The What How and Why of Overall Equipment Effectiveness (OEE)

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Overall equipment effectiveness, (OEE) can be used as a key performance indicator, (KPI) in Total Productive Maintenance, (TPM) and Lean Manufacturing Programmes, (LMP) as it provides the bigger picture of how well the equipment in your plant is functioning. This can be used as a signal to determine where to focus on improvement activity. From a Kaizen perspective, by acting concerning a baseline for a given piece of equipment, it helps in the monitoring and evaluation of continuous improvement. OEE is at the center of ‘equipment wellness’. All these add positively in favor of your factory adopting OEE as a measure of key metrics.

In effect, for TMP and LMP, OEE is a key metric on account of the following reasons:

  • It plays a critical role in planning for capacity, material, and other resources.
  • Provides methods to evaluate total productivity in your factory

From a performance point of view, the following three parameters are used for monitoring OEE:

  • Availability
  • Performance
  • Quality

Availability by taking into account the downtime losses shows the time the machinery is available for production. When we deduct the downtime, we get the operating time. Some examples of downtime are:

  • Equipment failure,
  • Excess change over time
  • Shortage in the material

Performance is determined by calculating the excess time taken for production when compared to standard operating time. Some such examples are:

  • Speed losses arising out of the low speed of loading/unloading of jobs
  • Operator’s fatigue resulting in excess cycle time in manual work
  • Idling or even minor stoppages

Quality takes into account the losses due to the production of defective and or non-conforming parts. Some examples in this respect are:

  • The inexperience of the operators in running the machines
  • Packaging defects
  • Frequent complaints from the customers about the poor quality

We need to keep in mind the fact that even if one component is low, due to the multiplicative nature of the calculation, it is going to be reflected in the overall results, pulling down the percentage of OEE performance.

 Some losses your plant encounters when OEE is not place

  • Break downs
  • Start-up Rejects
  • Sub-optimal speed
  • Production Rejects

Some benefits of OEE

  • It enables the setting up goals for improvement and tracking of the progress
  • It helps in the spotting of inefficiencies and rectifying them
  • It sets the benchmark data for setting up of new processes.

Dispelling misunderstanding of OEE

More often than not, OEE is criticized due to the wrong assumption that it is only a performance metric and not a business metric.

To remove this wrong notion, we have explained below how OEE is relevant as a management metric as well by taking into consideration one indicator, VIZ, availability of the equipment.

Functionally, availability is treated as the responsibility of the maintenance department. The maintenance department is used to do this with planned downtime or Planning Factor (PF). Traditionally, while planned maintenance activities and gaps in the production schedule were included, it used to ignore breakdowns, setup, etc. losses. When all the components are included, the Business OEE when multiplied by PF, furnishes a complete picture to the management of the available time which has been utilized for production purposes.

In sum, the Business OEE is

  • Total Productivity= OEEX Planning (PF)

Both your plant and the business gains when the performance metrics of OEE is clubbed with business metric. This highlights that it is not just the line managers alone are responsible for ensuring better output and it is equally the responsibility of the staff managers to take the responsibility to bring about in the overall performance of your factory.

The parting comments we can make are that OEE replaces the old terminology ‘ engineering is efficiency’ with the new ‘engineering is effectiveness’.


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One Response

  1. Great information!! OEE plays a very important role in increasing the productivity of a factory. With the help of computerized downtime tracking software, one can easily capture and analyze the quality and quantity of production at any stage of the process. Systems can display information in easily understandable forms, such as graphs and charts to understand downtime tracking. Thanks!!

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