Page 196 - TPM A Route to World-Class Performance

Managing the TPM journey 173

Customers Drive the business Necessary
company
-.
A I resmmes I

QUALITY

Figure 8.9 Customers drive OUT business

cost OEE BOW Prduce Prcduce
more88% same888
(A) Onput 100 110 100
Variable costs -- -
fllunit (B) FixtdCosts 110 110 105*
(c) Variablecosts 100 110 100
Fixed costs €110 ~~
(inc. labour €50) @) Totalcost 210 220 205
+ (E) Unit cost IXA €2.10 €2.00 €2.05 @+A
1.10
1.15
1.05
100 110 Output 0 Contribution --
(G) Unit sales price 3.15 3.15 3.15
~~
Totalcontribution 105 126.5 110 (FXA
(I) Rchxnoncapital
employed - +20W +5 (t
In the example
Producing 10 per cent more in the same time increases return on capital employed by 20 per cent
Producing the same in 10 per cent less time increases return on capital employed by 5 per cent
(*reduced labour cost by 10 per cent)
What is your organization’s potential return on capital employed?
Figure 8.10 OEE/loss relationship

if it is possible, will not be enough. This will reduce unit cost to only €2.05.
There are other hidden losses associated with redundancy - not least the
barriers it presents to continuous improvement. Finding the additional demand
will avoid the loss of 5p/unit.

Loss prioritization
Loss modellmg allows a comparison of potential cost structures at current
and forecast OEE levels and volumes. Using best of best and average OEE
improvement Curves, it is possible to predict forward the likely cash flow
gains from improved OEE. These areas of loss avoidance can be both linked
to the appropriate TPM techniques and allow resources to be focused and
then deployed through the pillar champions to the shopfloor teams.