Overall Equipment Effectiveness (OEE) is a common term in a manufacturer’s glossary. It’s the gold standard for assessing productivity. The higher your OEE, the more productive you are. So, how do you bring it closer to a 100% score? For that, you need to understand its components and the formula to calculate your factory’s OEE. Let’s dive in.
What is OEE (Overall Equipment Effectiveness)?
Seiichi Nakajima, the founder of the Total Productive Maintenance System was the first to coin OEE. This was in the early 1970s. As in those years, OEE is a Key Performance Indicator to measure the success of lean manufacturing initiatives.
In simple words, OEE reflects the percentage of time a machine churns out acceptable output. 100% is the highest score. This indicates that the machine has produced only pieces free from defects with no downtime and in the shortest time possible.
Rather than an absolute metrics, OEE is best used as a baseline to track progress. It is a popular benchmark to compare a machine or production line’s performance with similar machines or industry standards.
The Components of OEE: Availability, Performance, and Quality
OEE is a comprehensive score made up of 3 key factors:
Availability: Maximizing Equipment Uptime
Availability focuses on the actual time the machines are put to use as compared to the planned production time. This takes into account planned stops for maintenance and changeovers as well as unplanned stops. For example, a machine may break down.
Performance: Ensuring Optimal Speed
Performance refers to the speed of the manufacturing process in relation to its maximum potential. For example, a machine may be capable of producing a nut in 2 seconds but in real-time, it may take 3 seconds per nut. The performance component takes into account factors such as idle time, slow cycles, small stops and equipment speed.
Quality: Reducing Defects
Quality talks about the rate of acceptable production pieces as compared to the total output. Quality losses could be in the form of pieces that need reworking, defective pieces and scrap. This is an important component for manufacturers to assess the waste generated by their production lines.
An improvement in any one of these 3 components can improve OEE. However, OEE improvement initiatives are most effective when they address all 3 components in tandem. For example, let’s say you increase the machine processing speed. This will give you a higher output but it may also increase the rate of defects. Vice versa, focusing only on improving quality could slow down the systems.
How to Calculate OEE
OEE calculation is based on a simple formula.
OEE = Availability x Performance x Quality
Let’s say your machine is available for 90% of the time. It has a 90% performance score and 99% of the output passes quality inspections. In this case,
OEE = 90% x 90% x 99% = 80%
The nature of this calculation makes it difficult to achieve high scores.
OEE Benchmarks
Achieving 100% OEE is difficult. Some may consider it unrealistic. After all, all machines need some planned downtime for maintenance.
85% OEE is a more realistic goal. This is considered world-class for companies manufacturing distinct physical products.
60% OEE is considered a good score with the potential for improvement. This is a fairly typical score.
40% OEE is a low score. This is commonly seen among manufacturers who are just starting to monitor and track production performance.
Why is monitoring and improving OEE important in manufacturing?
OEE is a versatile metric and applicable across industries. Tracking it allows businesses to assess their performance and spot areas for improvement. Making changes to improve OEE can offer further benefits such as:
- Higher efficiency
- Increased productivity
- Lower costs
- Data-driven decision-making
- Enhanced quality
- Increased machine lifetime
Effective strategies to improve OEE
Improving OEE helps businesses boost productivity, see a higher ROI and stay ahead of the competition. Here are a few tips that could help.
Schedule proactive maintenance checks
Rather than wait for a machine to break down and bring your production cycle to a complete halt, invest in preventative maintenance. Scheduling regular checks on machine performance allows you to spot issues at a nascent stage. You can then fix them before they impact your productivity. In turn, this reduces unplanned downtime and extends your machine’s lifespan.
Automate data collection
Human input is essential but may not be sufficient to give you a true insight into your machine’s performance. Instead, use technology. IoT devices make it easy to collect unbiased real-time data directly from machines. This ensures consistency and eliminates the risk of human error.
Display real-time OEE on the factory floor
Knowing what you’re working towards makes a big difference to employee motivation. Use visual management boards to collect data from the machines, transform it into easily understood graphics and display the same on your factory floors. This allows employees to see how their inputs influence OEE. On the other hand, if an issue arises, teams can quickly be made aware of it. This shortens the reaction time.
Address the 6 big losses
The 6 big losses refer to planned and unplanned stops, micro stops, slow cycles, production rejects and scrap. Of these, fighting unplanned stops and production rejects are the most critical. That said, sometimes, a machine may not stop working but may significantly slow down. Hence, track all 6 metrics and let your data guide you to prioritizing improvement initiatives.
Run a root cause analysis
Once you identify factors limiting your OEE, run a root cause analysis rather than treating the symptoms. Techniques like the 5 Whys and fishbone diagrams can help you understand the real reason behind the problem you’re dealing with. For example, switching out a malfunctioning gear may solve a problem temporarily. However, this could recur unless you address the root cause and schedule weekly maintenance.
Inculcate a culture of continuous improvement
Continuous improvement is a culture that empowers every employee to continually assess productivity and design small changes to improve it. Small changes as simple as rearranging tools on a workstation could increase production speed and in turn, improve OEE. Once a proposed change has had a positive impact, you can standardize it across the factory floor.
Hold daily reviews
Daily performance reviews should ideally involve representatives from all departments. The more minds involved, the easier it is to find effective solutions. These reviews can help the team monitor production in real time and identify problems at their early stages.
Invest in digital tools
Having digital tools makes it easier to improve OEE. Digital tools can support each of the above strategies. Digital tools like Fabriq can be linked to IoT devices to automate data collection and make it visible on the factory floor. This improves communication between departments and enhances employee engagement.
These tools also make it easier to identify issues at an early stage and conduct a root cause analysis to find sustainable solutions. When it comes to daily reviews, sharing data on visual management boards puts everyone on the same page and thereby makes discussions more effective.
Summing it up
OEE is a versatile metric that helps manufacturers across all industries. As a product of availability, performance and quality, it offers a comprehensive view of how individual machines as well as entire production lines function.
Visual management tools like Fabriq are a great tool for initiatives to improve OEE. They facilitate knowledge sharing and help the team make data-driven decisions. Similarly, when it comes to analyzing productivity metrics, Fabriq helps visualize elements for easier understanding.
