rate × Yield Rate 

= 0.87 × 0.5 × 0.98 ≈ 42.6%

In this example, the Overall Equipment Effectiveness is at 42.6%, which is in a very poor state. This is due to the low Speed Utilization Rate and Net Operating Rate. Therefore, the corresponding measures would involve increasing the speed and addressing minor stoppages.

*In case you have questions/comments to JMAC or the author of this article, please contact us through the inquiry form.  CLICK HERE to contact JMAC!

●Author profiles

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

The improvement of losses that constrain cost reduction is not solely the responsibility of the manufacturing/production department. Loss improvement is carried out in each department individually or in collaboration with other departments. Let's investigate the losses in each department. Let's see  what types of losses exist by department. Assume the production site has the following processes. Assume that the production site has the following processes as "Production Management Business Process." The sequence of flow starts with sales, followed by development, design, production preparation, production, and logistics. (Below figure)

Production Management Business Process

The central part of the figure, production,  is the focus of  improvement activity (losses in production, planning and procurement, and sales departments).

The figure below illustrates the 16 major losses that constrain the efficiency of the production system.

The 16 major losses that constrain the efficiency of the production system

Losses can be broadly categorized into

(1) Equipment losses

(2) Labor losses

(3) Unit cost losses

Losses in the production department

Equipment losses are categorized into eight losses from the perspective of equipment efficiency.

These eight losses are called the eight major losses of equipment.

1. Equipment losses

① Breakdown Loss

is the loss caused by unexpected or chronic breakdowns, resulting in time losses (decreased output) and quantity losses (defect occurrence). Generally, a breakdown is defined as a situation where repair time exceeds 5 to 10 minutes.

② Setup/Changeover and Adjustment Loss

is the time loss incurred during the changeover and adjustment in the product change until producing good quality products.

③ Tool/Blade Change Loss

is the time loss associated with the regular replacement of tools (such as cutting tools and grinding stones) and chips, as well as temporary changes due to breakage or spatter adhesion, and the dressing process, along with the quantity losses (defects and rework) that occur before and after the changeover.

④ Startup Loss

is  the time loss during equipment startup when there are no mechanical issues (such as minor stoppages or small troubles) until quality stabilizes and good products can be produced, as well as the quantity loss (defects and rework) that occurs during this period.

⑤ Minor Stop and Idle Loss

is  short-term stoppage losses that occur without needing to replace or repair any parts. These losses are different from breakdown losses, which involve repair and replacement. A typical example includes temporary stoppages caused by product jams or obstructions in the transport system. Stoppages of less than 5 minutes are considered minor stoppages.

⑥ Speed Loss

is the loss resulting from the difference between the designed speed of the equipment and the actual speed, or from a designed speed that is lower than the current technological standards or expected performance, indicating losses incurred due to the slow speed of the equipment.

⑦ Defect and Rework Loss

is the quantity loss resulting from defects (waste of defective products) and the time loss incurred to correct these defects and produce acceptable products.

⑧ SD (Shutdown) Loss

SD (Shutdown) Loss refers to the time loss incurred when stopping equipment for periodical maintenance and the quantity loss that occurs during the startup process.

The definition of equipment loss may not always apply as stated, depending on each company's definition.

2. Labor Loss

From the perspective of labor efficiency, it can be categorized into five areas (as shown in the figure below). Labor loss primarily refers to the time loss in work and the workload (working hours × number of people).

⑨ Management Loss

is losses occurring due to management issues, such as waiting for materials, waiting for instructions, and waiting for recovery from breakdowns.

⑩ Motion Loss

is losses caused by working methods that deviate from the principles of motion economy or differences in skill maturity, including losses from walking or moving to obtain parts.

⑪ Line Organization Loss

is  losses associated with an operator managing multiple processes or equipment, which results in waiting times, as well as line balance losses in conveyor operations.

⑫  Automation Deficiency Loss

is losses incurred from not replacing tasks with simple automation that could reduce manpower. Logistical tasks such as supply, dispensing, and transportation of parts and products may also be treated as automation deficiency losses.

⑬ Measurement Adjustment Loss

is losses that occur due to frequently conducting measurements and adjustments to prevent the occurrence and outflow of quality defects.

3. Unit Loss

primarily focuses on various elements used and emitted during production activities, such as yield, energy, and molds/jigs (see figure below).

⑭Yield Loss

is the material loss resulting from the difference between the weight of the raw materials and the weight of the finished products, as well as the difference between the total amount of material input and the weight of the products.

⑮Energy Loss

is losses related to energy such as electricity, fuel, steam, air, gas, and water (including wastewater treatment).

⑯Mold and Jig Loss (including auxiliary material loss)

is losses incurred during the manufacturing and repair of molds and jigs necessary to produce products.

2.2　Losses in Indirect(Administrative) Department

Under the production management business process, the planning and procurement activity can be considered as indirect departments. This section focuses on all staff departments other than production departments directly involved in production (see figure below). As a premise for viewing these losses, each indirect department's work content will be divided into two categories.

Losses in Indirect(Administrative) Department

Business functions refer to all activities conducted in each department to achieve management goals (objectives).

Administrative functions refer to all administrative tasks that commonly occur in each department (see figure below).

Viewpoint 1 on Indirect Department Loss

Breaking down business functions leads to their decomposition into administrative function levels.

For these two functions, losses will be identified for each. For business functions, it involves a reassessment of the losses that occur in the course of management contribution and talent development. Losses arising from actions taken to contribute to management will lead to a reevaluation of measures for cost reduction, reliability improvement, and increasing (maintaining) sales in each indirect department, and if losses occur, new improvement themes will be established. For administrative functions, loss improvements will focus on administrative labor losses, aiming for time reductions and cost savings (see figure below).

Viewpoint 2 on Losses in Administrative/Indirect Department

Finally, the losses in the sales department (see figure below).

The perspective on losses is the same as indirect departments' losses.

The operational function of the sales department is to increase sales, but the key focus is on capturing the potential needs of customers.

Sales Activity Loss

The structure of sales activity loss is shown in the figure below. Losses in the sales department vary depending on activity styles and characteristics.Create definitions of losses that fit your company and aim to make losses visible.

Example of Loss Structure in Sales Department

Besides these losses, there should be many losses related to production business processes. For example, production lead time loss, inventory loss, design loss, and investment loss are not included this time. Please define and set losses according to the needs of each workplace and factory.

In the near future, JMAC is planning to introduce quantitative evaluations of losses (cost evaluation and efficiency evaluation).

In case you would like to integrate with one of JMAC TPM Consultants, please contact us through our inquiry form Click Here!

●Author profiles

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

Sharing the Process: Facilitates confirmation of direction among team members.

Visualization of Progress: Visual aids in schedule creation and progress management.

Human Resource Development: Enhances understanding of improvement methods and techniques.

Knowledge Accumulation: Simplifies the utilization of improvement outputs.

The goal of this page is to outline improvement steps for various types of losses and to explore the methods that best suit your organization. Improvement methods and implementation practices can be relatively easy to replicate. In this sense, the series of information that JMAC issues can be considered as a "HOW TO reference." We encourage you to read these articles as a reference to further accelerate and enhance your organization's improvement initiatives.

The improvement steps shared here are "sample procedures." While they serve as guidance, JMAC has developed these steps based on successful loss reduction cases from various companies. The steps and considerations for each type of loss will serve as a reference during implementation.

Of course, these suggestions do not limit how improvements should proceed. The actual process will vary depending on specific circumstances. As guidance from JMAC, we will introduce indicators to understand and quantify losses. We believe it is valuable to present fundamental improvement step processes, methodological differences, and specialized loss improvement steps designed for effective results based on loss characteristics.

Loss improvement does not require strict adherence to a predetermined process; overly focusing on steps can lead to unnecessary attention on procedural correctness, resulting in wasted time. However, when the aim is to enhance understanding of various improvement methods and practices to boost capabilities, applying structured steps can be beneficial.

For further insights and specific improvement tips, please do not hesitate to contact JMAC through our inquiry form at Contact JMAC!.

1-1 The Foundation of Improvement: Factual Verification

The basis of improvement lies in verifying facts. This refers to assessing issues in the actual workplace or the physical items involved. By continuously validating facts, the causes and necessary actions become clear, enabling issue resolution. The distinction between effective and ineffective improvements largely stems from the method of fact verification. Although it might sound extreme, "improvement steps encourage step-wise verification of facts."

A critical point in factual verification involves understanding losses. In the general improvement process, understanding losses is referred to as "identifying the current situation," which is a necessary step to clarify the magnitude of losses, severity of improvement themes, and the overall need for improvement. Effective identification of losses in daily production management serves as an important metric for assessing factory management levels. In higher-tier factories, losses are typically analyzed by production line or equipment, whereas lower-tier factories may only manage metrics such as production volume, input hours, or defect counts at a basic level.

However, it is not necessarily accurate to equate lower management levels with problematic factories; management levels need to align with the specific demands and contexts of the operation.

1-2 Understanding Losses that Constrain Cost Reduction

How much loss occurs in your factories or production lines? Let's delve into the concept of losses.

Losses come in various forms, including inefficiencies, quality or profit impediments, and non-value-adding activities. Additionally, there are organizational or decision-related losses at the management level. While various perspectives can be used to categorize losses, JMAC will first focus on losses occurring at the production site as below.

What is Loss?
Loss in production refers to anything that limits cost reduction. In essence, improving losses must yield cost savings. Directly speaking, cost reduction entails lowering manufacturing costs. However, the need for total cost reduction extends beyond manufacturing to include head office, management, design, sales, research, and subsidiaries. In this context, the primary focus is on manufacturing cost reduction.

A straightforward approach to quantifying loss is to assess "Current Costs - Target Costs." It is natural for factories to evaluate the gap between target (planned) costs and current costs.

What needs to be done?

To understand this, it is essential to identify and define the losses. The key is to view losses (cost gaps) clearly, breaking them down into recognizable components. This is akin to understanding the overall cost structure and establishes the relationship between cost reduction and losses.

Example Breakdown of Costs:

The following figure is an example based on the cost concept of MFCA (Material Flow Cost Accounting). Variations in methods and terminology exist across different companies and factories, yet they generally adhere to a standard conceptual classification of cost items.

Cost Reduction and Loss Analysis

Material Costs:

 A significant portion of costs is derived from material expenses (though processing costs may dominate in some factories). Strategies to reduce material costs include reviewing materials (adjusting conditions), lowering purchase prices through bulk buying, and streamlining trial processes. Short-term challenges may arise when revising processing methods to reduce material costs. Yield loss is a major factor that constrains material cost reductions, along with defect losses, startup losses, and volume losses.

Processing Costs: Options for reducing processing costs include eliminating unnecessary tasks, enhancing workflows through line balancing, and exploring outsourcing. Constraints on processing cost reductions often arise from operational and setup losses, with operational losses comprising management losses and action-related losses.

Management Costs:

These costs encompass expenses from administrative indirect departments and sales management. Logistics losses and inventory losses serve as common examples.

Energy Costs:

Involves fuel, electricity, and water expenses, alongside relevant losses such as startup and overload losses.

For further information, please refer to our article on the 16 Major Losses here. JMAC will also provide detailed explanations of these losses in the near future.

If you would like to engage in a discussion with JMAC consultants, please reach out through our inquiry form at Contact JMAC!.

●Author profile

Nobuhiro Otsuka, Chief TPM Consultant

After joining the Japan Institute of Plant Maintenance (JIPM), Nobuhiro has been working on projects to improve productivity, reduce costs, and improve quality in the metal products, electrical and electronic parts, automotive, food and beverage, pharmaceutical and medical products, and paper industries. Nobuhiro provides consulting support from both a Gemba (shopfloor) perspective and a management perspective. Supports many companies both domestically and overseas. Currently works on a wide range of projects including TPM, cost management/cost reduction, quality improvement, industrial engineering, factory layout planning, purchasing/procurement, etc.

Katsunori Kanegae, Chief TPM Consultant, Director of TPM Consulting Business

After working as a production engineer at an electrical manufacturer, Katsunori became a consultant. As an expert in production strategy, production methods, and equipment management, he has been supporting domestic and international manufacturing companies in productivity improvement, cost management, defect reduction, inventory reduction, and lead time improvement projects. His expertise extends to researching advanced equipment maintenance technology and working on digital transformation in equipment maintenance. He also has authored numerous articles on digital transformation.

As part of your visit, JMAC is excited to offer a unique opportunity to tour one of Japan's leading manufacturing companies on March 19, 2025. Witness the culture of continuous improvement that has driven their success.

*Please register here for factory tours (Registration Form)

For more information or to express your interest, please contact us through the inquiry form.(Click here for the JMAC inquiry form)

If you have the contact email address of your regional JMAC market manager, feel free to reach out to them directly.

We look forward to creating a memorable and enriching experience for you during your time in Japan.

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