16 big losses for manufacturing and services

16 Big Losses –
Manufacturing and Services
1
The School of Continuous Improvement
(C) THE SCHOOL OF CONTINUOUS IMPROVEMENT 16 BIG LOSSES V1.0

Foreword
1. This presentation on 16 Big Losses has been prepared by C.
Vishwanathan with reference to original literature from TPM (Total
Productive Maintenance).
2. Any reference to any companies is purely coincidental, with the
purpose of illustration only. To protect confidentiality, company
names are masked.
3. This module should be used only for purposes of learning and
implementation. Selling this module/ re-selling/ reproducing in any
form is punishable.
(C) THE SCHOOL OF CONTINUOUS IMPROVEMENT 16 BIG LOSSES V1.0 2

What is 16 Big Losses?
1. Toyota follows a strict protocol in their operating systems known as Total Productive
Maintenance. As per Total Productive Maintenance, factors that combine to impact
productivity in an organization are tagged under 16 various points. These are known as
16 Big Losses.
2. Names of these losses could be different in organizations, but broadly you would find
these categories existing in any organization.
3. These 16 losses add up to produce a negative impact on productivity and quality of the
products produced by the organization.
4. Although TPM has strict manufacturing contexts, a variant of TPM known as TSM (Total
Service Management) has been introduced in this module.

16 Big Losses – The Big 3
16 Big Losses
Labour effectiveness
losses
Resource
consumption losses
Equipment losses

Labour Effectiveness Losses
Labour
Effectiveness
Losses
Management loss
Line Organization Loss
Internal Logistics LossMotion Loss
Measurement and
adjustment loss

Management Loss in Manufacturing
1. Meeting
2. Setting up reports
3. Reporting
4. Waiting for materials
5. Waiting for instructions
Management Loss in Services
1. Team meetings
2. Quality Assurance Feedback
3. Delay in On the Job training
4. Delay in moving associate to operational role from training (Learning curve)
Management loss highlights the productive hours lost by an organization due to waiting
for instructions and materials.

Motion Loss in Manufacturing
1. Equipment shutdown
2. Equipment maintenance
3. Inadequate calibration of equipment
4. Slow machines
5. Incorrect maintenance procedure/ Inadequate maintenance staff
Motion Loss in Services
1. IT Downtime
2. Lack of SOPs/ Inaccurate adherence to SOPs/ Uncontrolled SOPs
Motion loss highlights the productive hours lost by an organization due to equipment
performance, methods and procedures and skill gaps.

Line Organization Loss in Manufacturing
1. Manual data collection for reports
2. Lack of automated downtime/ defect flagging mechanism
3. Offline training for operators
Motion Loss in Services
1. Data entry
2. Cumbersome procedures to capture information flow
3. High training time
Line organization loss highlights the productive hours lost by an organization due to
lack of automation/ failure to automate and poor organizational practices.

Internal Logistics Loss in Manufacturing
1. Wasteful movement of goods in the factory
2. Wasteful work in progress inventory
3. Unnecessary forklift movement
4. Waste due to excessive container/ pack sizes
Internal Logistics Loss in Services
1. Unnecessary information flow
2. Resources moving from one place to another seeking approvals
3. Transactions moving from one place to another in form of departmental hand-offs.
Internal Logistics loss highlights the productive hours lost by an organization due to
inefficient methods of movement of material through the organization.

Measurement and adjustment Loss in Manufacturing
1. Inaccurate and not precise measurement systems
2. Data recording errors
3. Bad calibration of measurement systems.
4. Excessive inspection
Measurement and adjustment loss in Services
1. Lack of reports.
2. Data entry errors.
3. Insufficient capture of information by existing reports.
Measurement and adjustment loss highlights the productive hours lost by an
organization due to frequent measurement and adjustment done by the organization.

Labour Effectiveness – An
Example
1. Total shift time = 540 minutes  Working Hours
2. Meeting times + Lunch Breaks = 90 minutes  Operating hours
3. Idle time + Waiting time = 60 minutes
4. Net working hours = 540 minutes – 90 minutes – 60 minutes = 390 minutes
5. Logistics + People movement time = 10 minutes
6. Effective working hours = 390 minutes – 10 minutes = 380 minutes
7. Measurement errors adjustment = 20 minutes
8. Value added production hours = 380 minutes – 20 minutes = 360 minutes
Labour effectiveness = 360 minutes/ 540 minutes = 66.67% or 360 minutes/ 480 minutes = 75%.
Thus, the organization loses approximately 33% of its time due to ineffectiveness in the way how its
workforce operates.

Resource consumption losses
Resource
consumption
losses
Energy loss
Consumables loss
Yield Loss

Resource Consumption Loss in Manufacturing
1. Startup heating of furnace to reach ambient temperature.
2. Thermal dissipation as a natural property
3. Overloading of equipment causing breakdown/ energy loss
Energy Loss in Services
1. Loss due to accumulation of files in server space resulting in slow working of
systems.
2. Overtime in organizations resulting in intellectual burnouts in resources.
Energy loss highlights the productive hours lost by an organization due to startup,
overload or any other mechanical characteristics of an equipment.

Consumable Loss in Manufacturing
1. Cost of spare parts
2. Cost of producing spare parts
3. Cost of replacing spare parts
Consumable Loss in Services
1. Cost of bad attrition
2. Cost of training associates
3. Cost of IT systems maintenance
Consumable loss highlights the cost incurred by the organization by consumption of
spare parts as part of the endeavour to keep machines running.

Yield Loss in Manufacturing
1. Loss due to over-packing
2. Loss due to in-progress scrap
3. Loss due to inefficient methods of dealing with material
Yield Loss in Services
1. Inefficient people performance as against benchmarked performance.
2. Inefficient system performance as against design
Yield loss is the loss in dollars due to difference in input provided to the production line
and the output of the finished goods.

Resource Consumption Loss –
An example
1. Standard cost of operations is $10 per unit.
2. Furnace heated for 15 minutes extra - $3 per unit.
3. Thermal dissipation losses - $1 per unit.
4. Cost of spare parts - $9 per unit.
5. Bad quality loss - $3 per unit.
6. Revised cost of operations - $26 per unit
As you can see, the resource consumption losses often contribute to increase the cost
incurred by the operations to make the product. This is by far spoken about as the Hidden
component to calculating cost of operations. Not a lot of factories pay attention to
resource consumption loss.

Equipment Losses
Labour
Effectiveness
Losses
Breakdown loss
Cutting Blade
replacement loss
Defect and Rework
loss
Setup and adjustment
loss
Startup loss
Idling and minor
stoppages loss
Shutdown loss
Speed reduction loss

Equipment Losses
Breakdown Loss in Manufacturing
1. Electrical fault
2. Failure causing machine to be stopped completely
3. Pneumatic failures
Breakdown Loss in Services
1. CRM systems downtime or failure
2. Power shutdown impacting working on the systems
Breakdown loss is the loss of time in hours due to equipment shutdown/ systems
shutdown, resulting in complete failure of operations.

Equipment Losses
Setup Loss in Manufacturing
1. Changing packaging
2. Die and Knife changes
3. Feeder Belt rate changes
Setup Loss in Services
1. CRM systems downtime or failure
2. Power shutdown impacting working on the systems
Setup or adjustment loss is the loss due to changeover of products which results in
changing the machine settings to make it ready for the next production run.

Equipment Losses
Cutting Blade Replacement Loss in Manufacturing
1. Machine components wear out
Cutting Blade Replacement Loss in Services
1. Replacing old IT systems.
Cutting blade replacement loss is the time loss incurred by the company when a worn
out component from the machine is replaced

Equipment Losses
Start-up Loss in Manufacturing
1. Start of the day machine setup
Start-up Loss in Services
1. Preparing a new trainee for production after training.
Start-up loss is the time loss incurred by the organization needed to setup their
equipment to a steady state so that manufacturing commences.

Equipment Losses
Idling Loss in Manufacturing
1. Machine indexing
2. Mould emptying
3. Sensor faults
Idling Loss in Services
1. Feedback sessions with Quality Department
2. System stoppages for less than 5 minutes fixed usually by rebooting or restarting.
Idling loss is the time loss incurred by the organization due to minor stoppages to work
due to certain machine faults/ service breaks etc.

Equipment Losses
Speed reduction Loss in Manufacturing
1. Poor quality belts
2. Lack of maintenance of machine components
Speed reduction Loss in Services
1. Low rate of procurement.
2. Increased turnaround time for processing a transaction.
Speed reduction loss is the production capacity loss incurred due to machines running
less than their design speeds.

Equipment Losses
Defect and Rework Loss in Manufacturing
1. Out of specifications products
2. Poor surface finish
3. Incorrect labeling
Defect and Rework Loss in Services
1. Transactions not meeting customer requirements.
2. Errors in transactions
3. Multiple work needed on same transactions.
4. Transactions looping back and forth in the value stream.
Defect and Rework loss is the production capacity loss due to products that are made
either out of specifications or products that needed rework.

Equipment Losses
Shutdown Loss in Manufacturing
1. Preventive maintenance schedules
2. Oiling periods
3. Periodic overhaul of machines
Shutdown Loss in Services
1. Townhall meetings for all employees
2. Complete system shutdown due to network failures
Shutdown loss is the loss of production time by completely shutting the equipment
down to carry out periodic maintenance activities.

Equipment Losses -
Clarification
1. There is a very fine line of difference between Breakdown and Shutdown loss and
this needs to be understood clearly.
2. Shutdown loss happens as a planned activity, whereas Breakdown loss doesn’t
happen due to planned activities.
3. Most of the times, factories plan their production targets around Shutdown losses.
Example, if a factory invests 4 hours in a week as preventive maintenance schedules,
these 4 hours will contribute to shutdown losses, but in essence, may consider
beneficial for the factory.
4. Eliminating these losses should never be the target as factories may face one or the
other issues. What every organization must do is to try and reduce these losses.

16 Big Losses – A Summary
1. Every organization should decide to collate losses measured under each of the
categories discussed here.
2. Reports should be collected. For bits of data that are not available, a manual data
collection mechanism should be set forth.
3. An organization should consider all modes of failure that have and can impact the
organization in the future.
4. Each of these losses will have a contributing root cause. The organization must use
tools like 5 WHY Analysis with Cause and Effect Diagrams to simplistically arrive at
the root cause.

16 big losses for manufacturing and services

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16 big losses for manufacturing and services