Mathematical Modeling with Sem – PLS in Elimination of Six Big Losses to Reduce Production Cost of Steel Factories

Authors : Erry Rimawan, Untung Mardono, Humiras Purba.

Volume/Issue : Volume 3 - 2018, Issue 10 - October

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Increasing productivity is very important for companies to achieve success in their business processes. The concept of Total Productive Maintenance (TPM) has been used by various companies to increase production operational productivity so that production processes become more efficient and produce sustainable corporate profitability performance. The steel processing industry is one of the capital-intensive industries where 80% of the production costs are in raw materials and energy, so the success of eliminating Six big losses is a key factor in success for reduce the production cost. This paper proposes a methodology for evaluating the effectiveness of production operational systems using a mathematical model in eliminating six big losses which are the 3 main components of OEE (Availability, Performance rate and Quality rate). Mathematical models in the eliminating six big losses are obtained by processing operating data for 3 (three) years and using the PLS SEM as the data processing software. The findings in this paper reveal that the OEE variable with 3 (three) indicators : Availability, Performance rate and Quality rate that are significant to the level of machine productivity, decreased production costs. From the mathematical equations generated from SEM PLS analysis, it provides information that the priority to eliminating of Six Big Losses: Reduce the downtime losses, reduce quality losses and Reduce speed losses.

Keywords : Six Big Losses, TPM, SEM-PLS, Profitability.


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