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OEE and Tools for Improvement QMSSystems


Contents What is Effectiveness? ............................................................................................................................ 3 Essential tools to improve OEE ............................................................................................................... 9


What is Effectiveness? “Effectiveness” as the name denotes refers to the capability of fabricating a desired result or the capability to produce some desired level of output. When something is considered to be effective, it means it has an intended or expected outcome, or produces a deep and detailed impression. In management science, effectiveness relates to getting the right things done at the right moments. We encounter the word “effective” in each and every walks of our life. The output that is to be expected by an industrialist will depend on the effectiveness of the machines, industrial assets and the manpower that he is employed with. The industrialist may wish to improve his/her manufacturing abilities and readdress numerous shortcomings that she continues to experience day in and day out. There are three most renowned manufacturing improvement methodologiesthat are always available at the industrialist’s disposal- Lean Manufacturing, Six Sigma, and Theory of Constraints. OEE (Overall Equipment Effectiveness)was developed as part of Lean Manufacturing, specifically as part of the powerful and holistic improvement process known as Total Productive Maintenance (TPM). In this eBook we shall dive intothe depthsof OEE, more specifically it’s definition, it’s effectiveness and certain measures through which further enhancements can be made to OEE. OEE as a tool is based on availability rate, performance rate and quality rate. It evaluates how effectively and efficiently a manufacturing operation is utilized. The results are stated in a generic form which allows comparison between manufacturing units in different industries. Even if it is not distinguished as an absolute measure it has many wide ranging uses, the best of which is to identify scope for process performance improvement and how to attain furtherance. It serves as a rightful metric to improve overall performance of the machines and industrial assets. The eBook is specifically divided into three sections for


better comprehension of the readers. The first section deals with OEE's meaning and history, followed by the measures to calculate it and last but not the least on how OEE can be improved. OEE measurement is also commonly used as a KPI (Key Performance Indicator) in conjunction with lean manufacturing that is responsible for measuring effectiveness and deviations from effective machine performance.Originally it was coined by Seiichi Nakajima a Japanese citizen and pioneering founder of theTotal Productive Maintenance system in the 1960s. It was based on the Harrington Emerson way of thinking regarding labour efficiency. During its initial stage it was used to find out how efficiently the manufacturing process is functioning. Gradually, OEE hasembarked the whole improvement process for reducing losses and increasing productivityby a great extent. The OEE is known for its multiple uses and most of them are industry-centred. A few of them are enlisted as under1) Effectiveness of operation undertaken 2) Achieving maximum availability of machine 3) Reducing losses 4) Increasing productivity There exists a precise and universal methodology for any improvement process and it enables us how to apply it to OEE. The methodology is renowned as IDA(Information, Decision, and Action). This highly effective process provides much greater scope for improving productivity using information that is at disposal. IDA emphasizes three factors: 1) Information: Information lays the foundation stone and starting point of IDA. Excellent, appropriate,reliable and easily interpretable information is a must. 2) Decision: Decisions are the ones that need to be undertaken and which lie between the due course of information and action. It refers to the moment when information is reviewed and a course of action is to be undertaken. 3) Action: Action is where something actually gets done so as to accomplish a given purpose; where decisions are transformed into results.


IDA is simple and universal. The equation looks a lot like the equationof OEE. The factors are multiplied to obtain the formula which is given as followsInformation x Decision x Action = Result. The process of calculating OEE comprises of calculating data from loss recording sheet of an operation. Then the main task in hand is to discover the areas that demand improvement followed by the phase that also requires improvement. We then collect data analysis and check whether it is true or not. We then find out about the loss that needs to be removed first, thereby putting it in the required formula which is as follows – OEE= Availability rate x Performance rate x Quality rate.


The losses that we ought to remove are provided by the loss recording sheet which comprise of the following1) 2) 3) 4) 5) 6) 7) 8)

Equipment breakdown Start-up loss Setup loss and adjustment Tool exchange loss Inspection loss Speed loss Minor stoppage Defect or rework

The first five losses are categorised under availability loss, which includes all events that stop planned production activity for an appreciable length of time. The next two losses are enlisted under performance loss which includes all the factors that cause the production asset to operate at less than maximum possible speed and the last one falls under quality loss which factor out manufactured pieces that do not meet quality standards, including pieces that are later reworked. For instance let’s assume a hypothetical situation where we are to evaluate OEE. Let’s assume there is a shift of 8 hrs (480 min) with a planned breakdown and breakdown of that day with figures of 60 min and 40 min respectively. Also the cycle time of operation is 30 sec (0.5 min) and the number of commodities produced is 600 in number. Plus the number of defect and rework is 6 in total. Then OEE=? LOADING TIME= = 480-60= 420 min





DOWN TIME= Total breakdown time = 40 min OPERATING TIME= LOADING TIME- DOWN TIME =420-40=380 min AVAILABILITY=LOADING TIME- DOWNTIME/LOADING TIME =420-40/420 =380/420=0.9047 OR 90.47%

PERFORMANCE RATE= STANDARD CYCLETIME x NO of products produced/ Operating time =0.5 x600/380=0.7894 OR 78.94%


QUALITY RATE= No of products produced – No of defect and rework/ No of products produced =600-6/600=0.99 OR 99% OEE= Availability rate x Performance rate x Quality rate =0.9047 x 0.7894 x0.99 =0.7070 OR 70.77%

This is very less in terms of the normal percentages. An OEE of 85% in the diagram above is said to be world class for the discrete manufacturers. For many companies, it is a suitable long-term goal. This reflects the fact that the above operation has the vital need for improvement. So an analysis is to be carried out in order to make the necessary improvements considering the availability, performance and the quality rate. After improvement again the data is to be recollected and the OEE recalculated. An OEE score of 100% is perfect production where the manufacturers manufacture nothing but qualityassured parts, as fast as possible, with no stop time. OEE is useful as a heuristic tool, but there is a severe possibility that it can break down in several circumstances. For instance, it may be far more expensive to run at a facility at certain times. Performance and quality may not be independent of each other or of availability and loading but experience may develop over time. Since the performance of shop floor managers is at least sometimes compared to the OEE, these numbers are often not reliable, and there are numerous ways to mislead these numbers. OEE also displaysthe properties of a geometric mean because of its ability to punish variability among its subcomponents.


OEE even if is a good metric, it is not free from limitations. There are numerous inefficiencies that underlie OEE. For instance, the OEE gets complicated when manufacturers gather too much or inappropriate data. Additionally, it becomes difficult to boost OEE performance across plants and production operations. The calculation or tracking of OEE is considered to be a ‘mammoth’ task for the machine maintenance and asset management personnel. Also the collection of indefinite data from multiple machines and several production lines makes it difficult to re-organise data which also misleads us in numerous situations. The overabundance of data is caused due to companies setting highstandards for downtime, quality or performance rates at unfeasible levels. Even the manufacturer uses a large number of reason codes for downtime and other machine events causing complications for the operators who are entitled with the task of recording OEE. Additionally, the comparisons between various machines and product lines are not always meaningful unless we apply them to similar industrial assets. For example- comparing OEE with different number of daily changeovers will enable the finding of differences between them, but they would not reveal much about productivity.


Essential tools to improve OEE

Enlisted below are a few practical propositions for taking the inefficiencies out of OEE tracking and making the practice much more valuable when it comes to maintenance and asset management1) PRIORITIZING MANUFACTURING ASSETS- First and foremost the truly business captious machines are to be targeted. Those assets that cause upstream and downstream consequences when they fail, slow down, or produce quality out of spec. Improving OEE performance; by the same token we may generate improvements that go beyond a single machine. Furthermore multiple factors can affect how an organisation views the critical nature of the asset as every operation and the industry are seamlessly concerned about it. Such asi) Safety risk for critical machine failures. ii) The manufacturing process and the different production schedules. iii) The breakdown costs at different stages of production. iv) Inspection regarding health and safety.


Knowing how equipment operates and how a malfunction is likely to affect the business the maintenance issues can beaddressed properly removing all sorts of operational vulnerabilities.

2) GATHER REAL-TIME IIOT DATA- The histories of machines can be competent and informative, but relying upon it all the times might not let us ahead. This is why it is suggested to connect high-priority assets to sensors on the IIOT(Industrial Internet of Things) and gather live data that enable us to know as of how the OEE is performing. Being a network of physical devices, vehicles and home appliances they are embedded with electronics software, sensors and connectivity that enables the fast flowing of data and connection. It results in efficiency improvements economic benefits and reduces human exertion. Thus, real-time machine condition-monitoring is the solution to improve OEE.


3) UNDERSTANDING THE COMPONENTS OF OEE- For improving OEE, it is suggested to dig into the values that make up the metric-machine availability, through performance, and output quality. They can take up different forms and are caused by numerous factors. The OEE is composed of 3 dimensions. Availability loss composes of those events that delayed the production process for an appreciable amount of time. Performance loss composes of any kind of activities or events that delayed the performance level not allowing it to perform at it’s maximum level. Quality loss accounts for thoseequipment that are not able to meet the quality standards. It is by the proper comprehension of the entire components that OEE can be improved.

4) OPTIMIZING THE OEE FORMULA- OEE should not necessarily mean the same thing for all production companies, or for all machines or production lines at work in their operations. Depending on how we create value for customers, quality may be the one essential metric that matters, whereas throughout performance is not critical at all. Or, throughout the performance is the top consideration, but quality isn’t a major concern because while mass-producing a commodity products the minor defects are nearly about negligible. The OEE score provides us a very valuable perception that is a more accurate picture of how effectively the manufacturing processes is at work. It enables us to provide improvements in the whole system, over time. A single number (OEE) is


telling us how well we are doing and three numbers (Availability, performance and quality loss) capture the fundamental nature of laws. The increase and decrease of several losses subsequently can provide us with a good OEE score.There can be further improvement in production with an OEE formula that rightfully fits the business, where the components of OEE are properly weighted according to their value in production. 5) PERFORM PREDICTIVE MAINTENANCE- Once real time machine conditioning-monitoring is in process and it yields meaningful data, we can further improve OEE by transforming maintenance management. The maintenance professionals don’t have to wait until performance, quality or downtime disruption of the production. Instead they receive a steady head-start as soon as the data evidence indicates a trend towards an unacceptable OEE value. The main aim of the predictive maintenance is the performing ofmaintenanceat a scheduled point of time when the maintenance activity is regarded to be most costeffective. The above process uses statistical principles in order to predict the future trend of the equipment’s condition and also it helps determine at what point in the future there will be the need for future maintenance. The predictive maintenance is thus an efficient measure and the OEE shall improve and it enables to generate better returns from the maintenance teams thus leading to further enhancement of the OEE value.

6) IMPROVING ASSET ENVIRONMENT- For most of the production machinery used by the companies in the production process the environmental conditions make a great


difference. Dust, fumes, temperatures, moisture, climate, building vibrations, airflows, light levels and other conditions may have an impact on the industrial assets or the materials and components that come to them in the production line. The real time conditioning monitoring can extend to track changes and trends in machine environments. Undoubtedly, the environment is a key factor and it can play a very profound role in influencing the OEE. Thus a production friendly environment may help in improving of the OEE score whereasan un-friendly one will not. 7) CONNECTING OEE AND MACHINE CONDITION MONITORING WITH BUSINESS SYSTEMSWhen the OEE and predictive maintenance are integrated with the other business systems and processes; they experience a great hike in value for the company. Eventually those integrations can help in the boosting of OEE and machinery performance. For instance, connecting OEE findings and machine condition monitoring analytics to the ERP system, production, procurement, and sales managers may find themselves in a much better position to plan resources, purchase materials and equipments and meet the customer commitment. More efficient planning, more reliable demand forecasting, and better quality materials can have a very positive impact on the OEE.

Thus, when companies adopt the lean manufacturing approach towards eliminating waste and focussing on producing value for customers, they face the challenge of verifying the effectiveness of their lean initiatives. Overall Equipment Effectiveness (OEE) is an important metric in accomplishing this. Lean manufacturing is all about customer value and they have been in the global scene for more than 50 years and counting. From its initial practice in manufacturing to its giant leap towards services, banking,


hospital management, air transport and other industries the journey has been quite phenomenal. Companies continue to embrace lean thinking and refine it with sophisticated analytics and modern technology. OEE thus continues to serve as an efficient diagnostic tool holding great future prospects and proving to be a great prized possession in the hands of the company officials.

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