OEE: Overall Equipment (Service) · PDF fileOEE: Overall Equipment (Service) Effectiveness ... Overall Equipment/Service Effectiveness (OEE) ... yet the OEE calculation gives us insight

OEE Presentation for ASQ 1124

Abidian, Inc. [email protected] 843-536-0942 Page 1

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OEE: Overall Equipment(Service) Effectiveness

Presented to Section 1124 of theAmerican Society for Quality

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We’ve learned about …



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• Learn about OEE and how to use it toimprove our overall efficiency, throughput,and quality in a plant, office, or service environment

• Gain an understanding of the financial opportunitiesavailable

• Learn how to use OEE to

1) Improve real-time efficiencies

2) Ensure compliance to budget

3) Evaluate capital expenditures

4) Compare one operation to another

Goals for Tonight

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Imagine a new car …



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Ideally …

We want our systems tooperate 100% of the time

at 100% of our bestdemonstrated speed

producing 100% goodquality product/services

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Reality is …

Our systems are notideal … it’s

unreasonable toexpect to operate allthe time at best ever

speeds producingnothing but goodproduct/services



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Soooo …Why is OEE so important?

• Companies make money by adding value to materialsand services to make products customers want

• As most companies use machines, people, andproduction lines to add value to their products, it’simportant they perform efficiently

• Overall Equipment/Service Effectiveness (OEE) is ametric used in Lean and Six Sigma to indicate howefficiently business systems are performing

• OEE promotes openness in information sharing and ano-blame approach in handling system-related issues.

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The Dollars: Overall Equipment Effectiveness (OEE)• Software simulations

can help vividlyillustrate the value ofincreasing the OEEcomponents ofPerformance, Avail-ability, and Yield

• In this example,improving OEE one (1)percentage point from28.1% is worth $120,000per year … note this isabout a $30M businessand the profit per piece isonly $10

• Similarly, improving thecurrent sigma value of3.27 by 1 is worth over$1.1M per year!



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Overall Equipment Effectiveness (OEE)

• OEE helps us to maximize

1. Performance … speed and/or utilization

2. Availability … uptime

3. Yield … quality

• On a real-time and budgeting basis

• Allows us to compare processes across plants,divisions, offices, and companies

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Time Available (24/7/365)

Time running

Time Operating

(1) Breakdowns, minor stops, offline PM’s,meetings, no sales

(2) Changeovers & adjustments

Availa-

bility

Losses

AVAILABILITY

Time Avail-Downtime

Time Available

x 100%

Availability (Uptime)

Availability: A comparison of the potential operatingtime and the time in which the system is actually

making products or providing services

For ExampleFor Example: We operate7 hours during an 8 hour shift

… our Availability wouldbe 7 divided by 8 or 87.5%



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Time running

Amount Produced/Served

Good Material/Services

Quality

Losses

(5) Quality defects in process, rework,callbacks, returns, …

(6) Start up and Transition losses

YIELD

Actual output - Defects

Actual inputx 100%

Yield (Quality)

Yield: A comparison of the raw materials (oroccurrences) put in to the process and the number of

products/services that meet the customer’s specifications

For Example: We input

3 divided by 100 or 97%

For Example: We input100 parts of which 3 are bad at

output … our yield is 100 minus3 divided by 100 or 97%

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Performance (Utilization or Speed)

Time operatingat maximum

rate

Perfor-mancelosses

Utilization

Actual Output

Max output in timerunning

x 100%

(3) Idling, Breaks, Minor Stops …

(4) Rate Losses (including ramp up)

Speed

Actual Speed

Best DemonstratedSpeed

x 100%or

Performance: A comparison of the speed/actualoutput with what the system could be consistently

producing in the same timeframe

For Example: We produce 80For Example: We produce 80units versus a best ever of 100 …

our Performance would be80 divided by 100 or 80%



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“6 Big Losses”Time Available (24/7/365)

Overall Equipment/Service Effectiveness (OEE)

OEE for World Class Manufacturers is 80+ %

Availability

(2) Set Ups, Changeovers & AdjustmentsTime Operating

Time Avail-Downtime

Time Available

x 100%

(1) Breakdowns, Minor Stops, OfflinePM’s, Meetings, No SalesAvaila-

bility

Losses

Time Operating atMaximum Rate

x

Performance

Actual Output

Max Output in TimeRunning

x 100%

(3) Idling, Breaks & Minor Stops

(4) Rate Losses (including ramp up)

Perfor-mancelosses

Time Operatingat

Maximum Rateand

Good Quality

x

Yield

Actual Output - Defects

Actual Inputx 100%

Quality

Losses

(5) Quality defects in process, rework,callbacks, returns, …

(6) Start up and Transition losses

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OEE: How it’s CalculatedOEE is the product of Three Components:

1. PERFORMANCE (Speed/Utilization) = Percentage of the output (# of parts oroccurrences) that the process actually produced, while it was running or the actualspeed vs. the best demonstrated speed for a given product, product family, service, ortransaction

X2. AVAILABILITY (Uptime) = Percentage of the total available time that theprocess/equipment was actually operating vs. 7/24/365

X3. YIELD = Percentage of the total parts/services produced that were good

OEE = Performance x Availability x Yield



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What is our OEE?

OEE: How it’s Calculated (Cont.)

Let’s look at an example:

We have a good plant. It averages 90% uptime on a7/24 basis. Production for the last month was 12,500

pallets versus a best ever month of 14,000 pallets.Scrap ran about 1.5%.

OEE = Overall Equipment Effectiveness

= Performance x Availability x Yield

= (12,500/14,000) x (0.90) x (.985)

= (0.893)(0.90)(.985)

= 0.792

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What is our OEE?

OEE: How it’s Calculated (Cont.)Let’s look at an example:

We have a good plant. It averages 90% uptime on a7/24 basis. Production for the last month was 12,500

pallets versus a best ever month of 14,000 pallets.Scrap ran about 1.5%.

OEE = Overall Equipment Effectiveness


= (12,500/14,000) x (0.90) x (.985)

= (0.893)(0.90)(.985)

= 0.792

by attacking performance and availability issues

This is a good plant, yet the OEEcalculation gives us insight that even

better results might be achievedby attacking performance and availability issues



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Let’s look at service/transactional example:

An Accounts Payable Department for a Fortune 100 company operates 2 8-hourshifts Monday through Friday. For a given month they processed 256,126 invoicesversus a best ever of 278,309. During the 28-day month they had 12,004 invoicespaid after the due date, 58,732 paid 5 or more business days before the due date, and38 that were missed/paid incorrectly.

OEE: How it’s Calculated (Cont.)

OEE = Overall Equip (Service) Effectiveness


= (256,126/278,309) x ((16 x 5) / (24 x 7))

x (256,126 - 12,004 - 58,732 - 38)

/ 256,126

= (0.92)(0.48)(.72)

= 0.318

What is the OEE?

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The last example isconsistent with mostbusinesses having an

opportunity to increasecapacity and/or

productivity by 25 to over100%!!

Overall Equipment Effectiveness (OEE)



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To compare OEE …

For comparison purposes… everyone should use 24/7/365as the basis for their availability

and best demonstrated (versus planor design) performance (speeds/

utilization)Counting unscheduled

time will encouragecreative ideas forreducing the time!

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Budgeted Production Efficiency (BPE)

“It’s not fair” to a business thatis limited by sales to take a “hit”

for not being able to run 24/7… for this reason a

Budgeted Production Efficiency (BPE)should be calculated to compare the

business to budgeted/planned productionschedules, line speeds, etc.



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Before expanding abusiness or adding a

line, we should ensurewe’ve maximized

current production;i.e., performance,

availability and yield!

Capital Appropriations

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Realtime Production Effectiveness (RPE)

For comparison and trendingpurposes, “OEE” should be basedon at least a week’s worth of data,

and ideally, a month or more … forrealtime trending, calculate insteada Realtime Production Efficiency

(RPE) using availableperformance, availability, and yield

information



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Real-time Work Area Scoreboard

95.6 SPEED

00:22:29 DOWNTIME

97.5 YIELD

89.0 EFFICIENCY

PERFORMANCE:PERFORMANCE:Compare current operations

against best ever

AVAILABILITY:AVAILABILITY:Track in “seconds” to create

a sense of urgency

to estimate…

YIELD:Ideally “weighed/counted” ... Might have

to estimate… include everything!

RPE:Realtime Prod Efficiency

… reset each shift/day

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Improving OEE• We use OEE to monitor the condition

of our equipment … similar to the waya nurse takes your temperature to seewhether you’re health has improved

• The point of using OEE is to drivesystem improvement

• Some improvement will occur from“awareness” when you start to measureOEE

• Sustained improvement requires adedicated approach



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Improving OEE

• Your approach should incorporatequantitative expectations, milestones,and a firm schedule for improvement

• A proven, effective way of quicklyimproving OEE is through a kaizenimprovement event … the kaizen isalso a great way to also increaseworker/supervisor buy-in

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Summary• OEE helps maximize throughput efficiency

• It focuses on Performance, Availability, and Yield

• OEE should be based on data for at least a week, andideally, a month to wipe out the effects of product mix

• Use Realtime Production Efficiency (RPE) tomaximize realtime/current operations

• Before capital expansions, check your OEE!

• To account for circumstances “beyond your control”… i.e., don’t have enough sales to run 24/7 …calculate a Budgeted Production Efficiency (BPE) tocompare your business to budget/plan



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Recognized Leadershipin ContinuousImprovement

Over 6000 individuals fromNorth America, Europe, andAsia have attended ourworkshops, presentations,and improvement events.Abidian has been recognizedby the American Society forQuality, United StatesCongress, and U.S.Commerce Association.

ABIDIAN: Business-Speak for Excellent Change

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• 97% of the attendees at Abidian's workshops and kaizens haverated the knowledge of their workshop facilitator as excellent.

• 94% of all workshop and kaizen attendees rated the hands-onexercises and practicality of the illustrations provided as verygood or better.

• 100% of all attendees have given their kaizen improvementevent or workshop an overall rating of very good or excellent.

• Projected savings identified by our clients from our recentworkshops, kaizens, and onsite efforts are well over $80million.

The Numbers …



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Questions?

… or looking for helpto get started?Contact Abidian today. You can reach usat 843-536-0942 or [email protected].

Abidian, a recognized leader in productivity improvement,provides hands-on training in Lean, Six Sigma, Maintenance

Excellence, Theory of Constraints, and Total ProductiveMaintenance/Manufacturing.

Learn more about us at abidian.com.

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