Written by Globalization has expanded manufacturing firms with competition characterized by both technology push and market pull and has forced the manufacturers to achieve world class performance through continuous improvement in their products and process. Today various innovative techniques and management practices such as TPM, TQM, and business process reengineering (BPR), RFT and JIT are becoming popular among the business houses including the textile industry. TPM (Total Productive Maintenance) is a philosophy designed to integrate equipment maintenance into the manufacturing process. The goal of any TPM is to eliminate losses tied to equipment maintenance or, in other words, keep equipment producing only A-grade product, as fast as possible with no unplanned downtime. Successful TPM is an effort where the entire organization works together to maintain and improve the equipment. As an initial initiative it is critical to measure even a small change.
When manufacturing companies run up against capacity problems today, they immediately look to increase overtime, add shifts, or purchase new equipment. Instead they should look to optimize the performance of their existing machines to increase equipment reliability, minimize changeover times, improve operator performance and lower overall downtime. All these investments can be made to increase capacity and will pay greater dividends by allowing a production plant to spend its valuable time and money on their production process instead of new machine purchases. The question is “How can a production unit optimize the performance of their existing machines?” The answer is Overall Equipment Effectiveness (OEE). OEE is an effective tool to benchmark, analyze, and improve your production process. The OEE tool gives you the ability to measure your machines for productivity improvements.
OEE is used to drive waste out of the manufacturing process by reducing or eliminating production time lost to machine failures. The goal of any OEE is to ensure that machinery and equipment is always available to manufacture products for the end customer by minimizing rework, slow running equipment and down time, maximum value is added at the minimum cost.
OEE is a metric originally developed to measure the success of TPM by associating the six big losses with three parameters: Availability, Performance, and Quality. OEE enables organization to benchmark and monitor their progress with simple, easy to understand metrics. OEE provides both a gauge for the success of TPM and a frame work to identify areas that can be improved.
OEE is critical to quality control, directly measures productivity and is correlated directly to operating income and profit. Production machines are designed on the basis of a certain production capacity. In practice, actual output lags far behind the capacity of the machine for a number of reasons, means that there is hidden production capacity. Many executives and engineers feel there is much room for improvement on the shop floor, but have difficulty in getting actual data to support their efforts.
Overview of the Basics: OEE
Overall Equipment Effectiveness is a major KPI (Key Performance Indicator) that accounts for three constituent elements:
1. Availability
Percentage of the actual amount of production time the machine is running to the production time the machine is available.
Availability = Operating Time / Planned Production Time.
OEE: The total run time of the machine subtracting all unplanned downtime.
2. Performance
Percentage of total parts produced on the machine to the production rate of machine.
Performance = Ideal Cycle Time/Operating Time
OEE: How well a machine is running when it is running.
Ideal Cycle Time is the minimum cycle time that a process can be expected to achieve in optimal circumstances. It can sometimes be called Design Cycle Time or Theoretical Cycle Time.
3. Quality
Percentage of good parts out of the total parts produced on the machine.
Quality = Good Pieces / Total Pieces
OEE: How many good parts versus bad parts a machine has produced.
OEE begins with Planned Machine Run Time and with reductions from the three metrics, Availability(Downtime Losses), Performance(Speed Losses) and Quality (Quality Losses) determines the Final Machine Run Time.
OEE = A x P x Q
Availability takes into consideration any Down Time Losses
Performance takes into consideration any Speed Losses
Quality takes into consideration any Quality Losses
The 6 Big Losses
The OEE calculation rolls the “6 big losses” of TPM into one number that represents the effective operating rate for a piece of equipment or synchronized line—in other words, the percent of time the machine or line is operating effectively, or its valuable operating time. That translates to the percentage of product produced compared to what could have been produced in the scheduled time.
| Availability | Down Times | Break Downs |
| Setup & Adjustments | ||
| Performance | Speeds | Minor Stoppages |
| Reduced Speeds | ||
| Quality | Defects | Process Defects & Repairs |
| Reduced Yeilds |
The purpose of OEE
By implementing a system that can measure and analyses OEE, manufacturers can improve machine performance, operating procedures, and maintenance processes.
The main purpose of any OEE initiative is to become the most efficient, most effective manufacturer within a market, minimizing the above main losses. A world-class OEE has a benchmark OEE rating of at least 85%. However, simply maintaining an 85% rating does not guarantee world-class status. Each component of OEE must meet different levels of individual performance; availability should be at 90%, performance should be at 95% and quality at 99%. These benchmarks allow manufacturers to have a point of reference for determining when these components meet acceptable levels.
OEE is Not TPM
OEE is the measure most closely associated with TPM, but OEE is not equivalent to TPM. At its heart, TPM is not about complex metrics; it’s about developing the capabilities of people. Everyone is involved in pursuing the dual goals of zero breakdowns and zero defects. Production, maintenance and engineering form an efficient partnership and operators share “ownership” in equipment. The new attitudes and behaviors result in a cultural shift that improves morale, drives continuous improvement, targets total asset reliability and supports lean initiatives.
TPM is fundamental to achieving lean flow because flow can’t happen without reliable equipment and processes. In turn, a good understanding of OEE fosters an effective TPM effort.
Because OEE packs a lot of information into one number, it’s powerful. But that can also make it difficult to calculate and confusing to interpret. People commonly get into trouble when they try to:
- Use OEE primarily as a high-level KPI (key performance indicator)
- View OEE as an external measure that has meaning to customers
- Gauge themselves against a “world-class” OEE measure
- Focus on the number for its own sake instead of the improvement context.
OEE as Overall Business Effectiveness
The critical value of OEE is that it helps you understand and analyze the 6 big losses. Think of it as an improvement measure, not a KPI. An operational metric like build-to-schedule is a simpler indicator of how your process is performing against schedule. Likewise, a measure like OTIF (on-time in full) lets you know whether you are meeting customer demand.
However, if you are not meeting demand because equipment is not working effectively in your value stream, you need to know why. That’s where OEE comes in – it provides levels of analysis to help you improve. Was there too much downtime? Not enough production when running? Too many defects?
The trouble with a simple process line performance metric is that it doesn’t tell you where your losses are. It may tell you that you’re operating at 80% or 90% of perfect, but you would have to look beyond the metric to analyze your losses. We should use OEE more as a concept than as a line performance metric but unfortunately we use it to teach people what percentage is their machines operating at. Neglecting what loss is and how to look for it on their line.
If you are running normally, meeting schedules, you may think ‘wow, I’m good; there’s nothing to improve.’ In many cases, machines may be up and running in a certain way for years, and nobody thinks about the way they perform. Things just are the way they are, and accepted as normal.
But if we apply OEE and a focus team and take a look at each step in the line or at each machine and identify where we are not adding any value, all that is defined as a loss somewhere in the OEE metric. We can sample OEE on a given machine and rather readily identify opportunities for reducing the 6 big losses.
A simple value stream metric like build-to-schedule also will not tell you whether machines are being used effectively, because the target is based on schedule, or present demand, not on theoretical capacity. You might be running at a greatly reduced speed but still reaching your target.
OEE helps match the theoretical capacity of equipment with production demands. If you are not meeting demand and you find that equipment is underperforming (operating at a low OEE), you know you have an equipment effectiveness problem that can be improved. If equipment is operating at a high OEE but not meeting customer demand, you know you have a capacity problem. And even if you are meeting current demand, without OEE you don’t know whether you have spare capacity to keep up with changes in demand.
There is no absolute that works as an OEE benchmark or target – it’s relative to your situation.
Your target should not be a world-class benchmark. It’s about drawing a line in the sand for a given piece of equipment (most often your constraint or bottleneck) and checking where you are relative to that line. Certain processes will never be capable of giving you a world-class number, because they weren’t designed to do that.
It isn’t about changing a number; it’s about the things we do that cause that number to change. The number itself doesn’t mean anything. You could be at a lower number or a higher one, depends on what you define as the normal operating rate. So it’s not whether your OEE is 85% or 25%; the rate at which you improve is the real measure of world class.