Leaning on OEE
Source : The Manufacturer US
Zone : Manufacturing operations
Published : 26 Sep 2005 16:39
Reliable metrics are needed to measure the effectiveness of any process. Rich Weissman looks at how overall equipment effectiveness can quantify lean improvements
The concept of overall equipment effectiveness (OEE) is all around us. We measure the performance of our automobiles in miles per gallon. We measure the effectiveness of our computers in file download speed. And we measure the success of our fitness regimen in our completion times in the 5K race. In our factories we measure the effectiveness of our equipment, in an effort to increase optimum machine uptime and operation, in a data driven process called OEE.
The theory of OEE is straightforward. The performance of a single piece of equipment, or even an entire factory, is governed by the cumulative impact of the factors of availability, performance rate, and quality rate. Analyzing these factors can help clarify a manufacturer’s equipment strategy. Yet OEE is often an underused or misapplied tool, even though it can help companies maintain existing equipment and even preclude the purchase of new equipment. It can be used effectively in both discrete and process based manufacturing environments.
Lean manufacturing continues to evolve and become increasingly ingrained in manufacturing processes. Often, lean success is measured in increased customer satisfaction levels, reduced inventory, increased product velocity throughout the factory, and even in lower head count. Many of the early gains in lean were highly anecdotal and often not rooted in meaningful data. Certainly the floor layout and product visibility was improved, shipments were going out on time, and customers seemed happier. Improved financial gains may have been the measure of success, but additional meaningful data was needed to measure the effectiveness of the lean implementation.
Once the easy gains are realized, often called low hanging fruit, lean needs to take on more of a systematic and data driven approach. Integrating concepts such as six sigma and statistical process control begin to drive the organization towards a more organized, structured, process driven, and metric-based approach to manufacturing efficiencies. The total quality management based concept of problem prevention finds itself in lean manufacturing as the foundation of total productive maintenance (TPM).
TPM focuses on a formal process of maintaining plants and equipment that is used throughout the manufacturing process. TPM traces its roots to the TQM movement and has enjoyed a renaissance in today’s lean manufacturing programs. While many lean success stories focus on Fortune 500 companies, there are smaller companies that successfully incorporate elements of lean, such as TPM, into their manufacturing strategies. The principles of TPM can be established in any sized company. It may be one of the most inexpensive and easiest ways to quickly improve operational efficiencies.
TPM is more than just a preventive maintenance program. It is a formal process that incorporates a thorough understanding of the importance of the tools and equipment used in the manufacturing process. It includes an intimate knowledge of production processes and the tools and equipment that support them, a tracking program for scheduled maintenance, an inventory of spare parts and consumable items required for the equipment, ongoing training of operators and repair personnel, and an organizational and management commitment for the TPM process. Strong relationships with equipment suppliers are also important, as their knowledge and support can help to increase equipment operation, throughput, uptime and yield.
OEE is the principal performance measure of TPM. It is a best-practice metric for monitoring and improving the efficiency of an organization’s manufacturing processes, including equipment and machinery, work cells, and assembly lines. OEE looks at such elements of manufacturing efficiencies as availability, performance, and quality by creating an overall OEE score, a metric that can be used as a benchmark for internal improvements or external comparison.
Availability quantifies a machine’s down time and operating time. Downtime can be caused by equipment failures, material shortages, and changeover time. The remaining time is considered operating time. The performance metric takes into account all of the factors that cause the process to operate at sub-optimal speed. These elements include machine wear, poor materials, misfeeds, and operator error. Quality is a measure of process yield, determining which product is acceptable and which needs to be reworked or scrapped. Simply, OEE is calculated by multiplying availability by performance and quality to determine an overall OEE metric. Some companies, however, modify the OEE calculation to better suit their objectives, but it still remains as an indicator of process efficiency.
World class OEE for discrete manufacturing plants is generally considered to be 85 percent or better, according to Itasca, IL-based Vorne Industries, a manufacturer of data collection and visual display products focusing on manufacturing productivity. Additional world class OEE related benchmarks are 90 percent for availability, 95 percent for performance, and 99 percent for quality. Vorne’s studies show that the average OEE score for discrete manufacturing plants is approximately 60 percent, a significant opportunity for improvement.
“OEE should be used as early as possible in the manufacturing process in order to determine root cause issues,” says James Feltman, Vorne’s sales manager. “It is the way to benchmark lean activities and provide a quantitative feedback link for measuring efficiency and improving operations.” Feltman sees OEE as a company wide metric that should not be limited to the shop floor, but used to focus the company on increasing the depth of lean. “OEE is a sensible metric that can be used as a true standard across the company. It allows for an objective point of view that can drive improvements.”
Feltman sees OEE as the platform for enhanced manufacturing efficiencies, often driven by lean. “One of the elements of lean is reduced set-up time, and set-up time reduction programs such as SMED help drive the OEE number higher,” says Feltman. A focus on OEE can be a rallying point to reduce breakdowns, avoid small stops, and cut down on start-up rejects. “OEE provides real time plant floor monitoring which allows for constant and consistent focus on the manufacturing process.”
While Feltman is an advocate for the use of OEE in discrete manufacturing, Rockwell Automation’s Lance Rodenfels sees the best use for OEE in process industries. Rodenfels, the Solution Manager for Performance Solutions for the Milwaukee, WI-based company, sees OEE as an indicator of a healthy manufacturing process. “I like to equate OEE in an industrial environment to an EKG in a healthcare setting,” says Rodenfels. “While companies may each calculate OEE a bit differently based on their own criteria, it is a good process measurement.”
Rodenfels feels that OEE provides a good start to determine root cause issues. “OEE is a consistent measurement that can be collected automatically, but OEE in itself is just a number. It is important to use it effectively to help manage and improve the process that it is monitoring.” He wants to make certain that companies are focusing on quality and not just yield. “OEE is really a three-legged stool,” says Rodenfels. “Is the equipment available, is it making what it is supposed to be making, and is it making quality product? I like to use quality as the measure of the level of efficiency.”
Rodenfels cites two cases that support the use of OEE as a diagnostic tool. One client had an issue on a packaging line that showed up in a reduction of the OEE number. An analysis of the data and manufacturing process showed that there were periods of time when cans were coming off of the line without lids. It seems there was a button on the equipment that was used to clean the machine while it was under operation. This button was located right above the button to stop the lid assembly operation, and the operator would inadvertently hit the wrong button, stopping the lidding process. An equipment modification solved the problem.
In another example, Rockwell Automation’s client Kraft Foods deployed OEE across multiple facilities. They used OEE to measure equipment performance and make the necessary changes, realizing a three-percent OEE improvement. This incremental improvement in equipment efficiency resulted in a savings of almost $12 million. “I cannot stress enough the need to use the OEE number to drill down into the manufacturing process it measures to solve problems and improve the methods,” says Rodenfels.
While data is becoming increasingly important in lean initiatives, some worry that focusing too much on the OEE number can force a company to lose sight of other lean-related improvements. “So much of lean success is tied up in behavioral change,” says Larry Cote, president of Ontario, Canada-based lean consultancy Lean Advisors Inc. “While working with an OEE model can be valuable, just paying attention to the number will not solve the manufacturing problems.” Cote feels that companies need to dig deeper to solve their quality and manufacturing problems.
“Often OEE is a tool used to increase speed, but sometimes increased speed leads to quality problems,” says Cote. “Speed may cloud the real organizational issues such as customer responsiveness, quality, or other important business objectives.” Cote understands that equipment availability is critical, and OEE can help to improve equipment uptime as part of the TPM process. Adds Cote: “Companies need to understand that OEE is a tool for process improvement. It is not a magic bullet.”
The fundamental concept of overall equipment effectiveness is certainly not new. As lean manufacturing continues to prove excellent results, old concepts may be reborn into new contexts. OEE, as part of a TPM program, will provide a series of data points and trends that will help companies focus on improving their manufacturing efficiencies within the lean framework. Companies utilizing this valuable tool are best cautioned to keep OEE in perspective. While data is certainly better than anecdotal information, striving to meet an unreasonable OEE number may cause them to hit a roadblock on their lean journey.
