The following are key concepts associated with Perfect Production. Each concept is presented as very practical definition from a manufacturing improvement perspective. You will want to be familiar with these concepts to fluently speak the language of Perfect Production!


Aces in Places

Put your most capable, engaged, and self-motivated people in roles where they will have the biggest impact – even if this role isn't part of their traditional job description. Aces in places is similar to the “first who, then what” idea presented by Jim Collins in his book Good to Great (2001). Identify your aces, and put them in key positions where they will drive change.


Deliver small chunks of business value in short release cycles. For each cycle, choose whatever will deliver the most value and get it done (deliver it). Do away with complicated master plans and instead be evolutionary and adaptive.

Agile is particularly effective for driving Continuous Improvement projects, which strive to achieve ongoing incremental improvements. Agile can be contrasted to Waterfall.

Autonomous Maintenance

Create equipment “ownership” for operators by training them to complete routine maintenance, inspection, and lubrication activities. Autonomous maintenance has an added benefit of freeing-up engineering resources to work on Root Cause Analysis for large Unplanned Stop events and to work on Continuous Improvement activities. Autonomous maintenance is a component of TPM.

Availability Loss

One of the three OEE losses. Availability loss includes all events that stop Planned Production for an appreciable amount of time (minutes or longer). Examples of these events include equipment failures, unplanned maintenance, material shortages, and changeovers.

Black Belt

A black belt is a full-time project leader in an organization implementing Six Sigma or Lean Six Sigma. Six Sigma uses a belt-based grading system inspired by the martial arts to denote the role and level of training that team members have in an improvement project. It is interesting to note that in many martial arts achieving a black belt represents a mastery of the fundamentals – it is the beginning of the path to becoming a true master.


If the Constraint is available to run (i.e., it has no internal fault), but cannot run because the outfeed of the equipment is full it is said to be blocked. This is an external loss to the constraint and is normally triggered automatically by sensors on the line. Blocked is one of the conditions detected and monitored by Causal Down Time.


See Constraint.


CAPA (Corrective Action, Preventative Action) is a best practices technique for addressing productivity losses.

CAPA can also be used as a way of aligning resources by focusing:

  • Operations on corrective actions
  • Engineering on preventative actions (including training)

Causal Down Time

Causal down time detects and monitors when the Constraint is unable to run, whether due to an internal issue or an external issue (i.e., being Blocked or Starved by other equipment). This is a practical application of the Theory of Constraints, which teaches that every manufacturing process has a single constraint and the best way to improve throughput of the process is to improve throughput of the constraint.


The period of time when a manufacturing process is stopped to change tools, parts, orders, materials, and/or ingredients. Changeover time is tracked as an Availability Loss to OEE and as a Planned Stop for Six Big Losses. It is considered a best practice to measure changeover time from the last good part of the previous job to the first good part of the next job.


The step of the manufacturing process that acts as a limit to the throughput of the entire process. Identifying and improving the constraint is the primary goal of the Theory of Constraints, which holds that the most effective way to improve throughput of the process is to improve throughput of the constraint.

Losses at the constraint are broken into two categories:

  • Internal loss (a loss that occurs because of a condition that is internal to the constraint)
  • External loss (a loss that occurs because of a condition that is external to the constraint)

External loss is further split into the categories of:

  • Blocked (blocked by downstream equipment)
  • Starved (starved by upstream equipment).

Corrective Action

An improvement action taken to fix a manufacturing problem after it has occurred. A corrective action is typically a short-term Quick Fix (a temporary Countermeasure). This is in contrast to a Preventative Action, which is typically a long-term or Hundred-Year Fix. Sometimes taking corrective action is colloquially described as “putting out a fire”.


An action taken to counter or mitigate a manufacturing loss. A countermeasure might be a short-term Corrective Action or a long-term Preventative Action. One of the challenges in manufacturing is finding effective countermeasures for each loss.

Continuous Improvement

A strategy to achieve regular, ongoing improvements in the manufacturing process. These improvements may be incremental (evolutionary) or larger breakthroughs (revolutionary). Continuous improvement is very compatible with Agile (delivering small chunks of business value in short release cycles).


The habitual and reinforced behaviors of people in your company. Culture is a combination of values, beliefs, and customs. Changing culture is hard and takes a great deal of time. Yet in many cases, it is necessary to achieve significant and especially enduring improvements. Culture is one of the most overlooked aspects of manufacturing improvement.

Cycle Time

The actual time it takes to produce one part (or one group of parts manufactured at the same time, such as with a multi-cavity die). It is typically measured as the time from the start of one part to the start of the next part. Cycle time is often compared to the Ideal Cycle Time (the theoretical minimum time to produce one part).


DMAIC (Define, Measure, Analyze, Improve and Control) is a cyclical improvement methodology used in Six Sigma. The process is essentially:

  • Define the problem
  • Measure key aspects of the manufacturing process
  • Analyze the measured data and seek improvement opportunities
  • Improve the process by implementing and testing potential solutions
  • Control the process and provide training so improvements are captured for the long run

Another cyclical improvement methodology, associated with Lean Manufacturing, is PDCA.

Early Equipment Management

Before buying new equipment, actively engage with the equipment manufacturer to ensure the equipment is easy to maintain and easy to run at its nameplate capacity. For example, verify that easily accessible lubrication and inspection points are designed in to support Autonomous Maintenance. Early equipment management is a component of TPM.


ERP (Enterprise Resource Planning) is a software application that integrates many disparate business processes into one unified system. Typically an ERP system manages purchasing, inventory, ordering, product costing, and production scheduling. In a broad sense ERP is intended to make it easier to achieve business goals. In a narrower sense it helps to ensure that customer orders can be met by manufacturing capability.

ERP systems are typically used in conjunction with an LIS or MES to obtain direct real-time feedback from the manufacturing process. A common problem for the plant floor is that many ERP systems are too locked down, too inflexible or too far removed from the plant floor to be particularly helpful for day-to-day or hour-to-hour manufacturing operations.


Manufacturing equipment and processes are made more robust by designing error detection and prevention into the equipment and processes. The goal is to eliminate defects and ultimately achieve zero defects. In Lean Manufacturing this concept is often referred to as “poka-yoke”, which is Japanese for “mistake-proofing”.

Focused Improvement

Small groups of employees focus on a specific equipment issue to achieve improvements in equipment operation. In Lean Manufacturing this is often referred to as “kaizen”, which is Japanese for “improvement” or “change for better”. Focused improvement is related to Continuous Improvement and is a component of TPM.

Fully Productive Time

Time where the manufacturing process is making only good pieces, as fast as possible, with no downtime. Fully productive time is a component of OEE. It is the time that is left after Availability Loss, Performance Loss, and Quality Loss are subtracted from Planned Production Time.

Green Belt

A green belt is trained to deploy specific tools and projects in an organization implementing Six Sigma or Lean Six Sigma. Six Sigma uses a belt-based grading system inspired by the martial arts to denote the role and level of training that team members have in an improvement project.


GMP (Good Manufacturing Practices) is a combination of Standardized Work and other documented guidelines intended to ensure consistently high manufacturing quality. May be part of a broader quality or production system. GMP is particularly common in pharmaceutical and food product manufacturing, where it is used to ensure that products do not pose any risk to consumers.

Hundred-Year Fix

A long-term “permanent” solution to a manufacturing problem. In CAPA this is associated with a proactive response known as a Preventative Action. A hundred-year fix is typically the outcome of a well-developed Root Cause Analysis process. Hundred-year fix can be contrasted to Quick Fix.

Ideal Cycle Time

The theoretical minimum time to produce one piece. Sometimes referred to as the nameplate or design capacity. By definition the ideal cycle time must be equal to or lower than the Cycle Time. Used to calculate Performance Loss and OEE.

Labor Productivity

The rate at which an employee (or group of employees) creates output as compared with the established standard rate. Typically measured by metrics such as Parts per Labor Hour or Labor Cost per Part.

Lean Manufacturing

A comprehensive system for relentlessly eliminating Waste from the manufacturing process. In lean manufacturing, the seven deadly wastes are:

  • Overproduction
  • Waiting
  • Transport
  • Motion
  • Overprocessing
  • Inventory
  • Defects

An eighth deadly waste is sometimes added – unused human potential (e.g., lost motivation, lost creativity and lost ideas). The eighth deadly waste plays a very large role in Perfect Production. For example, reference our pages on Leadership, Be Your Best and Great Meetings.

Lean Six Sigma

An improvement methodology that combines the principles of Lean Manufacturing and Six Sigma. The goal is to leverage the strengths of each discipline to eliminate waste, improve quality, reduce lead time, and reduce total costs. Typically, lean tools are first used to identify and eliminate waste. Then six sigma tools are used to identify and eliminate process variation. DMAIC is typically used as the overall cyclical improvement methodology.


Effective leadership creates change by inspiring and motivating others. It creates an environment where people love their work and strive to perform at their highest capability. Effective leadership influences people around them to achieve specific objectives and goals. Effective leadership is vital to changing Culture.


A LIS (Line Information System) is often used in conjunction with MES or ERP to provide real-time manufacturing data to those systems. The information provided to MES or ERP typically includes production counts, quality metrics, and OEE. The LIS may provide additional information to further drive improvements in manufacturing performance such as cycle analytics, Top Losses, Six Big Losses and TEEP.

Master Black Belt

A master black belt is a Six Sigma or Lean Six Sigma practitioner with extensive experience in their field. This experience may reflect a combination of years (e.g., five years) and/or projects (e.g., ten projects). Typically, the master black belt takes on a leadership, coaching, mentoring or teaching role. Six Sigma uses a belt-based grading system inspired by the martial arts to denote the role and level of training that team members have in an improvement project.

Mechanical Efficiency

A metric that identifies how well a machine is running during the time that it is intended to be running. It differs from OEE in that Planned Stops, such as Changeovers, are not included. In other words, from a Six Big Losses perspective, it takes into account Unplanned Stops, small stops, slow cycles, production defects, and startup defects, while excluding planned stops. It is calculated as:

  • Good Pieces x Ideal Cycle Time / (Planned Production Time – Planned Stop Time)


MTBF (Mean Time Between Failure) is a metric for assessing how long on average a manufacturing process or piece of equipment runs before it is stopped by a fault. In practice it is calculated as:

  • Run Time / Number of Full Stops


MTTR (Mean Time To Repair) is a metric for assessing how long on average it takes to repair equipment once it is stopped by a fault. In practice it is calculated as:

  • Unplanned Stop Time / Number of Full Stops


MES (Manufacturing Execution System) is a manufacturing software application that integrates many disparate elements into one unified system for transforming raw materials to finished products. Typical MES features are related to scheduling, product recipes, quality, resource management, traceability, and manufacturing performance. There is typically overlap between the role of ERP and MES.

Not Scheduled

The manufacturing process is not scheduled for production because there is no intention of running production during this time. This time is excluded from Planned Production Time and does not count as an OEE loss. On the other hand, this time is included in capacity metrics, such as TEEP, which by definition are measured against all time.

Breaks and meal periods are often treated as not scheduled time, as is time when the plant is “closed” (i.e., on shutdown), or when the plant is open but there are no orders to run.

Also refer to Run, Unplanned Stop, and Planned Stop.


OEE (Overall Equipment Effectiveness) is a metric that measures how close you are to achieving Perfect Production. In simplest terms, OEE is the ratio of Fully Productive Time to Planned Production Time. In practice OEE is calculated as:

  • Good Pieces x Ideal Cycle Time / Planned Production Time

Non-productive time (productivity loss) can be calculated as:

  • 100% – OEE

This productivity loss metric includes the combined effects of Availability Loss, Performance Loss and Quality Loss.


PDCA (Plan, Do, Check, Act) is a cyclical improvement methodology used in Lean Manufacturing. The process is essentially:

  • Plan (determine the objective and how to achieve it)
  • Do (implement the plan and collect information about the results)
  • Check (review the results and compare them against expectations)
  • Act (if there is improvement set as the new baseline; decide whether to perform another cycle)

Another cyclical improvement methodology, associated with Six Sigma, is DMAIC.

Perfect Production

Perfect Production is coined from the goal of achieving a perfect OEE score by manufacturing:

Perfect Production goes far beyond the idea of achieving perfect OEE. It is a completely modular approach to improvement that draws on best practices from the entire world of manufacturing – Lean Manufacturing, Theory of Constraints, Six Sigma, and many other sources.

It also draws significantly from the world of coaching, Leadership, and self-development. And, it is strongly influenced by Agile with short cycles (small projects) and frequent deliveries (iterative progress).

Performance Loss

One of the three OEE losses. Performance loss includes all factors that cause the manufacturing process to operate at less than the maximum possible speed when running (including both slow cycles and small stops). Examples of these factors include machine wear, substandard materials, and misfeeds.

Planned Maintenance

Proactively schedule maintenance activities based on predicted and/or measured failure rates to prevent equipment failure. Planned maintenance is a component of TPM and is often implemented together with Autonomous Maintenance so operators are responsible for a subset of planned maintenance activities.

Planned Production Time

Time during which the manufacturing process is scheduled for production. This is the time across which OEE is measured (in contrast to Not Scheduled Time, which has no impact on OEE). The sum of planned production time and not scheduled time is all time (24 hours per day x 7 days per week):

  • Planned Production Time + Not Scheduled Time = All Time

Planned Stop

The manufacturing process is scheduled for production and is not running, because of a planned event, such as a Changeover. Time in this state counts against productivity and capacity metrics (e.g., OEE and TEEP) since there is a benefit to reducing planned stop time (this is the rationale behind SMED programs). If a company makes a conscious decision that one or more planned events should not count against productivity and capacity metrics, the time for these events should be categorized as Not Scheduled.

Also refer to Run, Unplanned Stop, and Not Scheduled.

Preventative Action

An improvement action designed to prevent a known problem from recurring. A preventative action is typically a long-term Hundred-Year Fix (a permanent Countermeasure). Preventative actions often involve new Planned Maintenance but can also include operator training activities or the application of a known fix across equipment that is likely to (but does not yet) have an issue.

Quality Loss

One of the three OEE losses. Quality Loss includes productivity lost from manufacturing parts that do not meet quality standards after the first pass (similar to the concept of first pass yield). This includes scrap and parts that require rework.

Quality Maintenance

A quality-focused improvement method that:

  • First applies Root Cause Analysis tools to identify the underlying cause of a defect
  • Then designs error prevention processes into equipment (Error-Proofing) to eliminate the defect

Quality maintenance is a component of TPM.

Quick Fix

A short-term resolution to a manufacturing problem that restores equipment to operating functionality. In CAPA this is associated with a usually temporary response known as a Corrective Action. A quick fix is unlikely to address the underlying causes for an issue and may require Root Cause Analysis to identify a Preventative Action. Quick fix can be contrasted to Hundred-Year Fix.

Root Cause Analysis

A problem-solving methodology that focuses on resolving the underlying problem (in contrast to applying a Quick Fix that only treats the immediate symptoms of the problem). A popular approach is to ask “why” five times – each time moving a step closer to discovering the true underlying problem. A Hundred-Year Fix is the optimal output of a root cause analysis process.


The manufacturing process is scheduled for production and is running. The run state is the only truly productive state (albeit it is usually not Fully Productive Time). It is modeled as a continuous sequence of manufacturing cycles that collectively capture every moment of run time. Cycle analytics is exclusively performed on data from this state (the sum of all cycle times equals run time). The run state includes normal cycles, slow cycles, and small stops.

Also refer to Unplanned Stop, Planned Stop and Not Scheduled.

Short Interval Control

A factory-floor process for driving production improvements and maximizing OEE during the shift. Each shift is split into short intervals of time (four hours initially), within which plant-floor employees use data from the LIS (Line Information System) to identify, prioritize and implement improvement actions (typically via a Quick Fix). For example, an improvement action may:

  • Address an ongoing or emerging problem (e.g., an unusual number of small stops)
  • Improve existing production (e.g., experiment with different equipment settings)
  • Define a target for the next Planned Stop (such as for a Changeover or for a Planned Maintenance activity)

These quick and focused reviews of performance data during the shift enable ongoing course corrections and small-scale fixes that over time can result in significant improvements in manufacturing performance.


SMED (Single-Minute Exchange of Dies) is a collection of techniques for dramatically reducing the time it takes to complete a Changeover. Changeover times can typically be reduced to under 10 minutes (i.e., single-digit minutes). Each element of the changeover is analyzed to see if it can be:

  • Separated (moved before or after the changeover)
  • Converted (either eliminated or modified so it can be external to the changeover)
  • Streamlined (modified to be faster)

Six Big Losses

A very effective way to categorize equipment-based losses originating from the world of TPM. Each loss is categorized as either an Unplanned Stop, Planned Stop, small stop, slow cycle, production defect, or startup defect. Each loss maps very well to a specific set of Countermeasures and is aligned with one of the OEE losses:

Six Sigma

A framework for reducing variations in processes and products. It is most strongly associated with quality, but also has broader applications in reducing variation in manufacturing. Six sigma is named after the core quality metric, which sets a goal of 3.4 defects per million opportunities. Over time, six sigma has evolved into a rich improvement methodology, based on the core idea of exploring how variation inhibits desired results.

The six sigma methodology for process improvement projects is DMAIC (Define, Measure, Analyze, Improve, and Control). If a process cannot be improved sufficiently, it is redesigned with a process known as DMAIDV (where the last two steps are Design and Verify). Another important element of six sigma is a management element; ensuring that improvement projects are aligned to the overall business strategy.

Standardized Work

Documented procedures that capture best practices, preferably with a reference or benchmark time for completing each task. It is very important to treat standardized work as a living document that is easy to change and that evolves and improves as a form of Continuous Improvement.

While standardized work is normally considered necessary for operator tasks (such as running equipment) it can also add value for leaders by standardizing essential management activities such as running effective production meetings within a Structured Review processes.


If the Constraint is available to run (i.e., it has no internal fault), but cannot run because it lacks materials on the infeed it is said to be starved. This is an external loss to the constraint and is normally triggered automatically by sensors on the line. Starved is one of the conditions detected and monitored by Causal Down Time.

Structured Review

A framework for streamlining and connecting meetings at every level of the business. Structured review helps teams work in an aligned way to achieve the most important goals of the business.

Whenever multiple levels of an organization need to work towards the same objective, a structured review process adds significant value. For example, structured review provides a very effective framework for driving OEE improvement by aligning the focus and actions of operators, supervisors, managers, and executives.

Takt Time

The pace of production (e.g., manufacturing one piece every 1.6 seconds) that aligns production with customer demand. Takt time establishes the “rhythm” or “beat” of your manufacturing process. Takt is a German word that means cadence, rhythm, time, measure, bar or cycle. In practice takt time is calculated as:


TAED (Target, Actual, Efficiency, Down Time) is a set of real-time operator metrics that are particularly effective at driving improvement on the plant floor.

  • Target represents the expected production count and is driven by Takt Time
  • Actual is the number of good pieces that have been manufactured
  • Efficiency is the ratio of Actual to Target expressed as a percentage and provides a single score for how well production is performing (100% or better is “winning the shift”)
  • Down Time is a running total of down time for the shift (down time is typically the largest source of Waste in running production)

Theory of Constraints

A methodology for:

  • First identifying the most important limiting factor (i.e., the Constraint) that stands in the way of achieving a goal
  • Then systematically improving that constraint until it is no longer the limiting factor

The concept of the constraint was introduced by Eli Goldratt in his bestselling 1984 novel The Goal. Dr. Goldratt proposed that every complex system, including manufacturing processes, consists of multiple linked activities, one of which acts as a constraint upon the entire system (i.e., the constraint is the “weakest link in the chain”).

According to Dr. Goldratt, the constraint should be improved until it no longer limits throughput, at which point the next constraint should be identified and improved. Over time, Dr. Goldratt developed these concepts into a sophisticated set of tools and methodologies known as the theory of constraints.


TEEP (Total Effective Equipment Performance) is a performance metric that takes into account both equipment losses (as measured by OEE) and schedule losses (as measured by Utilization). It measures performance with respect to all time. In other words, it is the percentage of all time that is Fully Productive Time.

Measuring OEE and TEEP provides a very complete picture of how much capacity is waiting to be unlocked in your “hidden factory”. TEEP is calculated as:

  • OEE x Utilization


TPM (Total Productive Maintenance) is a holistic approach to maintenance developed by Seiichi Nakajima in 1971 while at the Japanese Institute of Plant Maintenance. He characterized maintenance as the responsibility of all employees. He further proposed that improvement is best carried out through small group activities with the goal of maximizing equipment effectiveness (as measured by OEE and the Six Big Losses).

TPM engages all employees with activities that maximize the operational time of equipment. It blurs the distinction between maintenance and production by placing a strong emphasis on empowering operators to maintain their equipment.


TPS (Toyota Production System) is a manufacturing strategy developed by Toyota Motor Corporation of Japan. It focuses on the complete elimination of Waste from the manufacturing process and is the progenitor of Lean Manufacturing.

Unplanned Stop

The manufacturing process is scheduled for production and is not running, because of an unplanned event, such as a breakdown. Time in this state counts against target, productivity and capacity metrics (e.g., OEE and TEEP).

Also refer to Run, Planned Stop, and Not Scheduled.


The percentage of calendar time that is used for production. Utilization is used for capacity planning and for calculating TEEP. In practice it is calculated as:

All time is sometimes referred to as calendar time or 24/7 time.

An alternate way to view the utilization calculation is as:

Value Stream Mapping

A way of looking at a manufacturing process from a purely customer perspective. Each step or stage of the process is mapped and categorized as one of two types of activities:

  • Value-added activities are a part of the manufacturing process that adds value from the customer's perspective
  • Non-value-added activities are a part of the manufacturing process that does not add direct value for the customer

Value stream mapping is a very effective tool for identifying Waste in the manufacturing process.


Any activity that does not add value from the customer’s perspective. According to research by LERC (Lean Enterprise Research Centre), 60% of production activities in a typical manufacturing operation are waste – they add no value at all for the customer.


Deliver large increments of business value using a comprehensive master plan and working through a series of gated stages (such as planning, design, implementation, and documentation). In recent years there has been a fairly strong movement away from waterfall and towards Agile.

Yellow Belt

A yellow belt is a project team member who is trained in a number of improvement tools and actively participates in projects in an organization implementing Six Sigma or Lean Six Sigma. Six Sigma uses a belt-based grading system inspired by the martial arts to denote the role and level of training that team members have in an improvement project.

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