A Systematic Methodology To Reduce Losses In Production .

Manufacturing Science and Technology 1(1): 12-22, 2013section shows a modification of the BSC approach andsuggests a new approach based on the factors of productionand production losses.4. Main Structure of the LossesScorecardTo reduce losses in a production system, it is essential tofollow a systematic course of actions. The BSC approach canhelp to operationalize the strategic goals and vision of acompany. In the case of loss prevention, the main aim is anefficient lossless production. To gain this, it is necessary todefine measures, target values, and activities. The fourperspectives of the scorecard (SC) are given as material,machines, energy, and manpower. These are the FOP ofNakajima, who describes the general condition of aproduction system. Figure 3 illustrates the general structureof this scorecard approach.In a following step, the allocation of losses is necessary.These losses may either be already described in the literatureor new sources of loss must be defined. New losses can be15identified by defining the considered system. To measurethese losses, it is necessary to set indicators. For this purpose,already established production metrics can be used. Thedevelopment of new variables is possible because newlyidentified losses cannot be measured.The proceeding of the loss scorecard (Figure 4) includes aback loop. This is important to adjust the metric system andto check the objective achievement. This method does nothave a static structure, so it is possible to adapt the metricsystem if objectives are reached or new losses occur. For theallocation of losses to the prospects, a catalogue is created inthis context.To see which losses influence others, it is recommended todraw up a strategy map (Figure 6). This mind mapping toolhelps to identify losses and to choose the right indicators ormain losses. Additionally, this tool shows dependencies ofthe occurring losses between and inside the perspectives.The case study shows how a scorecard can be implementedin a production system. The steps are mainly the same asdescribed above. Some changes have been done in thedefinition of the performance indicators.Figure 3. The general structure of the losses scorecard

16A Systematic Methodology to Reduce Losses in Production with the Balanced Scorecard ApproachFigure 4. Proceeding of the losses scorecardFigure 5. Production system of an extrusion process[19]

Manufacturing Science and Technology 1(1): 12-22, 201317Figure 6. Losses strategy map of the system5. Case StudyThe following case study shows the application of thelosses scorecard approach in the polymer industry. For thispurpose, the defined production system and losses areassigned. To aggregate the losses, a strategy map shows therelationships between the losses and the occurrence in thedefined perspectives (machine, manpower, material, energy).On that basis, some key indicators are defined in eachperspective that sum up all defined losses. The comparison

18A Systematic Methodology to Reduce Losses in Production with the Balanced Scorecard Approachof two production systems uses these defined metrics.5.1. Definition of the Production SystemThe general description of a production system is given inSection 1.1. These are the basis to describe the followingproduction process in the polymer industry. The consideredprocess is the extrusion process used to produce long plasticforms, like plastic profiles or tubes. Figure 5 shows the mainparts of this production process and the material flow of thewhole system. Additionally, the graphic shows the energy,water, and compressed air supply. The extrusion process is acontinuous production process which ends with adiscontinuous process at the end. This last process step isoften cutting the endless profile in customer specific parts.The continuous production process is shown in Figure 5 as“system boundary”. The machines inside this system arestrongly linked together. So if one of these parts fails, thewhole system stops or cannot produce good products.The first step of the scorecard procedure is to identify thelosses in the system. Additionally, every kind of losses is putin the flow chart of the general extrusion process. To build upthe scorecard, it is necessary to find similarities and links ofthese losses. Here a strategy map helps to do this task.5.3. Controlling the SystemAfter combining the losses as main losses, measurementand evaluation is necessary. The basis of the data is thesystem time. This time is stretched over the whole year and islimited by total production stops, weekends, and holidays.Additionally, the production shift system defines the timecapacity of the system. If the production works with one shift,only eight hours per day are available to produce products. Ifthere is a lack of capacity, the shift system can change to two(16h/day), three (24h/day), or up to four (24h weekend)shifts.Figure 7 illustrates the allocation of the time capacity. Inthis example one month is the time frame, so both systemshave the same amount of time capacity available. The usedcapacity differs slightly because System 2 uses extra shiftsordered by the management to produce all orders. System 1has an extreme lack of orders and auxiliary time where noproducts are produced. System 2 is fully occupied by orders,but the auxiliary time is also high. It seems that the operatorsuse this time code for losses. But nevertheless the focus ofthis method is to reduce losses, which are marked with aburst in the diagram. To improve the data quality, it is usefulto automate the time measurement or change the behavior ofthe operators.5.2. Building up the Strategy MapFirst of all, it is necessary to define the perspectives of thelosses scorecard. In that case, it is useful to set four factors.Derived from the FOP theories, the factors machine,manpower, material, and energy describe the productionsystem best. Therefore, these factors are set for the strategymap.Assigning the identified losses to the defined perspectivesis the next step. It is important to know which losses arecaused by production factors. Figure 6 shows the strategymap with all identified losses assigned to the perspectives.For each term, the losses are aggregated to main losses. Thered dashed lines show the links between losses. These lossesdepend or influence each other. For example, a lack of orderscan be caused by an organizational error, or rigging timecauses additional unplanned rigging time. The blue dottedline represents losses which are coupled with time. Thiscorrelation takes place in the adjustment and setting up loss.Several steps are accomplished sequentially. To produceproducts it is necessary to rig the machine, tools, andsuccessor system elements first. Next the system has to beadjusted to produce the right product quality. After fulfillinga production order, teardown and cleaning the system are thenext steps before a new order can start. These dependencieshave to be considered when summing up the losses as themain losses. In that case, system time is the connectingelement that connects all losses. This is good for controllingthe losses in each perspective as well as for scaling andcomparing them.Figure 7. Capacities of the two production systemsThe following figures show the results of the evaluation.The spider diagrams compare two systems with the sameloss structure. The measure scale is one shift (eight hours),and the data represents the loss time of the system.The first diagram (Figure 8) illustrates the four definedFOP. It is apparent that a lot of losses depend on the factormachine in both systems. System 2 has additional materiallosses. It seems that System 1 is more efficient than System 2.For a further analysis, a second diagram shows the mainlosses of the FOP perspective machine (Figure 9). System 2has much more setting-up and adjustment loss time. Toimprove this situation, it is necessary to reduce these losseswith rigging and adjustment workshops. Another cause forthis situation is that System 2 produces a larger product mix.If possible, a production sequence optimization can be done.

Manufacturing Science and Technology 1(1): 12-22, 2013Figure 8. Comparing two production systems19Figure 10 illustrates the factors material, manpower, andenergy. It can be seen that product fault time and rawmaterial currently available are the most intensive losses forthe factor material.Besides the system time as a loss metric, another loss hasto be measured, namely the physical material loss. Thishappens per manual counting of the produced waste. Figure11 shows the sub-losses were physical material loss iscreated. The main material is wasted by adjustment activities.In that case the process produces products, but they do not fitthe customer defined dimensions. The same applies to thequality loss. During the production time, material is alsowasted. The cause for that loss is to cut or punch the productsin the secondary operation element. Summing up, one cansay that every process activity (sub-losses) with material useproduces waste.Finally, it is not necessary to define key indicators in thatcase. The main losses are the indicators to see where whichlosses occur. For comparison of two production systems withthe same prosperities, it is sufficient to use main andsub-losses for the evaluation. For a benchmarking analysis oftwo or more different processes, it will be necessary to eitherdefine key indicators or use key indicators described in theliterature. A good metric will be the overall equipmenteffectiveness.3. ConclusionFigure 9. FOP machine comparisonFigure 10. FOP material, manpower, energy comparisonIndustry faces the fact to produce their products asresource efficient as possible. Resources can be see as thedefined factors of production, so producing companies tryto reduce every loss of these resources in their productionsystems. This method shows the possibility to identifymethodically losses in a production system. It adapts thebalanced scorecard method to find losses and their links andto set metrics to reduce them. The perspectives of themethod can be extended by other FOP, but for the first tryto implement this approach the suggested views fits best.The result of the case study shows the central focus of thesources of loss. On that findings, it is possible to specifymeasures to reduce them. The method has a back loop, soafter the first definition it is possible to do some changes inthe loss structure to get more accurate measurement resultsor focus some hot spots. Further research is required todefine metrics to measure standard losses in the productionsystem. It is also possible using this method in otherproduction near organizations like maintenance. Thedevelopment of detailed losses in the energy perspective isthe next step of research.

20A Systematic Methodology to Reduce Losses in Production with the Balanced Scorecard ApproachFigure 11. Physical material losses

Manufacturing Science and Technology 1(1): 12-22, 2013AppendixTable 1. Additional new lean management lossesManagement SystemLossesUntapped human potentialExcessive information and communicationTimeInadequate systems (EDP)Lean management / productionEnergy and WaterNatural ResourcesVariationKnowledgeNot exploit the potential for improvementSystem failure due to faultsSetup and adjustmentLean Management / servicesNo-load and short stopsDecreased velocityQuality lossesReduced output and start-up lossesMudaMajor lossesMuriMuraiTable 2. FOP and lossesFOPLossesVacation, sick leave, collective agreementPlanning lossesManpowerFlow lossesOrganization lossesQuality lossesOvertimeScheduledstopsSystemdisordersSetup timelossesMachineShortstopandload lossesProcedural and organizationallossesRatelossesLoss of quality machineMaterialEnergyLoss of quality materialCutting scrapUnused energy consumption during productionUnused energy consumption with reduced production21

22A Systematic Methodology to Reduce Losses in Production with the Balanced Scorecard ApproachTable 3. TPM losses by management systemManagement SystemLossesSystem failure due to faultsSetup and adjustmentNo-load and short stopsDecreased velocityQuality lossesReduced output and start-up lossesOrganizational lossesMovementsLine organizationLogisticsMeasuring / SettingEnergy lossesLosses due to molds, tooling and fixturesLoss of volumeProcurement lossesSupplier's lossesEmployment lossesDistribution lossesInventory lossesLosses due to sudden failureLosses due to idle and small stopsCapacity lossesStart up lossesOperating LossesQuality lossesTPM / Overall EquipmentEffectivenessTPM /humanlabourTPM / processTPM / AdministrationTPM / process industry[10] T. Ohno. Toyota Production System: Beyond Large-ScaleProduction, Campus Verlag GmbH, 1988.REFERENCES[1][2][3]H.-O. Günther and H. Tempelmeier, production and logistics.Springer, 2004.R. Günter. General technology: a systems theory oftechnology, KIT Scientific Publishing, 1978.T.Nebl.ProductionWissenschaftsverlag, 2007.Management,Oldenbourg[4]Vahlens great economic lexicon: A - E. Beck, Dt.Taschenbuch-Verl., 1994.[5]M. Gram. Adaptability and flexibility in the primary industryNew influences at the beginning of the value chain, inTBI ’11, 14. Tage des Betriebs- und Systemingenieurs,2011.[6]K. Subramaniam, Capital Theory And Economic Analysis.Gyan Books, 1987.[7]E. Gutenberg. Fundamentals of Business Economics,Springer, 1972.[8]H. K. Weber. To the system of productive factors, Z. FürBetriebswirtschaftliche Forsch., vol. 32, 1056–1071.[9]K. Rischar, C. Titze. Quality circles: effective problemsolving by groups operating, expert verlag, 2002.[11] J. Bicheno, M. Holweg. The Lean toolbox: The essentialguide to Lean transformation, Picsie Books, 2008.[12] S. Nakajima. Introduction to TPM: total productivemaintenance, Productivity Press, 1988.[13] T. Suzuki. New directions for TPM, Productivity Press,1992.[14] H. Biedermann. Knowledge based maintenance: Strategies,concepts and solutions for knowledge-based maintenance, 15.Instandhaltungs-Forum, TÜV-Verl., 2001.[15] M. Gram, S. Künstle. Efficient production by avoiding thesources of loss in plant operation: Identified sources of lossin production and maintenance, and their influence on thefactors of production, TÜV Media, 2011.[16] R. S. Kaplan, D. P. Norton. The balancedscorecard–measures that drive performance, Harv. Bus. Rev.,vol. 70, no. 1, 71–79.[17] H.-G. Baum, A. G. Coenenberg, T. Günther. StrategicControlling, Schäffer-Poeschel Verlag, 2007.[18] M. K. Welge, A. Al-Laham. strategic Management. Gabler,2003.[19] H. F. Giles, E. M. Mount III, J. R. Wagner. Extrusion: TheDefinitive Processing Guide and Handbook, WilliamAndrew, 2004.

the balanced scorecard methodology. A case study in the polymer industry is givenshowing how to identify and measure losses in a production system. Keywords . Production, Losses, Lean Management, Balanced Scorecard Approach, Scorecard, Case Study, Process Industry . 1. Introduction . Nowadays industry is facing rising material and energy