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3.1. OEE CATEGORIES ............................................................................................................................................ 2 3.2. DEFINING OEE EVENTS .................................................................................................................................... 4 3.3. WHAT IS CONSIDERED WORLD CLASS OEE? ......................................................................................................... 5
4. A REAL EXAMPLE .......................................................................................................................................... 6
6. FREQUENTLY ASKED QUESTIONS ABOUT OEE ............................................................................................... 8
7. OEE GLOSSARY OF TERMS........................................................................................................................... 11
ABOUT PARSEC ........................................................................................................................................... 11
TERMS AND CONDITIONS OF USE ............................................................................................................... 11
Total Available Time – This is the time that the plant is open and could be used for production.
Planned Production Time – This is the Total Available Time minus the Planned Shutdown Time.
Planned Shutdown could include meal breaks, holiday shutdown and scheduled maintenance.
Operating Time – This is the difference between Planned Production Time and the time lost to
downtime. Downtime events include equipment breakdown, unscheduled maintenance, setup
time and changeover. This is included in the OEE calculations.
Net Operating Time – This is the difference between the Operating Time and time lost to Speed
reduction. Speed reduction events include operating equipment at below rated speed
(increased cycle time), frequent short-lived stoppages not requiring maintenance and certain
operator errors. This is included in the OEE calculations.
Productive Time – This is the difference between the Net Operating Time and the time lost toQuality issues. Quality losses include rejected and reworked products. This is included in the
OEE calculations. TABLE 1 describes how each OEE Category is calculated.
OEE Category How it is Calculated
Downtime
Losses
Availability is the ratio of Operating Time to Planned Production Time
(Operating Time is Planned Production Time less Downtime Loss).
Availability of 100% means the process has been running with no stops.
Availability = Operating Time / Planned Production Time
Speed Losses Performance is the ratio of Theoretical/Ideal Speed to Actual Speed.
Performance of 100%means the process has been consistently running at
its theoretical maximum speed.
Performance = Parts Produced / (Ideal Speed * Operating Time)
Quality Losses
Quality is the ratio of Good Parts to Total Parts. Quality of 100% means
Also, consider if downtimes and short-lived stoppages were reduced by 10% or 125 minutes,then the same factory would be able to produce 58,327 more bottle during the same 5-day
period (assuming the same effective performance). With the wholesale price of each bottle at
$0.85, during each 5-day period, the Bottling Area can produce $49,578 more sellable product.
If the Bottling Area is operated 350 days during the year, the extra production will be worth
$3,470,486.
5. ConclusionToday’s economy favors companies that boost revenue without sacrificing profitability and
remain strong even when the financial markets decline. Increasingly, the financial analystsfactor in a long-term debt-to-capital ratio to acknowledge those companies that achieve growth
without accruing heavy debt. It is interesting to note that these companies manage to have
higher revenues even when sales are lower. This feat, among others, is accomplished by a
rigorous practice of productivity gains cost-cutting through increased efficiencies and
maximizing returns on fixed assets. OEE can play a critical and increasingly valuable role in
6. Frequently Asked Questions about OEE1) Do you define everything in numbers of parts, or units of time?
The answer depends on what's most intuitive for you and your operators. You can
actually mix and match. Availability is usually described in terms of hours or minutes.
Performance is usually described in terms of parts per minute or hour. Other quantity-
related measurements like pounds, kilos or meters per unit of time may also be used.
Most people talk about Quality as a ratio of good product to total production. But all of
these are converted to a % that shows actual vs. potential. These numbers are naturally
very revealing.
2) Is the final OEE composite number a "magic formula"?
No - you definitely should not think of it that way! Let's say you have a process that
gives you 89% availability, 86% performance and 98% quality, for a 75% total. Is that
good or bad? Only you can decide. Now let's say that you played musical chairs with thenumbers - 98% availability, 89% performance and 86% quality. Is a quality drop from
98% to 86% worth the dramatic improvement in availability? Most manufacturers would
consider this tradeoff to be totally unacceptable.
The beauty of OEE is not that it gives you one magic number; it's that it gives you three
numbers, which are all useful individually as your situation changes from day to day.
And it helps you visualize the total resources of your manufacturing in relation to what it
actually produces - a very practical simplification.
3) Is OEE data subject to misinterpretation?
Yes, without a doubt. The answer to the previous question is a great example of that.OEE tells you nothing about how much your resources actually cost in dollars, what the
easiest improvement actually is, or how much it will cost you to make that
improvement. What you should look for in OEE is losses and bottlenecks that can be
eliminated for minimal cost. In most cases that is possible. OEE data is only meaningful
in the context of your situation and your efforts to improve it.
4) How do you determine the "Theoretical Capacity" of a machine?
The simple answer is the "name plate capacity" - the stated capacity given by the
manufacturer of the machine. But like the speedometer in your car, this number may
only be an approximation and may vary considerably with machine age and other
circumstances. Ideally you should experiment, take measurements and come up withyour own number.
5) For the purpose of measuring productivity, how do you define whether a machine is
"producing" or not?
If the machine is producing anything at all, then the production clock is running.
6) How do you minimize number crunching, spreadsheets and reports and make OEE
truly simple?
Data isn't very useful if you don't get to see it until tomorrow. The printout in the
engineering office isn't nearly as helpful as a display you can see from fifty feet away,right on the shop floor. We recommend use of OEE oriented visual displays, which can
be plugged into a parts counting sensor and quickly configured to show relevant, real-
time OEE data, already digested into a form that is useful to you and your operators.
7) What period of time do you use for an OEE test?
You can choose any period you want. Most commonly it's based on the working cycle of
the factory, i.e. one shift (8 hours or 480 minutes).
8) Is it possible to have processes that exceed 100%?
No. If you obtain readings greater than 100%, then at some point you are not definingsomething correctly. It means that you were underestimating the capacity of a process
when you input your parameters.
9) If you have a series of machines or stages in a cell with different capacities, which
stage do you base your Theoretical Capacity on?
The fastest stage (not the slowest). This forces you to recognize all other bottlenecks
and strive to improve them - to do Kaizen, the Japanese philosophy of continuous
improvement.
10) Do OEE benchmarks, i.e. Theoretical Capacity, ever change?
Yes, but only if the fastest process or machine is improved.
11) Can OEE become a political football?
Yes, to the extent that it is misinterpreted interpretation and to the extent that it is used
for political purposes rather than genuine Kaizen. Of course that's true of all numbers
and measurements. The important thing is to keep the core objective in mind: To
produce more quality product with less waste and fewer headaches. Therefore you
should be very clear about exactly what you want and make sure you are measuring it.
Then you can create incentives for operators to deliver that result.
12) If there are several interpretations for the cause of a problem, where do you start? Always look for the simplest and most direct explanation. Obviously there are
exceptions, but here's what's important: Rather than ponder and discuss 50 different
causes, start with the most straightforward hypothesis and test it. Use a process of
13) Should preventative maintenance downtime be allowed to penalize an OEE
performance calculation?
If the preventative maintenance happens during production (rather than during
scheduled downtime) then it is interfering with production and should be counted. This
does not mean that you should not do preventative maintenance at that time; it onlymeans that over a period of time, OEE will tell you whether this maintenance results in
less overall downtime, because of fewer "surprises," or more downtime, because of the
lost productivity while maintenance is done. In this way, OEE gives you solid answers to
complex questions by attaching them to simple measurements.
14) Should re-worked parts be counted as good or bad in the OEE calculation?
In OEE, any part that doesn't come out right the first time is a bad part. It's an
equipment issue. Your strategy for improving original part quality vs. reworking old
parts is a separate management and financial issue.
15) If a process can run during scheduled breaks, then is that break time factored into
equipment availability?
A personnel break is not necessarily the same as a machine break. If the machine is
running (i.e. producing anything at all) then regardless of whoever is or isn't eating
lunch, OEE considers the machine to be on - the clock is running.
16) How does OEE relate to the management function of helping machine operators?
The true value of OEE is in helping you and your operators make systematic
improvements. Therefore everything you do with OEE, including the visual display of
OEE data, should be designed with operators in mind and stated in whatever terms they
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