OEE: A KPI with potential for improvement

The KPI OEE (Overall Equipment Effectiveness) is a capable measurement parameter regaring local improvement. However, this figure is often misused as a number for efficiency because it is included in target objectives. How can this key figure be used correctly??

There is still a misconception that OEE must be 100% and it is not unusual for managers to even take pride in reporting OEE values above 100%. Since this figure has a customer reference, it would big mistake if this was expected. The OEE to be achieved is basically calculated by the quotient of cycle time (process) and takt time (customers). An expectation of 100% means that these two values with time reference would have to be equal, which can certainly not be a realistic expectation. However, since OEE is only really understood by a few, many managers apply all kinds of measures to bring the KPI up as much as possible.

Reaching into the bag of tricks

No one intends to manipulate OEE - but it happens anyway. For example, in processes where machines run during work breaks, these times are deducted from the planned oprating time. Another trick to push the number up is dealing with set-up (change overs), i.e., rebuilding machines to produce a different variant. Here it is very often emphasized that setup is a planned operation and therefore, similar to TPM measures, must be deducted from the planned operating time. In principle, this is correct, but set-up is not a given loss that should be accepted as such. There is no way around breaks or maintenance measures that are obligatory by law or due to warranty conditions. Set-up times, on the other hand, are essential optimization potentials that must be improved. Therefore, this time must urgently be evaluated as OEE loss and improvements must be derived from it.

Less setup, less stock, more flexibility

If setup workshops are done and thus setup time are reduced, the gained time should by no means be used to produce more parts. The time gained is good for doing set-up more frequently. This can even bring down the OEE, which of course is not accepted if the salary is attached to the highest possible OEE value. However, a higher setup frequency means that smaller quantities of a variant can be produced more frequently, which reduces lot sizes and stock consequently. In the case of make-to-order production, customers can be promised shorter delivery times.

OEE makes improvement potentials visible

Here the old wisdom proves true:

Some make the key figure look good, others take the values as an occasion and actually work on their weaknesses in order to become better.

The problem is particularly striking in the case of OEE, since it must have an obvious customer reference in order to make sense. Customers are not interested in nice key figures, but in the right results.

Mario Buchinger?is (Economy-)Physicist, Musician and Author. The specialist for Lean and Kaizen worked for Daimler and Bosch as employee and executive for ten years, before he founded his own company Buchinger|Kuduz in 2014 located in Austria. He is no consultant, instead he and his team support as external colleagues the development of changeability regarding to process, strategy and climate transformation. In addition to industrial companies, his customers also include banks and public authorities.