Overall Equipment Effectiveness

It has been a while since I have seen anyone write on topic of Overall Equipment Effectiveness.  It makes me remember than most of the methods we use today date back to the earlier part of the 20th century.  The birth of lean comes from Henry Ford, GD&D and measurement standards has its origins with Eli Whitney.  Plan-Do-Check-Act is derivative work from Fredrick Taylor's Plan-Do-See.

Overall Equipment Effectiveness is the calculation of value added work performed by equipment.  Each of its components that make up the calculations have been around for a long time.  The basic philosophy of OEE comes from Lean Manufacturing (the elimination of waste) and value added work.  It is required to support Lean and Just-in-Time delivery.  This is just a short overview article.

OEE combines three topics which are Availability, Performance, and Quality.  Availability is how much time is available to run parts (Equipment Availability) Availability is a ratio where 1.0 is perfection (equipment is never down) and 0.5 states that the equipment only worked 50% of the time.  Performance is how many parts were produced versus how many parts were expected to be produced.  Performance is also a ratio where 1.0 means that the equipment produced the expected number of parts for the time it was running and 0.9 means that 1 of 10 hours of production was wasted.  Quality is simply the ratio of good parts divided by the total production produced while the equipment is running.

An OEE of 0.5 means that 50% of the value of the equipment, employees, and overhead is being wasted.  This is powerful information for any operations manager.  This is not a number from which to run.  It is a number that says there are huge opportunities.  The ratios prioritize the improvement strategies.

In the 1980s a good OEE number was 0.85 or 85% and this could be achieved by having all ratios achieving a minimum 95% and when the goal was not achieved, the strategy would be to work on the lower ratio.  No ratio could be lower than 95%.

• Low Availability means that you would have a team who understands tooling and equipment and the causes of equipment breakdown would be studied and the design of the equipment improved.  When reliability approaches 90%, the team would begin to add strategies to reduce mean-time-to-repair as it is easier to reach an availability of 95% with faster response and fix than to improve reliability.  Total Productivity Maintenance is also needed to optimize availability, especially when the equipment reaches 90%+ capacity.  Most equipment can reach 99%+ availability.
• Low Performance: Net operating time can be improved by getting the equipment back to its base state of maintenance where no equipment parts are worn out and there are no overly loose/weak interfaces.  Operators can be engaged with cleaning, adjusting, and minor equipment repairs.  Lean manufacturing and Kanban can eliminate standby waste.  Most equipment can reach 99%+ performance, unless it is a small batch process and
• Poor First Time Quality (FTQ) is improved by studying each action and energy transfer that produces materials, parts, and assemblies and eliminating the causes of poor quality functions (5 why, 8D, error-proofing, mistake-proofing, PFMEA, Equipment FMEA, root cause analysis, Design of Experiments, etc.).  Most processes can approach 100% good quality produced.

Today a good OEE number is well over 90% which is  95% equipment availability, 95% effective performance for production run rate, and 0ver 99.9% good quality.  Good OEE is required to support Just-in-Time delivery.  JIT is when the time required to order materials, process goods, and ship them to the customer is less time than the time at which the order is received from the customer and when the customer needs to have the order at their location.  No on hand inventory is required.  No money is tied up to cover manufacturing inefficiencies.  When OEE is not good, inventory must be maintained and there is a  "Just in Case" storage of inventory and finished parts.  Money is wasted.

The beauty of OEE is that once you understand the ratios that make up the Overall Effectiveness, you can develop teams with different skill sets.  One team does not need to be an expert in all methods.  Different teams work together based on the worst ratio and the opportunities for improvement.