OEE — Why Bother?

So, you’re busy. I get it.

I barely had time to write this post between napping at my desk and watching highlights from The Tonight Show on YouTube.

It’s hard to find time in today’s busy schedule to do things like monitor the performance of the equipment which manufactures the products that are sold to your customers… Alright, maybe your day is slightly busier than mine, but do you get my point?

If manufacturers can’t find the time to monitor and analyze the performance of their production assets, shouldn’t they prioritize their time? The performance of those assets is pretty important. If nothing less, that performance is largely what keeps the employees, well, exactly that: employees, and not job seekers.

What is OEE?

Of the many Key Performance Indicators (KPI) that exist as a means to monitor and analyze the performance of production equipment, Overall Equipment Effectiveness (OEE) might just be the most universally applicable for those in the production industry.

OEE is a simple and practical analytic metric that is used to identify the percentage of Planned Production Time that is being productive (actually outputting quality product).

OEE analysis starts with Plant Operating Time (the amount of time your facility is open and available for operation) and subtracts any Planned Shut-Down Events (could be maintenance, lunch breaks, etc.) as these are pre-meditated, non-operational periods.

The remainder, gives you the Planned Production Time. This allows for you to understand what the maximum production potential is, based on the full Planned Production Time.

OEE takes the most common sources of manufacturing productivity loss, categorizes them, and converts them into metrics which help you to determine your efficiency baseline (your current OEE). With your efficiency baseline, you can determine how your efficiency is currently stacking up compared to industry standards.

3 categories examined by OEE:

OEE was developed to evaluate the overall efficiency of a manufacturing operation. It does this by evaluating three key metrics of production.

Availability — Takes into account Down Time Loss, which includes any events that interfere with planned production.
Performance — Measures the loss in productivity which includes any factors that cause the process to operate at less than the maximum possible speed.
Quality — Measures losses from manufactured items which do not meet quality standards (scrapped items).

If it’s part of Smart Manufacturing, it’s probably a smart thing to do

OEE is frequently used as a key metric in Smart Manufacturing programs and provides you with an overall framework for measuring the production efficiency of your operation. OEE analysis is also commonly used as a KPI in association with a company’s Lean Manufacturing efforts to serve as an indicator of success as the score continues toward perfect production (100%).

Perfect production is defined as: manufacturing only quality product, as fast as possible within the defined parameters, with zero equipment down time.

Industry benchmarks for OEE:

 An OEE score of 100% — Perfect Production: manufacturing only quality products, as fast as possible within the determined parameters, with zero equipment down time.
 An OEE score of 85% — World Class. For most companies, World Class is a reasonable, long-term goal.
 An OEE score of 60% — Acceptable. This level indicates there is great room for improvement.
 An OEE score of 40% — Low. Can be easily improved through standard downtime prevention measures.

A penny saved is a penny earned

Most companies which are new to OEE will typically score in the “Low” to “Acceptable” range for their OEE. This may appear to be alarming at first, but it is a very positive score to see displayed in front of you. It allows for you to realize that there is the opportunity for significant improvement in the efficiency of your operations which results in the possibility for increased revenue! So, remember, increasing efficiency is just as effective at driving profit as is increasing production.

If you’re looking to improve production efficiency and increase revenue, OEE sure seems like a great place to start.