Equipment Productivity Equipment Productivity

By T.A. KhanBy T.A. Khan

January 2008January 2008

Overall Equipment EffectivenessOverall Equipment Effectiveness

In an ideal factory, equipment would operate 100 percent of the time at 100 percent capacity, with an output of 100 percent good quality.

In real life, however, this situation is rare.

The difference between the ideal and the actual situation is due to losses. Calculating the overall equipment effectiveness (OEE) rate is a crucial element of any serious commitment to reduce equipment- and process-related wastes through total productive maintenance (TPM) and other lean manufacturing methods like Operational Excellence, Six Sigma or World Class Manufacturing.

OEE OEE (The six big losses)(The six big losses)

*No scheduled

production

* Failures

* Setup

C Target Output

EActual Output

Total Operating time

Availability

Perf

orm

ance

Lost effectiveness

* Minor Stoppages

* Reduced Stoppages

Actual Output

Running time

D

B

Quality

OEE = B/A X D/C X F/E Availability rate Performance rate Quality rate

A

* Scrap/

rework

* Startup losses

Good Output

F

Net Operatingtime

Schedule LossesSchedule Losses

Losses Due to PlanningLosses Due to Planning ForecastingForecasting Initial Capacity PlanningInitial Capacity Planning Production PlanningProduction Planning

ExecutionExecution SkillsSkills Machine ConditionMachine Condition Material Quality Material Quality

ForecastingForecasting

Principles of ForecastingPrinciples of Forecasting

Forecasts are rarely perfect

Forecast accuracy is:

higher for shorter

time horizons

Grouped forecasts are more accurate than individual items

1. Decide what to forecast:Level of detail, units of analysis & time horizon required

2. Evaluate & analyze appropriate data

Identify needed data & whether it’s available

3. Select & test the forecasting modelCost, ease of use & accuracy

Step-by-Step

4. Generate the forecast5. Monitor forecast accuracy over time

Types of Forecasting MethodsTypes of Forecasting Methods

Qualitative methods:Forecasts generated subjectively by the forecaster

Quantitative methods:Forecasts generated through mathematical modeling

Qualitative MethodsQualitative Methods

•Weaknesses:–Forecaster bias can reduce the accuracy of the forecast

PastFuture

•Strengths:–Incorporates inside information–Particularly useful when the future is expected to be very different than the past

Types of Qualitative ModelsTypes of Qualitative Models

Type Characteristics Strengths WeaknessesExecutive opinion

A group of managers meet & come up with a forecast

Good for strategic or new-product forecasting

One person's opinion can dominate the forecast

Market research

Uses surveys & interviews to identify customer preferences

Good determinant of customer preferences

It can be difficult to develop a good questionnaire

Delphi method

Seeks to develop a consensus among a group of experts

Excellent for forecasting long-term product demand, technological changes, and

Time consuming to develop

Quantitative MethodsQuantitative Methods

•Strengths:•Consistent and objective•Can consider a lot of data at once

• Weaknesses:•Necessary data isn’t always available•Forecast quality is dependent upon data quality

Types of Quantitative MethodsTypes of Quantitative Methods

Time Series Models:Time Series Models: Assumes the future will follow same patterns as Assumes the future will follow same patterns as

the pastthe past Causal Models:Causal Models:

Explores cause-and-effect relationshipsExplores cause-and-effect relationships Uses leading indicators to predict the futureUses leading indicators to predict the future

Capacity PlanningCapacity Planning

Initial Capacity PlanningInitial Capacity Planning How Much Do we need? (Volume)How Much Do we need? (Volume) When do we need? (Time horizon)When do we need? (Time horizon) Where to make? (Location)Where to make? (Location)

Capacity ExpansionCapacity Expansion Lead StrategyLead Strategy Lag StrategyLag Strategy AverageAverage

Initial Capacity PlanningInitial Capacity Planning

Capacity decisions are important because: 1. They have an impact on the ability of an

organisation to meet future demands. 2. There is a definite relation between capacity &

operating costs. 3. Initial investments depends upon capacity

decisions. 4. It involves long term commitment of resources.

Three BasicQuestion

What kind of capacity is needed?(Intended product or services)

How Much is needed? (The agony of too much & too little CAPACITY.)

When it is needed? (Opportunity missed is opportunity lost)

Capacity PlanningCapacity Planning

How much?How much?

Cost-Volume Analysis

0

100

200

300

400

500

600

700

800

900

1000

0 2 4 6 8 10 12 14 16 18 20

Output in 1000 units

Tota

l Annual

cost

($0

00)

A

B

C

D

Capacity ExpansionCapacity Expansion

Volume & certainty of anticipated demandVolume & certainty of anticipated demand Strategic objectives for growthStrategic objectives for growth Costs of expansion & operationCosts of expansion & operation Incremental or one-step expansionIncremental or one-step expansion

Capacity Expansion StrategiesCapacity Expansion Strategies

UnitsCapacity

Time

Demand

Capacity lead strategyUnits

Capacity

Time

Demand

Capacity lag strategy

Units

Capacity

Time

Demand

Average capacity strategy Incremental vs. one-step expansionUnits

Incrementalexpansion

Time

Demand

One-step expansion

Strategies for Meeting Strategies for Meeting Non-Uniform DemandNon-Uniform Demand

Build up inventoryBuild up inventory Back-orderingBack-ordering Smooth demand through marketingSmooth demand through marketing

increase price to reduce demandincrease price to reduce demand decrease price to increase demanddecrease price to increase demand

Strategies for Meeting Strategies for Meeting Non-Uniform DemandNon-Uniform Demand

Vary capacity Vary capacity overtimeovertime extra shiftsextra shifts subcontractingsubcontracting hiring and layoffshiring and layoffs

Loss Loss CategoriesCategories

The Six Big LossesThe Six Big Losses

Downtime (lost Downtime (lost availability) availability)

Equipment failures. Setup and adjustments Equipment failures. Setup and adjustments

Speed losses (lost Speed losses (lost performance) performance)

Idling and minor stoppages. Reduced speed operation Idling and minor stoppages. Reduced speed operation

Defect losses (lost Defect losses (lost quality)  quality) 

Scrap and rework Start-up losses Scrap and rework Start-up losses

Operational LossesOperational Losses

Implementing TPM means striving toward a vision of the ideal manufacturing situation, a vision that encompasses 

zero breakdowns zero abnormalities zero defects zero accidents

The path to this ideal situation is a process of continuous improvement that requires the total commitment of everyone in the company, from operators to top management.

OEE OEE (TPM)(TPM)

OEE OEE (TPM)(TPM)

Total productive maintenance (TPM) was first defined in 1971 by the Japan Institute of Plant Maintenance (JIPM). TPM is a company wide strategy to increase the effectiveness of production environments

The difference between the ideal and the actual situation, in factory operations, is due to losses. Equipment operators face the results of these losses on a daily basis. TPM gives them the tools to identify the losses and make improvements.

A key strategy in TPM is identifying and reducing what we call the six big losses.

Maintenance ManagementMaintenance Management

The organisation of maintenance activities within an agreed policy

Business Objectives & Strategy

Production Objectives & Strategy

Maintenance Objectives Maintenance Policy

Plant & Equipment•Asset register•Classification•Criticality•Operating Regimes

Maintenance Strategy•Preventive•Corrective

Information•Management•Technical•Manuals•Drawings•Analysis

Resources•Parts/ Tools•Services•Facilities•Equipment•Diagnostics

Procedures•Planning•Scheduling•Technical

Organisation•Accountability•Communication•Structure•Support•Partners

Control system•Measurement•Reports•Tracking•Action

People

Trade skills, Engineering Skills, Management Skills, Safety, Training & development, Leadership

People

Values, Rewards, Recognition, Sanctions

A formalised Framework, accepted by senior mngt.,, within which decisions on maintenance are taken.

The availability rate is the time the equipment is really running, versus the time it could have been running.

A low availability rate reflects downtime losses:

• Equipment failures

• Setup and adjustments

The performance rate is the quantity produced during the running time, versus the potential quantity, given the designed speed of the equipment.

A low performance rate reflects speed losses:

• Idling and minor stoppages

• Reduced speed operation

The quality rate is the amount of good products versus the total amount of products produced.

A low quality rate reflects defect losses:

• Scrap and rework

• Startup losses

THE ELEMENTS OF OVERALL THE ELEMENTS OF OVERALL EQUIPMENT EFFECTIVENESSEQUIPMENT EFFECTIVENESS

Overall Equipment EffectivenessOverall Equipment Effectiveness

(OEE)(OEE)

Overall Equipment Effectiveness

Availability losses

Performance losses

Quality losses

Set-up

Breakdown

Minor Stoppages

Speed losses

Start-up losses

In process losses

Inconsistent Times, Insufficient skills. Poor Planning & scheduling, Different methods, Poor tooling, Poor start up controlsMissing parts, Insufficient support, Excess start-up adjustment

Lack of maintenance, Low operator interest, not knowing of problems, Poor Training, Design Problems, Inferior Material

Material not available, Change over at start/end Jams/misfeeds/ overloads, operator error, operator absence

Unclear design specs., poor maintenance history, incorrect settings, Poor Training, Speed deliberately reduced, inconsistent Material

Poor machine changeover, Inconsistent materials, No start-up check lists, Waiting for temp. - pressures, Minor adjustments

Temperature & pressure changes, inconsistent materials, Process not followed, poor calibration, Gauges not calibrated properly.

We recommend that the operator collect the daily data about the equipment for use in the OEE calculation. Collecting this data will 

•teach the operator about the equipment •focus the operator’s attention on the losses •grow a feeling of ownership of the equipment

The shift leader or line manager is often the one who will receive the daily operating data from the operator and process it to develop information about the OEE. Working hands on with the data will; 

•give the leader/manager basic facts and figures on the equipment  •help the leader/manager give appropriate feedback to the operators and others involved in equipment improvement  •allow the leader to keep management informed about equipment status and improvement results