Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.



Published on

The ultimate guide and hidden secrets of OEE. The presentation include how you can utilize OEE to improve productivity, eliminate wastes and increase performance.

Overall equipment efficiency (OEE) is a total productive maintenance (TPM) module; machine capacity is a part of all three terms: availability, performance, and quality. Each term present numerous improvement opportunities.

Presentation contents:
1. OEE calculation to find the improvement opportunities.
2. Relation between wastes and profitability.
3. Review of OEE as a TPM module.
4. OEE metrics - Measurement, Analysis & Improvement.
5. OEE Analysis Process.
6. Following Toyota Way of solving problems.

Published in: Business
  • Login to see the comments


  1. 1. 1
  2. 2. 2 OEE Can Be Your Key to Productivity Improvement Presented by:- Eng. Mohammed Hamed Published in the IIE Magazine Issue of AUG2013
  3. 3. Example to present different types of improvement OEE Overall Equipment Effectiveness calculation Basically, any machine has a capacity. It should be able to deliver specific number of units in a given time. If it can produces 20 units in an hour. In 8-hour day, it should have the ability to produce 160 units. Over 5 days, the capacity is 800 units. This is the rated capacity when everything is perfect. If the machine has to be slowed to half speed due to poor maintenance, it would make only 400 units. Performance would be (800-400)/800*100=50%=0.5 ๐‘๐‘ข๐‘š๐‘๐‘’๐‘Ÿ ๐‘œ๐‘“ ๐‘ข๐‘›๐‘–๐‘ก๐‘  ๐‘š๐‘Ž๐‘›๐‘ข๐‘“๐‘Ž๐‘๐‘ก๐‘ข๐‘Ÿ๐‘’๐‘‘ ๐‘ƒ๐‘œ๐‘ ๐‘ ๐‘–๐‘๐‘™๐‘’ ๐‘›๐‘ข๐‘š๐‘๐‘’๐‘Ÿ ๐‘œ๐‘“ ๐‘ข๐‘›๐‘–๐‘ก๐‘  1. Finding the Improvement Opportunities Performance % X 100 3
  4. 4. 4 Consider the break-times. So, over five days, the equipment was not available for use for a five-hour period. ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘ก๐‘–๐‘š๐‘’ ๐‘Ž๐‘ฃ๐‘Ž๐‘–๐‘™๐‘Ž๐‘๐‘™๐‘’ โˆ’ ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘‘๐‘œ๐‘ค๐‘›๐‘ก๐‘–๐‘š๐‘’ ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘ก๐‘–๐‘š๐‘’ ๐‘Ž๐‘ฃ๐‘Ž๐‘–๐‘™๐‘Ž๐‘๐‘™๐‘’ X 100Availability%= In a 40-hour week, the availability is (40-5)/40*100= 87.5%=0.875 With a lost time, we can only make 0.875 times 100= 350 units in a week. Availability tracks any time the machine isnโ€™t available for use.
  5. 5. Quality %= If we have 10 units that need re work due to quality defect, this mean Quality ratio is (350-10)/350*100= 97.14%=0.9714 OEE=Performance x Availability x Quality= 0.5 x 0.875 x 0.9714= 42.5%. ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘›๐‘œ ๐‘œ๐‘“ ๐‘ข๐‘›๐‘–๐‘ก๐‘  ๐‘๐‘Ÿ๐‘œ๐‘‘๐‘ข๐‘๐‘’๐‘‘ โˆ’ ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘›๐‘œ ๐‘œ๐‘“ ๐‘‘๐‘’๐‘“๐‘’๐‘๐‘ก๐‘  ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘›๐‘œ ๐‘œ๐‘“ ๐‘ข๐‘›๐‘–๐‘ก๐‘  ๐‘๐‘Ÿ๐‘œ๐‘‘๐‘ข๐‘๐‘’๐‘‘ X 100 5
  6. 6. One more thing is whether OEE calculation should be based on 24 hours and 7 days or just the number of hours the machine was operated. The OEE is higher if only the operating shifts are considered. If there is a perfect OEE of 100 but the factory is only open for a single 8 hours shift 5 days per week and the factory shutdown the rest of the week, this doesnโ€™t means the OEE is 100%. What about the 128 hours the machine is not available because the factory is closed? Should the availability not be only 40/168=23.8%? OEE gives us only 340 units, the world-class OEE is 85%, this is an indication that something needs to be fixed. 6
  7. 7. 57.5% Quality problems Performance Problems Availability problems Value added 42.5% Losses Figure 1.Losses & non-Value Adds during the Operating Time Data Box: Value add = 42.5% Non-value add =57.5% OEE OEE Calculation Based on 87.5% availability 7
  8. 8. Plant Unavailability Working Period 23.8 Operation Cost Total Investment Additional investment โ€œwhat we give investmentโ€ 76.2 Value Add Operation Losses 13.6% Data Box: Investment =100% Plant Availability = 23.8% Non-value added= 78.8% Benefit/Gain = 10.2% Operation Losses= 13.6% 10.2% Figure.2 The real picture Equipments Peoples Facilities Utilities OEE Calculation based on 23.8% availability 8
  9. 9. First figure focus only on the wastes inside the operation time which is called operation wastes. The second one shows that 76% of improvement is possible, if a huge order appeared, the team would know that there are 128 extra hours of availability and can be used if sales improved. So both figured should be used and calculated. Some organizations have reported that OEE is low, due to the sales problem; it means if they have an order of 600 pieces per shift, and the equipment is capable of 1200 per shift, they will only produce what customer needs. OEE in this shift is 100% if the equipment is running at optimum efficiency and producing the target of 600 in 4 hours. Others would produce it in 8 hours! And OEE in this case is 50%. In the first case, the equipment was available for the other 4 hours because the factory was open, but there were no product to process. In the second case, this is the improvement that should be made to the process. 9
  10. 10. 2. The Relation Between Wastes and Profitability Frequently, the inexperienced estimators will perform a cost estimate assuming everything is perfect and the plant is working at full capacity. This approach is totally erroneous as it does not consider all operation wastes such as downtimes, waiting between processes, inventory carrying for long periods, re working for quality, and delay of orders delivery. The relation between the profit and these wastes can be seen through this simple formula: ๐‘ท๐’“๐’๐’‡๐’Š๐’• = ๐’“๐’†๐’—๐’†๐’๐’–๐’† โˆ’ { ๐’‡๐’Š๐’™๐’†๐’… ๐’„๐’๐’”๐’• + ๐’—๐’‚๐’“๐’Š๐’‚๐’ƒ๐’๐’† ๐’„๐’๐’”๐’• + ๐‘พ๐’‚๐’”๐’•๐’†๐’”} 10
  11. 11. The fixed and the variable costs are the manufacturing operation costs required to make the product. Organizations that are working at or near the breakeven, can find ways to be more profitable through the losses. For example, if a company is running at 80% of their actual capability and can sell 100% of their capacity. There is an opportunity to produce the extra 20% through the losses. Those twenty percentages of losses are the sales losses that can be recovered through removal of the operation wastes. The losses are the price of the unsold parts which recover the profit, labor salaries, maintenance costs, overheads, and indirect expenses. 11
  12. 12. 12 Brainstorming! Specify which is fixed cost and which is variable cost from the following resources: 1. Employees basic salaries 2. Machines depreciation 3. Bonuses & rewards 4. Materials 5. Transportation
  13. 13. 13 Publication at the Institue of Industrial Engineers, August 2013
  14. 14. 3. Review of Overall Equipment Efficiency as a TPM module Overall equipment efficiency (OEE) is a total productive maintenance (TPM) module; machine capacity is a part of all three terms: availability, performance, and quality. Each term present numerous improvement opportunities. 14
  15. 15. How OEE is related to productivity and capacity? OEE measures the ratio (%) of what product is actually made which is defect less and sellable, to what could be made according to the design. One hundred percent of OEE is the design or maximum capacity a process or a machine is designed to make with zero defects. The intention is to find why this process is not working as what have been expected, and why the real output is low. Then, some actions should be taken to maximize the current process capabilities, fix problems, and improve productivity. Why use OEE & what is the intention behind this? ๐‘น๐’†๐’‚๐’ ๐‘ซ๐’†๐’‡๐’†๐’„๐’•๐’๐’†๐’”๐’” ๐‘ถ๐’–๐’•๐’‘๐’–๐’• / Design Output 15
  16. 16. 4. OEE Metrics OEE involves three metrics, described as follow: 4.1. Availability this is a time metric that is usually measures as a percentage of the operating time. Machine availability is a measure of how much time this machine was available to run product. A machine that is busy or canโ€™t make product is considered unavailable. Improving the machine available time by reducing wastes and excess motions from the process will improve: ๏ฑ Costs ๏ฑ Utilization of both operating time & resources ๏ฑ Time required to make a product ๏ฑ Overtimes 16
  17. 17. 4.2. Performance: This is one of the most debate issues. It takes into account the factors that are affecting the speed of the machines. Most of companies take the number of pieces produced and compare it to the design, count quality and availability, then, assume the problem is a machine speed that has been caused by in proper maintenance. Actually, the performance can be affected by many other factors: 1. Untrained operators 2. Bad/insufficient operation instructions 3. No instructions 4. No work standardization procedures 17
  18. 18. What is the effect of working at lower performance or speed? ๏ฑ Consume more resources ๏ฑ Waste money ๏ฑ Longer production lead time ๏ฑ More operators Some companies plan their productivity according to the current situation and the current process capability, making a few hours job last the whole shift. With no trial to evaluate the process or see if it can be improved, the process will never run efficient. 18
  19. 19. 4.3. Quality This is one of the greatest wastes in the process. Quality is so important for customers, adding value to your customer is what keeps you in business. If a process is producing a number of defected pieces, the required working time to compensate those defects and re produce sellable items will reduce the capacity of making a new product and will consume more resources. Cost of producing a defected piece plus the cost of re working it could be more than double the cost of making it right at the first time. And if a defected product passed to the customer, this can lead to complete business loss. It is more important to make sellable parts rather than focus on just making high number of parts. Reducing the defects ratio will improve the real output of the machine, increase the capacity of making product, reduce the inspection effort, reduce costs, and add value to your business. 19
  20. 20. 20 Quality Cost Defect Parts Re Work Parts If poor quality or failed product gets through to the customers, we have an issue worse than just a drop in production. There is a risk of losing the customer which worth more than money.
  21. 21. 5. OEE Analysis Process Find: What waste time? What slow the speed? What degrades the quality? Production availability & time analysis As shown in fig.1, availability of the machine can be affected by any of these factors. Each problem in fig1 presents a different type of improvement. Availability often presents the waiting waste which is one of the most common wastes in terms of muda (seven-wastes). It can be seen in the most of process improvement events. Unfortunately, many people use the availability as a measure of uptime subtracting many other wastes, and present the formula by this way: ๐‘ป๐’๐’•๐’‚๐’ ๐’˜๐’๐’“๐’Œ๐’Š๐’๐’ˆ ๐’•๐’Š๐’Ž๐’† (๐’–๐’‘๐’•๐’Š๐’Ž๐’† + ๐’…๐’๐’˜๐’๐’•๐’Š๐’Ž๐’†) โˆ’ ๐‘ป๐’๐’•๐’‚๐’ ๐’…๐’๐’˜๐’๐’•๐’Š๐’Ž๐’† ๐‘ป๐’๐’•๐’‚๐’ ๐’˜๐’๐’“๐’Œ๐’Š๐’๐’ˆ ๐’•๐’Š๐’Ž๐’† 21
  22. 22. The above formula tends to focus on an individual process which is the machine downtime, often caused by preventive maintenance, routines, adjusting, calibration, overhaul and the other maintenance activities. The maintenance folkโ€™s main goal is the uptime-keep the equipment working which does not means that this equipment is available to run product. There are still many factors influence the availability of the process or machine as presented in fig.1. But by considering only downtime, this means reducing the PM time or the mean time to repair (MTTR) and losing the opportunity to improve the overall process effectiveness. The main goal of the OEE is to understand the obstacles and wastes that are lowering the productivity rate. For this reason, the availability should be presented by this formula: ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘๐‘Ÿ๐‘œ๐‘‘๐‘ข๐‘๐‘ก๐‘–๐‘œ๐‘› ๐‘ค๐‘œ๐‘Ÿ๐‘˜๐‘–๐‘›๐‘” ๐‘ก๐‘–๐‘š๐‘’ โˆ’ ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘๐‘Ÿ๐‘œ๐‘‘๐‘ข๐‘๐‘ก๐‘–๐‘œ๐‘› ๐‘‘๐‘œ๐‘ค๐‘›๐‘ก๐‘–๐‘š๐‘’ ๐‘‡๐‘œ๐‘ก๐‘Ž๐‘™ ๐‘๐‘Ÿ๐‘œ๐‘‘๐‘ข๐‘๐‘ก๐‘–๐‘œ๐‘› ๐‘ค๐‘œ๐‘Ÿ๐‘˜๐‘–๐‘›๐‘” ๐‘ก๐‘–๐‘š๐‘’ 22
  23. 23. Productivity time Non-Value Add Activities Wait for loading Machines setting time for changeovers No operators Break-times Operation Losses Value-add Figure 1. Most common availability and time lost issues during the operating time Maintenance downs downsWait to get tools Wait for quality inspection Wait for CNC program loading Wait for instructions Wait for materials Wait for spare parts Electric cut-off Wait for the manufacture drawing 23
  24. 24. 24 Factor Cause Cause Wait for loading No material Bad planning Inventory issue Transportation delay Too much work in process inventory WIP causes process waiting Clark breakdown Clark driver is absent/not available No order to process Sales or market problem 5.1. Time Analysis for Availability Issues Use Why Why to investigate causes
  25. 25. 25 Factor Cause Cause Possible solutions Machines setting time for changeovers Lack of operator training on the changeover task Training has been neglected for several reasons Company donโ€™t invest on training the staff Allocate budget for training No work standardization procedures No continuous improvement culture in the organization Build a culture of continuous improvement Operator spend time getting the tools needed for the changeover task causing a delay to the process Tools are not handy or operator is not trained to realize where is the appropriated tools for this task Tools have to be arranged and provided in a clear place. Operator has to be trained sufficiently to recognize where the appropriated tools are located
  26. 26. 26 Factor Cause Cause Possible Solution Operator absent Any type of vacation: sick, annual, emergency,..etc Need supervision and control Change management Too much overtime cause many absences during the normal working days Inappropriate distribution of workload cause overtimes and increase operation costs Eliminate/reduce the overtime, revise planning, and smooth the workload Lack of operators number Break-times Operator take breaks to lunch or rest, the machine operation is basically depend on him and can not process any production during his absent Operators need break because machines are manual based operation Find a management solution to eliminate the production losses, or replace operators with some robots & automation
  27. 27. 27 Factor Cause Cause Cause Maintenance downs Failure Improper maintenance Lack of PM/ inefficient PM Each failure need a preventive task in the PM process Operator is not trained to do the routine tasks regularly to keep the equipment running The failure is complex result in longer MTTR Training is needed for all of workers so they can perform all maintenance jobs efficiently Delay in processing the work request when the failure occurred ERP issue or planning problem
  28. 28. 28 Factor Cause Cause Cause Maintenance downs PM activities are taking long time (cleaning, inspection, replacing partsโ€ฆetc) Spare parts not available No system to provide the technician with the tools & parts need in the right orientation Lack of preparation Technician is not trained enough to do the job efficiently Training has been neglected because management think it is not important Tools not available Insufficient tools/lack of tools PM is complex for this machine Improper selection of maintenance policy
  29. 29. 29 Factor Cause Cause Cause Wait for quality inspection Waiting for the inspectors Absence/insufficient labors Process is producing defects that need intensive inspection No work standardization procedures to improve the process Lack of continuous improvement culture in the organization Wait for material Planning problem The purchase department Warehouses problem ERP or planning problem Supplier problem Shipping has been delayed Production problem Too much WIP inventory between process steps
  30. 30. 5.2. Performance Analysis In many times, the primary cause of performance issues is hidden and overlap with the availability metric. Performance Maintenance issues Data Management programs like ERPs donโ€™t provide solution or root cause of the problem. The reason of low machine output regardless of the quality issue and availability can be the speed of the machine Operator Skills Training Skills 30
  31. 31. It is hard to catch the performance reasons by a software. It will require a deep observation at the gemba. Performance (low speed issues) Causes Maintenance Machine need calibration, adjusting, or tweaking. Machine condition has been deteriorated Lack of PM/ Machine need to be restored to its basic condition Operator Training Operator has not been trained well Quality of instructions Lack of work standard process, lack of instructions, no instructions, or no work standardization procedures 31
  32. 32. 32 The root cause of some activities which are affecting the availability could be performance problem such as slow changeovers which is a result of operator training issue on the changeover task
  33. 33. 33 5.3. Quality Analysis It is not difficult to know how many defects exist using a simple sheet to record the number of the defected parts which canโ€™t be sold. What is not easy to know is the cause of this defect which requires an intensive effort to understand the source of variation that is causing the quality problem. It will be necessary to perform an in deep process analysis in order to grasp the real situation for elimination of the root causes.
  34. 34. 6. Toyota way of analyzing & solving quality problems : 1. Genchi genbutsu (Observe the real situation at the gemba) 2. Mistake-proofing (Poka Yoka) 3. Simple tool like Pareto for data analysis 4. Ask 5 whys to find the root causes. What Six Sigma and other complex analysis tools can do? 34 Prepared by Eng.Mohammed Hamed Ahmed Soliman Industrial Engineering Consultant & Lecturer Email: : Tel : +201001309903 LinkedIn: