Addressing the 'Six Big Losses':
A New Approach to Old Problems in Process Manufacturing
The Missing Ingredient in MES
Once a company realizes that a paper-based system isnot going to work, it will typically deploy some form of automated shop floor data collection system, often inthe form of an MES (Manufacturing Execution System).But MES, while the right idea, often adds confusionand complexity. These systems tend to generatereports and a plethora of data that is difficult to act on.Furthermore, an MES is not designed to force a changein behavior. MES can certainly produce a tremendousamount of data. But data in and of itself does notengender action. Without a feedback loop thatdelivers real-time information to operators on howthey are performing at any given moment, operatorscannot make sound decisions and take appropriateand timely action.
“Relying on streams of raw data and outdated analysis canbe compared to driving a car blindfolded and then gettinga report at the end of the day detailing every accidentyou caused,” says David Gallagher, operations director forGreencore Cakes and Desserts, one of Europe’s leadingambient cake and dessert manufacturers. “A report on yieldand cycle time three days later is not very useful to a busyoperator whose primary task is to keep the line moving atthat very moment. What operators need is real-time andrelevant information they can use to avoid ‘accidents’ as theyapproach obstacles.”
In terms of continuous improvement, this string of potential failures puts manufacturers back to squareone: managing production operations in the dark. This can be especially frustrating for executives thatrecognize that they are still sitting on a potential20 to 50 percent opportunity for performanceimprovement—yet they are still unsure of how tocapitalize on that opportunity.
A New Approach to Address OldProblems
Increasingly, companies working in processmanufacturing environments are discovering asurprisingly effective framework from which to tacklethe CI challenge: the “Six Big Losses” approach.Developed in the 1970s by the Japan Institute of PlantMaintenance (JIPM), the Six Big Losses framework enables manufacturers to examine their efficiencyproblem with an unprecedented level of granularity.
The Six Big LossesLoss Category
1. Equipment failures2. Set-up and changeoversUtilization (Availability)3. Idling and minor stoppages4. Reduced speed operationRate Loss (Performance)5. Scrap and rework 6. Startup lossesYield (Quality)
Besides measuring the product coming out of a machine, the Six Big Losses framework helpsa manufacturer delve deeper into productionperformance by better determining what could havecome out of the machine and where effectiveness issuffering. The framework categorizes the reasons why100 percent efficiency is not being attained into threemajor areas—downtime (availability), speed losses(performance) and defect losses (yield)—which arethen broken down further into six distinct categories.Overall Equipment Effectiveness, or OEE, offers asimple numerical representation of what is causing theinefficiency gap, providing daily information abouthow effectively equipment is running and which of thesix loss areas need improvement. (OEE is representedas Availability Rate × Performance Rate × QualityRate). Breaking these constituent parts into the SixBig losses enables producers to not only calculate aholistic performance metric but to also delve into theunderlying categories affecting performance. This proven framework has enabled hundreds of manufacturing organizations to determine withgreat precision, the root cause of their inefficiencies.It provides the necessary structure for tacklingthe problems, improving efficiency and capacity,driving down costs and improving profitability.For manufacturers focused on removing capacityconstraints, the framework can also help unlock additional capacity while reducing manufacturingcosts and improving profitability.
Adopting Adequate Technology
At the same time, improving manufacturingperformance through a focus on the Six Big Lossesrequires a move from spreadsheets and paper-basedsystems to real-time performance managementtechnology. Accurately measuring OEE and the SixBig Losses manually or with spreadsheets is not onlyextremely difficult, it also fails to provide granularvisibility into each of the six performance areas.