Losses and Key Performance

Indicators Approach

(Packaging and Process Area)

Version 3 - October 2008

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 Contents
1. Introduction 3

2. Losses Approach 4

3. OEE and OPE Approach 7

3.1 OEE Approach 7

3.2 OPE Approach 13

4. Conclusion 15

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 1. Introduction
The definition of losses and OEE (Overall Equipment Effectiveness) was established
in order to have a common view and understanding across Packaging Area. The
objective is to provide consistency in the calculation of losses and OEE performance,
across the entire Company. In terms of Process Area, the same approach have been
agreed taking in consideration the index OPE (Overall Process Effectiveness) and
losses associated.

The definition of the sixteen losses was based on the JIPM definitions. In order to get
a better understanding within the Unilever operations, the language used has been
customised.

Another significant agreement was the adoption of “reasons” under their respective
losses definition. It allows a future exercise in benchmarking process and activities in
Virtual Sites due to common platform avoiding “new” losses generation. An
additional advantage is the application of this concept for any technology.

OEE (Packaging Area) and OPE (Process Area) are the indexes to measure the
performance from “loading time” to “valued operating time”. For measuring the
efficiency from “total time” to “loading time”, “Capacity Utilisation” (Asset
Utilisation) has been defined as an index.

Thus, the two different entities have been established, such as:

- Losses (16 Losses), which identify all losses collected from “total time” to
“valued operating time” interval. All levels are able to address actions either in
operational or business aspects.

- Capacity Utilisation (Asset Utilisation) and OEE/OPE indexes, which show

through efficiencies how the factory is being managed in the operational
(OEE/OPE) and business perspective - Capacity Utilisation (Asset Utilisation).

Ideally, both entities should be used together. The impact of losses reduction could be
reflected on efficiency indexes and vice-versa. For this reason, Unilever has adopted
the TPM methodology in order to materialise this process.

The approach described above is now explained in the following parts of this
document.

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 2. Losses Approach
Figure 1 below shows the 16 big Losses related to categories: Equipment, Manpower,
Material & Energy and Shutdown.

1 Equipment Breakdown
2 Changeover
3 Cutting blade change
7 Major Equipment Losses 4 Start Up / Ramp Down
5 Minor Stoppage
6 Speed
7 Defects and Rework
Shutdown Loss 8 Shutdown
9 Management
10 Operational Motion
5 Major Manpower Losses 11 Line Organisation
12 Logistics
13 Measurement & Adjustment
14 Energy
3 Major Material & Energy
15 Maintenance Spare Parts
Losses 16 Yield

Figure 1 – Unilever TPM 16 Losses Structure

Losses have a close relationship with cost and benefits. Figure 2 below shows which
unit is used to quantify each one. This approach drives Losses from 1 to 13 to be
captured in terms of time (minutes and/or hours) being converted later, in cost. Add
to these, Losses 14, 15 and 16 a total of cost that becomes available.

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 1 Equipment Breakdown
2 Changeover
3 Cutting blade change
7 Major Equipment Losses 4 Start Up / Ramp Down

TOTAL COST LOSSES

5 Minor Stoppage
6 Speed

COST
TIME
7 Defects and Rework
Shutdown Loss 8 Shutdown
9 Management
10 Operational Motion
5 Major Manpower Losses 11 Line Organisation
12 Logistics
13 Measurement & Adjustment

14 Energy

COST
3 Major Material & Energy
15 Maintenance Spare Parts
Losses 16 Yield

Figure 2 – Unilever TPM 16 Losses Structure and Cost

Note that Losses due to manpower are not considered in this Loss Tree. The reason
for that is:

- JIPM addresses that just using an index indicating how efficiently the manpower
is utilised for equipment operation, the overall performance can be expressed
using the following equation:

Total Efficiency = Standard man-hours x Product units processed

Loading man-hours

Considering this approach, the cost of manpower should be managed aside of these
Losses via cost in itself and index above or as called in Unilever, “Productivity”. This
index is used in many sites into “P” which comes from “P, Q, C, D, S, M” as a main
KPI.

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Figure 3 – Unilever TPM Losses Definition (Packaging and Process Areas)

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 3. OEE and OPE Approach
3.1 OEE Approach
The Overall Equipment Effectiveness (OEE) is an index which calculates the
equipment operating state and judge if the equipment is utilised to its fullest.

To express the OEE, the following equation should be used:

OEE = Availability x Performance Rate x Quality Products Rate

See below in Figure 4: OEE calculation considers the exact moment when the
packing starts at the beginning of a shift for instance. It means that OEE calculation is
considered from “Loading Time” to “Value Operating Time”. What happens between
“Total Time” and “Loading Time” will be calculated via another index (defined by
MET) called “Asset Utilisation” index and the Loss associated is the No. 8
(Shutdown).

Figure 4 – OEE structure

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The typical JIPM (JIPM, 1987) loss structure is reproduced in Figure 5 expressing the
link between “Losses and OEE”, reinforcing the “5 Major manpower losses” that
accompany the “7 Major equipment losses”.
Note: Possible time lost in shutdown loss is out of OEE calculation.

Figure 5 – Losses and OEE relationship – Typical JIPM Loss Structure

Considering the above and OEE structure, the Unilever TPM losses definition has
been linked in this approach as shown in Figure 6.

Figure 6 – OEE and Unilever TPM Losses

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In order to quantify Losses from No. 1 - 13 (Losses 14, 15 and 16 are not based on
time), reasons should be grouped under each respective ones underpinned by Unilever
TPM losses definition.

Figure 7 below, the table shows a practical example of reasons being addressed to
each loss. This classification had been done during a practical session.

It also shows how to prepare information to be filled in each loss through relevant
reason(s), which comes from the daily basis. OEE approach is used for this,
collectively; loading time, operating time, net operating time and valued operating
time.

The Shutdown Losses will include the 4 main reasons (No. 1 - 4) separately, as seen
in Figure 7, plus the breakdown of “other shutdown losses - 1” (No. 5 - 19) and
“other shutdown losses - 2” (No. 20).

Therefore, in AMIS, any “other shutdown losses 1” with reasons (No. 5 - 19),
associated and “other shutdown losses - 2” (No. 20) can be seen as an aggregated
figure respectively.

Note: “other shutdown losses - 2” is just as an additional alternative as sites can

decide to use this field to reporting different reason (s) from No. 5 - 19.

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Figure 7 – Link between Unilever Losses and Reasons

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The OEE could be comprised having the same reasoning. The chart below
summarises the calculation for this index.

In relation to losses, there is an example considering their respective “reasons” which

are defined in accordance with each technology and becomes vital to address actions
to close the gaps either in losses analysis or OEE as an index.

Figure 8 – Examples of “Reasons”

The OEE calculation could be materialise using examples above:

Note: “NA” means that it does not fit for this example

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3.2 OPE Approach
The Overall Process Effectiveness (OPE) is an index which calculates the process
area operating state and judge if it is utilised to its fullest.

The approach is similar to OEE as mentioned in the Section 3.1 in this document.

Thus to express the OPE, the following equation should be used:

OPE = Availability x Performance Rate x Quality Rate

Figure 9 – OPE Structure

Considering the same approach to OEE structure, the OPL index is comprised by
identical Unilever TPM Loss structure as seen in the figure 10 below.

Figure 10 – OPE and Unilever TPM Losses

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Figure 11, this table shows a practical example of reasons being addressed to each
Loss from Process perspective.

It also shows how to prepare information to be completed in each loss through

relevant reason, which comes from the daily basis. OPE approach is used for this,
collectively; loading time, operating time, net operating time and valued operating
time.

Figure 11 – Link between Unilever TPM Losses and “Reasons”– Process areas
The OPE could be comprised having the same reasoning as used in the OEE.

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Figure 12 below shows some examples of reasons which are defined in accordance
with each technology and becomes vital to address actions to close the gaps either in
losses analysis, OPE or Capacity Utilisation (Asset Utilisation) indexes.

Figure 12 – Examples of “Reasons” Process Areas

4. Conclusion
Below is a summary of Unilever Losses, OEE, OPE and the Capacity Utilisation
(Asset Utilisation) KPI’s. It clarifies a position for each item within this approach.

The Capacity Utilisation index reflects the Asset Utilisation of the site and reasons
associated can be seen in the Loss 8 - Shutdown Losses - to eradicate it.

Figure 13 – OEE/OPE and Capacity Utilisation (Asset Utilisation)

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