Operational Equipment Effectiveness (OEE) is a Lean
Manufacturing concept that is generally found in discrete manufacturing
facilities. However, the philosophy can be
used in many other business sectors such as Call Centers and Information
Technology. In many continuous improvement
initiatives, it becomes difficult for Process Engineers to measure the gains of
their improvement efforts. OEE is a powerful
benchmark to provide rapid feedback on a given system or process. Companies that currently operate Six Sigma
programs use data to identify areas of improvement and also monitor the
modifications made. OEE enables the Process engineer to perform these
measurements.
An ideal process, equipment or system that has been
implemented would operate:
100% of
the time, at 100% capacity, and with an output of 100% good quality.
In real life, however, this situation is rare. The difference between the ideal and the
actual occurrence is due to losses.
If there is a gap between our daily process and the ideal situation, it makes
sense to focus on this gap and look for ways to bridge it. Losses can be categorized into 3 main
categories: downtime, speed, and defects.
There are a number of specific losses that can be grouped under these 3
categories but the six most common ones are listed in the table below.
Calculating the OEE is easy and can be applied to many types
of systems. It is the “availability rate”
multiplied by the “performance rate”
multiplied by the “quality rate”.
- The “availability” rate is the time the
equipment or system is really running, versus the time it could have been
running
- The “performance”
rate is the quantity produced during the running time, versus the potential
quantity, given the designed speed of the equipment or system.
- The “quality
rate” is the amount of products meeting requirements versus the total
amount of products produced.
The chart below outlines the OEE calculation and graphically
shows the relationship of the common wastes which ultimately contributes to
lost effectiveness. The gray shaded
areas are the waste which intrudes on the white (productive space).
As more waste is observed in each category, the available
time and output that is productive is reduced (white space becomes less).
Consider this example:
A current computer system used to process checks is
operating at 80% of the designed operating speed, with defect rate of 3%, and
is only running 35% of the time due to maintenance. The OEE equation would look something like
this.
Availability (35%) x
Performance (80%) x Quality (97%) = 27% OEE
Obviously, the first place to do process improvement is on
the availability of the equipment. With
some reactive maintenance to fix the current problem and then preventive
maintenance to keep the equipment running, at 95% up-time goal can be
achieved. Here is how our OEE has
changed:
OEE = 95% x 80% x 97%
= 73%.
A world class benchmark would show a system performing at
85% OEE. Though the equation will vary, depending on the process, here is an example
of an equation for world class OEE:
World Class OEE = 95%
x 90% x 99.9% = 85%
Why should you considering using this methodology?
- It will provide a structured framework to compare alternatives and perform ‘what if?’
analysis on process improvement investments.
- Companies can use ‘what if?’ analysis to
determine if it makes more sense to fix
the current equipment or purchase new.
- OEE quickly provides key insight into the limitations of a system and can provide focus on
what changes will provide the biggest impact toward achieving the ideal goal.
