The Power of Overall Equipment Effectiveness (OEE) – What to Expect

My role allows me to work in various manufacturing facilities across America.  One of the programs most of these plants can benefit from is Overall Equipment Effectiveness (OEE) management. If you are considering embarking on an OEE program or looking to re-vitalize an existing program, I’d like to share an element of what to expect.

Let’s start with a definition: OEE is a way to measure how well a line or machine center performs compared to ideal operating scenarios. In a perfect world you would make perfect Quality parts (i.e. no defects or rejects), in the allotted/ideal time (based on machines and people all working at full capacity- i.e. perfect Performance), with full Availability (i.e. zero unplanned downtime!). OEE is a metric composed of these three factors.  When multiplied together you arrive at your OEE result. Example – Availability (90%) x Performance (90%) x Quality (90%) = OEE @ 72.9%

Looking at the above example you may think 90% in any one category is a pretty good “score”.  But as you perform the OEE calculation you quickly start to see the losses adding up. A maintenance manager may say 90% up-time is “good”, or the quality manager may say “only” 10% loss is “OK” or the production manager is thinking that running at 90% of potential is “commendable”. These values taken on their own do not seem too much out of control, but the overall effect of the OEE calculation is substantial (an overall loss of 27.1%!) and helps us focus on the opportunity to continuously improve.

Now that we see the definition of OEE and how it is calculated, you may ask “how do I get started on utilizing OEE at my plant?” Good question.

• Document your baseline – review your historical values (past 12-24 months is a good place to start). Many manufacturers have the data in historians, spreadsheets and on paper production workbooks – “do the math”) Consider that you are not looking for OEE values, per se, but rather those elements that constitute the OEE value:
  • Availability – This is usually a monthly KPI broken down by line or department, depending on the type of business.
  • Performance – These values are likely known by production planners or the accountants. This category can be difficult to gain agreement on as it affects the entire production floor, but it is very valuable to get on the same page as to what’s possible.
  • Quality – The overall quality levels and lost product is usually rather accurate in the overall picture but not accurate when you try and narrow the time frame as to when the waste occurred and most importantly, why. Do the best you can to get started.
• After you obtain these historical values work the equation and set that as your baseline OEE goal (Add it to your current KPI report)
• Don’t be surprised how low your historical OEE will likely be, it’s not uncommon to have OEE values starting at 50 or 60%, or even lower.
• Once base values have been calculated it is time to accurately track “new” data and see how close your historical base OEE numbers compare.
• Remember, there can be lots of variability when it comes to data collection – are people manually gathering data? Is there room for interpretation? Do you have an historian or MES (Manufacturing Execution System) where automated data can be obtained? Is the process for gathering scrap accurate and properly accounted for? All of these factors can affect the OEE accuracy.
• Tip – a good way to know if your data is being gathered accurately is by looking at the end of month actual values vs budget to see discrepancies in loss. Often times, there are surprises with large variances in inventory levels, these point toward poor data management.

Real World Example – The Truth Revealed

Now that we have discussed many of the needed fundamentals of OEE with a focus on the “what” and “how”, I want to focus in on a real-life example where OEE helped identify losses associated with breaks and changeovers for a production line in food manufacturing, so you can know what to expect. Here’s the background:

A food manufacturer recorded all of their downtime, breaks, changeovers, and production data on paper.  Using this paper-based system made it difficult to accurately track breaks and the plant relied on the crews recording these downtime events…..but they were doing it.  That’s commendable.

The plant crews worked together for many years and were a “family” of sorts in that they wanted to do a good job and took the work seriously. Still, it was no secret that accuracy of data (especially regarding breaks) was suspect. There was a “sense” that significant improvements in availability was possible.  Something needed to change to try and gain back run time/availability.

An OEE measurement system was installed whereby most of the paperwork was eliminated. The crews and supervisors were trained on how to use this new OEE system and all employees quickly came up to speed in its use. {it is important to note that the OEE system was not installed just to capture break times, but I wanted to highlight one specific advantage of OEE that can be overlooked}

After approximately 3 weeks of gathering data with the new system and verifying its accuracy it was noted that the crews were taking extended breaks (25-30 minutes vs a scheduled 20-minute break which involved 15 crew members – quite a bit of time lost – approx. 100 minutes per break)

Management, seeing that there was an opportunity to correct the existing extended break problem, created a brief accurate slide presentation to show the crew the impact of the break times being abused. True data was displayed and discussed with the crew. It is important to note here that the method of presenting the data was just as important as the data itself, i.e. “how we communicate is as important as what we communicate.”

The crew received this information very well as it appeared they did not realize just how much impact extending breaks had on the plant operations. As the crews began work after the OEE presentation was made, productivity and teamwork rose appreciably.  The noticeable improvements were shared with the workers (thru regular communication update channels) Bonuses increased due to the improvement realized. Takeaways from the OEE deployment:

• Accurate data leads to proper actions
• Don’t be afraid to tell the people the truth concerning plant operations and their impact in the big picture
• Unintended consequences are difficult to predict and not always detrimental, e.g. The rise in productivity came not only from added available time because breaks were shortened, but also the improved morale and teamwork of the crew had an additional positive impact, as shown on the Performance portion of the OEE calculation. (crew members were policing themselves to make sure they got back from break on time – holding each other accountable)
• Communication channels were widened between management and operators with a level of trust and honesty not often witnessed in manufacturing

OEE programs are crucial tools for most manufacturing settings.  You should expect continuous improvement, if your program is implemented and managed well. OEE fundamentals need to be performed (the what and the how), but there are often unanticipated positive outcomes from deploying a tool that touches so many parts of an operation. Expect improved communication as well as productivity by exposing the true OEE data and sharing it, in good faith, with those who have the most ability to impact your bottom line!

To learn more about specifically improving your OEE or Digitization programs for Operational Efficiency in general, please contact InSource for a free consultation.