OEE - Overall Equipment Effectiveness
OEE is a measurement traditionally used in Total Productive Maintenance programs. The measure includes machine effectiveness and efficiency and is a metric commonly found in Lean Manufacturing. It answers these three questions: How often is the machine available to run? How fast does it run when it is running? How many good parts are being made? The formula is shown below:
Availability x Performance x Quality
The following defines the three components along with an example at the bottom of the page. AVAILABILITY (A): AVAILABILITY = Operating Time / Planned Production Time This is NOT the same as Utilization. This only includes the time the machine was scheduled, planned, or assigned to run. Utilization can include all hours of the day regardless of schedule. Utilization is more effective in capacity planning and analyzing the absorption of fixed costs. Availability looks at the machine itself and focuses more on variable cost absorption. Operating time = Planned Production Time - Planned Downtime Planned downtime includes lunch breaks, meetings, and any other regularly scheduled breaks that are independent of the machine.
PERFORMANCE (P): PERFORMANCE = Pieces Produced / (Ideal Speed * Operating Time) * 100%
QUALITY (Q): "PLANNED" scrap is a troublesome term to use because all scrap is lost profit even if it is built into the quote and cost. If a competitor figures out how to eliminate it then you create a disadvantaged cost structure and winning new business becomes more unlikely. For example, if the machine must warm-up for a few pieces or learn a process than these pieces should not be included in the calculation. HOWEVER, this does represent opportunity. Finding a way to permanently avoid these warm-up pieces or initial scrap pieces is a credible improvement. QUALITY = Acceptable Pieces / Total Pieces * 100%
Total Pieces = Acceptable Pieces + Unplanned Scrap Pieces
Which Machine OEE is better?OEE and the straight percentages can be misleading. It is very rare that one metric can tell the entire story regardless of how encompassing its formula may seem. There is always a human element of check and balance with reason.For example: Lets say there are two machines that can run a particular part and we'll assume Availability and Quality are equal for each machine. MACHINE 1 and MACHINE 2 given info: Availability: 93.75% Quality: 90.00% Let's say: Normally the part is always scheduled in MACHINE 2 because it gets the same Quality level and Availability AND it runs much faster than MACHINE 1. The typical Performance is MACHINE 2 is 225 pieces/minute when over operating time of 450 minutes (7.5hrs) thus produces 101,250 pieces. However, if MACHINE 2 is full or down for repair on that day, it is sent to MACHINE 1 to run. Through the same 450 minutes, MACHINE 1 makes a total of 87,750 pieces and this is an average of 195 pcs/minute. Looking at straight percentages of Performance: MACHINE 1 PERFORMANCE = 87,750 / (200*450) = 97.5% MACHINE 2 PERFORMANCE = 101,250 / (250*450) = 90.0%
MACHINE 1 OEE: 93.75% * 97.5% * 90.0% = 82.2% MACHINE 2 OEE: 93.75% * 90.0% * 90.0% = 75.9% Sounds great right, MACHINE 1 has better OEE and the part should be produced there? NO. 195 pieces/minute is not acceptable when it normally runs at 225 pieces/minute in MACHINE 2 at the same Quality and Availability levels. This is even more important when the part is quoted at the rate of 225 pieces minute to give the company the best chance to win the job. The company knows upon quoting that this type of part should run at 225 so anything less is going to reduce the margin - assuming everything else is constant. Someone may say, "use 250 pieces/minute as the ideal rate in the denominator when calculating the performance for MACHINE 1", but then this is not truly the MACHINE 1 overall equipment effectiveness. MACHINE 1 did what it was supposed to do, after all 97.5% is a very good. The company should keep this part in MACHINE 2 and work to reduce the speed losses to increase the Performance level to that of MACHINE 1. TPM or better capacity planning are closer to the root cause as to why the part couldn't be produced in MACHINE 2 and those are the reasons a team should correct and prevent.
Defining WORLD CLASS OEEWorld Class OEE is shown differently by many authors and companies. It is a relative value, as competition increases and expectations increase the value of WORLD CLASS OEE is driven higher.Most importantly when improving OEE is to use a consistent and standard definition. Include your team's definition on the Data Collection Plan and the Control Plan. This applies for any metric definition for which there is varying industry accepted formulas. If your company is producing pencils then an acceptable quality level may be >90.00%. But if your company is producing aircraft landing tires then 99.99% may be a minimum world class level.
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