What is OEE and Why is it Important?

OEE was first described as a central component of the TPM methodology in Seiichi Nakajima’s book ‘TPM tenkai’ (1982, JIPM Tokyo). TPM which was initially an acronym for Total Productive Maintenance eventually evolved into Total Productive Manufacturing.

OEE or Overall Equipment Effectiveness is a powerful metric in manufacturing however if implemented incorrectly or interpreted for the wrong reasons, it can prove to be useless. OEE is simple to calculate as

OEE = Availability * Performance * Quality ………………………………..(i)

…all factors to be calculated for  equipment / machine / device / asset

If any of the factors fall below 1 or 100%, OEE will be lower than 100%. By definition, since all 3 factors are together in this formula, the effect of a 10% drop in each one is compounded leading to approximately 27% drop in OEE. Though the formula does not indicate any order and the order does not impact the calculation, there is an inherent dependency.

OEE can be calculated for a plant as –

(OEE)plant = ∑ [ (OEE)asset * (weight)asset ]  where weights are assigned as per relative value contributed by asset  and   ∑ (weight)asset =1

As per the OEE standard, an average machine in an average factory runs at 35-45% OEE approximately. This means that it loses 55 to 65% capacity while it is stopped or running at a reduced speed or producing products which do not meet the quality requirements. Still, in many cases, we find organizations reporting OEE of 80%. This is a result of incorrect definitions and incorrect visualization of losses.

An 100% OEE means that the machine was available 100% of the time for production. In that time, it performed ideally as per expectations producing as many total parts as expected. Additionally, all the parts were of good quality. Now if the machine was not available 100% of the time due to downtimes, stoppages or any other reasons, we have an idle asset.

When the machine is available for production, if the machine is operated at a slower speed than ideal within the available time or is idle for certain time periods during the production of a part, performance drops. This could be due to various reasons like wrong choice of cutting feed/speed, idle operation, tool movement in air, etc.

Finally, in the available time and at the operating performance, if we produce defective parts resulting in poor quality, the machine throughput drops further. The reason for a defective part could be incorrect programming, incorrect tool selection, improper cooling, etc.

To be effective, not only should we have a machine available for production, it should be operating at optimum speeds and produce consistently good quality parts.

In the formula (i) mentioned above, Availability is calculated as the ratio of Available Time to Potential Available Time where

Available Time equals sum of Producing time and Standby time and Potential Available Time equals sum of Available time, setup time and unplanned downtime. Standby typically occurs when the machine is idle during a cycle even though the machine is running. Unplanned downtimes may occur due to incidents like machine or tool failure or other unforeseen issues.

Performance in  (i) is calculated as the ratio of ideal to actual cycle time. Actual cycle time may be higher than ideal due to idling, minor stoppages, or reduced operation speed.

Quality is simply the ratio of the number of good parts to total parts.

OEE can be maximized by maximizing one or more factors in equation (i).

To maximize availability, unplanned downtimes have to be reduced. To maximize performance, the actual cycle time has to be as close to the ideal as possible. To maximize quality, we should have as few defective parts as possible.  An ideal OEE is 1 or 100% which is the desired end goals and looking at the trend of OEE over time, we can understand how we are performing and how close are we to achieving that goal. An OEE score of 100% means that we are manufacturing only good parts, as fast as possible, with no stoppages. Even though we may talk of an ideal OEE or a world class OEE, it is important that we should not fixate on the absolute value of OEE. Instead, we should focus on improving OEE continuously and our ability to do so.

OEE has been popular since it is a good fraction or percentage to track at a manager level by observing trends and comparing against benchmarks however for someone who needs to act on it, it is not sufficient. Switching the percentages in the formula still results in the same number so one can achieve the same OEE if the machine availability goes down and performance goes up equally and so on. Hence, to derive maximum benefit from OEE, the question we need to ask ourselves is – “What prevents us from achieving an OEE of 1”? Which of the answers are in our control? Which factors can we influence, what levers can we pull to increase OEE? The answers surely lie in increasing availability, improving performance and achieving higher quality….and there begins our journey of continuous improvement.

Though OEE is a quick and easy way to get an handle on “how are we doing?”, it is prone to misuse. OEE data is relevant in the context of our business objectives. Using OEE for appraising site or line managers will lead to reporting of higher values!! OEE is the most powerful when used for improving manufacturing efficiency and effectiveness.

A reliable real-time manufacturing analytics solution is a very effective companion in this journey and that is exactly what MINTVIZOR offers you. Data collection and OEE calculation is automated. Machine learning algorithms are used to derive the true cycle time for manufacturing parts. The cycle time is continuously updated to account for any process improvements. Since the data is streamed directly from the machine without any manual intervention, efforts and typical errors involved in this process are avoided. Web based, role driven, configurable panels and dashboards make it easier for operators, supervisors and managers get required for decision making and immediate actions. Getting the answers to any questions around manufacturing effectiveness becomes easier and your journey to a higher performance factory floor becomes fruitful if you have MINTVIZOR as your trustworthy advisor.

To know more, write to mintvizor.marketing@hcl.com.

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