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Source: Optimizing OEE, productivity and production cost for improving sales volume in an automobile industry through TPM: a case study.
By: Gupta, Pardeep, Vardhan, Sachit,
Picture Source: https://www.tafe.com/tractors/imt/
Tractor Company
Situated in Punjab, India and manufactures tractors in range from 20 to 75 HP.
The company initiated the TPM journey from 2008 onwards for achieving zero breakdowns, zero losses, zero defectives and zero accidents with a motive to improve various TPM performance measures or aspects such as quality, productivity, cost, delivery, safety and morale.
The key management indices (KMIs) are the representative measures of the successful implementation of TPM as manufacturing performance improvement tool which were identified after critical examination with an aim to gain the TPM goals and are presented. . The responsibility of attaining these KMIs, KPIs and KAIs was of TPM steering committee, pillars and circles, respectively.
Deployment of TPM strategies to KMIs.
TPM parameters XYZ Ltd. strategies Key management indices (KMIs)
Quality Improve customer centricity Customer satisfaction index, Number of field complaints
Sales & Improve market position Sales volume, Expand product range
Production
Cost target cost leadership System cost
Safety Achieve sustainability Safety (no. of major accidents)
Morale Enhance organisational capability Employee satisfaction index
Sales volume was taken up as the principal KMI to be addressed first to achieve the following objectives to attain high operational performance.
( 1) Old plant and ageing machines.
( 2) Higher number of breakdowns.
( 3) Reduce manufacturing cost by minimising losses.
( 4) Quality improvement.
( 5) Quick response to market.
OEE provided the management a tool that helped the company to monitor and optimise process stability after improving the OEE of all the machines to more than 85%. OEE improvement focuses on overcoming production deficiencies, reduce downtime, minimise set-up time and improve operator performance. Productivity means how much and how well has been produced from the available resources. Producing more or better goods from the same resources or the same goods from lesser resources means increase in productivity. Production cost is also a significant manufacturing performance measure and its reduction can be realised by increasing productivity and reducing production losses.
3. Improving sales volume constructs
Productivity (tractors/man/month) target is to increase tractor production from 2.4 to 4.3, and production cost reduction target is (% to total cost) from 9.26 to 6.5 in a period of next three years.
Annual production of tractors achieved
Year Year 2008 Year 2014
Production volume 19,109 46,324
OEE improvement
The initial measurement of OEE at the start of TPM initiatives is normally less than 40% in most of the industries and a well-managed TPM programme can elevate OEE to over 85% as a world-class standard within a period of two to three years. The company has 238 machines pertaining to the plant which were about 15 to 25 years old. Initially OEE of 50 machines belonging to light machine shop (LMS) with the application of OEE tool was attempted. ed. The OEE of all these machines was evaluated with the use of excel-based software.
OEE measurement methodology
OEE = Availability (A) × Performance Rate (P) × Quality Rate (Q)
Loading time = Working time − Planned stoppages time
Operating Time = Loading Time – Unplanned Downtime
Planned stoppages time includes: Cleaning time, Preventive maintenance time, Operator's non availability time, Time spent on communication meetings
Un-planned down time includes: Waiting time because of non availability of tools, Set up change time, Set up adjustment time, Breakdown time, Waiting time to receive material, Power failure, Tool change time, Time lost due to tool breakage
Analysis of OEE of LMS machines
After calculating the OEE of all the 50 machines on daily basis, monthly average OEE and three months average OEE of these machines were evaluated to find out the machines having OEE less than 85%. It was found that only eight machines were having OEE more than 85% and there was a need to enhance the OEE of the remaining 42 machines having low OEE.
Five machines having OEE less than or equal to 70% were first considered for improving their OEE. The losses responsible for low OEE got identified after the use of the why–why analysis and then time bound future action plans were initiated on these five machines for enhancing their production efficiency.
Action plan for loss reduction.
S. No. Machine Loss type Action plan
1 M 08 Measurement adjustment To rectify machine/fixture
2 M 13 High set up time To reduce set up activities
3 M 16 Measurement adjustment To resolve quality problems
4 M 21 Waiting material To reduce bin changeover time
5 M 01 High set up time To reduce set-up activities
A good number of kaizen projects were carried out and the desired improvement in OEE of these five machines was achieved. Similarly, the OEE of all other machines pertaining to LMS got improved to more than 85% level.
Productivity improvement
The productivity of the company in terms of tractors/man/month was enhanced. The productivity improvement was carried out through value analysis, value engineering, de-bottlenecking and OEE improvement. For increasing production volume, investment was done on automation, improvement in infrastructure and new machines. Overall, 74% capacity enhancement was achieved after the implementation of TPM initiatives. The progressive improvement in productivity from 2.4 in 2008 to 3.8 in 2012.
Progressive improvement in productivity.
Year Capacity Productivity (tractors/man/month)
2008 25,200 2.4 0
IE - Kaizen - TPM Projects Done
Use of multi start hob
Use of plunge shaving
Machining on rear cover line
Increase bull gear loading charge
Chassis punching machine installed
2009 30,000 3.21
IE - Kaizen - TPM Projects Done
Balance gear box machining line
Re-balancing of assembly line
Life cycle assessment on bull gear shaving machine
Loading of additional gears with shafts in heat treatment (HT)
Extension of loop conveyor
2010 31,800 3.27
IE - Kaizen - TPM Projects Done
No. of hangers increased in paint shop
Manipulator of hood in assembly
Use of electrostatic gun in paint shop
Use of combination drills
Multi machine manning in light machine shop (LMS) and heavy machine shop (HMS)
Modify forging of internal gears
Shifting break housing from Heavy Machine Shop (HMS) to Light Machine Shop (LMS)
Slat conveyor installation
2011 36,000 3.72
Capital investment (INR in millions): 137
IE - Kaizen - TPM Projects Done
Re-Layout of bull pinion shaft line
Installation of 2 HT furnaces
3- start hob on bull gear
Outsourcing of low value added activities
Reduction in production cost
The product cost includes material cost, production cost and profit. Production cost incorporates machining/processing cost and costs associated with production losses. Production losses can be controlled and reduced to a good extent and this can help in reducing the production cost. Thus reducing production cost (% of total cost) from 9.26 to 6.5 within two/three years remained the aim of the company. The approach adopted by the company for reducing the contributing losses resulted in decreasing the production cost
Losses prioritisation to identify key contributing losses
Shutdown losses, availability losses, operator performance losses, quality losses and cost losses were contributing significantly in increasing the manufacturing cost of products produced by the company. One of the goals of TPM was to reduce or minimising the major losses. The purpose of implementing TPM initiatives was to identify the losses, prioritise these losses to further reduce the major contributing losses to reduce the production cost.
Loss–cost matrix preparation
The loss–cost matrix gives a clear indication of the cost impact associated with 16 major losses which can help the management to focus its efforts to effectively mitigate the most expensive losses. A loss register was maintained at the shop floor to record the losses occurring during the production cycle for each machine. The equipment downtime under different losses used to be recorded precisely in the loss register for all the shifts and for all the machines. Costs associated with all the losses with respect to variable cost and fixed cost were estimated and recorded in a well-designed loss–cost matrix by a trained Kobetsu–Kaizen (KK) pillar member having thorough financial knowledge. Then total loss–costs were calculated in terms of INR/tractor that helped in identifying the main contributing losses after prioritisation. The highest affecting losses as identified were energy loss, breakdown loss, set-up loss, yield loss and tool change loss contributing 34.3, 16.9, 15.8, 10 and 7.9% of the total loss–cost, respectively.
Loss cost matrix.
Sr. No Loss Total loss cost INR/tractor
1 Breakdown loss 98.15
2 Set up loss 91.5
3 Minor stoppages loss 5.07
4 Start up loss 5.03
5 Tool change loss 45.93
6 Speed loss 3.91
7 Shut down loss 2.11
8 Rejection & rework loss 13.75
9 Waiting material 5.14
10 Motion loss 1.38
11 Logistics loss 9.44
12 Under inspection 1.62
13 Line organisation loss 1.43
14 Energy consumption 199
15 Fixture breakdown 38.55
16 Yield loss 58
1 Reduction of energy loss
It was discovered that the highest electricity consumption of 26% was taking place in pre-treatment of components area pertaining to paint shop. A modification in heating system of phosphate solution used in paint shop was carried out on the recommendation of the IE (kaizen) project team. Indirect heating of phosphate solution through water jacket was replaced with a new system of direct heating of phosphate solution with the use of two immersion rods. With this breakthrough idea, the electricity consumption reduced from 37 Kwh/tractor to 24 Kwh/tractor causing a saving of 35% in energy consumption. Similarly, very innovative 45 different kaizen projects for energy consumption reduction were carried out in the plant leading to a total cost saving of INR 32.5 million.
2 Reduction of set-up losses
A good number of IE projects (Kaizens) were performed that resulted in reducing set-up time from 12,117 to 3184 h causing a big saving in set-up time of 73%.
3. Reduction of tool change losses
Tool change losses used to cause machines non availability leading to a significant production loss. The machines utilising highest tool change time were identified with a purpose to reduce this time. A good number of Kaizens were performed and on implementing their findings resulted in reducing tool change time from 1365 h in 2009 to 412 h in 2014. Thus a saving in tool change time by 69% was achieved within a period of five years.
4 Reduction of breakdown losses
Machines breakdown and their maintenance were the major area of concern due to their high numbers and repetitive nature of breakdowns. The major cause for high breakdowns was due to old age of majority of the machines, most of the operating system getting obsolete and due to poor planned maintenance. Jishu–Hozen (JH) initiatives, maintenance management system, maintenance information management system and predictive maintenance were evolved and implemented in all the sections of the plant to reduce the breakdown losses. With the Planned Maintenance (PM) pillar initiatives from 2008 to 2014, a total number of breakdowns reduced from 326 to 31, breakdown hours come down from 3100 to 300, mean time to repair in hours reduced from 9.5 to 2 and maintenance cost in INR/tractor reduced from 1350 to 760.
5 Reduction of yield losses
The objective of implementing quality maintenance (QM) pillar activities was to reduce field failure, in-process machining defects and to improve product quality. Defects capturing and stratification, quality assurance matrix preparation, identification of root causes for major defects, initiating kaizen projects, implementation of kaizen findings and confirming results remained the major QM pillar activities to reduce rejection and rework losses. As a result the machine shop rejection and rework decreased from 5290 to 860 PPM/month, reduction in supplier rejection reduced from 8.6 to 1.2% and field complaints also reduced by 30%. This reduction in rejection and rework losses caused a huge saving to the company.
Overall improvement in production cost
The implementation of TPM tools and techniques remained highly successful in reducing highest affecting losses – energy loss, breakdown loss, set-up loss, yield loss and tool change loss. An overall 30% reduction in production cost was achieved after saving the costs associated with the major losses within a period of six years (2009–2014).
Conclusion
The OEE of all machines got improved above 85% level. Overall 39% improvement in OEE has taken place in about five years period. An appreciable improvement up to 74% in productivity was obtained with the implementation of TPM initiatives. The implementation of TPM initiatives remained successful in minimising production losses which contributed to reduce the production cost by 30%. The reduction in production cost (percentage of total cost) occurred from 9.26 to 6.4 in six years time. The holistic impact of improvements in OEE, productivity and production cost played a prominent role in optimising the sales volume of the company form 27,423 tractors in 2008 to 78,765 in 2014. The growth in sales volume brought a considerable improvement in market share of the company from 9.1 to 12.8%.
It is observed that OEE and productivity are closely linked together and improvement in OEE contributes in enhancing plant productivity. The study also summarises that OEE is not the only productivity improvement criteria whereas capacity building through improvement projects or technology up gradation with capital investment also contributed in escalating productivity. The company achieved notably tangible and intangible benefits with the TPM implementation and received the 'Award for TPM Excellence' in 2012 in recognition of its enhanced manufacturing capability. The company continued its TPM journey further to achieve higher levels of improved manufacturing performance.
Read the original case study for more details.
Source:
Optimizing OEE, productivity and production cost for improving sales volume in an automobile industry through TPM: a case study. By: Gupta, Pardeep, Vardhan, Sachit, International Journal of Production Research, 00207543, May2016, Vol. 54, Issue 10
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