Understanding the 6 Big Losses in Manufacturing

What are the Six Big Losses in Manufacturing?

The Six Big Losses framework categorizes various types of common equipment-related losses. These include availability loss, performance loss, and quality loss. Manufacturers should be familiarized with these areas of losses—but addressing them is a moving target. Making a meaningful impact on the sources of loss requires a commitment to proactive maintenance, methods for quantifying specific causes of loss, organizing teams to address losses in their roles, and making smart investments in digital solutions.

How do the Six Big Losses relate to OEE and TPM methodologies?

The Six Big Losses are sorted into the three main components of Overall Equipment Effectiveness (OEE)—availability, performance, and quality. By directly aligning the losses with OEE, it is easier to understand which losses are affecting performance and why. And by breaking each of the three factors into two additional subsets, manufacturers can drill down on more specific root causes. For example, two types of losses fall under “availability”—breakdowns and changeovers. Instead of flagging “availability” as a possible cause for lagging OEE, the Six Big Losses framework allows workers to get more granular and pinpoint equipment breakdowns as the true root cause.

The concept of the Six Big Losses in manufacturing originates from the idea of Total Productive Maintenance (TPM), which states that maintenance is the responsibility of all employees. Using a TPM model, teams should work together to maximize equipment effectiveness. It requires cross-functional teams, each working within their roles to make maintenance more proactive, predictive, and integrated. TPM is a methodology for organizing teams to look at maintenance as a fundamental cornerstone of operations. The mindset driving TPM is an understanding that reactive, break-fix models are the source of these Six Big Losses—which can inflict punishing costs to time, productivity, and profit.

TPM and OEE work hand-in-glove, as TPM helps organize teams and direct-role based efforts. These teams use OEE as to guide their efforts, quantify the impact of losses, and measure the effect of their efforts to reduce loss.

Why use Six Big Losses?

The Six Big Losses framework gives a more detailed view of the types of losses that can degrade OEE. As manufacturers improve upon each of the Six Big Losses, their OEE scores can drastically improve, indicating an upward trend in efficiency. Since the introduction of the Six Big Losses in Manufacturing was first introduced in 1971, the definitions of specific losses have been refined to be more precise and effective. By focusing on the areas experiencing significant losses, you can begin to understand the root causes of issues, fix them, and guarantee a more seamless process moving forward.

The Six Big Losses

Availability Loss

In OEE, availability refers to the ratio of run time to planned production time. Any availability loss that amounts to over a few minutes can negatively impact OEE. Stops can sometimes be mitigated by encouraging operators to perform essential tasks when production processes are not underway.

Unplanned Stops

Unplanned stops occur when equipment is scheduled to run but cannot due to events such as breakdowns, tool failures, maintenance, or a lack of workers. These stops are often the most disruptive and costly type of downtime as they interfere with the manufacturing process and require immediate attention.

Planned Stops

Planned stops, on the other hand, occur when known events such as changeovers, cleaning, planned maintenance, and quality inspections cause machine downtime. Although planned stops are unavoidable and necessary for the long-term health of equipment, they also reduce productivity in the moment.

Performance Loss

Performance loss is one of the factors that affects OEE, as it reduces the speed of the manufacturing process. Anything that might cause a slower than usual run time can lead to performance loss.

Small Stops

Small stops occur when equipment briefly stops working for about one or two minutes. These are frequently caused by equipment issues, jams, or blockages, but are usually quickly resolved. While small stops might not seem like they amount to much, they can add up to a significant amount of lost production time and create a noticeable impact on performance.

Slow Cycles

A piece of equipment experiences slow cycles when it is running slower than average. Dirty or old equipment and inexperienced operators can contribute to slow cycles. Slow cycles reduce the number of pieces that can be manufactured, causing efficiency and profitability to sink.

Quality Loss

Production Defects

Wrong machine settings or operator errors can cause production defects. These defects include faulty parts created throughout the production process. These defects lessen product quality and can negatively impact customer satisfaction.

Startup Defects

Faulty parts might also be produced during changeovers or at the very beginning of the manufacturing process. These defects can occur if the manufacturing equipment isn’t properly optimized to produce a new item or batch and are usually scrapped or reworked into new parts.

Fully Productive Time: How losses are measured against OEE

Benefits of Six Big Losses

Analyzing the Six Big Losses in Manufacturing is one of the first steps a manufacturer can take to improve their OEE. By using the framework to categorize production losses, manufacturing teams can gain a better understanding of their top improvement initiatives—and how to prioritize them.

In the short term, the Six Big Losses framework can:

• Prioritize individual improvements based on the impact of each loss category on OEE

• Encourage communication and collaboration across multiple teams to tackle equipment issues

• Help identify root causes of productivity loss

In the long term, the framework can:

• Cultivate a culture of continuous improvement and encourage all team members to take responsibility for maximizing OEE

• Help achieve overarching strategic goals, such as reducing costs or increasing customer satisfaction

How to reduce production time loss

Without detailed data for root cause analysis and a lack of real-time visibility, manufacturers traditionally have resorted to trial and error to reduce time loss in their production process. MES and home-grown applications often require manual data collection, which can introduce errors and shifts focus away from problem solving and implementing necessary improvements.

To be more efficient in their loss-reduction efforts, manufacturing leaders are increasingly turning to out-of-the-box manufacturing solutions. These digital solutions are enabling them to swiftly capture data with less manual effort, ultimately allowing them to set and confirm priorities on allocation of continuous improvement (CI) resources. Some of these tools also provide a more expansive ability to measure loss in ways that would be too complex using manual methods—such as identifying and measuring the impact of loss across multiple manufacturing sites. These tools also help provide a more objective assessment of the true cost of losses; in some cases hidden or seemingly small problems may be more costly than highly visible issues.

Moving the needle: digital manufacturing solutions in action

Manufacturing leaders who are embracing digital transformation solutions to redefine the limits of OEE and CI efforts are quick to cite a dramatic impact on their business. For instance, the automotive leader Tofaş has seen a 60% drop in safety incidents, a 7% reduction in energy consumption, and shedding 15% of their maintenance costs. All of this has resulted in a dramatic 12% boost to their OEE metrics.

Benefits of reducing lost production time

By reducing lost production time, organizations can more easily improve quality, productivity, and profitability. By taking measures to maximize production time, manufacturers can achieve:

• Lower costs: Unplanned downtime can contribute to the waste of raw materials, energy, and labor. As lost production time reduces, so does the need for expensive materials, repairs, and replacements.

• Heightened quality: Defects, rework, and customer dissatisfaction can often stem from downtime on the manufacturing floor. Minimizing downtime can help ensure consistent quality and reduce costs relating to scrap and rework. Digital manufacturing solutions helped Brembo improve uptime, ultimately allowing the brake manufacturer to boost OEE, enhance quality, and increase throughput.

• Higher employee engagement: Lost production time can cause stress and confusion on the manufacturing floor. Reducing equipment downtime can help manufacturers get back to work quicker, boosting morale and satisfaction in the process.

• Improved safety: Unplanned downtime is often caused by machine breakdowns. By reducing these stops, manufacturers can foster a safer environment and avoid mishaps caused by equipment malfunctions.

How do performance management solutions help?

TPM and OEE Are both crucial tools in addressing the challenge of the Six Big Losses in Manufacturing, but once adopted, they may offer diminishing returns over time. Digital manufacturing solutions— particularly those focused on performance management—are changing the game by unlocking previously inaccessible data-driven insights into losses and performance issues. In short, they are helping companies collect these insights faster, more fully, and are providing a clear prioritization into which problems are truly the most costly.

Traditional improvement measures often lack flexibility and agility, meaning disconnected processes and a lack of insights make it difficult to collect and interpret valuable data. Implementing performance management solutions can boost OEE and uncover unplanned downtime, categorize it, and prioritize the best opportunities for CI. Regaining lost production time can result in potential revenue generation in the millions.

In high-pressure, highly competitive markets where myriad companies are looking for the latest edge to jockey for market-leadership position, manufacturing leaders are actively seeking out innovative solutions to bring about substantive reductions in loss. Companies that settle for yesterday’s approach risk losing out on growth to competitors who are making smart digital transformation investments.