Overall Equipment Effectiveness(OEE)

Precise Tools for finding the losses of resources

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency. — — — Bill Gates

Very often we come across the discussion in a manufacturing organization as a question within the team about what is productivity, but hardly we hear or come across the word “OEE”. For all purposes, the OEE is the only applicable word to identify or evaluate the performance of any equipment in the manufacturing operation.

In manufacturing operations, Overall Equipment Effectiveness, or OEE in short, is the gold standard for measuring productivity.

For measuring OEE, equipment should be involved in the process.

OEE was first described by Seiichi Nakajima in 1970 during the beginning era of Industry 3.0, as a part of his TPM (Total Productive Maintenance) methodology. OEE identifies the percentage of manufacturing time that is productive while considering three different elements: Availability, Performance, and Quality.

Overall Equipment Effectiveness is a simple but powerful metric that has been used for more than five decades now, although it gained mainstream popularity in the last decade or so. Since then, OEE has helped many teams and organizations visualize, monitor, and reduce inefficient usage of equipment and waste.

What is OEE?

OEE, which stands for Overall Equipment Effectiveness, is a metric used to measure how effective a manufacturing process is compared to its full strength during its Planned Production Time.

OEE is a precise tool to identify the effectiveness of any production line, and wastage of resources and provide an opportunity to improve the quality of the product and Process capability of production Equipment.

OEE is a standardized methodology to measure a piece of equipment’s effectiveness during the defined operative mode or period in which all activities are related to production.

Overall, OEE is a powerful metric for the operational management of manufacturing companies, OEE applies to all manufacturing units, which are produced with the help of equipment, regardless of individual equipment like Tablet compression M/C and Packing M/c ( Pharmaceutical Operation).

OEE is the performance indicator to generate transparency about the specific equipment. It is a lean manufacturing tool.

An OEE score of 100% means the manufacturing process runs without interruption throughout the whole Planned Production Time (100% availability), constantly at its theoretical maximum speed (100% performance), and only produces good, non-defective products/parts (100% quality.)

Let us begin this guide with the basics: what is Overall Equipment Effectiveness?

Efficiency vs. Effectiveness

However, there are lot of confusion about the concept of OEE and the terms “efficiency” and “effectiveness”.

To understand OEE, we have to make sure we understand the definition of “effectiveness” as opposed to “efficiency.”

• Efficiency: the ability of something to achieve the desired optimum results with the least amount of wasted time, money, resources, and effort.
• Effectiveness: the degree to which something is successful in producing the desired result.

“Efficiency is doing things right;

Effectiveness is doing the right things”

To bring more clarity on this Effectiveness and efficiency let us go for example, let us assume a Tablet compression machine can technically produce 100,000 Tablets an hour but somehow only produces 80,000 Tablets an hour of the right quality. In this case, the equipment is 80% efficient.

On the other hand, out of these 80,000 Tablets in an hour 4000 are produced as defective. Then, in this case, the process is considered only 76% effective.

When calculating OEE, it’s crucial to understand that we are discussing effectiveness instead of efficiency. For OEE the effectiveness is applicable instead of efficiency.

Measuring OEE essentially enables the organization and/or management to understand three things:

1. How often is the piece of equipment available to run? (Availability)
2. How fast does it produce the desired number of products when it’s running? (Performance)
3. How many products are considered acceptable? (Quality)

So, Overall Equipment Effectiveness= Availability(A) x Performance(P) x Quality(Q)

Importance of OEE Calculation-

OEE is the primary indicator of a machine’s performance. So for most manufacturing companies, knowing the OEE score of each piece of equipment or unit operation is very beneficial for three main reasons:

1. Knowing the production baseline

Knowing the actual OEE and the ideal OEE score to pursue, determines the ideal performance of the equipment to ensure the business stays profitable.

1. Knowing when to perform maintenance

When the equipment’s OEE score suddenly goes below its usual level and stays there, it’s a sign that the machine needs maintenance and (probably) repairs.

A Low OEE score can help us to understand the machine needs maintenance identify potential issues and figure out what needs to be done to bring back the equipment to its optimal performance.

1. Knowing which machine is underperforming

If the manufacturing company has multiple machines, then calculating OEE can help to identify which machine is currently underperforming so that the issue can be fixed and improve productivity.

Definition of Three Core Elements in OEE Calculation: Availability(A), Performance(P) and Quality(Q)-

1. Availability (A)

Availability refers to how long (in a unit of time) a piece of equipment is available to operate, divided by the operative mode time (i.e. the total possible available time).

Availability takes breakdowns/unplanned downtime and planned downtime into account, including meetings, lunch and tea breaks, and other regularly scheduled breaks.

Availability= B/A, in which:

A=Total operative mode time

B=Run time actual

A-B=downtime

1. Performance (P)

Performance refers to how fast the equipment runs while it is running within the operative mode time.

A 100% performance score means the process is running as fast as the machine is theoretically capable of running during the total available time.

The performance takes calculated speed loss into account, including human error, material mistakes, stuck material, etc.

Performance=D/C, in which:

C=Optimal operational speed (Actual run time x Theoretical speed)

D=Actual speed (Actual Run time x Actual Speed)

C-D=speed loss

1. Quality (Q)

Quality refers to the number of products that are within specification or requirement compared to the total number of products produced.

A 100% score in quality means there are 0 defects.

Quality=F/E, in which

E=Total products produced

F=Accepted products

E-F=Rejection/product waste/out of specification

Considering all these elements, we can use the following formula:

OEE = B/A x D/C x F/E

Let’s assume we have a compression machine that operates with the following details:

• The total operative mode time is 8 hours
• The machine only operates for roughly 7 hours during a working day
• The machine can theoretically produce 81,000 Tablets per hour (so 648,000 Tablets in a working day of 8 hrs.) However, in practice, it can only produce 567,000 Tablets per day in 7 hrs.
• Due to speed and minor stops, it only produced 472,500 Tablets
• Out of the 472,500 Tablets produced in a day, only 467,000 Tablets as final yield, meet the desired specification.

Based on this data, we can calculate:

A=Availability score = Run time/total operative mode time

= 7/8

=87.50%

P=Performance score = Actual speed/Optimal operational speed

=472,500/567,000

=83.24%

Q=Quality score = Accepted products/total products produced

=467,000/472,000

=98.94%

Last but not least, we can finally calculate the OEE score of the machine:

OEE= Availability score x Performance score x Quality score

= A x P x Q

= 87.50 % X 83.24 %X 98.94 %

= 72.06 %

The usefulness of OEE:

• OEE is useful in establishing a baseline in Total Productive Maintenance (TPM) for accurately tracking progress over time in improving effectiveness and eliminating waste.
• OEE is also useful as a benchmark to compare the performance of any piece of equipment to another piece, to industry standards, or results for different shifts of the same equipment.

OEE can be improved in many different ways-

Identifying and eliminating bottlenecks or wastage

Improving maintenance schedules

Developing better workflows, and so on.

However, the actual answer would depend on the state of each piece of equipment and the specific effectiveness issues it is currently facing.

Below, are a few actionable strategies that can be implemented to improve OEE:

1. Prioritize the most important pieces of equipment in the line of manufacturing

In practice, improving OEE on all assets can be time-consuming and not cost-effective, so need to prioritize the most important equipment to consider for OEE.

It’s best to focus the resources and time on improving assets and equipment that are most mission-critical and, ideally, those that can help to improve other assets up and down the value chain with the only effort directed on this single piece of equipment.

2. Automate data collection

Another important strategy to improve OEE is to automate production data collection and reporting by implementing OEE data collection software.

The faster the data is accessed always helpful to address the bottlenecks and issues, and the faster to troubleshoot the issues. Not only that, but manual data collection is both time-consuming and error-prone, which may contribute to the wrong OEE score.

3. Use Root Cause Analysis (RCA) to grasp the OEE’s origination points

The OEE score of each machine might seem simple, but in reality can be quite complex.

For example, the low OEE of a machine may happen due to an issue that happens much earlier in the production process caused by another machine(for example in the packing line the primary blistering machine is online connected secondary area cartonator, the low performance of the one machine will impact another machine also.

With that being said, it’s recommended to use Root Cause Analysis (RCA) to understand the core cause of a problem and, in this case, the root cause of the OEE score.

Root Cause Analysis (RCA) consists of six key steps:

A. Define the event

1. Identify the potential causes
2. Determine the root cause
3. Find potential solutions
4. Take action
5. Evaluate and verify solution effectiveness

Knowing and addressing the root cause of the OEE is the only viable and permanent solution instead of only treating symptoms. RCA can help to prevent the OEE losses from recurring in the future.

4. All production stops are addressed, need to assure

Another key strategy to improve the OEE of the machines is to make sure all production stops are properly addressed to create visibility of the production’s downtime.

The basic approach is to simply ask the supervisors to comment on each stop and check them at the end of each shift. The supervisors must aim to understand why each stop (especially unplanned ones) happens and add a comment on their report.

Ultimately, the goal is to develop a more thorough understanding of the production’s downtime and how to prevent it from happening or recurring in the future.

5. Focus and attention to improving the working environment

Various negative conditions in the working environment if we take care of improvement in OEE is 100% possible. For example, excess flying and settled dust inside the machine can significantly affect equipment OEE. Poor lighting conditions may also affect factory workers in operating the machines, lowering OEE. So focus and the right attention is very much required in the right place to identify potential issues in the working environment surrounding the machine that may affect OEE and fix the issues accordingly.

What is a Good OEE Score?

1. A 100% OEE score is theoretically perfect production. The equipment is capable of producing only good products as fast as possible without any stop time.
2. 85% OEE score is considered word class. For most companies and discrete manufacturers, this is a sustainable long-term goal to pursue.
3. A 60% OEE score is considered typical for most manufacturers, but there’s room for improvement.
4. A 40% OEE score is considered low, but it is not uncommon for many manufacturing companies. Typically, this low score can be easily improved by fixing obvious issues and implementing fairly simple improvements.

The average score for most manufacturing units all around the world — including some really good ones — is ‘only’ between 60% and 70%.

Instead, when deciding on a target for the OEE score, it’s best not to focus on an arbitrary number but rather on consistently improving.

Monitor the current OEE score, and try to incrementally but steadily improve from this score. Set targets that are realistic and meaningful for the business; each incremental milestone should be attainable every couple of months — not too soon to seem insignificant, but not too long so that we lose engagement from the team.

Yet, throughout this incremental process, it’s important, to be honest. That is, even if the current true OEE score is disappointing, do not be too discouraged with it, and even worse, do not hide it. Need to understand the current state of OEE as an opportunity to improve.

Using OEE as a tool for improving productivity: Implementation

OEE can be a powerful top-level analytical tool by breaking down OEE into its three underlying components: Availability, Performance, and Quality.

However, knowing the scores for each of these components alone won’t tell us much about what we need to do to improve OEE.

Instead, the true value of OEE comes from the ability to act on the underlying losses for each component: Availability Losses, Performance Losses, and Quality Losses.

Each component has two types of major losses Source(making it six losses in total), so they are often referred to as the Six Big Losses.

1. Availability Losses- a. Unplanned downtime(stops during production time), b. Planned Downtime(Change Over/Line clearance/Bio,Lunch and tea Breaks)

2. Performance Losses- a. Lower speed than considered (Slow cycles) b. Small Stops (Breakdown)

3. Quality Losses- a. Start-up rejects b. Online Production Rejects

Why monitoring OEE is crucial for improving productivity-

OEE is a holistic metric that combines measurements of Availability, Performance, and Quality output; all three are the most important elements of manufacturing productivity.

With that being said, monitoring OEE will provide the following benefits:

1. Identify and Prioritize the issues

When we monitor real-time OEE, we can quickly identify any losses and conditions that may lower the OEE and overall performance, so that we can bring the solution to situation resolve the situation. By measuring the three different indicators of OEE, we can identify the multiple losses in multiple areas, allowing us to prioritize more critical issues that demand immediate attention.

1. Importance of transparency and accountability

Let us not forget that human factors also play a significant part in manufacturing productivity. Real-time monitoring of the OEE will allow us to monitor what’s going on with the equipment at the moment, including operator errors. This will improve the transparency of the whole manufacturing process while at the same time keeping the team members accountable for improving OEE and overall productivity.

1. To Fix quality issues as soon as possible

By monitoring the OEE, we need not wait until the end of the production line to identify quality losses. By utilizing sensors and other means, we can get notified when there are any quality deviations in the manufacturing process as soon as they occur. This will ultimately allow us to fix any quality losses as soon as possible and improve the OEE in the process. Not to mention, by correcting quality deviations immediately, we can keep the customers happy by always getting the quality they expect from the products.

1. How to Optimize manufacturing performance and process Capability

Real-time monitoring is the best way to improve the performance component of the OEE. By knowing how the machine operates in real-time and monitoring its performance, we can address any issues and eliminate bottlenecks as soon as possible. This way, we can keep the manufacturing process running at its optimal level consistently and make our process more capable.

1. Preventive and Predictive maintenance need to Enable

i. Preventive Maintenance — Real-time monitoring allows us to perform preventive condition-based maintenance on the equipment and manufacturing assets to minimize downtime. When, for example, the sensors identify potential emerging issues, we can perform quick maintenance before the machine slows down — or worse, fails. Preventive maintenance will especially improve the availability component of the OEE.

ii. Predictive Maintenance- Based on the data analysis, and is scheduled based on machine data that measures the asset’s condition. Data of tests like Vibration analysis, Oil analysis, Acoustics, Infrared or thermal imaging tests (thermography), and Motor circuit analysis. So, it is data-driven, Predictive, and proactive maintenance methods that are designed to analyze the condition of equipment and help predict when maintenance should be performed. Analyse historical data and identify critical assets. Predictive maintenance reduces the risk of unexpected breakdowns, leading to improved equipment reliability and longevity. By detecting potential issues early and preventing major failures, this approach helps minimize downtime and maintenance costs.

OEE Management Basis — Appropriately managing the business always could be challenging sometimes, when the business is in a growing phase and the business complexity is greater.

So to address such complexity in the business, the business house should follow the PDCA methodology.

· Plan: set goals and develop a plan for improvement;

· Do: implement the plan and collect data to track progress;

· Check: analyze the data and evaluate the results against the goals; and

· Act: adjust the plan and continue the cycle.

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