Academic literature on the topic 'Total productive maintenance'

Tujuan: Penelitian ini dimaksudkan untuk menganalisa penerapan TPM melalui penerapan 8 pilar TPM di salah satu perusahaan yang berlokasi di salah satu kawasan Industri Indonesia. Metodologi: Desain penelitian yang digunakan adalah bagan 8 pilar TPM, operasional variabel yang digunakan adalah Total Produktive Maintenance beserta dengan pilar-pilarnya, pengumpulan data dilakukan dengan metode interview dan obeservasi , sedangkan analisa datanya menggunakan radar chart. Temuan: Hasil penelitian menunjukan bahwa dari skor penuh 10, pencapaian untuk masing-masing pilar adalah sebagai berikut: Autonomous Maintenance 4,6; Focused Improvement 7; Planned Maintenance 6,6; Quality Maintenance 6,6; Training and Education 6,5; Safety, Health and Environment 8,5; Office TPM 10, Development Management 6,6. Dari 8 pilar TPM tersebut hanya terdapat 3 pilar yang telah mencapai skor di atas 7 sedangkan pilar yang lainnya masih di bawah target. Implikasi: Untuk meningkatkan penerapan TPM maka semua poin dalam pilar TPM yang telah dituangkan ke dalam bentuk prosedur dan panduan perawatan harus dijalakan dengan disiplin. Orisinalitas: Penelitian ini bisa menggambarkan permasalahan yang dihadapi oleh perusahaan yang diteliti sehingga bisa dijadikan sebagai acuan untuk melakukan tindakan perbaikan.

Purpose – The purpose of this paper is to review the literature on total productive maintenance (TPM) implementation practice to present an overview of TPM implementation practices adopted by various manufacturing organizations and suggest possible gaps from researchers and practitioner’s point of view. This study tries to identify the best strategy for improving competitiveness of small and medium enterprises (SMEs) in globalized market and evaluates TPM implementation practice in SMEs. Design/methodology/approach – The objective of this paper is to study the role of TPM program in context of Indian industries either from SMEs to large-scale industries. The approach has been directed toward justification of TPM implementation practice for its support to competitive manufacturing in the context of Indian manufacturing industries. Findings – TPM implementation improves productivity and working efficiency of employees and also improves equipment effectiveness and a positive inclination toward company is registered. Therefore, equipment maintenance is an indispensable function in a manufacturing enterprise. In this highly competitive environment, manufacturing organizations should consider maintenance function as a potential source for cost savings and competitive advantage. SMEs must be considered as an engine for economic growth all over the world (Singh et al., 2008). A total of 148 papers related to TPM implementation in large-scale industries and SMEs were collected, analyzed and classified on the basis of their applications, broadly into large industry and SMEs and further divided into Indian and Non-Indian, then case study, implementation, model, literature review, maintenance, service, etc. This classification has clearly shows that SMEs are in a need to adopt TPM implementation practice to compete in this global market and changing requirements of large industries. Maintenance is an indispensable function in a manufacturing enterprise. In this highly competitive environment, manufacturing organizations must be considered maintenance function as a potential source for cost savings and competitive advantage. Singh et al. (2008) have concluded that SMEs must be considered as an engine for economic growth of all over the world. Following are the objectives of this study: to suggest a classification of available literature on TPM implementation; to identify the need of TPM implementation in SMEs; to identify critical observations on each category of classification; to identify the potential of SMEs in India; to identify emerging trends of TPM implementation in India; to suggest directions for future researchers in the field of TPM implementation on the basis of above mention points; and to consolidate all available literature on TPM implementation practice. Research limitations/implications – The challenges of stiff competition and the drive for profits are forcing the organizations to implement various productivity improvement efforts to meet the challenges posed by ever-changing market demands. In the dynamic and highly challenging environment, reliable manufacturing equipment is regarded as the major contributor to the performance and profitability of manufacturing systems. Practical implications – In this dynamic world, importance of SMEs in the growth of the nation needs more attention of researchers and industrialists. After the globalization of market, SMEs have got many opportunities to work in integration with large-scale organizations. All the organizations from SMEs to large-scale industries can adopt effective and efficient maintenance strategies such as condition-based maintenance, reliability-centered maintenance and TPM over the traditional firefighting reactive maintenance approaches (Sharma et al., 2005). Social implications – In our view, this paper clearly identifies implications for research which will be useful for society. The gap discussed by authors needs to be addressed by future researchers. Originality/value – This implementation strategy can help to save huge amounts of time, money and other useful resources in dealing with reliability, availability, maintainability and performance issues. On the basis of available literature, it can be understood that SMEs should change their maintenance strategies to cope up with global competition so that a lot of resources can be utilized in a better direction.

The global marketplace is highly competitive and organisations who want to survive long-term, have to continuously improve, change and adapt in response to market demands. Improvements in a company's performance should focus on cost cutting, increasing productivity levels, quality and guaranteeing deliveries in order to satisfy customers. Total Productive Maintenance (TPM) is one method, which can be used to achieve these goals. TPM is an approach to equipment management that involves employees from both production and maintenance departments. Its purpose is to eliminate major production losses by introducing a program of continuous and systematic improvements to production equipment. TPM should be developed and expanded to embrace the whole organisation and all employees should be involved in the process as members of improvement teams. This thesis describes the development of TPM and the TPM implementation process. Research is focused on the implementation process of TPM. The author has had the opportunity of both monitoring and steering a company through part of its TPM implementation program and has conducted a longitudinal study. The implementation process takes several years and this thesis focuses on the initial three years of the process. This study demonstrates that driving forces, obstacles and difficulties often are dependent on the organisation, its managers and the individual employees. It also shows that the TPM implementation process has many similarities to the implementation of other improvement concepts. The analysis of these findings forms the basis for recommendations and guidance for organisations, who intend to implement TPM.

Godkänd; 2000; 20070318 (ysko)

A growing uncertainty in the global economy is forcing many manufacturers to reassess their corporate outlook towards the environment. Today there is a growing attention to sustainability in industry accompanied by a paradigm shift towards realizing a sustainable society. It is now very common to hear about Green Production and Green Systems, but few literature exist that deal with the relatively newer subject of Green Maintenance. The term green production is often used to describe production with a sustainable perspective. Also, lean production has been proposed as a means of achieving sustainability. Lean and Green production systems require efficient production and low use of resources such as energy, materials, etc. One major facilitator of this is effective maintenance. Sometimes regarded as the necessary evil, maintenance still has a negative image in the industry. But as the paradigm on manufacturing shift towards realizing a sustainable society, we should also begin to realize the changing role of maintenance. Still, the impact of maintenance on sustainability and Green production is not very well described in research.   This Master Thesis within the School of Innovation Design and Engineering at Mälardalen University presents a literature review on green maintenance by trying to identify and assess the key factors of maintenance effects on green production, life cycle assessment and sustainability of maintenance activities. In addition, a brief introduction to the greening of remanufacturing activity, part of a green process by itself, is provided. The research is based upon extensive literature study, questionnaire survey and interviews with relevant industry as well as academic personnel. A discussion of the results of the interview followed by a conclusion on the key factors of maintenance on sustainability is provided. Future research areas have also been suggested.       Keywords: Green maintenance, Production maintenance, Sustainable maintenance,     Total Productive Maintenance

Manufacturing processes should operate at optimal levels in order to remain competitive in current economic environment. The optimal manufacturing performance can be achieved by overall equipment efficiency which is also a measurement for Total Productive Maintenance (TPM). The successful implementation of TPM has been evaluated at Faurecia Interior Systems. The research consisted out of a literature review into the elements and benefits of TPM. A questionnaire was sent to all operator level personnel at Faurecia Interior Systems to establish their views on the implementation level of TPM at the East London site. In conclusion, this research paper has also led to the development of recommendations which should improve TPM at the site.

Total Productive Maintenance (TPM), recently interests many major industrial companies, for the need to maintain the physical assets and the continuity of work. According to the Japan Institute of Plant Maintenance (JIMP), the (TPM) is based on eight principles: focused improvement, autonomous maintenance, planned maintenance, training and skills development, initial phase management, quality maintenance, TPM in Office, and safety environment. Through the implementation of those principles, an increased productivity can be achieved by reducing faults, improving quality, delivering times when specified, improving working conditions and raising the morale of the workers. This Research focused on factors and obstacles that effect this program. The research aims to design a framework that identifies the most important factors that affect the success of the application of TPM, as well as the tools and techniques that help in the application process. To determine the factors and obstacles when applying TPM, Libyan Iron and Steel Company LISCO has been selected as case study. This study analyzed impediments and obstacles to the implementation procedure and revealed key success ranked factors concluding with a conceptual framework for a successful TPM implementation along with the identification of tools and techniques to support implementing TPM. Also, TPM cannot be applied unless there is cooperation and coordination between the maintenance department and other sections of the company. Accordingly, this research also provided several recommendations, including the application of the concepts and principles of TPM in the company and make it the responsibility of everyone, and work in light of the proposed improvement plan.

Productive Plants Maintenance is a strategic function of industrial realities that aims to ensure the regular functioning and good conservation of productive equipment. (OSCE, 1993); in particular, it comprehends all technical and administrative techniques, including controlling activities, that aim to restore to and/or maintain an item in a condition in which it can performed the required function (UNI9910). A company, at in a first moment, decides to invest a part of its capital in new equipment for production, to reach its core business goals and gains success; in a second moment, anyway, it is necessary to invest resources and time to guarantee its correct functioning and conservation, to satisfy the productive expectation (Pay Back). TPM (Total Productive Maintenance) is an industrial tool that comprehends all techniques and methods that aim to optimize industrial plants effectiveness, through equipment availability improvement and making downtime and failure decrease. TPM paradigm aims to increase productivity (Productive), involving all the staff (Total), through maintenance (Maintenance). TPM benefits are well known in our industries: companies that applied these techniques registered a reduction of failures of about 50%, a reduction of production loss of about 70%, the 60% of reduction of maintenance costs and, finally, 50-90% of reduction in set-up time. However its implementation in industrial realities it is not always so easy: it is necessary to take care to some critical factors that might influence the success of the project. In the world of automatic production systems, where the human factor is reduced and often useless, to involve people in equipment maintenance might be hard. Moreover, to align production and maintenance requirements, in order to optimize equipment availability, means to plan together production downtime, looking to satisfy the demand that is becoming more and more variable and uncertain, with shortest lead time. In this context, this work aims to carry out a useful framework to apply TPM in automatic production systems, in particular in Food & Beverage sector, focusing on the drivers that might influence its implementation. Food Industry, in addition to peculiarities related to the automation world, is characterized by factors related to security, safety, quality and sustainability. From literature review about many case studies of TPM Implementation it arises that the application of this paradigm on industrial realities requires a very long time and a lot of resources, and its benefits are slowly to arise. What is proposed in this work is different in the way it aims to maximize and to highlight TPM benefits in a faster way; the framework, in particular, is focused on carrying out productive equipment criticalities, through the use of various tools and techniques, to optimize and arise results. Therefore, it is propose the application of the framework to a real industrial case. Then, a second part of this work is dedicated to micro downtime analysis in automatic production flow lines. In fact, as it arises from the case study, micro downtime is the greatest cause of inefficiency in these production systems. Micro downtime can be related to technical and/or design causes, or to the normal functioning of more machines working in series with different characteristics. Sometime micro downtime inefficiency could be solved with technical solutions, if they result convenient (efficiency improvement compared to the investment proposed); in other cases it is required to evaluate the buffer size and allocation. In fact, in this sector, machines downtime might be related to lack of product in ingress ( the upstream machine is down – starving) or the excess of product in exit (the downstream machine is down – blocked). The Ph.D. thesis structure is the follow: 1. State of the art analysis about factors that influence TPM implementation in automatic production systems and about food and beverage sector peculiarities; the core objective is to identify an innovative and structured framework for TPM implementation; what is new in the proposed framework is the focus on accelerated and visible benefits. 2. TPM framework application to a real industrial case, in particular a bottling line. During the framework implementation, micro downtime arise as the core inefficiency. 3. State of the art analysis about Downtime in automatic production systems, focusing on micro downtime impact on production efficiency and machines availability. Improvement for these inefficiencies are proposed as: technical solutions related to the improvement of equipment effectiveness (CPI – Cost Performance Indicator) or evaluation of buffer sizing and location through a simulative model (BAP – Buffer Allocation Problem); 4. Micro downtime analysis applied to a real case study; construction of the CPI, when possible, and of a new simulative model to evaluate buffer sizing and allocation. It is proposed a new simulative model based on ad hoc micro downtime probability distribution (Weibull Distribution for each micro downtime). This Ph.D. Thesis has been carries out in strong collaboration with Acqua Minerale San Benedetto S.p.A., that made possible the framework implementation and data collection.
La Manutenzione degli Impianti Produttivi è una funzione strategica delle realtà industriali che ha l’obiettivo di assicurare il funzionamento regolare ed il buono stato di conservazione di questi sistemi (OSCE, 1993); in particolare, secondo la definizione UNI9910, essa comprende tutte le azioni tecniche ed amministrative, incluse le azioni di supervisione, volte a mantenere o a riportare un’entità in uno stato in cui possa eseguire la funzione richiesta. Se inizialmente un’azienda decide di investire una parte del proprio capitale nella costruzione ed avviamento di un nuovo impianto produttivo, successivamente è necessario investire tempo e risorse per il suo mantenimento, al fine di mantenere i requisiti richiesti e soddisfare le aspettative (Pay Back). Il TPM (Total Productive Maintenance) consiste in un insieme di tecniche e strumenti che hanno la funzione di ottimizzare il mantenimento degli impianti produttivi, aumentandone l’affidabilità e riducendo fermi e guasti. Il TPM mira ad aumentare la produttività degli impianti (Productive), coinvolgendo tutto il personale (Total), attraverso la manutenzione (Maintenance). I benefici del TPM sono ormai ben noti nelle industrie: le aziende che hanno implementato tale paradigma hanno registrato una riduzione dei guasti del 50%, del 70% di produzione persa, del 60 % dei costi di manutenzione e tra il 50-90% dei tempi di set-up. Tuttavia la sua implementazione non è sempre facile e diretta: è necessario porre attenzione ad alcuni fattori che possono pesantemente incidere sul successo del progetto. Per quanto riguarda il mondo degli impianti automatizzati, dove il fattore umano è ridotto e spesso estraneo, coinvolgere il personale nel mantenimento delle macchine può risultare difficoltoso. L’obiettivo di allineare esigenze produttive e manutentive, nell’ottica di ottimizzare l’affidabilità degli impianti, implica concordare fermi produttivi rispettando tempi di consegna sempre più ristretti con previsioni della domanda estremamente variabili; pertanto risulta evidente come ottimizzare la produzione attraverso la manutenzione possa essere un obiettivo ambizioso nelle realtà industriali. In tale contesto si inserisce la presente trattazione, che ha l’obiettivo di proporre un framework di applicazione di tecniche di manutenzione nel contesto degli impianti automatizzati, in particolare legato al mondo del Food & Beverage. Tale settore, oltre alle peculiarità legate al mondo automatizzato, è caratterizzato da fattori di sicurezza alimentare, elevata qualità e obiettivi a sfondo ecosostenibile. Da quanto emerso in letteratura, il processo di applicazione del TPM è lungo ed impegnativo, e spesso i suoi benefici richiedono lunghi periodi per diventare tangibili. Quanto proposto in questo lavoro si differenzia dall’attuale stato dell’arte in quanto ambisce a massimizzare ed evidenziare i benefici di tale paradigma in tempi più ristretti; il framework proposto, in particolare, mira a focalizzarsi sulle criticità degli impianti produttivi, proponendo varie tecniche risolutive al fine di massimizzare i risultati e aumentarne la visibilità. E’ poi proposta l’applicazione di tale framework ad una vera realtà industriale, quale una linea di imbottigliamento. Una seconda parte di tale lavoro è dedicata, invece, all’analisi delle micro fermate negli impianti automatizzati. Infatti, come emerso anche dal caso studio, esse rappresentano una rilevante fonte di inefficienza negli impianti automatizzati. Le microfermate possono essere di natura tecnica e/o di progetto oppure legate al normale funzionamento di più macchine con caratteristiche differenti che lavorano in sequenza. Tale inefficienza talvolta può essere risolta con soluzioni tecniche mirate e definitive, se opportunamente convenienti (recupero efficienza rispetto investimento proposto); talvolta invece è richiesta una rivalutazione del dimensionamento del Buffer tra le due stazioni di lavoro al fine di ridurre l’incisività delle micro fermate di una macchina sull’intera linea (fenomeni di starving and blocking). Nelle linee automatizzate è frequente che una macchina si trovi nelle condizioni di non poter operare per mancanza di input (starving) o per eccesso di output (blocking). La tesi è suddivisa in quattro fasi: 1. Analisi dello stato dell’arte dei fattori che hanno influenzato l’implementazione della TPM nei sistemi automatizzati e delle peculiarità dell’industria alimentare al fine di identificare un modello di implementazione strutturato ed innovativo; la differenza dallo stato attuale è il focus su risultati accelerati e visibili. 2. Applicazione del modello ad un impianto di imbottigliamento; individuazione delle micro fermate come causa impattante di inefficienza produttiva. 3. Analisi dello stato dell’arte sui Downtime negli impianti automatizzati, focalizzandosi sull’impatto delle micro fermate sull’efficienza produttiva ed affidabilità del sistema. Proposte di miglioramento di tali inefficienze: Soluzione tecniche mirate con modello di recupero di efficienza produttiva (CPI – Cost Performance Indicator) o rivalutazione del dimensionamento dei buffer (BAP – Buffer Allocation Problem). 4. Analisi mirata delle micro fermate di una stazione di lavoro critica e relativa costruzione del modello simulativo per valutare il dimensionamento di un buffer. Tale modello risulta innovativo in quanto è basato su distribuzioni di Weibull personalizzate per ogni tipologia di micro fermata. Tale progetto di ricerca è stato svolto grazie alla collaborazione con Acqua Minerale San Benedetto S.p.A., che ha reso possibile l’implementazione del modello e la raccolta dei dati.

Thesis (M.S.)--Massachusetts Institute of Technology, Sloan School of Management, 1996, and Thesis (M.S.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science, 1996.
Includes bibliographical references (p. 172-173).
by Eugene C. Hamacher.
M.S.

The study improved the overall equipment effectiveness (OEE) of machines and processes through the implementation of a total productive maintenance (TPM) approach at Company S over a three-month period. By comparing the OEE of equipment before and after the implementation of autonomous maintenance, this study concluded that autonomous maintenance improves OEE. The target of this study was one general product line at a polytetrafluoroethylene (PTFE) plant. Due to time limitations, the study only applied autonomous maintenance to operational activities. This research involved machine and processes selection, condition assessment, baseline OEE assessment, operator training, execution of autonomous maintenance, and OEE measurement. The approach was based on the steps of autonomous maintenance but was simplified for the conditions of the plant.

The manufacturing industry has experienced an unprecedented degree of change in the highly competitive and dynamics manufacturing scenario. Recent competitive trends have been pushing manufacturing executives to reconsider the impact and importance of increasing equipment availability and utilization, maintenance productivity and resource utilization, and increasing quality and responsiveness of maintenance services in meeting overall goals to achieve World Class status. TPM has been envisioned as an effective tool in the quest for achieving the world class status and meeting the ever increasing competition. This paper elaborates the contribution of TPM implementation towards improvement in organizational behavior in the Indian process industry in the quest to attain world-class competitiveness and sustainability efforts. The case study of TPM implementation though team building in Indian process industry has been brought out through the presentation of TPM benefits at the Hot Strip Mill division at a steel manufacturing company. The various aspects of TPM implementation have also been illustrated with the help of a case study.

Banco de la República is celebrating its 100th anniversary in 2023. This is a very significant anniversary and one that provides an opportunity to highlight the contribution the Bank has made to the country’s development. Its track record as guarantor of monetary stability has established it as the one independent state institution that generates the greatest confidence among Colombians due to its transparency, management capabilities, and effective compliance with the central banking and cultural responsibilities entrusted to it by the Constitution and the Law. On a date as important as this, the Board of Directors of Banco de la República (BDBR) pays tribute to the generations of governors and officers whose commitment and dedication have contributed to the growth of this institution.1 Banco de la República’s mandate was confirmed in the National Constitutional Assembly of 1991 where the citizens had the opportunity to elect the seventy people who would have the task of drafting a new constitution. The leaders of the three political movements with the most votes were elected as chairs to the Assembly, and this tripartite presidency reflected the plurality and the need for consensus among the different political groups to move the reform forward. Among the issues considered, the National Constitutional Assembly gave special importance to monetary stability. That is why they decided to include central banking and to provide Banco de la República with the necessary autonomy to use the instruments for which they are responsible without interference from other authorities. The constituent members understood that ensuring price stability is a state duty and that the entity responsible for this task must be enshrined in the Constitution and have the technical capability and institutional autonomy necessary to adopt the decisions they deem appropriate to achieve this fundamental objective in coordination with the general economic policy. In particular, Article 373 established that “the State, through Banco de la República, shall ensure the maintenance of the purchasing power of the currency,” a provision that coincided with the central banking system adopted by countries that have been successful in controlling inflation. In 1999, in Ruling 481, the Constitutional Court stated that “the duty to maintain the purchasing power of the currency applies to not only the monetary, credit, and exchange authority, i.e., the Board of Banco de la República, but also those who have responsibilities in the formulation and implementation of the general economic policy of the country” and that “the basic constitutional purpose of Banco de la República is the protection of a sound currency. However, this authority must take the other economic objectives of state intervention such as full employment into consideration in their decisions since these functions must be coordinated with the general economic policy.” The reforms to Banco de la República agreed upon in the Constitutional Assembly of 1991 and in Act 31/1992 can be summarized in the following aspects: i) the Bank was assigned a specific mandate: to maintain the purchasing power of the currency in coordination with the general economic policy; ii) the BDBR was designatedas the monetary, foreign exchange, and credit authority; iii) the Bank and its Board of Directors were granted a significant degree of independence from the government; iv) the Bank was prohibited from granting credit to the private sector except in the case of the financial sector; v) established that in order to grant credit to the government, the unanimous vote of its Board of Directors was required except in the case of open market transactions; vi) determined that the legislature may, in no case, order credit quotas in favor of the State or individuals; vii) Congress was appointed, on behalf of society, as the main addressee of the Bank’s reporting exercise; and viii) the responsibility for inspection, surveillance, and control over Banco de la República was delegated to the President of the Republic. The members of the National Constitutional Assembly clearly understood that the benefits of low and stable inflation extend to the whole of society and contribute mto the smooth functioning of the economic system. Among the most important of these is that low inflation promotes the efficient use of productive resources by allowing relative prices to better guide the allocation of resources since this promotes economic growth and increases the welfare of the population. Likewise, low inflation reduces uncertainty about the expected return on investment and future asset prices. This increases the confidence of economic agents, facilitates long-term financing, and stimulates investment. Since the low-income population is unable to protect itself from inflation by diversifying its assets, and a high proportion of its income is concentrated in the purchase of food and other basic goods that are generally the most affected by inflationary shocks, low inflation avoids arbitrary redistribution of income and wealth.2 Moreover, low inflation facilitates wage negotiations, creates a good labor climate, and reduces the volatility of employment levels. Finally, low inflation helps to make the tax system more transparent and equitable by avoiding the distortions that inflation introduces into the value of assets and income that make up the tax base. From the monetary authority’s point of view, one of the most relevant benefits of low inflation is the credibility that economic agents acquire in inflation targeting, which turns it into an effective nominal anchor on price levels. Upon receiving its mandate, and using its autonomy, Banco de la República began to announce specific annual inflation targets as of 1992. Although the proposed inflation targets were not met precisely during this first stage, a downward trend in inflation was achieved that took it from 32.4% in 1990 to 16.7% in 1998. At that time, the exchange rate was kept within a band. This limited the effectiveness of monetary policy, which simultaneously sought to meet an inflation target and an exchange rate target. The Asian crisis spread to emerging economies and significantly affected the Colombian economy. The exchange rate came under strong pressure to depreciate as access to foreign financing was cut off under conditions of a high foreign imbalance. This, together with the lack of exchange rate flexibility, prevented a countercyclical monetary policy and led to a 4.2% contraction in GDP that year. In this context of economic slowdown, annual inflation fell to 9.2% at the end of 1999, thus falling below the 15% target set for that year. This episode fully revealed how costly it could be, in terms of economic activity, to have inflation and exchange rate targets simultaneously. Towards the end of 1999, Banco de la República announced the adoption of a new monetary policy regime called the Inflation Targeting Plan. This regime, known internationally as ‘Inflation Targeting,’ has been gaining increasing acceptance in developed countries, having been adopted in 1991 by New Zealand, Canada, and England, among others, and has achieved significant advances in the management of inflation without incurring costs in terms of economic activity. In Latin America, Brazil and Chile also adopted it in 1999. In the case of Colombia, the last remaining requirement to be fulfilled in order to adopt said policy was exchange rate flexibility. This was realized around September 1999, when the BDBR decided to abandon the exchange-rate bands to allow the exchange rate to be freely determined in the market.Consistent with the constitutional mandate, the fundamental objective of this new policy approach was “the achievement of an inflation target that contributes to maintaining output growth around its potential.”3 This potential capacity was understood as the GDP growth that the economy can obtain if it fully utilizes its productive resources. To meet this objective, monetary policy must of necessity play a countercyclical role in the economy. This is because when economic activity is below its potential and there are idle resources, the monetary authority can reduce the interest rate in the absence of inflationary pressure to stimulate the economy and, when output exceeds its potential capacity, raise it. This policy principle, which is immersed in the models for guiding the monetary policy stance, makes the following two objectives fully compatible in the medium term: meeting the inflation target and achieving a level of economic activity that is consistent with its productive capacity. To achieve this purpose, the inflation targeting system uses the money market interest rate (at which the central bank supplies primary liquidity to commercial banks) as the primary policy instrument. This replaced the quantity of money as an intermediate monetary policy target that Banco de la República, like several other central banks, had used for a long time. In the case of Colombia, the objective of the new monetary policy approach implied, in practical terms, that the recovery of the economy after the 1999 contraction should be achieved while complying with the decreasing inflation targets established by the BDBR. The accomplishment of this purpose was remarkable. In the first half of the first decade of the 2000s, economic activity recovered significantly and reached a growth rate of 6.8% in 2006. Meanwhile, inflation gradually declined in line with inflation targets. That was how the inflation rate went from 9.2% in 1999 to 4.5% in 2006, thus meeting the inflation target established for that year while GDP reached its potential level. After this balance was achieved in 2006, inflation rebounded to 5.7% in 2007, above the 4.0% target for that year due to the fact that the 7.5% GDP growth exceeded the potential capacity of the economy.4 After proving the effectiveness of the inflation targeting system in its first years of operation, this policy regime continued to consolidate as the BDBR and the technical staff gained experience in its management and state-of-the-art economic models were incorporated to diagnose the present and future state of the economy and to assess the persistence of inflation deviations and expectations with respect to the inflation target. Beginning in 2010, the BDBR established the long-term 3.0% annual inflation target, which remains in effect today. Lower inflation has contributed to making the macroeconomic environment more stable, and this has favored sustained economic growth, financial stability, capital market development, and the functioning of payment systems. As a result, reductions in the inflationary risk premia and lower TES and credit interest rates were achieved. At the same time, the duration of public domestic debt increased significantly going from 2.27 years in December 2002 to 5.86 years in December 2022, and financial deepening, measured as the level of the portfolio as a percentage of GDP, went from around 20% in the mid-1990s to values above 45% in recent years in a healthy context for credit institutions.Having been granted autonomy by the Constitution to fulfill the mandate of preserving the purchasing power of the currency, the tangible achievements made by Banco de la República in managing inflation together with the significant benefits derived from the process of bringing inflation to its long-term target, make the BDBR’s current challenge to return inflation to the 3.0% target even more demanding and pressing. As is well known, starting in 2021, and especially in 2022, inflation in Colombia once again became a serious economic problem with high welfare costs. The inflationary phenomenon has not been exclusive to Colombia and many other developed and emerging countries have seen their inflation rates move away from the targets proposed by their central banks.5 The reasons for this phenomenon have been analyzed in recent Reports to Congress, and this new edition delves deeper into the subject with updated information. The solid institutional and technical base that supports the inflation targeting approach under which the monetary policy strategy operates gives the BDBR the necessary elements to face this difficult challenge with confidence. In this regard, the BDBR reiterated its commitment to the 3.0% inflation target in its November 25 communiqué and expects it to be reached by the end of 2024.6 Monetary policy will continue to focus on meeting this objective while ensuring the sustainability of economic activity, as mandated by the Constitution. Analyst surveys done in March showed a significant increase (from 32.3% in January to 48.5% in March) in the percentage of responses placing inflation expectations two years or more ahead in a range between 3.0% and 4.0%. This is a clear indication of the recovery of credibility in the medium-term inflation target and is consistent with the BDBR’s announcement made in November 2022. The moderation of the upward trend in inflation seen in January, and especially in February, will help to reinforce this revision of inflation expectations and will help to meet the proposed targets. After reaching 5.6% at the end of 2021, inflation maintained an upward trend throughout 2022 due to inflationary pressures from both external sources, associated with the aftermath of the pandemic and the consequences of the war in Ukraine, and domestic sources, resulting from: strengthening of local demand; price indexation processes stimulated by the increase in inflation expectations; the impact on food production caused by the mid-2021 strike; and the pass-through of depreciation to prices. The 10% increase in the minimum wage in 2021 and the 16% increase in 2022, both of which exceeded the actual inflation and the increase in productivity, accentuated the indexation processes by establishing a high nominal adjustment benchmark. Thus, total inflation went to 13.1% by the end of 2022. The annual change in food prices, which went from 17.2% to 27.8% between those two years, was the most influential factor in the surge in the Consumer Price Index (CPI). Another segment that contributed significantly to price increases was regulated products, which saw the annual change go from 7.1% in December 2021 to 11.8% by the end of 2022. The measure of core inflation excluding food and regulated items, in turn, went from 2.5% to 9.5% between the end of 2021 and the end of 2022. The substantial increase in core inflation shows that inflationary pressure has spread to most of the items in the household basket, which is characteristic of inflationary processes with generalized price indexation as is the case in Colombia. Monetary policy began to react early to this inflationary pressure. Thus, starting with its September 2021 session, the BDBR began a progressive change in the monetary policy stance moving away from the historical low of a 1.75% policy rate that had intended to stimulate the recovery of the economy. This adjustment process continued without interruption throughout 2022 and into the beginning of 2023 when the monetary policy rate reached 12.75% last January, thus accumulating an increase of 11 percentage points (pp). The public and the markets have been surprised that inflation continued to rise despite significant interest rate increases. However, as the BDBR has explained in its various communiqués, monetary policy works with a lag. Just as in 2022 economic activity recovered to a level above the pre-pandemic level, driven, along with other factors, by the monetary stimulus granted during the pandemic period and subsequent months, so too the effects of the current restrictive monetary policy will gradually take effect. This will allow us to expect the inflation rate to converge to 3.0% by the end of 2024 as is the BDBR’s purpose.Inflation results for January and February of this year showed declining marginal increases (13 bp and 3 bp respectively) compared to the change seen in December (59 bp). This suggests that a turning point in the inflation trend is approaching. In other Latin American countries such as Chile, Brazil, Perú, and Mexico, inflation has peaked and has begun to decline slowly, albeit with some ups and downs. It is to be expected that a similar process will take place in Colombia in the coming months. The expected decline in inflation in 2023 will be due, along with other factors, to lower cost pressure from abroad as a result of the gradual normalization of supply chains, the overcoming of supply shocks caused by the weather, and road blockades in previous years. This will be reflected in lower adjustments in food prices, as has already been seen in the first two months of the year and, of course, the lagged effect of monetary policy. The process of inflation convergence to the target will be gradual and will extend beyond 2023. This process will be facilitated if devaluation pressure is reversed. To this end, it is essential to continue consolidating fiscal sustainability and avoid messages on different public policy fronts that generate uncertainty and distrust. 1 This Report to Congress includes Box 1, which summarizes the trajectory of Banco de la República over the past 100 years. In addition, under the Bank’s auspices, several books that delve into various aspects of the history of this institution have been published in recent years. See, for example: Historia del Banco de la República 1923-2015; Tres banqueros centrales; Junta Directiva del Banco de la República: grandes episodios en 30 años de historia; Banco de la República: 90 años de la banca central en Colombia. 2 This is why lower inflation has been reflected in a reduction of income inequality as measured by the Gini coefficient that went from 58.7 in 1998 to 51.3 in the year prior to the pandemic. 3 See Gómez Javier, Uribe José Darío, Vargas Hernando (2002). “The Implementation of Inflation Targeting in Colombia”. Borradores de Economía, No. 202, March, available at: https://repositorio.banrep.gov.co/handle/20.500.12134/5220 4 See López-Enciso Enrique A.; Vargas-Herrera Hernando and Rodríguez-Niño Norberto (2016). “The inflation targeting strategy in Colombia. An historical view.” Borradores de Economía, No. 952. https://repositorio.banrep.gov.co/handle/20.500.12134/6263 5 According to the IMF, the percentage change in consumer prices between 2021 and 2022 went from 3.1% to 7.3% for advanced economies, and from 5.9% to 9.9% for emerging market and developing economies. 6 https://www.banrep.gov.co/es/noticias/junta-directiva-banco-republica-reitera-meta-inflacion-3