Overall equipment effectiveness (OEE) is a tool employed in lean manufacturing and continuous improvement practices at manufacturing facilities around the world. It is intended to represent efficiency, and it varies in scope from single machines to entire factories.
OEE is the multiplication of three values:
- Quality: the percentage of good products out of the total products produced over a certain period of time
- Performance: the ideal amount of time to produce the product over the actual time said production took
- Availability: the amount of time during which the factory, line, or machine was producing product over the planned amount of time for production
For a full breakdown of how to calculate OEE, you can visit our blog!
OEE is one of the most important manufacturing metrics. CFOs can use it to track and report company performance and to drive company profitability. It can also be used as a metric to benchmark your performance against other manufacturing companies. OEE can even be used as a predictive maintenance tool.
Perhaps more importantly, OEE is often paired with lean manufacturing practices, which seek to eliminate any waste and/or any process during production that does not add value for the customer. Implementing lean manufacturing processes can help to dramatically improve OEE, but it is important to know which lean manufacturing metrics to measure to make the biggest impact.
The following section breaks down OEE into its three metrics and sorts the lean manufacturing waste types into their relevant OEE metrics categories. By understanding these relationships, you can begin to understand which lean manufacturing metrics you should be measuring in order to improve your OEE score—and your business results.
Lean Manufacturing Waste Types by OEE Metric
Defects wastes are the only waste type relevant to the OEE metric of quality. In fact, defects are the very cause of decreased quality. Defects in product, particularly in food manufacturing, will often ruin the product. Even if the product can be reworked, the part will still not be considered “good” when quality is calculated from an OEE perspective because rework was required.
Low quality reduces your overall OEE and is a clear indicator of an area for manufacturing improvement. You have an opportunity to rapidly improve ROI as you reduce this form of lean manufacturing waste.
You can learn more about the cost of defects waste, how to use it as a lean manufacturing metric, and ways to improve it in these articles:
If machines or material storage aren’t arranged in an efficient way, unnecessary transport waste, particularly of raw material, will waste time and therefore hurt your manufacturing metrics. Transport waste can contribute to “microstops,” which can accumulate into a significant amount of downtime if left unchecked. You can learn a bit about how to use Worximity to manage transport waste here.
Excessive motion waste, be it the motion of machines or employees, will hurt performance in a similar way to excessive transport by taking up unnecessary time in production. For these reasons, it is imperative that a factory floor and individual lines are arranged as efficiently as possible to minimize transport and motion waste and improve this lean manufacturing metric.
Waiting waste might be caused by machine downtime or simply waiting for more material to arrive from a storage location. This waste can lead to significantly longer cycle times and lower performance.
Excess processing waste is relevant to your performance OEE score because it adds extra steps to the cycle that may be unnecessary. For example, a company shouldn’t double-check products for quality if a single check will suffice. Eliminating extra cycle steps and overprocessing will decrease cycle time.
Defect waste is the final relevant metric related to OEE performance. As mentioned above in the quality section, if a product is defective its first time through a line, it can sometimes be reworked. However, this rework will increase the amount of cycle time needed to create a good product, thereby hurting performance.
Waiting waste is the only lean manufacturing metric relevant to availability. Machine downtime and even simply waiting for material to arrive at a machine or line will lead to waiting, which in turn will lead to a decrease in run time.
Important OEE Lean Manufacturing Metrics
The OEE lean manufacturing metrics that should be continuously measured are the ones that will have the greatest impact on OEE. The most impactful of these metrics are defects and waiting, which are each relevant to two OEE metrics. Waiting, simply put, will waste time in manufacturing, hurting OEE by both increasing cycle time and decreasing run time. Defects are single-handedly responsible for the quality value of OEE, and can also hurt performance by increasing cycle time.
Transport, motion, and excess processing are relevant to performance, but they can be summarized as inefficiencies in the manufacturing process, including unnecessary steps and inefficient arrangement of work stations, lines, or the factory floor. These waste metrics should be measured if possible, because decreasing their values will streamline production and help to improve performance.
Of course, we can’t discount the importance of monitoring waste via excess inventory and overproduction. However, these values aren’t relevant here because they don’t impact OEE.
In order to quickly and efficiently maximize OEE, it’s important to be able to find and reduce the types of lean manufacturing wastes identified above. TileBoard, Worximity’s shop floor management software, will enable you to quickly gain insights into the wastes that are occurring in your manufacturing operation.
With these insights, you’ll be able to prioritize the main causes of waste in your operations that are contributing to lower-than-desired OEE. Your team will receive actionable information on dashboards created for this purpose, so they can create improvement plans to deliver rapid improvements in OEE and fast ROI!