Overall Equipment Effectiveness (OEE)

Overall Equipment Effectiveness (OEE) is a measure of how well equipment is able to be utilized.

Why use OEE

• OEE is used because it is a standardized method of measuring productivity from an equipment standpoint
• It is an unbiased method
• By understanding the losses experienced by the equipment we can fix them

How to calculate OEE

OEE = Availability * Performance Rate * Quality Rate

• Availability = Time available to produce, this is reduced by planned maintenance, change overs, breakdowns, sanitation, and cleaning
• Performance Rate = The designated speed or rate of production
• Quality Rate = Good parts produced, or value delivered, this is reduced by defects, holds, scrap, unaccepted work

Data – where to find it; how to use it

• Availability
  • Usually a manual calculation
  • Most often calculated for full calendar time (24×7; 5×7 – usually operational staffed time) then the unused time (usually market down time) is subtracted from total expected time.
• Performance Rate
  • Usually calculated from run time information captured on equipment
  • It can be manually calculated but is not practical to manage using manual calcs on large scale operations
  • Theoretical performance rate must be determined and used to calculate the rate
• Quality Rate
  • Can be calculated on the line if reject system is operational
  • Final calculations may come shifts, days, or even weeks later.  This depends on the quality system and when product is dispositioned from ‘hold’

Common problems to avoid when leveraging OEE for improvement

1. Not counting all time on the equipment as Available time.
   • Availability can be thought of as an indication of capacity.  If planned downtime (such as that for maintenance, changeover, or sanitation) are removed from the availability calculation, then the load requirements of the equipment cannot be determined.  Therefore changes in production schedule cannot be accurately planned.
   • If 4 hours of planned maintenance is required on equipment each week, that accounts for approximately 3% of Availability.
   • Activities to reduce planned downtime are cannot be value-added if these times are not included in OEE.
     • This is an example of silo thinking.  Engineers working on reducing downtime, either by SMED activities, or instituting more condition monitoring cannot accurately account for the ROI of such activities.
     • In truth, the company will see benefits, but the battle over how the savings are accounted, and who gets to claim the reductions will overshadow the real tangible benefits.  Some will claim the engineers calculations are funny-money; operations will see a real jump in OEE, but not be able to account for the jump.
   • The purpose of OEE is to find losses, and determine if they are worth eliminating.
2. Using OEE as a measure of people, not equipment.
   • Since equipment is in the very name of the measure, this seems obvious.  But most organizations use the OEE measure to operations, shifts, and sometimes even individuals
   • Management needs to manage.  OEE is best used as a metric to determine where to troubleshoot, but it is never a measure of people’s performance.
   • The purpose of OEE is to find losses, and determine if they are worth eliminating.
3. Setting a specific number as an OEE goal
   • We love goals, and we love numbers.  Even “Dancing with the Stars” publishes metrics.  However, even the goal there is not to get a perfect score, but to get a better score than last week. – Oh yeah, and a better score than the competitors.
   • I’m often asked what is should a line’s OEE be.  I have spouted “80-85”, but that’s just an arbitrary number.  Who cares what the number is? 80-85% of statistics are made up on the spot (see what I did there?).
   • The purpose of OEE is to find losses, and determine if they are worth eliminating.  That’s it.  Find losses and make a determination if they are worth eliminating.  This means finding a fix for the loss and running an ROI to see if the fix is worth eliminating
4. Taking action too early or too late to correct
   • The purpose of OEE is to find losses, and determine if they are worth eliminating.
   • Ensure that thorough troubleshooting and root cause analysis are taken on the loss investigation.  Otherwise, you will be solving symptoms, not problems.  This can happen if you react to the data too quickly.  Usually a full week to a month of data are needed to see a good pareto of the losses.
   • Waiting too long to act on the data gives the impression that it is not important.  It takes a lot of conscientious effort by operators to correctly capture and code losses.  If they do not perceive value in their efforts, the downtime coding will become generic.
5. Not communicating with operators, maintenance, and others how the organization is using OEE and how they are a part of it.
   • Lack of communication will lead to finger pointing and suspicion.  The age old silos of maintenance and operations will use the OEE numbers to blame each other for the recorded losses.
   • Understanding losses is a positive thing.  Do not focus on the OEE number,  instead focus on the losses and how to eliminate them.  You can inspire enthusiasm and spur creative thinking in all team members when root blame is not the focus.

Example Time!

OEE Using a Car as an Example

Availability = Time the car is available to drive where you want

• Reduced by Planned Downtime
  • Time to fuel up
  • Preventive maintenance** (oil changes, tire rotation, tune up, washing, …)
• Unplanned Downtime
  • Time in shop for maintenance / repairs
  • Accidents
  • Breakdowns
• Not reduced by
  • Time spent parked
    
    **Remember spending time on preventive maintenance reduces breakdowns and unplanned downtime

Performance Rate= Time spent with car at speed limit (or expected speed)

Reduced by

• Idling car
• Traffic problems / jams
• Weather related bad road conditions
• Debris, junk on the road
• Slowing down in an unfamiliar situation
  
  Speeding has negative potential consequences, so it is discouraged
• Tickets
• Crashes from mis-matched speeds on roads
• Equipment malfunctions (blown tires)
  
  Performance rate problems translate into Availability issues
  • Accidents
  • Low fuel economy causing increased fuel stops
  • Breakdowns

Quality Rate: The car performs as expected

Reduced by

• Low fuel economy
• Poor emissions
• Appearance (dirty, paint chipped, rusted,…)  These can become maintenance issues, or interfere with transportation reputation
• Inability to transport/haul/tow everything you want

So, let’s calculate the OEE for a typical week on a car.

The car is used to go to and from work 5 days per week.  Work is 25 miles from home.  It takes 1 hour to get to work and 1:06 to get home (1.1 hours).

The kids school is 1.5 miles away and the car was driven there 3 times during the week; total of 9 miles.  It took 1 hour for each round trip.

One day during the week there was a stop for fuel and a car wash.  This took 45 minutes.

Standard Performance Rate is 30 miles per hour.   (I declared that.)

There were no quality defects, as all activities performed as expected.

Availability = 100- (Total time car was occupied; 15.25 hrs)/(Maintenance time ; fuel and car wash; .75 hours)*100

Availability = 95%

Performance Rate = 100-(Total Miles/Total Hours Performing) / Standard Performance Rate)*100

Performance Rate = 100- (269/14.5)/30)*100 = 38%

Quality Rate = 100%

OEE =  95%*38%*100% = 36 %

Is 36% OEE good or bad?  The answer is NO – it is neither good or bad.

Areas of losses – potential reductions

• Maintenance; fuel and car wash – find a faster car wash
• Waiting for children – determine that OEE is more important and make the kids wait for the car, not the car wait for the kid.  Disclaimer: This is cruel and not to be taken seriously. The point is, this loss is not worth reducing.
• Perform detailed analysis to improve the Standard Performance rate; make it a variable based on the type of trip.  This is similar to have a performance rate specific to a product.

The car did everything needed, the maintenance was able to be fit into the schedule. The car is not at capacity, therefore it is not value-added to improve the OEE.   So, even though the OEE was 36%, it is acceptable, because the losses were evaluated and the equipment (car) was operating within expectations.  A 36% OEE on a city bus, would likely not be acceptable.  So acceptable is relative to use/application factors.  Use OEE to find losses and determine if they are worth eliminating or reducing.  OEE is a tool, not an end product.

———————————————————————————————————————————–