JMAC Consultant Tips: Concept of Loss Improvement #2 ~ 16 Major Losses (+α) ~ Total Productive Maintenance - TPM

Loss definition and classification are one of the most important issues, especially when you embark on the journey of loss elimination. This time, JMAC focuses on loss definition and classification.

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.