OEE - An Introduction

7/27/2019 OEE - An Introduction

http://slidepdf.com/reader/full/oee-an-introduction 1/18

Parsec Automation Corp.3000 East Birch Street; #104

Brea, CA, 92821 USA

+1 714 996-5302

+1 714 996-1845www.parsec-corp.com

© Parsec Automation Corp 2010. All rights reserved. Parsec Automation Corp., Parsec logo,

and Parsec product names are trademarks of Parsec Automation Corp. References to other

companies and their products use trademarks owned by the respective companies and are for

reference purposes only.

An Introduction:

OVERALL EQUIPMENT

EFFECTIVENESS (OEE)

Driving Continuous Improvement and EnablingOperational Excellence



An Introduction to OEE Page i

All print and electronic rights are the property of Parsec Automation Corp. © 2010

TABLE OF CONTENTS

1. OVERVIEW .................................................................................................................................................... 1

2. DEFINITION OF OEE ...................................................................................................................................... 1

3. UNDERSTANDING OEE TERMINOLOGY ......................................................................................................... 2

3.1. OEE CATEGORIES ............................................................................................................................................ 2 3.2. DEFINING OEE EVENTS .................................................................................................................................... 4 3.3. WHAT IS CONSIDERED WORLD CLASS OEE? ......................................................................................................... 5

4. A REAL EXAMPLE .......................................................................................................................................... 6

5. CONCLUSION ................................................................................................................................................ 7

6. FREQUENTLY ASKED QUESTIONS ABOUT OEE ............................................................................................... 8

7. OEE GLOSSARY OF TERMS........................................................................................................................... 11

ABOUT PARSEC ........................................................................................................................................... 11

TERMS AND CONDITIONS OF USE ............................................................................................................... 11



An Introduction to OEE Page 1


AN INTRODUCTION TO OEE

1. OverviewIt has become increasingly clear that the financial markets put a premium on a company’s

ability to maximize productivity and utilization of CURRENT assets. This will result in a net

reduction in cost of operation, which directly and positively affects the bottom line. In order to

do this, you have to CONTINUALLY measure, analyze and adjust your output. This is a complex

process that affects labor, equipment, consumables, procedures, quality and capital

investment.

As part of the plan to maximize productivity, the following is a list of goals common to most

manufacturers:

Reduce operating costs

Increase true capacity / Decrease time to produce

Reduce fixed-asset base (increase return on assets)

Better manage, allocate and spend capital

Increase total shareholder returns

But how do you accomplish these. Overall Equipment Effectiveness (OEE) has emerged as a

powerful method of evaluating the productivity of production systems. This document will

provide a brief guide to the concept of OEE.

2. Definition of OEE

OEE is an effective methodology to help improve the efficiency of manufacturing processes.

Increasingly since the early 1990s, OEE has emerged as a leading approach for accurately

measuring the true plant productivity. Although, initially, OEE was regularly associated with

Total Productive Maintenance (TPM) programs, it is now being looked at as a powerful means

of evaluating the key productivity indicators.

By definition, OEE is the product of Availability, Performance and Quality category percentages:

OEE = Availability * Performance * Quality

Where:

Availability is a measure of Downtime Losses,

Performance is a measure of Speed Losses, and

Quality is measure of Defect Losses.





3. Understanding OEE TerminologyThe following Sections describe the various OEE terms used.

3.1. OEE Catego ries There are three Categories that make up OEE:

Availability

Performance

Quality

Each one of these categories represents losses that result in loss of productive Operating Time.

We begin with Total Available Time and subtract time lost to Availability (Downtime),

Performance (Speed) and Quality (Reject/Rework) issues. Very quickly, one can see the effects

of these losses on production time. Clearly, the Productive Time becomes a fraction of Total

Available Time. Obviously, by using OEE, the goal is to increase the Productive Time as much as

possible.

FIGURE 1, below, demonstrates the time losses due to various OEE Categories.

FIGURE 1 – Time Losses

Please note that the Planned Shutdown Time is not included in the OEE calculation.





Total Available Time – This is the time that the plant is open and could be used for production.

Planned Production Time – This is the Total Available Time minus the Planned Shutdown Time.

Planned Shutdown could include meal breaks, holiday shutdown and scheduled maintenance.

Operating Time – This is the difference between Planned Production Time and the time lost to

downtime. Downtime events include equipment breakdown, unscheduled maintenance, setup

time and changeover. This is included in the OEE calculations.

Net Operating Time – This is the difference between the Operating Time and time lost to Speed

reduction. Speed reduction events include operating equipment at below rated speed

(increased cycle time), frequent short-lived stoppages not requiring maintenance and certain

operator errors. This is included in the OEE calculations.

Productive Time – This is the difference between the Net Operating Time and the time lost toQuality issues. Quality losses include rejected and reworked products. This is included in the

OEE calculations. TABLE 1 describes how each OEE Category is calculated.

OEE Category How it is Calculated

Downtime

Losses

Availability is the ratio of Operating Time to Planned Production Time

(Operating Time is Planned Production Time less Downtime Loss).

Availability of 100% means the process has been running with no stops.

Availability = Operating Time / Planned Production Time

Speed Losses Performance is the ratio of Theoretical/Ideal Speed to Actual Speed.

Performance of 100%means the process has been consistently running at

its theoretical maximum speed.

Performance = Parts Produced / (Ideal Speed * Operating Time)

Quality Losses

Quality is the ratio of Good Parts to Total Parts. Quality of 100% means

there have been no reject or rework parts.

Quality = Good Parts / Parts Produced

TABLE 1 – OEE Calculations





3.2. Defining OEE Events

Within each OEE Category, there are several events that must be identified, and correctly

measured and analyzed. There are situations (or events) that may require further thought to

decide which category they belong to. For example, Short-lived stops and operator errors could

be recorded as either Availability (Downtime) or Performance (Speed) losses. The correct

categorization will be made based on the specific manufacturing process and plant. It is

important to be consistent and uniform in categorizing events in order to get reliable results.

As stated above, there are many events that affect OEE. However, there are those which are

considered the most common causes for efficiency loss in the manufacturing environment.

Naturally, by implementing an OEE practice, you must aim to reduce these commonly occurring

loss events to increase the overall plant/manufacturing productivity. TABLE 2 provides a list of

the Common Loss Events, and the categories to which they are attributed.

Common Events OEE Category Comment

Equipment

Breakdowns

Availability Loss Depending on the specifics of the production

environment, certain variety of breakdowns not

requiring maintenance could be categorized as

Performance/Speed Losses.

Process Setup and

Adjustments

Availability Loss Includes certain operator errors and product

changeovers.

Short Stops and

Idling

Performance

Loss

Short stops are typically those which do not require

maintenance. Generally, problems with consumables

could be categorized as Performance/Speed Losses.

Reduced Speed Performance

Loss

Factors such as equipment age or production anomalies

that keep the operation from running at the maximum

theoretical speed would be included in this category.

Startup Rejects Quality Loss Products lost (Rejected) during initial stages (transition)

of startup prior to reaching steady state (regularly

producing good products).

Production

Rejects

Quality Loss Products lost (Rejected due to defect) during the normal

production stages.

TABLE 2 – Common Loss Events





3.3. What is Cons idered World Class OEE?

The purpose of implementing an OEE program is to improve productivity. As we have already

described, OEE his three main components (categories). It is important to know what you are

aiming at achieving. What is considered to be World Class OEE? Are the components of OEE

important by themselves? These are very significant questions.

By general consensus, World Class OEE is 85% or higher. By contrast, most manufacturing

plants have an OEE in the range of 30% to 60%. Additionally, it is not unusual for these plants to

experience daily fluctuations of about 10%. Obviously, there is a lot of room for improvement.

The components of a world class OEE are as shown in TABLE 3:

OEE & its Components World Class

Overall OEE 85.0%

Availability 90.0%

Performance 95.0%

Quality 99.9%

TABLE 3 – World Class OEE Components

Achieving world class OEE is quite challenging and requires a rather rigorous program that is

consistently and religiously followed. This means regular measurements, analysis and takingaction based on the findings.

An important point to keep in mind is that you must look at all four numbers (OEE, Availability,

Performance and Quality) together and individually. It is possible to have a reasonable OEE

without having an acceptable productivity score. For example, if achieving higher OEE has been

at the expense of lower quality (more reject/rework), in most cases the outcome is

unacceptable.

The OEE percentage by itself may not provide the right answer. You must

scrutinize its components.





4. A Real ExampleIt is good to know what OEE and its components are. However, in order to have a good

understanding of the concept, it is very helpful to look at a real example. Consider a beverage

plant with the following production schedule for the Bottling Area:

Item Data

Days of Operation Planned 5

Number of Shifts 15 (3 per day, 8 Hrs, each)

Total Planned Shutdown 2400 minutes (160 minutes/shift)

Downtime 1250 minutes (for all shifts)

Theoretical (Ideal) Rate 600 bpm (bottles per minute)

Total Bottles Produced 1,656,502Rejected Bottles 1,207

TABLE 4 – Production Data for Calculation of OEE and its Components

Planned Production Time = Total Available Time – Total Planned Shutdown

= 7,200 – 2,400

= 4,800 minutes

Operating Time = Planned Production Time – Downtime

= 4,800–

1,250= 3,550 minutes

Good Bottles = Total Bottles Produced – Rejected Bottles

= 1,656,502 – 1,207

= 1,655,295 Bottles

Availability = Operating Time / Planned Production Time

= 3,550 minutes / 4,800 minutes

= 0.7396 (or 73.96 %)

Performance = Bottles Produced / (Ideal Rate * Operating Time)

= 1,656,502 / (600 bpm * 3,550 minutes)

= 0.7777 (or 77.77%)

Quality = Good Bottles / Total Bottles Produced

= 1,655,295 Bottles / 1,656,502

= 0.9993 (or 99.93%)





OEE = Availability * Performance * Quality

= 0.7396 * 0.7777 * 0.9993

= 0.5748 (or 57.48%)

Considering that OEE can also be defined as:

OEE = Productive Time / Planned Production Time

Then:

Productive Time = OEE * Planned Production Time

= 0.5748 * 4,800 minutes

= 2,759.04 minutes

Also, consider if downtimes and short-lived stoppages were reduced by 10% or 125 minutes,then the same factory would be able to produce 58,327 more bottle during the same 5-day

period (assuming the same effective performance). With the wholesale price of each bottle at

$0.85, during each 5-day period, the Bottling Area can produce $49,578 more sellable product.

If the Bottling Area is operated 350 days during the year, the extra production will be worth

$3,470,486.

5. ConclusionToday’s economy favors companies that boost revenue without sacrificing profitability and

remain strong even when the financial markets decline. Increasingly, the financial analystsfactor in a long-term debt-to-capital ratio to acknowledge those companies that achieve growth

without accruing heavy debt. It is interesting to note that these companies manage to have

higher revenues even when sales are lower. This feat, among others, is accomplished by a

rigorous practice of productivity gains cost-cutting through increased efficiencies and

maximizing returns on fixed assets. OEE can play a critical and increasingly valuable role in

driving this bottom-line driven practice.





6. Frequently Asked Questions about OEE1) Do you define everything in numbers of parts, or units of time?

The answer depends on what's most intuitive for you and your operators. You can

actually mix and match. Availability is usually described in terms of hours or minutes.

Performance is usually described in terms of parts per minute or hour. Other quantity-

related measurements like pounds, kilos or meters per unit of time may also be used.

Most people talk about Quality as a ratio of good product to total production. But all of

these are converted to a % that shows actual vs. potential. These numbers are naturally

very revealing.

2) Is the final OEE composite number a "magic formula"?

No - you definitely should not think of it that way! Let's say you have a process that

gives you 89% availability, 86% performance and 98% quality, for a 75% total. Is that

good or bad? Only you can decide. Now let's say that you played musical chairs with thenumbers - 98% availability, 89% performance and 86% quality. Is a quality drop from

98% to 86% worth the dramatic improvement in availability? Most manufacturers would

consider this tradeoff to be totally unacceptable.

The beauty of OEE is not that it gives you one magic number; it's that it gives you three

numbers, which are all useful individually as your situation changes from day to day.

And it helps you visualize the total resources of your manufacturing in relation to what it

actually produces - a very practical simplification.

3) Is OEE data subject to misinterpretation?

Yes, without a doubt. The answer to the previous question is a great example of that.OEE tells you nothing about how much your resources actually cost in dollars, what the

easiest improvement actually is, or how much it will cost you to make that

improvement. What you should look for in OEE is losses and bottlenecks that can be

eliminated for minimal cost. In most cases that is possible. OEE data is only meaningful

in the context of your situation and your efforts to improve it.

4) How do you determine the "Theoretical Capacity" of a machine?

The simple answer is the "name plate capacity" - the stated capacity given by the

manufacturer of the machine. But like the speedometer in your car, this number may

only be an approximation and may vary considerably with machine age and other

circumstances. Ideally you should experiment, take measurements and come up withyour own number.

5) For the purpose of measuring productivity, how do you define whether a machine is

"producing" or not?

If the machine is producing anything at all, then the production clock is running.





6) How do you minimize number crunching, spreadsheets and reports and make OEE

truly simple?

Data isn't very useful if you don't get to see it until tomorrow. The printout in the

engineering office isn't nearly as helpful as a display you can see from fifty feet away,right on the shop floor. We recommend use of OEE oriented visual displays, which can

be plugged into a parts counting sensor and quickly configured to show relevant, real-

time OEE data, already digested into a form that is useful to you and your operators.

7) What period of time do you use for an OEE test?

You can choose any period you want. Most commonly it's based on the working cycle of

the factory, i.e. one shift (8 hours or 480 minutes).

8) Is it possible to have processes that exceed 100%?

No. If you obtain readings greater than 100%, then at some point you are not definingsomething correctly. It means that you were underestimating the capacity of a process

when you input your parameters.

9) If you have a series of machines or stages in a cell with different capacities, which

stage do you base your Theoretical Capacity on?

The fastest stage (not the slowest). This forces you to recognize all other bottlenecks

and strive to improve them - to do Kaizen, the Japanese philosophy of continuous

improvement.

10) Do OEE benchmarks, i.e. Theoretical Capacity, ever change?

Yes, but only if the fastest process or machine is improved.

11) Can OEE become a political football?

Yes, to the extent that it is misinterpreted interpretation and to the extent that it is used

for political purposes rather than genuine Kaizen. Of course that's true of all numbers

and measurements. The important thing is to keep the core objective in mind: To

produce more quality product with less waste and fewer headaches. Therefore you

should be very clear about exactly what you want and make sure you are measuring it.

Then you can create incentives for operators to deliver that result.

12) If there are several interpretations for the cause of a problem, where do you start? Always look for the simplest and most direct explanation. Obviously there are

exceptions, but here's what's important: Rather than ponder and discuss 50 different

causes, start with the most straightforward hypothesis and test it. Use a process of

elimination until you are certain.





13) Should preventative maintenance downtime be allowed to penalize an OEE

performance calculation?

If the preventative maintenance happens during production (rather than during

scheduled downtime) then it is interfering with production and should be counted. This

does not mean that you should not do preventative maintenance at that time; it onlymeans that over a period of time, OEE will tell you whether this maintenance results in

less overall downtime, because of fewer "surprises," or more downtime, because of the

lost productivity while maintenance is done. In this way, OEE gives you solid answers to

complex questions by attaching them to simple measurements.

14) Should re-worked parts be counted as good or bad in the OEE calculation?

In OEE, any part that doesn't come out right the first time is a bad part. It's an

equipment issue. Your strategy for improving original part quality vs. reworking old

parts is a separate management and financial issue.

15) If a process can run during scheduled breaks, then is that break time factored into

equipment availability?

A personnel break is not necessarily the same as a machine break. If the machine is

running (i.e. producing anything at all) then regardless of whoever is or isn't eating

lunch, OEE considers the machine to be on - the clock is running.

16) How does OEE relate to the management function of helping machine operators?

The true value of OEE is in helping you and your operators make systematic

improvements. Therefore everything you do with OEE, including the visual display of

OEE data, should be designed with operators in mind and stated in whatever terms they

most easily understand.





7. OEE Glossary of Terms

Term Definition Implication

Adjustment Time Productive time lost while tweaking

equipment

Can be a significant loss factor

Availability Possible production time after all

shut downs, planned and

unplanned, are subtracted. The

ratio of Operating Time to Planned

Production Time

Theoretical maximum benchmark

that OEE is measured against

Best Practice Methods that are considered “stateof the art” by the most respected in

an industry

Successful companies usedifferent methods than

unsuccessful companies

Breakdowns Lost time due to equipment failure,

a Downtime Loss

Cost of maintenance must be

weighted against production

losses & optimized

Changeover Time Lost time due to swapping of

equipment, connections or

materials

A prime candidate for

improvement for most people

Downtime Loss Production time lost to unplanned

shutdowns

Major focus area for

improvement

Event In OEE, a production loss which

must be categorized

OEE’s purpose is to clarify the

nature and effect of Events

Fully Productive Time Actual productive time after ALL

losses are subtracted

The true bottom line of your

facility's use of time

Ideal Cycle Time Theoretical minimum time betweenparts

A crucial calculation for settingOEE values

Ideal Run Rate Theoretical maximum production

rate

The inverse of Ideal Cycle Time






Kaizen Continuous improvement Japanese concept so important,

it's now part of the Englishlanguage

Lean Manufacturing Quality philosophy that minimizes

consumption of resources that add

no value to the finished product

Focus is eliminating waste:

unnecessary motion,

overproduction and Work In

Progress

Minimum Cycle Time The rate at which the fastest stage

in production can produce products

OEE measures against the fastest

stage. What is measured varies

with product/process

Net Operating Time True productive time before product

quality losses are subtracted,Operating time minus Speed Loss

Equipment time losses normally

are much larger than defectlosses

OEE (Overall

Equipment

Effectiveness)

Framework for measuring the Six Big

Losses for continuous equipment

improvement

OEE helps you see and measure a

problem so you can fix it

Operating time Productive time available after

unplanned shutdowns are

subtracted

Does not include Downtime Loss,

does include Speed Loss

Performance The rate at which equipmentconverts available time into product

Calculation excludes availabilityand quality losses

Planned Production

Time

Total time that equipment is

expected to produce

Only excludes planned

downtime, i.e. lunches & breaks

Planned Shut Down Deliberate unproductive time Excluded from all OEE

calculations

Plant Operating Time The time the factory is open and

capable of equipment operation

Theoretical maximum benchmark

that OEE is measured against

Production Rejects Parts which do not meet quality

standards

OEE views defects in terms of lost

time

Reduced Speed See Speed Loss






Quality % of parts which meet spec OEE recognizes quality as only

one aspect of equipmentutilization

Quality Loss % of parts which do not meet spec OEE views defects in terms of lost

time

Setup/Adjustments Time lost configuring equipment Typically a major target for

improvement

Major Losses The major categories of equipment

production loss: Breakdowns,

Setup/Adjustments, Small

Stops/Idling, Speed Loss, Startup

Rejects, Production Rejects

One of the reasons OEE is so

practical is that it clearly isolates

these six different issues so they

can be addressed individually

Six Sigma Systematic quality program that

strives for 6 standard deviations

between the mean and the nearest

specification limit

In extremely high quality

processes, rejects will be the

smallest of the Six Big Losses

Small Stops/Idling Brief pauses not normally thought of

as downtime, a Speed Loss

Idling is an "insidious" as

opposed to "obvious" loss of

time, but still costs you money

Speed Loss Lost productivity due to equipment

running below maximum speed

see "minimum cycle time"

Standby Time spent during setup,

adjustment & breakdowns

Not to be confused with "idle

time"

Startup Rejects Rejects produced while equipment

is adjusted for production, a Quality

Loss

OEE views this as a major loss to

be reduced

Theoretical Cycle

Time

See "Minimum Cycle Time"






Total Productive

Maintenance (TPM)

Maintenance system covering life of

all equipment: planning,manufacturing, and maintenance

and improving performance via

elimination of the six major types of

waste

OEE is the formula for defining

equipment effectiveness in aTPM program

World Class OEE 95% Availability, 95% performance

& 99.9% quality, with total of 85%

effectiveness

A composite OEE number means

very little without the total

context

TABLE 5 –

OEE-Related Terms





ABOUT PARSEC

Parsec Automation Corp. (Parsec) is the developer of TrakSYS™, the leading real-time operations &

performance management software. Manufacturing companies worldwide rely on Parsec for flexible

and configurable tools to quickly track, record, analyze, and report the events critical to productivityenhancement. Without production disruption TrakSYS™ helps manufacturers to significantly improve

asset utilization and efficiency, increase capacity with no new capital equipment, reduce production

costs, and improve profitability. With measureable ROI TrakSYS™ fuels Lean, Six Sigma, TPM, and

Operational Excellence efforts. For more information about Parsec please visit the corporate web site at

www.parsec-corp.com.

© 2010 Parsec Automation Corp. All rights reserved. TrakSYS™, LOGICTrak™, MODELTrak™, INTELLITrak™,

GLOBALTrak™, EVENTTrak™, ALERTTrak™, SENSORTrak™, LEANTrak™, PRODUCTTrak™, WEBTrak™, HISTORITrak™,

AUDITTrak™, IMPROVETrak™, SPCTrak™, BATCHTrak™, and any other Parsec products and services mentioned

herein as well as their respective logos are trademarks or registered trademarks of Parsec Automation Corp. All

other products and service names mentioned are the trademarks of their respective companies. Data contained in

this document serve informational purposes only.

http://www.parsec-corp.com/






TERMS AND CONDITIONS OF USE

Upon receipt of this electronic publication, it is understood that the user will and must fully comply with

the terms and conditions of use as stipulated herein.

This publication is protected by United States copyright laws and international treaties. Unless

otherwise noted, the entire contents of this publication are copyrighted by Parsec Automation Corp.,

and may not be reproduced, stored in another retrieval system, posted on any Website, or transmitted

in any form or by any means without prior written consent of Parsec Automation Corp. Unauthorized

reproduction or distribution of this publication, or any portion of it, may result in severe civil and

criminal penalties, and will be prosecuted to the maximum extent necessary to protect the rights of

Parsec Automation Corp.

The trademarks and registered trademarks of the corporations mentioned in this publication are the

property of their respective holders. All information contained in this report is current as of publication

date. Information contained in this publication has been obtained from sources Parsec AutomationCorp. believes to be reliable, but is not warranted by the publisher. Opinions in this publication reflect

judgment at the time of publication and are subject to change without notice.

THIS DOCUMENT IS FOR ELECTRONIC DELIVERY ONLY

The following are prohibited:

Transmittal via the Internet

Reproduction for Sale

Posting on any Website

Documents

OEE - An Introduction