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Innovative Thinking

Importance of Overall Equipment Efficiency (OEE)

OEEThere are several important metrics manufacturing managers use to either gauge or improve their facilities’ efficiency or productivity. One of the most common is called Overall Equipment Efficiency, or OEE. Having an in-depth understanding of OEE and its importance can help managers achieve their efficiency targets in a timely fashion, without requiring frequent interventions.

OEE is a way to measure the efficiency of a process or machine in a facility.  Some use OEE as a key performance indicator, or KPI, to rate their facility against other facilities or to show how well their facility performs. However, OEE’s main purpose is to show how to improve a process’s efficiency in a facility.

Measuring and Interpreting OEE

OEE uses three different values to calculate the efficiency of a process: Availability rate, Performance rate, and Quality rate. Availability refers to how long a machine is able to be in use. Performance refers to the comparison between the machine’s operational speed and the speed it’s designed to output. Lastly, Quality refers to the percentage of parts the machine or process outputs that are quality versus the entirety of the parts produced. Combining the three rates gives the OEE of a process. The basic equation for determining the OEE of a process is:

Availability x Performance x Quality = OEE

For example, if a process’s Availability rate is 94%, its Performance rate is 85%, and its Quality rate is 79%, then equation would go as follows:

0.94 x 0.85 x 0.79 = 0.63 or 63% OEE

While 100% is the absolute ideal, it’s practically impossible to achieve that high an OEE because even the smallest decreases in percentage will heavily impact the result. Instead, many manufacturing managers aim for an OEE around 85%.

But how should an OEE rating be interpreted? Is it a benchmark metric that determines the worth of a company? Or is it an internal metric that has no weight outside of the facility? The best answer is that OEE should be interpreted as what it was meant to be: an improvement metric. OEE was designed to determine what the biggest losses are in a process. Once these have been determined, then a facility can determine how to best improve upon those areas.

The Six Losses

There are six areas where loss in a facility is largest according to OEE. Each of them fall under one of the three ratings. These loss categories can be summed up as downtime, speed, and defects with two factors under each category, though there can be some overlap as to cause and effect between them.

The two losses associated with downtime are breakdowns, and setup and adjustment. The first is any type of equipment failure that stops the process or machine from continuing its tasks. Setup and adjustment refers to any time to setup and adjust the machine as necessary throughout the process.

Stoppages and idling and reduced operation speed are the losses associated speed. Occasionally, a process will experience stoppages or idling, leading to downtime and decreased production. A process can also experience reduced operation speed, especially as the process is starting up or during idling.

The last two defect losses are process defects and reduced yield. Process defects are flawed parts, parts that need repaired, scrap, or anything produced that isn’t up to par with quality regulations. Reduced yield refers to a reduced amount of parts made from the start of the process to stable production.

Using the OEE equation can point out where in the process the most improvements can be made to decreases these losses. For example, a low Availability rate might indicate a high number of breakdowns or too much time in setup and adjustment. A low Performance rate might indicate ways of speeding up the operation speed. A low Quality rate might indicate a high number of defects or that the process isn’t producing enough parts.

Tracking OEE

There are several different ways a facility can track OEE, manually and automated. Manual tracking takes manual data collection through recording individual data reports and compiling them to determine a process’s OEE. Automated tracking involves using a software to compile data and calculate the OEE of a process. Automated is generally seen as the better alternative because it calculates OEE faster, allowing more calculations to be made across multiple criteria faster.

Tracking OEE allows facility managers to make the appropriate adjustments and improvements to counter the losses and optimize production. At the same time, facility managers should be careful not to use the OEE metrics and results to compare too harshly. OEE is specifically meant to show where improvements can be made, not how well a process is performing at different times. And as there are always limitations to accurately tracking the data, it’s important to not use OEE as an authoritative metric.

OEE is a powerful metric that can be incredibly helpful if used properly. Using it improperly can lead to confusion and frustration in a facility. Its purpose is to show where the best improvements can be made to a process in a facility, not as a benchmark or even a high-level KPI. Only using OEE in the proper manner can lead to improvements and a better production line in the end.

Achieving a Higher OEE

Engineering firms around the world are taking note of new strategies to improve OEE, and companies such as Premier Automation are on the cutting edge of efficiency in automation solutions. In fact, Premier takes a crucial role in integrating existing equipment with new capabilities including tracking abilities and accompanying software to map out changes. Reach out to us for a free consultation and our engineers can bring your automation system into the future.

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