Most companies today are implementing the fundamentals, principles and tools of a process that has been developed over the course of many years by a leading global manufacturer: the Toyota Production System.
As we all know, Lean Manufacturing is the process of utilizing the minimum amount of people, inventory, supplies, equipment and tools absolutely necessary to meet customer requirements. It is such a powerful methodology that it has transitioned from its manufacturing roots into other industries (Lean Healthcare, Lean Thinking, Lean Office, etc.). Through this industrial transformation, Total Productive Maintenance (TPM ), one of the most important Lean tools in the industry, has transformed accordingly.
Outside the scope of the manufacturing industry, service operations are 80% of the GDP. In the manufacturing industry, it is common to have only 20% of products driven by direct manufacturing labor; the other 80% comes from costs that are designed into the product or cost associated with support and design functions (Finance, HR, Product Development, Purchasing, Engineering, etc.).
So let’s discuss the impact of TPM in both the manufacturing and service industries. TPM has different meanings and, depending on the industry, even different names, such as Total Preventive Maintenance, Total Perfect Manufacturing, Total Productive Management, Total Profit Management, Total People/Process Management, etc. Whatever it’s called, there is really only one definition: TPM is a process improvement strategy which improves a process or equipment effectiveness by shifting from reactive activities to proactive activities. It is based on the belief that it is impossible to consistently provide quality products or services with unreliable or defective processes and equipment.
We focus on two metrics for TPM effectiveness: OEE (Overall Equipment Efficiency) commonly used in the manufacturing industry, and OPE (Overall Performance Efficiency) commonly used in the service industry.
OEE is a metric that the teams use to measure their progress. OEE is a “best practices” way to monitor and improve the effectiveness of your manufacturing process (machines, manufacturing cells, assembly lines, etc.) OEE is simple and practical. It takes the most common and important sources of manufacturing productivity loss, places them into three primary categories and distills them into metrics that provide an excellent gauge for measuring where you are – and how you can improve. OEE is measured by multiplying three factors expressed in percentages: Equipment Availability (Equipment Failure & Adjustments and Set-ups), Performance Efficiency (Reduced Speed, Minor Stops and Idling), and Quality (Rejects and Defects, Startup Losses). If you’re operating at 85% OEE, you are considered to be World Class.
OPE is the TPM metric commonly used outside the manufacturing environment (it can be used in the manufacturing environment to analyze people/process performance). OPE stands for Overall Performance Efficiency. OPE indicates how effective People/Processes are running and provides a tool on which to base improvement efforts in support of business objectives. OPE is calculated by multiplying three factors expressed as percentages: Scheduling & Abnormalities, Operator Performance, and Process Performance. These factors measure Value and Non-Value Added in the process (waiting waste, change-over waste, retrieving waste, delivering waste, cell motion waste, rework waste, etc.).
OPE and OEE follow a six step process (Making and Observation):
1. Select the process (target output, cycle time, main activities)
2. Make detailed process description (based on shop floor observations while following and observing the operators and find out value added operations)
3. Stopwatch the operations (identify causes of variability)
4. Make OPE and OEE calculations (to find out the wastes within the process and evaluate them)
5. Look for the root causes of waste
6. Confirm with observed members that the root causes identified are representative.
Applying manufacturing tools and techniques in other industries outside the manufacturing environment (hospitals, office, etc.) may seem counterintuitive but as other industries have learned, it’s not the tool but the concept of the tool or process that is important.