Overall Equipment Effectiveness (OEE): Does My Factory Really Need to Gather More Data?

Overall Equipment Effectiveness (OEE): Does My Factory Really Need to Gather More Data?

The gold standard for measuring manufacturing productivity today is OEE (Overall Equipment Effectiveness) – a measure that purports to identify the percentage of manufacturing time that is truly productive. It does this by calculating machine availability × performance × quality, to arrive at a figure that supposedly reflects how well your factory is doing in those three areas. Simply put, an OEE score of 100% is the ideal as this means you are manufacturing effective parts, as fast as possible, with no downtime – 100% Quality, 100% Performance, and 100% forward motion on production. Sounds good in theory but is OEE just another time-wasting measurement that manufacturers are forced to expend resources collecting and deciphering, or is it genuinely useful?

The technologization of manufacturing processes means that it is now possible to reach greater heights of efficiency than ever before – well that’s the theory. Every manufacturer wants to see their machines seamlessly pumping out flawless products every hour of every day, but this rarely happens in practice. As every manufacturer knows, a single hour of downtime on the factory floor can cost your company thousands of dollars in lost revenue – yet unwanted downtime is an everyday occurrence in the majority of factories. Fortunately, technology has an answer for that too, in the form of ever better ways to measure and monitor your factory so that this data can drive action towards improving efficiency and reducing downtime. That’s where OEE comes into the picture.

Studies suggest that there are six major causes of loss of equipment-based productivity in manufacturing. Measuring OEE is a concrete way in which manufacturers can identify, reduce (and possibly eliminate) these 6 causes. They are:

1. breakdowns and failures
2. setup and adjustments
3. stalls in production
4. reduced speed of production
5. startup rejects (poor quality at the beginning of the production cycle)
6. production rejects (poor quality products, in general)

OEE is useful as a benchmark to compare the performance of one piece of equipment to similar equipment, to industry standards, or even to results for different shifts working on the same equipment. It can also be used as a baseline to track progress in eliminating losses from one piece of equipment.

There are also a number of other benefits to be gained from measuring OEE. Here are some of them:

• Achieve greater ROI on equipment – OEE yields insights into where and how manufacturers can make changes to get the best performance from new and existing machinery, and whether an investment in additional equipment is required.

• Visualize performance more easily  – OEE lets you know the real factors behind production issues, rather than relying on gut feel – revealing the “Hidden Factory”. Importantly, OEE also helps you visualize these issues in simple terms,

• Provides a real-time target – OEE can provide operators with real-time, achievable targets so that operators can tweak and fine-tune the process to hit their production targets.

• Maximize workforce productivity – An OEE system identifies operator downtime reasons and highlights lengthy changeovers or set up times this can help management better allocate resources and identify where extra capacity is needed.

• Help you remain competitive – By reducing production losses (and therefore costs), OEE can help manufacturers remain competitive.

Many still argue that OEE is a flawed metric because as an overall measure (which represents an average of three different values put together) it provides no detail into what actually caused each issue – and of course, it is very hard to fix a problem without fully understanding the source.

So what’s the bottom line –  is it worth measuring  OEE or not?  In our view, as long as you are aware of its limitations, absolutely yes. OEE is clearly not a foolproof fix-all measure, but it can readily flag-up roughly where your major profit-drains lie. It does not give you the entire picture but it is a stepping stone in the right direction, showing you where you need to investigate further.  46% of manufacturers would agree with that, saying that tracking OEE levels in real-time on a per-machine basis significantly helps them improve production-line efficiency. Ultimate efficiency and productivity is not easy to achieve so leveraging anything that can help along the way is a smart idea. OEE is another useful tool in a manufacturer’s armory and one that is certainly worth looking into.