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Understanding OEE: A Measuring Aid For Manufacturing Productivity

One of the best practices for a productive manufacturing process is measuring overall equipment effectiveness. This helps you track valuable, important information that can help improve the efficiency of manufacturing equipment. Continue reading this guide to learn what OEE is and how you can benefit from it.

What is Overall Equipment Effectiveness?

OEE is short for Overall Equipment Effectiveness but it can also be referred to as Overall Equipment Efficiency when the goal focuses more on total efficiency rather than effectiveness. In other words: OEE is the use of manufacturing equipment up to its limit. In contrast, overall equipment efficiency is using manufacturing equipment up to the limit with minimal resources. Overall equipment efficiency was coined by the founder of the Total Productive Maintenance System (TPMS), Seiichi Nakajima. It’s a standard established to measure the performance and quality of machine equipment to improve manufacturing productivity. Overall equipment effectiveness is based on the Harrington-Emerson way of thinking about labor efficiency.

Overall equipment efficiency is defined as measuring how well a manufacturing process runs in parity with the expected run time at full equipment potential as it measures the percentage of manufacturing time that was actually productive.

An OEE score of 100 means that a production process is perfect in the sense that good parts were produced (100% Quality), at a maximum speed (100% Performance), without any unnecessary breaks or intrusion (100% Availability).

These three values are the main components that are measured in OEE. The results of the measurement will help provide information (losses, defects, and countermeasures) that can guide quality managers on what to do to improve equipment effectiveness.

The main aim of measuring overall equipment effectiveness is to understand how to improve manufacturing processes systematically. It’s a method that is simple enough to be understood by all workers and broad enough to function as a driving force for promoting the growth of a business.

For reliable overall equipment effectiveness monitoring, data must be collected directly from all machines that aid the manufacturing process. The data will include performance, quality, run time and stop time, defects, losses, etc. Below are the recognized OEE industry standard scores and what they mean.

  • An OEE score of 100% means there’s a perfect production process.
  • An OEE score of 80% is the world-class accepted score for production processes.
  • An OEE score of 60% is the typical standard for production processes but is still subject to further improvements.
  • An OEE score of 45% signifies a low rating but is not uncommon.

In this guide, we’ll discuss:

1. The 3 main components of overall equipment effectiveness

2. How to calculate overall equipment efficiency

3. The 6 big losses of OEE

4. How to systematically improve OEE

5. The benefits of overall equipment efficiency

Machines lined up for OEE inspection

What Are The 3 Main Components Of Overall Equipment Effectiveness?

OEE is a measure taken to determine areas in production that need improvement. It focuses on the most crucial areas of productivity loss which are:

  • Availability
  • Performance
  • Quality

OEE helps us decipher how much operating time in a manufacturing process was productive, gives us insight into what issues affect the quality of products and how we can implement resolution measures. It also shows how we can deliver quality products by ensuring manufacturing processes and equipment are working to their limit without wasting time. In view of acquiring valuable information to take action on OEE, three main areas are targeted that we will break down here:

1. AVAILABILITY

The availability component of the OEE metric considers the record of all time involved in a production process. It measures the planned and unplanned stops during a production process and compares the run time of a process with the planned production time. Planned stops, such as moments of scheduled breaks and changeover, and unplanned stops as a result of equipment failure, machine breakdown, etc., are recorded. An availability rating of 100% indicates that a process is constantly running during the planned production time.

An example of availability rate calculation:

A production unit is scheduled to run for a 9-hour (540-minute) shift with a planned break of 60-minutes. Then there is an unscheduled downtime of 120 minutes.

The scheduled time = 540 minutes – 60 minutes(break time)= 480 minutes.

Operating time = 540 minutes – 60 minutes Schedule Loss – 120 minutes Unscheduled downtime = 360 minutes.

Calculation: Availability = operating time / scheduled time

Availability = 360 minutes / 480 minutes = 75.0%

2. PERFORMANCE

Performance considers slow cycles and unnecessary small stops during a production process. Overall equipment effectiveness aims to support fast-running processes in a production unit, production plant, individual station, or workshop, so the causes of slow run time in production processes will be highlighted. A performance rate of 100% indicates that the manufacturing or production processes are running as quickly as possible.

Example:

A given production unit is scheduled for a 9-hour (540-minute) shift with a 60-minute planned break.

Operating time = 480 Min Scheduled – 120 Min Unscheduled Downtime = 360 minutes.

The Standard Rate for the part being produced is 40 Units/Hour or 1.5 Minutes/Unit.

The production unit produces 200 Total Units during the shift.

Time to Produce Parts = 212 Units * 1.5 Minutes/Unit = 318 Minutes

Performance (Productivity) = 363 Minutes / 360 Minutes = 88.3%

3. QUALITY

The Quality in an OEE metric accounts for the rate at which good parts are being produced. This measures the process yield in production compared with the production unit’s intended outcome. A 100% quality score means that only good parts have been produced through the production or manufacturing process. Quality in OEE is being calculated like this: Quality = (units produced – defective units) / (units produced).

Example:

212 Units are produced. 12 are defective.

(242 units produced -212 defective units) = 200 units

200 good units / 212 total units produced = 94.3% Quality

How To Calculate Overall Equipment Effectiveness

Understanding what overall equipment effectiveness is, how to calculate it, and how it works is crucial for determining your OEE target and using machines and equipment up to their limit. Overall equipment effectiveness helps you to understand the reason behind the degradation in quality, performance, and availability of production processes and manufacturing equipment.

As a lean manufacturing tool, OEE is a standard that manufacturers consider before thinking, planning, and executing. If you want to uncover the true potential of your production plant, factory, or business and realize all the losses that can be overturned, a checklist controlling all important factors can help you through the entire process.

Overall equipment effectiveness is a factor of the 3 components mentioned above, so to calculate the overall equipment effectiveness of a manufacturing or production process, we’ll be multiplying the results of all three components of OEE. For instance, Availability × Performance × Quality = OEE. An example, using the results of the case studies from above, is:

Availability (75.0%) × Performance (88.3%) × Quality (94.3%) = OEE (62.4%)

Women working in waterdispender production

What Are The Six Big Losses Of OEE?

Following the development of Total Productive Maintenance (TPM), the concept of Six Big Losses arose and has been applied by many production experts so far. It encompasses all losses that a product of a manufacturing unit can face while running its processes. These losses can be evenly found in the 3 components of OEE (Availability, Performance, and Quality).

The main aim of identifying these losses is to formulate specific countermeasures to improve efficiency and reduce the possibility of loss. The possible losses that can be encountered in the performance, quality, and availability of a manufacturing process and equipment are referred to as the Six Big Losses. They are:

  1. Planned Downtime
  2. Breakdowns
  3. Minor Stops
  4. Speed Loss
  5. Production Rejects
  6. Rejects on Start-up

1. Planned Downtime

This refers to the planned production downtime due to everyday activities relating to start-up and adjustments. These activities involve changeover, machine, and tooling adjustments, planned machine maintenance, warm-up, quality inspection, cleaning, paid rest breaks, meetings e.t.c. These are regular and planned events that reduce a production process’s run time. The list of planned events will vary depending on the type of production process or company; however, a good start is to note down every planned downtime scheduled that occurs to derive the actual run time of a productive process.

2. Breakdowns

Breakdowns involve unplanned events that cause a production process to stop before the intended stop time. Also categorized as unplanned stops or downtime, breakdowns refer to what occurs when manufacturing equipment is supposed to be running but is not due to unplanned events like machine or equipment breakdown, lack or loss of equipment, inadequate operators, impromptu maintenance, e.t.c. Breakdowns are a major factor affecting the availability metric of OEE. Ordinarily, a completely available machine equipment and process means that production processes will run non-stop throughout the planned production time. But when breakdowns happen, a planned production time can no longer be met.

3. Minor Stops

This refers to when the production process or manufacturing equipment stops running for a short period of time, usually about 2-3 minutes or less. These minor stops can sometimes be overlooked when considering overall equipment effectiveness, but they too contribute to a major loss affecting manufacturing productivity. Minor stops can include periodic quick cleaning, incorrect equipment settings, equipment design issues, material jams, misaligned or blocked sensors, etc. They can often be repetitive but are minor issues if they are handled smartly.

4. Speed Loss

This is simply the reduction in production speed compared to the ideal cycle time (theoretical fastest time it takes to produce one good piece of product). This can happen due to various reasons concerning the equipment, environment, or operator involved in the process. Examples of factors that can reduce the speed of production processes are worn out or rickety equipment parts, poor lubrication, wrong or inaccurate machine settings, poor working environment, and lack of adequate personnel training or experience. Minor stops and speed loss affect the performance rate of production processes and manufacturing equipment.

5. Production Rejects

Production rejects are the number of defective parts manufactured during a stable and efficient production process, including scrapped parts and parts that require reworking. Incorrect equipment handling or settings and operator error are primary factors of production rejects. The number of defective parts will determine how well a production process delivers quality parts. If no defective parts are accounted for, only quality parts have been produced throughout the entire production time.

6. Rejects on Start-up

This refers to the defective parts or products that have been produced from the start of a production process before a stable quality production is attained. These defects occur after any equipment or machine starts up. Factors that could lead to production defects are suboptimal changeover, equipment that requires a warm-up, and manufacturing equipment that produces waste immediately after start-up.

How To Systematically Improve OEE

Quality managers can go about improving overall equipment effectiveness or efficiency in a production plant by following the IDA method, which translates to Information + Decision + Action = Result. This method involves identifying information regarding the performance and quality of a process, arriving at decisions for improvements, and acting on those decisions. Let’s have a quick rundown on the IDA method and how it works for equipment effectiveness and production process efficiency. IDA places emphasis on these three factors:

  • Information: This should cover accurate, real-time, and easy-to-understand information regarding issues within a process. For example, if the palletizer in a bottling company breaks down, operators won’t be able to load cases of bottles into a pallet for shipping. In this case, the operator in charge would note down the palletizer issue as needed information. The information stage of IDA typically identifies constraints and captures loss info.
  • Decision: This is the part that joins information and action together. It is the moment where all information is thoroughly reviewed in order for responsible personnel to come up with countermeasures. In this stage, you decide what will change, the time for change, and who will be responsible for the change. We recommend setting two weeks as the time for any improvement. It’s short enough to retain urgency yet long enough for significant changes to be made.
  • Action: This is the final stage where theoretical possibilities are transformed into tangible progress. This is where every change or countermeasure is implemented. To ensure seamless implementation of change, you’ll need to ensure that various requirements are met. For instance, all employees should be briefed to ensure that everyone is on the same page, that all needed materials are purchased, and all tasks included in the improvement cycle must be carefully outlined for clarity.

The follow-up of the targets highlighted above can help maintain continuous improvement in any production plant, industry, or business.

What Are The Benefits of Overall Equipment Efficiency?

Implementing OEE is a great way to achieve better performance in the production process. It allows you to gain enough valuable information that will enable you to make the right tweaks in your manufacturing processes, reduce downtime, increase processing speed and achieve better quality and efficiency. Overall equipment effectiveness, like Gemba or Lean Manufacturing are key performance indicators that will help sustain consistent improvements but also help track any back-and-forth progress in real-time. Below are benefits that come from an implementation of OEE:

  1. Increase Workforce Productivity: With overall equipment efficiency, you’ll be able to recognize areas in your production process that require more manpower. Using OEE measurements reveals where you’re lacking and what you need to do appropriately to complete the set workload. As you discover those areas in which you need to hire more operators, you’ll be able to evenly distribute workload to improve the productivity of your workforce.
  2. Opportunity to Easily Visualize Performance: Instead of guessing what is wrong with your production process, OEE helps you visualize your production problems accurately while summing them up in a single percentage. By highlighting process complications in percentages, every team member will correctly understand the areas that need improvement.
  3. ROI for Equipment: Most production units spend heavily on manufacturing equipment, so it would make sense that the returns on equipment investment need to be maximized. Using an OEE strategy can help you make profitable returns on investments that you have made in machinery and equipment.
  4. Improve Competitiveness: If manufacturers can completely erase losses in production processes, it will add more value to the establishment than other production units with more problems and losses. OEE can help increase competitiveness among production plants because all production wants to attain a world-class OEE score.
  5. Reduced Equipment Costs: Implementing an overall equipment effectiveness strategy will give you insight into your machinery’s exact potential and limits as a manufacturer. When you understand your equipment’s efficiency, you’ll know when they’re working effectively or when they are functioning below their expected standard. With a proper understanding of your equipment limit, you’ll become more aware of issues and problems they might face. As a result, you’ll be able to dramatically reduce machine upkeep costs.

Man with basecap packing bottles in a box

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