3. 5 S’s Practiced on Percent of Critical Equipment

This indicator examines the percentage of critical equipment that has been or is currently included in the 5 S program. These activities focus on cleaning and organizing the workplace. They uncover ways to make the workplace more efficient or uncover problems with equipment, because clean equipment is easier to inspect. The calculation is:

Critical Equipment Items Covered by 5 S Activities*

Total Number of Critical Equipment Items

This indicator is derived by dividing the critical equipment items covered by the 5 S activities by the total number of critical equipment items. The goal is 100%. These activities can highlight basic opportunities for improvement. They should never be overlooked because they are usually low cost and can produce some good cost benefits.

Strengths

This indicator is essential for any company striving to insure good employee involvement. The activities are basic in nature, but give all a chance to be involved. The indicator insures that no equipment is missed and no operators are left out of the activities.

Weaknesses

The major weakness to this indicator is it may cause some to focus too much on just cleaning and organizing. Such a focus is a trap that some companies have been led into by those who think cleaning is all the improvement their equipment requires. It certainly is a good place to start, but not to stop.

4. Savings Attributed to TPM Efforts

This indicator is calculated by quantifying the increase in overall equipment effectiveness. For example, if the OEE increases by 10 points from 45% to 55%, how much additional product is made or processed? Maybe it is 5,000 more plastic cases at a value of $10 each. This would represent $50,000 worth of additional product. Does the market exist to sell the items or are sales tied to a fixed contract? These issues impact the true value to the company of the increased production. Perhaps the only benefit is that the product is produced at a lower cost due to the increased efficiency. However, maybe the market demand for the product exists and every additional part that is made can be sold. In either case, the study needs to be made and the savings needs to be calculated. The two major areas to examine are:

Increased Capacity

Increased Quality

While the OEE is the real indicator, the results need to be converted to dollars. Then on a weekly or, at most, a monthly basis the improvement results need to be trended in dollars and posted by the equipment where the employees can see the results of their efforts. This form of recognition motivates and stimulates individuals to look for even more improvement opportunities.

5. Decreasing Cost of Production (Manufacturing) per Unit

This indicator is closely tied to the previous one. Instead of being able to sell the additional capacity that is generated from the TPM effort, some companies focus on lowering the cost to produce. This approach is generally used by companies with fixed markets. If this is the case, the profit margin is still impacted positively because the cost to produce is an expense. The expense avoidance, or cost reduction, is converted to profit on a dollar-for-dollar basis. Tracking the cost to produce on a weekly basis and trending it over a rolling 12-month window can provide some interesting stimulation for managers interested in improving the company’s profits.