1.1 Background of Research
to achieve the world-class manufacturing performance, the more and more
companies are undertaking the efforts to improve the quality and productivity,
and to reduce the manufacturing costs by means of the equipment performance
improvement based on the Total Productive Maintenance (TPM) (Mckone et al., 1999; Hipkin and Cock, 2000; Takahashi, 1996). TPM
has been adopted in order to strengthen the manufacturing business performance
and to achieve the world-class manufacturing competitiveness since 1971 (Demeter,
2003; Shirose, 1996; Swanson, 2001).
The purpose of
TPM is to secure the physical improvement of personnel and equipment, and also
that of the manufacturing company. The major target among TPM effect indices is
to make the improvement of Overall Equipment Efficiency (OEE) and labor
productivity, eventually to secure the equipment failure to zero, defects and
rework to zero and industrial accident to zero (Shirose, 1996; Nakajima, 1996;
Takahashi, 1992a & 1992b; Suzuki, 1997).
As the concrete means to achieve the equipment failure to zero,
defects and rework to zero, and industrial accident to zero, the eight major
elements of TPM activities such as individual improvement, autonomous
maintenance, planned maintenance, skill-up education & training, quality
maintenance, Maintenance Prevention (MP), safety & environment and office
TPM are implemented, and the set-up and goal-setting of TPM effect measuring
indices are required for the effect measurement in advance (Shirose, 1996;
Suzuki, 1997; Mckone et al., 1999; JIPM, 1996 & 1998; KSA, 2000; Nakajima,
1996; Okamoto, 1994).
At a preparation stage of TPM deploying program, the basic TPM
policy and effect improvement target must be settled. As a goal setting of TPM,
the bench mark review of TPM effect indices and improvement increment goal
setting are performed. To grasp an activity performance from the introduction
stage to the steady application stage, the index of OEE as the effect measuring
indices in TPM is normally used (Shirose, 1996; Suzuki, 1997; JIPM, 1998;
on, on the basis of the equipment time loss structure, the OEE for the
processing type equipment and Overall Plant Efficiency (OPE) for the plant type
equip-ment, and also time availability, performance efficiency and good quality
rate as the components of OEE and OPE have been used for the equipment
OEE is widely adopted as an important means among the equipment
performance measurement indices for the appraisal of TPM activities' results available
in the processing type equipment (Schroeder and Cua, 2001). Up to now, there
are no standardized calculat-ion models of OEE (Oechsner et al., 2002). The successful
analysis on OEE only is not sufficient because no machine is isolated in a
factory, but operates in a linked and complex environment. A wider approach has
to focus also on the performance and utilization of whole equipment in a factory
during a given calendar time and the effective measurement of contributive
managerial effect resulted from TPM activities.
The calculation methodology of OEE based on an equipment loss
structure in the processing type and plant type equipment has been shown by
several researchers such as Oechsner et al. (2002); Schippers (2001); Chand and
Shirvani (2000); Wang and Lee (2001); Shirose (1996); Nakajima (1996); JIPM
(1998); Mckone (1996) and Cua (2000), and that on the equipment productivity
was shown by Oechsner et al. (2002); Jung (2001) and KSA (2000).
We intend to control and
improve the equipment efficiency by using the OEE in case of the processing
type equipment such as batch type, independent production type,
non-continuously working type as the equipment efficiency indices among the TPM
effect indices (Shirose, 1996; Nakajima, 1996; Takahashi, 1992b).
The studies on TPM effect
appraisal indices to meet the requirements of diversified manufacturing business
types seem to be insufficient. Especially, the studies on the effective and
practical methodologies capable of measuring TPM managerial effect
quantitatively seem to be insufficient also.
dissertation presents the more systematic and informative calculation methodologies
for the equipment efficiency, productivity, reliability and maintainability
indices based on a newly designed universal equipment time loss structure
different from the existing ones on the TPM literatures to promote the equipment
performance and to strengthen the TPM effectiveness.
TPM is called as
“money-earning PM activities” and
oriented for “Total Profit-able
Maintenance” or “Total Productive Management”. Therefore,
TPM activities shall contribute to the managerial profit directly and to the
profit-producing result practically (Suzuki, 1989; Swanson, 2001). To make the
additive profit quantitatively by the TPM activities, the calculation of
additive contribution profit and saved manufacturing cost must be performed to
measure how much TPM activities contribute to the profit-producing improvement
(Kwon and Lee, 2004).
well-known TPM effect indices are insufficient in view of apprais-ing “money-earning PM activities”. In view
of Top’s interest on TPM effect indices, it has been
pointed that the contributive profit is more important rather than the other
this dissertation, to show the calculation methods of managerial effect as the
summed-up value of additive contribution profit and saved manufacturing cost
resulted from the TPM activities, a calculating methodology example for the
processing type in the manu-facturing industry is presented.
1.2 Purpose and
Importance of Research
The purpose of TPM effect
measurement is to extract the important problems hindering the equipment and
production losses, to remove the problems promptly, and to heighten the
manufacturing business performance (Demeter, 2003). The TPM effect indices
capable of realizing the exact and effective measurement on the result of TPM
activities must be the ones capable of judging whether the ordinary TPM
activities contribute to the improvement of effect indices, to the induction of
the countermeasures and improvement points on the problems and finally to the
contributive managerial effect.
Because the equipment
productivity, reliability, efficiency and maintainability become the critical
issues in the capital-intensive operations, the strategic importance of productive
maintenance in a manufacturing business must be recognized (Tsang, 2002).
The individual equipment
efficiency indices such as time availability, performance efficiency, good
quality rate and OEE calculated by the time loss structure for the process-ing
type equipment seem to act a good role on reducing the related losses as the
integrated equipment efficiency indices (Nakajima, 1996). But, these indices cannot provide the
sufficient information in view of the whole equipment performance appraisal,
and this methodology based on an existing loss structure is insufficient to
calculate the equipment productivity,
reliability, efficiency and maintainability indices together with the equipment
efficiency indices from one loss structure.
The first purpose of this
research is to present a new calculation methodology model for measuring the
equipment productivity, reliability, efficiency and maintainability indices based on a new and modified time loss structure designed differently from
the existing ones on the TPM literatures.
The maintenance cost is often
regarded as a necessary expense that belongs to the operating budget. However,
it is a common item on the hit list of cost-reduction programs. Because the reliability
and maintainability become the critical issues in the capital-intensive
operations, the strategic importance of maintenance cost reduction and mainten-ance
quality improvement in a manufacturing businesses must be recognized
(Takahashi, 1996; Suzuki, 1997).
The targets of TPM activities
must be contributed to the managerial profit of a company. To realize the
profit-producing TPM activities, and to measure the TPM effects about how much they
contribute to the managerial effect such as contribute managerial profit, the
calculation of additive contribution profit and saved manufacturing cost shall
be performed (Kwon and Lee, 2004; Ham, 1998).
If TPM activities do not
contribute to the managerial profit practically, the reconsideration on the
TPM deploying methodology shall be made, and the improvement activities on the
insufficient elements shall be strengthened (Mckone et al., 2001).
1.3 Method of
first purpose of this research is to suggest the new calculation methodologies
for the equipment efficiency, equipment productivity, reliability and
maintainability indices among TPM effect indices on the basis of a new
universal time loss structure, and additionally for the contributive managerial
effect enabling the quantitative calculation for the purpose of improvement of
manufacturing performance and the setting-up of effective countermeasures on
the equipment losses.
this research draws on the methodologies that are suitable for the theoreticcally
driven empirical research. Weick (1989) suggested that the theories should be
developed by use of three systematic processes involving the literature review,
use of data, and use of intuition and assumptions (Cua, 2000). In building the
business operations management theories and purposes, the principle of Weick's
suggestion can be used. Levis (1998) pointed that the processes of theory
development are not meant to be the sequential trial & error, and
Eisenhardt (1989) pointed that those must be used in conjunction and in balance
the business Operations Management has been dominated by the deductive
approaches, and the mathematical modeling and simulation analysis has been the
common tools of analysis (Cua, 2000). In the 1990's, an attention was drawn to
the potentiality of empirical research involving cross-technical and
longitudinal data analysis. The recent case study is considered as an
indispensable complement to the quantitative analysis (Cua, 2000).
dissertation, the methodologies of literature reviews, suggestion of new
models, case studies and reviews are used in conducting this research. These
four methodologies are not conducted in strict sequence. Instead, they are used
complementarily to develop, enhance, and empirically verify the new calculation
models on the equipment efficiency and contributive managerial effect.
illustrate the research question of this dissertation, the literature reviews
on the TPM and TPM effect indices, equipment
productivity, equipment efficiency indices such as OEE and OPE, equipment reliability
and maintainability, managerial effect indices in TPM, contributive managerial
profit and saved manufacturing cost as the managerial effect are conducted.
research is theoretically grounded on the factory management principles such as
the concepts of equipment management, equipment efficiency, equipment
productivity, prod-uction economics, production innovation engineering, plant
productive maintenance engineering, equipment reliability engineering and cost
of literature reviews on the equipment management and monetary effect
principles can be helpful for establishing a theoretical framework for a set of
practical and effective TPM effect measurement practices.
dissertation, to provide a “reality validation” of the relevance about the
theoretically developed framework, the first case study used the collected data
for the OSRK company's fluorescent lamp manufacturing and the second case study used the collected data for the DSB company's
Coke filler equipment suitable for the processing type equipment during the given period.
(1994) pointed that the case studies can also serve a source of analytic generalization
to the theory, hence the information obtained from the case studies is used to
enhance the theoretical framework (Cua, 2000). Case analysis helps to answer
and “how”questions in the natural setting of phenomena under
observation and also provides the direction for a subsequent research.
illustrate the suggested theoretical framework and its associated definitions
systematically, the first case study on the new TPM effect appraisal indices
such as the equipment productivity, equipment
efficiency composed of OEE and TEEP (Total Effective Equipment Productivity), equipment
reliability and maintainability on the basis of universal equipment time loss
structure newly defined on this dissertation is performed with the collected data for the OSRK company's
fluorescent lamp manufacturing during the given period . And the second case study on the contributive managerial effect is
performed with the collected data for the DSB company's Coke filler equipment
suitable for the processing type equipment (Kwon and Lee, 2004).
all, the new TPM effect measurement indices must be able to be used for the
practical TPM effect measurement methodologies. And these new methodologies
will be more effective and useful in TPM performance measurement practice.
Hence these two case studies and illustrations have been performed about the
theoretical framework to investigate the empirical validation and the
feasibility of utilization in TPM practices.
1.5 Contents of
To present these two new
models for the TPM effect measurement, this research is conducted on the basis of the literature reviews on the TPM and TPM effect indices, equipment productivity, equipment efficiency indices such as OEE
and OPE, equipment reliability and maintainability, managerial effect indices
in TPM, contribution profit and saving cost as the managerial effect.
Firstly, this dissertation presents a new model for the
calculation methodology on the equipment productivity indices such as equipment
utilization rate, planned availability, equipment operation rate and total
effective equipment productivity (TEEP), the equipment reliability indices such
as time availability, mean time between failure (MTBF), failure intensity rate
and failure frequency rate, the equipment efficiency indices such as
performance efficiency, good quality rate, OEE and net equipment efficiency
(NEE), and the equipment maintainability index such as mean time to repair
(MTTR) (Kwon and Lee, 2003).
And secondly, this
dissertation presents a newly suggested methodology for calculating the
contributive managerial effect corresponding to the total monetary amount of
effect composed of the additive contribution profit and saved manufacturing
cost that can be obtained by the improvement of OEE in the processing type
The contributive managerial
effect that is regarded as the total monetary managerial effect calculated on
the basis of unit contributive managerial effect earned by keeping the OEE at
the 1% upraised condition for a given yearly period can be calculated by the
following equation; “Contributive managerial effect acquired by 1% upraised OEE
= Additive contribution profit + Saved manufacturing cost” (Kwon and Lee, 2004).
Based on the above unit
contribution managerial effect, the total monetary managerial effect amount
corresponding to the total upraised value of OEE during the same period can be
calculated as the unit contribution managerial effect is multiplied by the
total upraised value of OEE. The suggested calculation methodology can be
demonstrated by applying to a Coke filler as a processing type manufacturing
equipment as shown on the case study.
Contributions of Research
From now on, the equipment efficiency indices such as OPE, OEE,
time availability, performance availability and good quality rate based on a
time loss structure of equipment have been known and used already in the TPM
However, the methodology capable of calculating all indices such
as equipment efficiency, productivity, reliability, maintainability and also
work readiness measurement all together from one equipment time loss structure
has not been known and used.
This new methodology capable of calculating the equipment
productivity, reliability, maintainability and also work readiness measurement
additionally from one equipment time loss structure together with equipment
efficiency can help the various views of TPM effect grasping works for
extracting the higher performance of TPM. And this contributes to the removal
of equipment losses concretely, and it contributes to the improvement of
The various indices on TPM activities of diversified manufacturing
business types can be measured additionally, but grasping how much TPM
contributes to the managerial effect as its performance can be considered as
the more important thing.
The possibility of calculating the contributive managerial effect
by OEE as TPM effect measurement methodology enables to grasp the quantitative
contributive managerial effect as a TPM activities' result. And also, it will
enable to heighten an interest on TPM, and to extract the financial assistance
about the innovative activities from the top management.
The possibility of
calculating the contributive managerial effect by OEE is not confined to only
the processing-type industry, but can be applied to the plant type, too.
Hereafter, we hope that the research on this methodology for the plant type
industry and equipment will be conducted more actively, and that by this the
maturity of TPM will be able to be more improved.
The remainder of this
dissertation is organized by the literature reviews on TPM effect measurement
composed of TPM for strengthening the manufacturing competitiveness, the literature
reviews on the equipment productivity, equipment efficiency, reliability and maintainability
indices, the managerial effect indices in TPM, the contribution profit and
saving cost as the managerial effect, a model on the equipment performance
indices, a model on the contributive managerial effect and the conclusions in