Overall equipment effectiveness (OEE) is an excellent metric for tracking the overall effectiveness of a piece of equipment, groups of equipment, or production lines. The OEE compares the actual performance of a production line with its theoretical maximum performance. One reason OEE is so useful is that it combines three separate measures into a single number to provide a quick overview assessment of a production area’s effectiveness.
OEE is expressed as a percentage and is calculated by multiplying three production area values:
The maximum achievable OEE value is 100 percent. One hundred percent OEE means the production line produced only perfect parts, operated with no stops or delays, and ran at the equipment’s maximum throughput rate. Though 100 percent is the theoretical maximum limit, it is nearly impossible for any production operation to achieve this performance. In practice, OEE values of 80-85 percent are considered excellent.
OEE presents a good picture of an area’s overall effectiveness, but it nevertheless should be used with caution. High values of OEE should be analyzed in light of other metrics. For example, if a line is running perfect parts at a high throughput but is producing the wrong part, the OEE will be good, but real operating effectiveness is poor. The high OEE is meaningless because the line produced pieces no one wanted. In this case, time was wasted, money was invested in unwanted inventory, and actual customer orders were delayed.
In addition to calculating OEE, managers should include KPIs that support a lean manufacturing philosophy. Gauging the performance of processes that deliver customer-focused value should be top-of-the-list. Below are five essential measures that can be used to reinforce OEE’s performance picture.
Separately Analyze Each OEE Component
A low or down-trending OEE value will tell you that something is wrong, but not what is causing the problem. Also, a high OEE value can indicate that the line is performing well, but problems may be hidden within the numbers or located elsewhere in the organization.
To fully understand how a line or department is functioning, analyze each OEE component separately. The following formula is used to calculate OEE:
OEE = Availability x Performance x Quality
Each component should be reviewed. The root cause or other analysis can be used to analyze excessive downtime, slower-than-desired cycle times, and quality reject issues. Include KPIs for these metrics in the operation’s performance reporting.
Highly effective and low-priced systems are available to help managers track performance and identify issues. Worximity, is a provider of lean manufacturing solutions and can supply manufacturers with a complete suite of customizable production line data capture and analysis tools. Important KPIs, including OEE, are calculated from data gathered via sensors mounted on equipment and communicated wirelessly to Worximity’s proprietary software. The needed metrics are then developed and presented on TileBoard, an in-factory dashboard.
Develop Schedule Attainment Measures
A guiding principle of lean manufacturing is to deliver customer-focused value. Production schedules reflect customer demand, order fill rates, and inventory levels. If production schedules are not completed as planned, some element or elements of customer value delivery suffer. For a production area, high OEE can be achieved while failing to meet production planning goals. As a result, schedule attainment and related KPIs should be included in performance reporting.
Report Inventory, Shipping, and Receiving Metrics
Inventory levels represent an investment in products in anticipation of customer demand. When a customer order is received, if inventory records are inaccurate, the order may be either delayed or only partially filled. As a result, inventory metrics should also be included in critical KPIs.
In addition, if a customer order is filled accurately and completely and delivered as promised, the customer will be happy and will return to conduct additional business. Tracking these metrics, as well as customer returns, helps build a complete picture of an organization’s performance. These values are not included in OEE calculations, so these measures should be included in a plant’s overall KPIs.
Poor raw material quality or late or incorrect materials from suppliers can negatively impact an operation’s throughout. Defective raw materials may negatively impact the quality component of OEE. However, if you only learn there is a raw material problem after a bad part is made, it’s too late. Maintaining KPI measures for incoming raw material and raw material inventories can help identify material issues early.
Maintain a Complete Picture of Factory Performance
Maintaining OEE, as well as other complementary KPIs, allows a manager to locate the source of problems as soon as they occur. Worximity’s lean manufacturing tools can be customized to provide these and any other metrics needed to present a complete picture of an organization’s performance. Worximity can provide a free system demonstration, discuss its ease of installation, and explain how benefits can be quickly realized.