Overall Equipment Efficiency - A Next-Gen KPI for the Manufacturing Industry

1. OVERALL EQUIPMENT EFFICIENCY A Next-Gen KPI for the Manufacturing Industry

2. OVERVIEW In 1960, the pioneering founder of the Total Productive Maintenance System, Seiichi Nakajima coined the term overall equipment efficiency (OEE). Equipment can run for a long duration of time but how much of it is actually productive? That is what OEE helps to determine. Measurement of OEE and the underlying losses helps managers to get a clear idea on how to systematically improve the manufacturing process. It is the single best metric that can be used to identify losses, benchmark progress, and improve the productivity of manufacturing equipment.

3. Simply put, OEE measure the performance of a manufacturing unit as three separate components: Availability, Performance, and Quality. Availability refers to the percentage of scheduled time that the machine is available for operation. Performance refers to the speed at which machine runs as a percentage of its designed speed. Quality refers to the units produced by the machine as a percentage of the Total Units Started.

4. SIX BIG LOSSES For thorough calculation of OEE, the three categories can be further subdivided into two categories each. So, availability can be broken down into planned downtime and breakdowns. A 100% availability score means that a process is always operational during the planned production time. Performance is divided into minor stops and speed loss. A 100% score means that the process is operating at the fastest speed of which it is capable. Quality has been broken down to production rejects and rejects on startup. 100% score in quality means that only good parts are being produced by the process.

5. CALCULATING OEE OEE can be calculated by dividing the least amount of time required to produce parts under optimal conditions by the actual time needed to produce them. It becomes the ratio of Fully Productive Time to Planned Production Time. The formula is: OEE = (Good Count × Ideal Cycle Time) / Planned Production Time

6. But this formula does not provide information about the three loss- related factors: Availability, Performance, and Quality. So, the universal formula through which OEE is determined is (Availability)*(Performance)*(Quality). Availability represents all events that can halt planned production long enough where a reason can be tracked for downtime. Essentially it is a ratio of Run Time to Planned Production Time. It is calculated as: Availability = Run Time / Planned Production Time

7. Performance represents anything that causes the manufacturing process to run at less than the maximum possible speed while operational. Therefore, it is a ratio of Net Run Time to Run Time. It is calculated as: Performance = (Ideal Cycle Time × Total Count) / Run Time Quality represents the manufactured parts that are substandard and do not meet the quality requirement. It also includes the parts that need to be reworked. It is calculated as: Quality = Good Count / Total Count The first step in calculating OEE, is to exclude any Shift Time where there is no intent of running production, such as breaks. Next we have to calculate the amount of time when production was actually running and was not stopped. Stop Time should include both Unplanned Stops like Breakdowns and Planned Stops. Next we have to typically calculate the individual values of availability, performance and quality using the above formulas. Multiplying the three factors gives us the OEE value.

8. IMPLEMENTING OEE Before OEE can be implemented, a pilot area must be selected to determine the success of OEE. It can be a single machine, cell, or line. Secondly, a constraint or bottleneck has to be selected in that particular process, which can be a single step or machine that manage the throughput of the overall process. OEE can be either manual or automated. Three pieces of information are needed to calculate OEE:

9. GOOD COUNT This only include parts that are defect- free the first time through the process. 01 IDEAL CYCLE TIME This is the theoretical minimum time to produce one part, and 02 PLANNED PRODUCTION TIME This is the total time that the manufacturing process is scheduled for production. 03

10. IMPROVING OEE OEE was developed under Lean Manufacturing – as part of the powerful and holistic improvement process known as TPM (Total Productive Maintenance). The universal methodology for driving any improvement activity in OEE is referred to as IDA (Information, Decision, Action).

11. INFORMATION This is the foundation of IDA. It can be subdivided into identifying constraint and capturing loss information. 01 DECISION Decisions are the axle between Information and Action. It comes as a moment when Information is assessed and a course of Action is decided. It can be subdivided into picking a top loss and deciding countermeasures. 02 ACTION Action is where the Decisions are transformed into Results. Here is where you implement the decided countermeasures and capture data. 03

12. OEE scores provide an accurate picture of how effectively a particular manufacturing process is running. It makes it easy to monitor and track improvements in that process. It helps managers to systematically improve the manufacturing process.