More and more businesses push their assets for more output at minimum cost. The analytical power of manufacturing intelligence solutions may reveal the secrets of production efficiency and effectiveness, but how do you know what to look for? This comprehensive whitepaper describes the three core OEE elements, how to calculate OEE, the purpose of OEE, the enterprise benefits, and frequently asked questions.
The Three Core Elements of OEE: Overall Equipment Effectiveness (OEE) is a key performance indicator that includes three core elements:
Availability
The percentage of time that machines are available for scheduled production compared to the actual time they were producing. Scheduled maintenance, planned downtime, or equipment trials are excluded.
Performance
Compares the theoretical machine rate with the number of items produced during operating time. It indicates whether low output is due to efficiency or downtime issues. Performance is calculated as:
Quality
The percentage of items that pass the first quality inspection. It allows managers to compare consistency between machines and
operators.
Calculating OEE
OEE considers all three factors: Availability, Performance, and Quality. It is calculated as:
OEE = Availability × Performance × Quality × 100
It is important to recognize that improving OEE is not the only objective. The following data for two shifts illustrates this:
It may appear that the second shift is performing better than the first, since its OEE is higher. However, very few companies would want to trade a 5% increase in availability for a 3,5% decline in quality. OEE doesn’t only offer one magic number; it provides three numbers, which are all useful individually as a situation can change from day to day. It also helps visualising performance in simple terms.
Purpose and Benefits of OEE:
By implementing a system that can measure and analyse OEE, manufacturers can improve equipment performance, operating procedures, and maintenance processes. The following are six categories of productivity losses that are almost universally experienced in manufacturing:
1. Breakdowns
2. Setup and Adjustments
3. Small Stops
4. Reduced Speed
5. Start-up Rejects
6. Production Rejects.
The main purpose of any OEE initiative is to become the most efficient, most effective manufacturer within a market, minimising the above main losses. A world-class OEE has a benchmark OEE rating of at least 85%. However, simply maintaining an 85% rating does not guarantee world-class status. Each component of OEE must meet different levels of individual performance; availability should be at 90%, performance should be at 95% and quality at 99%.
These benchmarks allow manufacturers to have a point of reference for determining when these components meet acceptable levels. Instead of making reactive maintenance decisions based on breakdown reports and product manufacturing decisions based on plant schedules, OEE measurements enable proactive decisions based on throughput, efficiency, effectiveness and process bottleneck constraint analysis. Tracking OEE can help manufacturers to spot patterns and influences of equipment problems and allows them to see the results of their improvement efforts.
More generally, OEE also captures reasons for downtime (due to machine conditions, material status, production personnel or quality issues) and can encompass the entire plant. At the plant level, OEE metrics can be correlated with other plant metrics to provide more KPI’s. With enterprise level technologies, such as Executive Dashboard, managers can monitor OEE plant metrics and drill down to find root causes of problems, getting minute-by-minute updates to enable real-time process improvement.
Enterprise Benefits of OEE:
Implementing an adequate OEE system brings immediate financial benefits to manufacturing operations. A few major benefits are listed below.
Reduced Downtime Costs:
Lowers machine downtime, protecting revenue and meeting delivery deadlines; a 1% reduction in downtime for critical equipment can yield nearly $100 million in annual savings.
Reduced Repair Costs:
Supports predictive maintenance, cutting repair costs by identifying trends and enabling proactive actions like early parts ordering and better resource allocation.
Increased Labor Efficiencies:
Enhances workforce productivity by capturing data on downtime and performance, allowing better resource use and reducing the need for new hires.
Reduced Quality Costs:
Monitors quality metrics to identify defects’ root causes, reducing expenses on rework, scrap, and warranty claims.
Increased Personnel Productivity:
Automates downtime tracking and reporting, reducing non-value-added tasks, and enabling a focus on higher-value activities across the organization.
Increased Production Capability:
The net effect of reduced machine downtime, higher productivity of operators and reduced defects is the ability to achieve higher production levels with the same number of resources.
Frequently Asked Questions:
How universal are the key terms that constitute OEE?
Answer: While there are many variants, the approach is generally the same.
Are terms like “Operating Time” and “Net Operating Time” industry standards?
Answer: No. Different companies use different variations.
Where is the greatest potential for improvement?
Answer: This depends on the industry and process, but availability often has untapped potential.
Can OEE be applied to any process?
Answer: OEE is most valuable when measuring automated production and processing systems.
Why is performance measured by counting parts rather than by adding up stoppages?
Answer: Counting parts simplifies capturing speed losses and reduces complications in measurement.
What is the biggest issue that typically affects automated lines?
Answer: Shortstop failures, which often go unnoticed due to their brief duration
How do OEE performance numbers relate to existing plant efficiency metrics?
Answer: OEE provides a more comprehensive view of efficiency by including all potential losses.
How does OEE data compare with manually collected data?
Answer: Manually collected data often misses short stops, while OEE data captures all events
What ROI can be expected from an OEE program?
Answer: Many manufacturers achieve a 4-10% improvement in the first year.
Who should be involved in an OEE effort?
Answer: Top management, operations teams, engineering, maintenance, quality, and scheduling groups.
Who achieves World Class OEE?
Answer: The benchmark of 85% varies by industry, with continuous processes more likely to reach this level.
What is the biggest “gap” in setting up an automated OEE system?
Answer: Many systems do not track availability-related losses.
What events are not included in OEE?
Answer: Planned shutdowns, such as weekends and holidays.
What other data is important in an OEE program?
Answer: Overlaying OEE data with contextual information such as time, shift, product, and batch details.
Is it significant to monitor OEE in real time?
Answer: Yes, as it allows for rapid response to emerging problems.
Should operators be involved in all short stops?
Answer: Not always, as frequent minor failures may overwhelm them.
Overall Equipment Effectiveness (OEE) is a powerful metric for manufacturers to optimize production, minimize losses, and increase efficiency. Implementing an OEE system enables proactive decision-making, ultimately leading to better financial performance and competitiveness in the market.