Leveraging TPM to the corporate bottom line

This is Part 1 of a two-part series. The second part will appear in the June issue. Total productive maintenance (TPM) was first introduced in Japan by Seiichi Nakajima in the early 1970s. The purpose of TPM is to maximize equipment effectiveness through autonomous maintenance by operators and company-led, small-group activities.

05/10/2004


This is Part 1 of a two-part series. The second part will appear in the June issue.

Total productive maintenance (TPM) was first introduced in Japan by Seiichi Nakajima in the early 1970s. The purpose of TPM is to maximize equipment effectiveness through autonomous maintenance by operators and company-led, small-group activities. These activities focus on eliminating failures, defects, wastes, and losses incurred through equipment operation.

A key tenant of TPM's approach is to involve everyone (executive level management to production workers). A system-wide view includes maintenance, operations, and engineering. Nakajima reports that among PM prize winners, "Worker productivity increased by 60%, and accidental breakdowns were reduced to1/ 100 or1/ 500 — close to zero." Tremendous operational efficiency gains have been made, but TPM efforts will not translate into bottom-line profits unless the company as a whole is in position to leverage these gains.

Albert Einstein said, "The significant problems we face today cannot be solved at the same level of thinking we were at when we created them.... The important thing is not to stop questioning."

Leveraging benefits

CEOs and CFOs are frustrated because they have little to show for their significant investments in improved operations. The inability of TPM practitioners to directly link their efforts to increased profits results in a lack of credibility for TPM and inhouse manufacturing as a whole. Without a foreseeable path to increased profits, the corporate decision makers are forced to follow the rest of the pack and jump on the bandwagon of outsourcing and offload. We won't focus on the mechanics of TPM, its history, or its well-documented benefits, but rather on how to leverage the benefits realized through TPM into the corporate bottom line.

TPM practitioners can impact the bottom line — they have the necessary insights into the inner workings/flow on the shop floor, and they are key to keeping production flowing. In order to directly link the improvement activities to increased profits, the TPM practitoner must understand the nine key principles and translate them into guidelines for action. We'll discuss the first five principles now, and explore the last four in the June installment.

Principle 1

Hold a systems view.

We intuitively know that equipment effectiveness is important to the competitiveness and profitability of a company. But at the same time, TPM advocates realize that there are many aspects of the profitability equation that are beyond their scope of control.

If we want to understand the manufacturing system equipment and the manufacturing system itself, we are going to have to look to the larger, containing system for understanding. In addition, the aim of the system, and the interdependent component interactions, are two attributes we must consider.

The next principle will provide the TPM advocate with a simple perspective for viewing the overall system.

Principle 2

The production system can be viewed as a chain system with a weakest link. The weakest link limits the output of the entire system.

One simple way a company or a production system can be modeled is through an illustration of a chain. The purpose or function of a chain is to transmit force from one end to the other. Each link in the chain is dependent on the previous link to accept force and the following link to receive force. If any link in the system fails, the chain cannot perform its aim.

No chain is capable of transmitting infinite force. If the load (or market) is infinite, one of the links in the chain will break. Somewhere in the chain is the weakest link — this weak link limits the effectiveness of the overall chain system. If we want to increase the capacity in our chain, we must start by increasing the load capacity at the weakest link. By definition, all other links already have more capacity, so if we strengthen any of the nonconstraints, we will not increase the strength of the chain. We would just be making it heavier and more difficult to manage.

A product manufacturing company can easily be viewed as a chain. Somewhere in the sequence of stages in transforming products from customer orders to delivery and paid receipts, there is a limiting stage — a weak link. Sometimes, the limitation is somewhere in manufacturing, implying if you could make more you would sell more. Understanding this principle can open the door for increasing production for little or no increase in expense and simplify overall manufacturing management.

Principle 3

Any waste or loss at the weakest link is a loss to the entire production system.

Potential losses at the weak link have two potential causes. The first cause is expressed through TPM measures known as overall equipment effectiveness (OEE). Nakajima defines the six OEE losses in Chapter 3 of Introduction to TPM .

Certainly the weak link should be the first and primary focus of the TPM program.

Principle 4

Resources before and after the weakest link, by definition, have capacity to catch up with the weak link, subject to variation.

The second weak-link-loss cause is starvation. Any time the most constrained resource does not have work to do, that lost production is lost forever. When using the chain analogy, the stages feeding the weak link have more capacity than the weak link. However, we must remember all resources are subject to variation — on some days any resource will have less capacity than other days.

When the resource feeding the weak link stops or slows down, there are only two easy questions the shop manager and TPM practitioners need to answer to establish the priority of the problem:

1. How long will it be before the weak link resource is forced to stop? 2. Can the feeding resource catch up before the weak link starves?

Principle 5

Increased production capacity of the weakest link must be sold. Otherwise, there is no gain for the system.

It is easy to make the assumption that increased production at the weak-link resource due to TPM and managing for no starvation will generate more profit. But the larger system must be considered. We must understand where the increased production is going. If the production is going to inventory, more work in progress (WIP) on the factory floor, or more reserve stock at the distributors, then the overall system is not generating more profit — it is just unnecessarily clogging up the system with inventory or work in progress.

If the increased capacity at the constrained resource is going to reach the bottom line, the additional production must be sold.


Author Information

Steve Dightman recently retired from a Fortune 15 company where his focus was building knowledge and skills in others. Today, Mr. Dightman is a Principal with RegularGuys Consulting where his focus is helping business leaders achieve their business goals by leveraging their unknown capacity and hidden opportunities in their organizations. He can be contacted by email at stevedightman@theregularguys.com , or by telephone at 253-988-0878.




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