Considering The Importance Of Tpm Particularly In Vehicle Manufacturing Industry Accounting Essay


Total Productive Maintenance (TPM) is used as established process in which machine operator get trained to perform the simple maintenance and fault-finding. This maintenance process aims to improve the organizational productivity by making processes more reliable and less wasteful. The manufacturing of vehicle much depends on the machine process and therefore the TPM as maintenance process is widely used to control the waste during the manufacturing process. This case study is the analysis of use of Total Productive Maintenance (TPM); and identifies the six losses of TPM and analyzes the losses of TPM using Overall Equipment Effectiveness (OEE). Three factors used to analyze the six losses are discussed as availability, performance and quality.

Paper is designed as case study and comprises four main sections; Introduction, literature review, analysis (calculation) and conclusion.

Chapter 1


Efficient and effective use of equipments is an important factor in the manufacturing industry. This importance rises when it comes to vehicle manufacturing because working with inventory and stopping production of vast plant may cause considerable problems and instability to the production process (Waer, 2003). In modern world when almost in all industry machines are being used and operated, in which equipments and machines is the core of the manufacturing process, there is need of such determinants that balance the performance of the organizational production function and also balance the level of success achieved in the organization (Nakajima, 1988).

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This case study is prepared considering the importance of TPM particularly in vehicle manufacturing industry. The study design chosen is literature review which examines the TPM in vehicle industry with six losses. These six losses are identified and analyzed using Overall Equipment Effectiveness (OEE) . Paper is designed to provide comprehensive literature on the use of TPM and presents six losses such as breakdown losses, set up and equipment adjustment losses, minor stoppages and interruption losses, speed losses and slow running losses, defective quality and re-work, and yield losses / Start-up/ restart losses. The analysis section of paper has analyzed the TPM losses using OEE as it is an important tool of TPM and also presents the calculation. Analysis is done to show how three main factors of OEE affect the TPM and how to improve TPM using OEE.

The conclusion of the paper presents the findings of the case study.

Chapter 2

Literature Review

Total Productive Maintenance (TPM)

With the fact that maintenance is not an expense rather an investment, this investment in maintenance is now considered as one of the most essential and basic function in vehicle manufacturing industry (Gulati et al, 2009). The aim of this maintenance is to improve the manufacturing process, have returns through quality, providing safety and creating dependability (Teresko, 1992). Over the past decades, maintenance has been recognized by world class manufacturing as such unified process that is part of manufacturing rather than an isolated function in organization. World's largest firms strive to adopt the maintenance strategies to achieve the firms' goals and objective that is increased production (Etienne-Hamilton, 1994). Total Productive Maintenance (TPM) is widely used as maintenance tool in manufacturing process and it is defined as such productive activities that are implemented by all employees. TPM mainly involves every individual in the organization including operator and the senior management in equipment improvement (Wireman, 2004). The main departments in the organization where TPM is implemented are maintenance, operations, facilities, design engineering, project engineering, construction engineering, inventory and stores, purchasing, account and finance, and plant and site management (Wireman, 2004). The implementation of Total Productive Maintenance aims to build a close relationship between Maintenance and Productivity that demonstrate the good care and up-keep of equipment resulting in higher productivity rate (Panneerselvam, 2006). It further represents the concept of improvement and creates ownership in machine operators. Through the maintenance process organization employees are empowered with the sense of efficiency and manufacturing process. The process combines the senior management and a machine operator to perform at equal level by efficiently performing on the production goals of organization. Within the organization productivity, the concept of effective and efficient is not new but the implementation of TPM possesses both characteristics (Hermann, 2000). As a result of increased competition in the quality of product and cost of product, it is vitally important for organization to maintain the quality, cost and delivery of the product by improving the productivity process. The production quality can be increased by effective and efficient equipment performance saving losses of the organization. The purpose of TPM is to save the further production investment and resources by utilizing the machine efficiently (Chan, et al., 2003).

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To better understand the functions of TPM it is essential to review goals and objectives of TPM. The major objectives of TPM are as follows:

Objectives of TPM

Improving equipment effectiveness

Improving maintenance efficiency and effectiveness

Early equipment management and maintenance prevention

Training to improve the skills of all people involved

Involving operators in routine maintenance

With above mentioned objectives TPM increases productivity, quality and controls costs inventory, increases safety and morale. With all these benefits of implementing TPM it becomes significant for companies to implement TPM in the manufacturing process of their industry (Wireman, 2004).

If TPM is implemented with its true essence in the organization manufacturing process it increases the organizational finances both at the top and the bottom of the organization (Harrison & Petty, 2002). However, eliminating the losses in the organization business process is considered as the primary essence of TPM, there are two types of losses that that it deals with: losses measured as breakdowns and quality defects and secondly it deals with the setup or change like minor stoppages, as well as lesser resources utilization (Takahashi & Osada, 1990). The implementation of TPM largely focuses on the both types of losses mentioned above with the activities that enhance the overall effectiveness of equipment process and plant through inflexible removal of 16 types of losses and improvement of performance. The process of TPM implementation is first started with the identification and design of activities that eliminated the losses carefully after measuring and evaluating them.

Losses of TPM

There are more than 10 losses found in the literature about TPM and these losses are classified according to their effects. The numbers of effects found are: major losses that affect overall equipment efficiency, Losses that affect equipment loading time, losses that affect workers efficiency and losses that affect efficient use of production subsidiary resources (Blanchard et al, 1995). The total losses found in these classifications are:

Major Losses that Affect Overall Equipment Efficiency

Failure losses (Breakdown)

Set up and adjustment losses

Cutting blade change losses

Start-up losses

Minor stoppage and idling losses

Speed losses

Defect & rework loss

Losses that Affect Equipment Loading Time

Shutdown (SD) losses

Losses that Affect Workers Efficiency

Management losses

Motion losses

Line organization losses

Distribution losses

Measurement and adjustment losses

Losses that Affect Efficient use of Production Subsidiary Resources

Energy losses

Die, jig and tool losses

Yield losses

(Kister & Hawkins, 2006)

This case study will address the six big losses of TPM that can result from faulty equipment or operation.

Table 1 presents the list of losses of TPM and has been discussed in the case study.

S. No.

Six Major Losses

Detail of Losses


Breakdown losses

It includes such losses caused by failures and types of failures may be sporadic function-stopping failures, and function-reduction failures in which the function of the equipment drops below normal


Set up and equipment adjustment losses

It includes stoppage losses that faces set-up changeovers


Minor stoppages and interruption losses

It includes the losses that take place when the equipment temporarily stops as a result of sensor actuation or jamming of the work. The equipment will operate using simple measures like removal of the work and resetting.


Speed losses and slow running losses

It includes the losses caused by actual operating speed dropping below the designed speed of the equipment.


Defective quality and re-work

It includes the losses caused by defects and reworking


Yield losses / Start-up/ restart losses

It includes the material losses caused by differences in the weight of the input materials and the weight of the quality products

(Wilson, 2002)

These losses are important to deal with by organization due to the cost that organization faces in a result of these losses.

Organizational Cost for Losses

The organizational costs of these losses are as follows:

Unexpected Breakdown

If organization is not ready to deal with an unexpected breakdown it will have to bear equipment downtime for repairs. The cost may be downtime labor and spare parts.

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Set up and Adjustment Losses

If organization has not arranged maintenance for equipment it may face the losses in set up issue and adjustments like loss of production opportunities and (yields) that take place during product changeovers, shift change or other changes in operating conditions (Hutchins, 1999).

Minor Stoppages and Interruption Losses

Lack of maintenance may cause minor stoppages and loss of interruption. Organization without TPM can bear the loss of frequent downtime production. These losses are usually not shown in the reports always remain hidden bust these losses may cause considerable equipment downtime and lost production opportunity (Willmott & McCarthy, 2001).

Speed Losses and Slow Running Losses

Lack of equipment maintenance widely affects the speed of production and ultimately slows down the process of production. If production process gets slow down due to lack of appropriate maintenance equipment it may cause the prevent quality defects and minor stoppages. Since the equipment keeps operating, these kinds of losses are not recorded and they remain hidden (Ben-Daya & Raouf, 2000).

Defective Quality and Re-work

If defective quality such as low standard production is caused by the malfunction of equipment or poor performance of machine it may cost the company to rework on the production process. The rework on the production process will increase the total cost of total production. Thus the production process which can be carried out in single cost will be double as a result of lack of maintenance (Davis, 1995).

Yield Losses / Start-up/ Restart Losses

The losses like scrap, rework, in-process damage, in-process expiration, and incorrect assembly may cause the production process to restart or yield losses. These losses can interrupt the production process as a result of improper set up and can increase the production cost for the organization.

The implementation of TPM can develop the system that eliminates the overlapping from different levels. The importance of TPM is due to elimination of probable losses and wastes that cost large amount of investment. By building TPM these cost can be saved and productivity of organization can be increased. The implementation process of TPM is comprised of four main stages including preparatory stage, introductory stage, and implementation stage and stabilizing stage. The above literature about the TPM discussed the importance of TPM within manufacturing industry and also identified the six big losses of TPM. The identification of big losses included the major areas of losses, losses details and the cost of losses that an organization has to bear. The next section of the paper presents the importance of TPM in vehicle industry, and then there would be discussion and analysis about Overall Equipment Effectiveness (OEE) in third chapter of the paper.

The Importance of TPM in Vehicle Industry

The considerable benefits of TPM have first influenced the Japan base vehicle manufacturing company Toyota. The importance of the TPM in a vehicle industry can be assessed by the fact that TPM has helped the Toyota to take its production system to the higher level. With respect to implementation of TPM in vehicle industry, working with the inventory and preventing the production process can be caused by maintenance instability problem and create a sense of urgency in the labors. In vehicle manufacturing industry, that is done in mass production plant, if there is TPM implemented system there will be no urgency by the labors because there will be excess inventory that will take care of operation during the maintenance of machine problems. In the case of lean production, the production stoppage by operator for maintenance may cause crisis and a sense of urgency. In vehicle industry this can be prevented by implementing TPM that provides the stability for lean production. In automotive industry the supply of product is not possible unless causes of poor equipment performance are evaluated and systematically removed. The growing demand in vehicle product has increased the production of vehicle that is provided in time to customers with quality, and lower operating rate and improved profit rates. However, the TPM system Toyota adopted was facilitated by upgraded maintenance unlike the previous practice of elimination of waste to reduce manufacturing cost; the new TPM was developed to identify and remove equipment losses (Bird, 2002). The role of machine in lean manufacturing practice in vehicle industry is important and maintenance is critical part that assures the availability of machine. The practice of TPM in vehicle manufacturing industry helps to achieve maximum efficient usage of machines using total employee involvement (Suzuki, 1994). As Toyota with the implementation of TPM has achieved to establish an organizational culture, this organizational culture induces the employee participation in the manufacturing process (Salvendy, 2001). In vehicle manufacturing industry, the need of group activities is regarded as necessary among shop-floor team members; the organizational culture developed in the result of TPM implementation encourages the employee to improve equipment reliability and productivity to lowering maintenance and operating costs (Lu & Kyōkai, 1989). Two significant aspects if TPM in vehicle manufacturing industry are training and open communication between operators and engineering. To make the TPM process successful and effective, the most important action required is to train the production personnel to perform routine maintenance. According to this process operator is trained to be responsible for operating machines functions, technicians are trained to be responsible for specialized maintenance and for improving maintainability and engineer is responsible for improving the process of maintenance.

The modern vehicle manufacturing process consists of "TPS House" diagram. This TPS house is a production system of Toyota and developed to present their supply base the principles. The basis of the house represents operational stability in the organization and Total Productive Maintenance is defined as one of the components of the operational stability.

Chapter 3

The Analysis and Calculation

Overall Equipment Effectiveness (OEE)

Overall Equipment Effectiveness (OEE) presents such hierarchy of metrics which is used in the measurement of effective manufacturing operation. According to this model, results are used to compare the manufacturing units in the production process (Hansen, 2001). This method is not yet proved to be best method for measuring manufacturing units but it is the most used method in organization. The method is used to identify the scope for process performance improvement and also identify the ways this improvement can be achieved. Thus if the cycle of the production process is reduced the OEE also reduces, though more production is occurring using less resources (Hansen, 2005). The change in set up such as serving high volume, low variety market or serving a low volume, high variety market can also lower the OEE in comparison, but in case of the selling of product at premium rate can increase the margin with a lower OEE. OEE within organization presents the overall effective utilization of material, resources and time in the production process. OEE provides such metrics which directly point out the gap between actual and ideal performance (Peters, 2006).

OEE is the basic measure associated with Total Productive Maintenance (TPM). OEE is used to indicate the actual but hidden capacity in the organization (Stamatis, 2010). The measurement is widely used by maintenance department in organization. OEE is largely affected by the design and installation of equipment and the way they are operated and maintained. OEE is used to measure the TPM efficiency and effectiveness with equipments (Schmidt, 2004).

The Indicators of OEE

OEE measurement model of effectiveness and efficiency deals with three basic indicators of equipment performance and reliability. OEE functions with three indicators are as follows:




Thus OEE = A x PE x Q


OEE = Availability x Performance Efficiency x Rate of Quality product

Since OEE has to deal with all losses caused by the equipment, it includes not only factor of availability but also incorporates performance rate and quality rate. The key purpose of using the OEE is to eliminate all these six losses (Jones, 1995). Here it is essential to mention that OEE represents only number relative comparison of equipment performances, the actual use of OEE is conducted applying the factors of OEE that helps to find the root cause by analyzing it and remove it and also find the cause of poor performance. So by using the factors of OEE organization only aims to collect and trend. Studies have demonstrated that the use of OEE improves the effective capacity of production while lead to reduced production process time and cost per unit on the same capacity. Below is given a description of the factors of OEE.


The availability is also referred as uptime. The availability part of the OEE metric gives the percentage of scheduled time that the operation is available to operate such as downtime, planned or unplanned, tool change, and job change etc. The Availability Metric presents an original measurement of Uptime and it is developed to reduce the effects of quality, performance, and scheduled downtime events. Availability metrics to six big losses accounts for a machine's losses caused by downtime, in a ratio of real operating time to scheduled operating time. Of the Six Big Losses, availability accounts only for those as a result of downtime, and not those caused by slowed production defects.

The calculation used for downtime in the vehicle manufacturing industry is:

Availability = Available Time / Scheduled Time

Availability metrics here means availability of the machine. Thus the availability is the proportion of the time that shows that machine is actually available out of the time it must be available.

Availability = (Planned production time - unscheduled downtime) Planned production time

Production time = Planned production time - Downtime

This can be explained as if a car manufacturing plant is scheduled to work for 8 hours thus total minutes count are 480 minute per shift. So the normal shift will be scheduled as 30 minutes break when plant is expected to be down. The manufacturing plant is experiencing 60 minutes of unscheduled downtime

Scheduled Time = 480 minutes - 30 minutes break = 450 Min

Available Time = 450 minutes Scheduled - 60 minutes Unscheduled D Min

Availability = 390 Avail Minutes / 450 Scheduled Minutes = 90%

So, if actual available hours for production have 365 days, then it has 24 hours per day and 7 days a week. The planned downtime also has holidays. The availability losses have equipment failures and changeovers showing the scenario when the line is not running while it is anticipated to run.

Performance Efficiency

The performance efficiency represents the real vs. design capacity. This portion of the OEE metric aims to give the speed at which the work runs as a percentage of its designed speed. Thus the performance portion of the OEE metric shows the speed at which the manufacturing plant runs as a percentage of its designed speed. The Performance Metric gives an original measurement of speed that is developed to eliminate the effects of Quality and Availability.

Thus the performance efficiency is given by the calculation of rate efficiency and speed efficiency. This rate efficiency includes the actual average cycle time and jams, minor recorded stoppages, small problems and adjustment losses and all these decreases the productivity of organization. The speed efficiency is the actual cycle time that decreases the output of the machine. The rate of quality of products is the percentage of machine parts out of the product.

The formula for Performance Efficiency can be expressed in this way

The formula gives the net production time; the net production time is when product is produced. The speed losses, minor stoppages, demonstrate the line is running and it is returning the quantity that it should.

It can be understood as if a vehicle manufacturing plant is scheduled 8 hours shift with 480 minutes while break is scheduled for 30 minutes.

If the standard rate of the part being produced = 40 hours then plant is producing 242 Total Units during the shift. Here it is important to mention that the basis on which it is calculated is Total Units rather than Good Units. The reason is that performance efficiency metric does not deal with Quality.

Rate of Quality

Rate of quality refers to defects and rework. This part of the OEE metric gives the Good Units generated as a percentage of the Total Units Started. It is also referred as First Pass Yield FPY.

The Rate of Quality Metric is an original measurement of Process Yield that is developed to eliminate the effects of Availability and Performance.

Rate of quality represents the percentage of good parts out of total parts produced in the plant. Since there are quality losses caused by in-progress production, therefore to explain the calculation here is the formula:

It can be understood if a vehicle manufacturing plant is producing 230 Good Units during a shift then 242 Units were started to produce the 230 Good Units.


Overall OEE is calculated as running percentage of time, operating percent of design capacity such as flow, cycles, and units per hour and producing quality output percent of the time.

Formula for total OEE will be:

The successful TPM is achieved if the rates of OEE elements are as follows:

Availability Rate____greater than 90%

Performance Rate____greater than 95%

Rate of Quality_____greater than 99%

On average a successful TPM have OEE rate greater than 85%

OEE is the tool used to evaluate the availability, performance and Output Quality of a machine by measuring them. Machines in plant like a Coordinate Measuring Machines or welding machine will be available for operation if they are productive rather than damaged or in broken condition. The element of OEE availability provides a planned opportunity for maintenance of machines when machines are not available for producing. It is a fact that not all machines can be available 100 % with changeovers. Since changeover gives major losses to efficiency and effectiveness, the analysis of OEE largely focuses on the no changeover allowances. The performance efficiency measures the production output during available time, therefore there could be analysis about at what standard output should be determined. The performance calculation can be made on the base of best performance; this could either be greater or less than design speed. If welding machine has never reached its best design performance ever then it is not beneficial to measure it on the opposed of that. If welding machine has always performed the design speed then its performance ability can be measured to hide the poor performance.

Here it is worthwhile to mention that it is one of the objectives of OEE to find the capacity to meet customer demand. The measurement of output quality means percentage of the total output with no rework. So, the issue with OEE is that it does not find immediate quality result. Studies recommend that quality should not be included in OEE calculation because in the fast moving world where consumer are demanding they can come back with complaint after three months, therefore focus should be on measure for quality. It is supported with the reason that if a component of OEE cannot be measured then it should not be used. There are many vehicle companies including Toyota using OEE as true plant efficiency metric that measures and improves cash flow and improves the production capacity and eliminates equipment purchases capital. The implementation of OEE is helpful focusing on the increase performance of machinery after assessing the performance with the remarkable effects on the bottom line. The important factor is that this improvement is measureable and reliable.

The Application Analysis of OEE to Analyze the Losses

The previous section of the paper analyzed the application of OEE generally in terms of its components. This section presents the analysis of OEE application on six big losses. In the previous sections, big six losses were found in the automobile manufacturing company. Since this section is the analysis of big six losses therefore these big six losses are concerned with automobile manufacturing industry.

Big six losses identified in the paper are related to breakdowns and changeover which further divides into tool changes, material changes and reduced yield at start up. If these losses are analyzed they are in real same losses. Breakdowns of machines are of two basic types; the one caused by drop or fall of appropriate maintenance and another is the one caused by complicated features of machines. Most of the machines used in the manufacturing of automobiles are complicated in their features thus it responds to three different problems related to availability. The issues related availability mainly deals with improvement in changeovers, basic maintenance and machine characteristics. According to given analysis of losses, availability can be responded by acting on one or two of them.

As far as performance losses are concerned, they are classified into speed loss and small stoppages. This performance loss includes the slow performance of machine, or non-running condition of machine. If small and minor stoppages are evaluated for the loss, they are actually less than ten minutes and reduce to goes till three minutes. Using this approach it can be said that measuring the lost time caused by small stoppages should be included in breakdown of machines rather than in minor stoppages separately. It is fact that number of stoppages can be calculated but quantity cost of these stoppages cannot be measured. However, minor stoppages or slow speed also accounts for practical use; it is caused by a slow running of machine which can be sped up. On the other hand, in case of jamming in the machine physical mechanism will be investigated and thus the cause of jams will be removed. The finding of the root cause of the problem is always helpful to resolve the main issue. There is level of differences observed in the performance losses caused by decline or infectivity and those caused by machine actual features.

With the breakdown analysis, it is found that there are two types of improvement approaches; one is better maintenance and equipment re-design.

Improvement Analysis of TPM using OEE

The level of improvement is the reason to analyze the losses vs. metrics of OEE. If there is measureable improvement of using tool for making an operation successful then that process of tool can be considered as useful for the organization. The only purpose of measuring and analyzing it is to find the level of improvement it provides. In order to measure the OEE for the losses it is necessary to use whole improvement cycle because without whole improvement cycle there is no purpose of measuring OEE. At a gross level of all OEE the understanding of the comparison of the required result and the schedule helps to conduct original measurement.

Making an average OEE's over whole plants and time periods will merely cover up the issues and the use of OEE as specific measurement tool is important for specific improvement in projects. There are some misuse of OEE that uses the comparison between different processes, plants and machines. OEE will not be useful tool or a key performance indicator unless it gives improvement measures. Even the operational measures aims to provide the improvement measures.


This case study examined TPM as effective tool in the maintenance of organizational productivity and identified the big six losses in the regard. The important finding of the study is the analysis of OEE vs. losses using three main components of OEE. To conduct the paper for analyzing the TPM six losses, it was important to develop the understanding with three factors of OEE. Three factors or metrics of OEE were used as availability, performance efficiency and rate of quality. Examination of three metrics gave overview about the key efficiency of the OEE and significant productive losses in the automobile manufacturing plant.

Since Overall equipment effectiveness data after calculation is used to find a single asset such as machine or equipment and single flow of process related losses for the reason to increase total machine performance and productivity. Overall equipment effectiveness data (information) is also used to find and classicize major losses of poor or worse performance of machine or equipment. Through this case study it is found that OEE is the best means of providing the basis for establishing improvement and finding of root cause analysis. It also gave calculation base effects of OEE on losses. The finding of the way OEE can affect the TPM losses are found by tracking OEE percentage and trend the improvement in equipment effectiveness over a period of time. OEE percentages can be helpful to indicate hidden capacity of machine or equipment in a manufacturing process and lead to balanced flow.