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Integrating OEE and Process Improvement


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Using OEE more effectively for Process Improvement, Lean, and Six Sigma initiatives

Published in: Business

Integrating OEE and Process Improvement

  1. 1. How the use of OEE can drive Operations Excellence Edward Brown April 24, 2009 1
  2. 2. OEE for Process Improvement Topics Process Improvement  Process Improvement Why OEE? The Science of OEE  Why OEE? Guidelines  The Science of OEE The Technologies The Culture of OEE  Guidelines  The Technologies  The Culture of OEE April 24, 2009 2
  3. 3. OEE for Process Improvement Processes for Improvement Process Process Improvement Improvement Which of the following Improvement Initiatives is in Why OEE? place, or formally planned to begin within 6 months, at your company? The Science of OEE  Recent survey of executives  85% - Asset Utilization or OEE Improvement Guidelines  61% - General Continuous Improvement The Technologies  54% - Six Sigma  46% - TPM The Culture of OEE  38% - Lean Manufacturing  38% - Predictive Maintenance  8% – Other: Software Integration April 24, 2009 3
  4. 4. OEE for Process Improvement Making Process Improvement Work Process Process Improvement Improvement The Processes only work when you have: Why OEE?  Awareness  Knowing what to measure The Science of OEE  Knowing how to measure it Guidelines  Knowing what’s important The Technologies  Accuracy The Culture of OEE  Measurements in context  What’s included  What’s excluded  Responsibility  Actionable Issues Assigned  Empowerment  Follow-Up April 24, 2009 4
  5. 5. OEE for Process Improvement How well do you know that KPI? Process Process Improvement Improvement Existing KPIs May Be Inadequate Why OEE? Failing to recognize the limitations of the existing plant The Science of OEE performance measurement system. Guidelines  What is included? The Technologies  What is excluded? The Culture of OEE  Standard across areas or plants?  How are Management incentives structured?  Is Management more concerned with reporting a high efficiency value rather than focusing on improvement? April 24, 2009 5
  6. 6. OEE for Process Improvement Can We Believe Our Numbers? Process Process Improvement Improvement How efficient do you think Most of these companies Why OEE? your plant is? are really operating at only Many mfg companies 30-60% of their true The Science of OEE believe they are 80-90% potential as measured by Guidelines efficient Overall Equipment  Andthey are… the way they Effectiveness (OEE) The Technologies have come to measure  85% OEE is “World Class” The Culture of OEE themselves.
  7. 7. OEE for Process Improvement The Way of OEE Process Improvement  OEE Identifies and Organizes KPI’s Why OEE? Why OEE?  Equipment – Downtime, Speed, Quality The Science of OEE  Materials – Availability, Quality Guidelines  Labor – Availability, Speed, Quality The Technologies  Ability to Measure or Compare at any Level The Culture of OEE  Specific Machine or Working Cell  Line or Group of Machines/Cells  Production Area or Plant April 24, 2009 7
  8. 8. OEE for Process Improvement Why OEE? Process Improvement Overall Equipment Effectiveness Provides a framework for Manufacturing Process Improvement Why OEE? Why OEE?  New Product Development The Science of OEE  Product Changes Guidelines  Reducing Non-Value Added operations The Technologies  Developing Equipment Maintenance Strategies The Culture of OEE  Equipment Reliability Practices  Personnel Training Effectiveness  Improved Root Cause Analysis  Improving Limiting Constraints April 24, 2009 8
  9. 9. OEE for Process Improvement Unlocking Your Inner Super Plant Process Improvement OEE can be used by Teams to unlock “Hidden Why OEE? Why OEE? Capacity” found in almost every plant The Science of OEE OEE Savings Benefits Guidelines  Reduce Capital Expenditures  Justify Capital Expenditures The Technologies  Reduce Labor Costs The Culture of OEE  Reduce Scrap and Rework  Reduce Inventory Costs April 24, 2009 9
  10. 10. OEE for Process Improvement The Gold Standard Process Improvement Overall Equipment Effectiveness is becoming the Why OEE? de-facto standard for measuring the efficiency and capability of production processes with consistency Science of OEE The Science of OEE Guidelines OEE Measures Three Critical Factors: The Technologies Availability – Whether equipment, material, and personnel are available for production The Culture of OEE Performance – Whether equipment and personnel are performing to their capacity Quality – Whether the product is being produced correctly the first time (first pass yield) April 24, 2009 10
  11. 11. OEE for Process Improvement Capturing the TPM “Six Big Losses” Process Improvement OEE Major Losses Notes Why OEE? Category Science of OEE Major There is flexibility on where to set the The Science of OEE Breakdowns threshold between a Breakdown Availability Loss (Availability Loss) and a Short Stop Guidelines (Performance Loss). The Technologies Setup and Availability Loss Includes changeovers. Adjustments The Culture of OEE Short Typically only includes stops that are Performance Stops/Idling under 5-10 minutes and that do not Loss require maintenance personnel. Causes preventing the process from Performance Reduced Speed running at its theoretical maximum Loss speed (minimum cycle time). Bad products during warm-up, startup Startup Rejects Quality Loss or other early production. Production Bad Products during steady-state Quality Loss Rejects operation.
  12. 12. OEE for Process Improvement In A Perfect World Process Improvement A line with an OEE of 100% runs Why OEE?  All of the time it is scheduled The Science of OEE The Science of OEE Guidelines  No time loss for Changeovers, Cleaning, Breakdowns The Technologies  Always runs at the full rated speed The Culture of OEE  No short stop failures  Has a 1st pass Yield of 100% April 24, 2009 12
  13. 13. OEE for Process Improvement OEE – More than a Number Process Improvement Why OEE? OEE = Availability * Rate * Quality The Science of OEE The Science of OEE Example: (.77)*(.65)*(.98)*100% = 49% OEE Guidelines OEE Element Components The Technologies The Culture of OEE 98% yield alone is not enough Availability Actual runtime / Available time Production Rate Total production (good & bad) / theoretical limit Quality Good quantity / Total quantity April 24, 2009
  14. 14. OEE for Process Improvement World Class OEE Process Improvement OEE = 85% is “World Class” Why OEE?  Very challenging for a company to operate at this level when OEE is measured accurately. The Science of OEE The Science of OEE  We don’t see production lines that are operating at 85% OEE Guidelines  But… we have seen lines operating in the 20 – The Technologies 30% range! The Culture of OEE OEE Factor World Class Availability 90.0% Performance 95.0% Quality 99.9% Overall OEE 85.0% April 24, 2009 14
  15. 15. OEE for Process Improvement Reality Check Process Improvement  Majorityof Plants operating at 30 to 40%. Why OEE?  Day to day variation can be +/- 15% or more  Scheduling deviations The Science of OEE The Science of OEE  Labor overtime  Inventory accumulation Guidelines The Technologies World Class Pharma OEE The Culture of OEE Number of SKU's OEE Low SKU Count (1-2) 83% Medium SKU Count (3-5) 80% High SKU Count (6-12) 73% Very High SKU Count (> 20) 63% April 24, 2009 15
  16. 16. OEE for Process Improvement Overall Suggestions Process Improvement If you can’t measure it, you can’t (won’t) improve it!  Use OEE measurements as part of Process Improvement Why OEE? program The Science of OEE Create Downtime Reasons that are Meaningful Guidelines Guidelines  Machine Codes and Ad Hoc entries are a poor foundation The Technologies Set performance targets at achievable levels  When was theoretical ever reached? The Culture of OEE Develop an ability to calculate an Accurate Measure of the true capability of a production line  Include all significant losses Develop a written factory performance spec that precisely defines what is included, excluded, and special cases.  To compare other plant/lines, all OEE measurements must be made in same way April 24, 2009 16
  17. 17. OEE for Process Improvement Divide and Conquer Process Improvement Set separate Improvement Targets for: Why OEE?  Availability  Performance The Science of OEE  Quality Guidelines Guidelines The Technologies The Culture of OEE April 24, 2009 17
  18. 18. OEE for Process Improvement Set Separate Goals Process Improvement  Reduce Availability Losses by 10-50% on time basis Why OEE? The Science of OEE  Reduce Performance Losses by 5-20% on time basis Guidelines Guidelines 25 The Technologies  Quality Improvement will vary depending 20 on the process and industry (0.5%?) The Culture of OEE Defect Loss Hours 15 Perf Loss  Improve OEE by 5-10% per year (or Avail Loss more) 10 Sch'd DT Run Time 5 0 Line Line Line 1 2 3 April 24, 2009 18
  19. 19. OEE for Process Improvement Return on Investment Process Improvement Baseline with 66.5% OEE Why OEE? 19 cases/minute/line 18,194 cases/day/line The Science of OEE $ 14.00/case (wholesale) $ 254,722 day/line Guidelines Guidelines Before After The Technologies Availability 80% 85% The Culture of OEE Performance 84% 86% Quality 99.0% 99.2% OEE 66.5% 72.5% Revenue Improvement: +1,641 cases/day or $22,974/day $8.3 million/year
  20. 20. OEE for Process Improvement Key Technologies Process Improvement  Automated Downtime Why OEE?  Machine Downtime for emergency and short-stops  Labor Tracking for personnel operation timing The Science of OEE  Structured Downtime Reason Trees Guidelines  Categorized by product/operation/machine The Technologies Technologies  Drill Down Capability for Root Cause Analysis  Basis for Process Improvement Charts The Culture of OEE  Automated Production Counts  First Pass Yield Counts  Rework Counts April 24, 2009 20
  21. 21. OEE for Process Improvement Automated Downtime Process Improvement Relying on Manually Collected Data Why OEE?  Entry errors  Significant effort to collect and analyze The Science of OEE Guidelines Making decisions based solely on Manually The Technologies Technologies collected Downtime data  Isnotoriously unreliable. The Culture of OEE  Are all hours of the day accounted for?  Does it match up with actual product produced?  Can it account for all the short stops occurring on a typical line (most lines have 1,000 or more short stops / week). April 24, 2009 21
  22. 22. OEE for Process Improvement OEE Without Automation? Process Improvement Why OEE? Inaccurate The Science of OEE Availability Data Guidelines Inflates OEE The Technologies Technologies Incidents Total time The Culture of OEE Manual Phantom Average Manual Automated Downtime (Before) (After) Incidents 12 140 Duration 15 <2 (minutes) *Theoretical based on Total time 180 280 95% quality & 95% OEE* 79% 73% performance
  23. 23. OEE for Process Improvement Operator Input is Important Process Improvement Selectively involve the operator…. Why OEE?  Automate collection of OEE and the supporting downtime data so that good decisions can be made regarding actions that will The Science of OEE improve OEE.  Time and again, clipboard data collection for OEE and Downtime info Guidelines has proven to be of little value The Technologies Technologies  Operators don’t time themselves  Operators can’t perceive the effect of repetitive problems The Culture of OEE  Changeover vs. shift change example  But, do not limit yourselves to the automation layer  Can not always provide root cause  Downtime reason selection by Operator IS powerful April 24, 2009 23
  24. 24. OEE for Process Improvement Structured Downtime Reasons Process Improvement Why OEE? The Science of OEE Guidelines The Technologies Technologies The Culture of OEE
  25. 25. OEE for Process Improvement Downtime Reasons and Drilldown Process Improvement Monthly to Current Downtime Why OEE? 25 The Science of OEE 20 15 10 Guidelines 5 0 Line Stop Incidents Equip Planned Line Stop Rejects The Technologies Technologies Down Maint 10 8 Shift 1 Shift 2 Shift 3 The Culture of OEE 6 4 Transfer Errors 2 0 Raw Transfer Quality Material Error Hold 20 Shortage 15 10 5 0
  26. 26. OEE for Process Improvement Automate Production Counts Process Improvement Collecting production counts is simple, effective Why OEE? means to determine First Pass Yields The Science of OEE Counting Rework cycles for an item more difficult, but Guidelines can make dramatic improvements in Quality The Technologies Technologies The Culture of OEE April 24, 2009 26
  27. 27. OEE for Process Improvement Eight Key Elements of Process Improvement Process Improvement  Management involvement to set the Business Why OEE? Objectives and maintain program focus. The Science of OEE  Ability to accurately measure productivity in Real-time.  Ability to accurately capture detailed reasons for Guidelines efficiency losses, for corrective actions. The Technologies  Assign Responsibility to Issue Champion Culture of OEE The Culture of OEE  Empower Issue Champions to Solve Problems  Ability to selectively involve the Operators.  Web Reporting for easy distribution of current performance to all parties.  Maintain Issue and Resolution Histories April 24, 2009 27
  28. 28. OEE for Process Improvement There’s No “I” in OEE Process Improvement Achieving RESULTS requires participation of the entire Why OEE? team.  Get Operations, Production, Maintenance, Engineering, and Quality The Science of OEE on board right from the beginning. Guidelines The Technologies Culture of OEE The Culture of OEE April 24, 2009 28
  29. 29. OEE for Process Improvement Conclusion! Process Improvement Improved Productivity and Asset Utilization… Why OEE?  Always result in savings that drop right to the Bottom Line (earnings) The Science of OEE  Always result in Reduced Capital Expenditures Guidelines  In Good Times, unleashes unused capacity, so volume can ramp up without requiring major investment in more The Technologies plants, equipment, and employees. Culture of OEE  In Bad Times allows plants to: The Culture of OEE  Cut back to only those shifts that are necessary  Reduce overtime expenditures  Reduce waste  Identify and sell under performing assets, reducing depreciation and maintenance costs. April 24, 2009 29
  30. 30. OEE for Process Improvement Conclusion! Process Improvement Improved Productivity and Asset Utilization… Why OEE?  Provides Data to make Suppliers more Accountable The Science of OEE  EquipmentSuppliers  Consumables / Raw Materials Suppliers Guidelines The Technologies  Gather Hard Data related to equipment performance. Culture of OEE The Culture of OEE  Identify equipment problems.  Justify Capital Improvements or Asset Reductions.  Motivate Operators and Maintenance Team  Drive Uniformity in Plant Scorecard calculations. April 24, 2009 30
  31. 31. Questions? Web Site: Contact Information: Ed Brown – 919.468.4334 x221 Eric Mayer – 919.468.4334 x202 April 24, 2009 31