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Seiichi Nakajima published a book in 1984 called TPM Nyūmon (published in English as Introduction to TPM: Total Productive Maintenance), which we highly recommend as an as an excellent and practical introduction to TPM, OEE and the Six Big Losses.
A common problem in manufacturing improvement programs is deciding where to focus resources. Should all equipment be improved? Should the improvement focus be on Downtime? Setup? Slow Cycles? Small Stops? Quality?
A related question is where to measure OEE (Overall Equipment Effectiveness). At every step? At the end of the line? At the beginning of the line?
The answer to both sets of questions is the same – focus on the manufacturing constraint (the bottleneck).
The concept of “the constraint” was introduced by Eli Goldratt in his 1984 novel The Goal. Dr. Goldratt described how every complex system, including manufacturing processes, consists of multiple linked activities, one of which acts as a constraint upon the entire system. The constraint should be improved until it no longer limits production, at which point the next constraint should be identified. Over time, Dr. Goldratt developed these concepts into a comprehensive set of tools known as the Theory of Constraints.
Bottom line – measure OEE AND focus improvement efforts on the constraint. The constraint is the fulcrum (i.e., point of leverage) for the entire process. Focusing improvement efforts on the constraint ensures optimal use of resources and is the fastest route to improved productivity and profitability.
The first thing to consider in a multistep manufacturing process is that OEE should always be measured at the constraint. In this context, OEE is a measure of productive time at the constraint, and OEE Quality Loss is a measure of time lost at the constraint because a part has not been made correctly the first time. Consider the following scenarios:
In addition to OEE Loss, you may have Labor Loss (if a reject part is reworked) or Yield Loss (if a reject part is scrapped). Note that Yield is a measure of the conversion of “material in” versus “good product material out”. Labor Loss and Yield Loss can occur at any point of the manufacturing process, and are independent of OEE Loss.
Beware of the temptation to measure “everything” when you actually just need to measure “enough” to drive improvement and to capture significant costs. Most companies spend too much time measuring and too little time using the information they gather.