Post on 21-Jan-2019
Industrial ManagementOEEThe Good, the Bad and the Ugly
(L d OEE)(Lean and OEE)
Prof.dr.ir. Dirk Van GoubergengPresidentVan Goubergen P&M Productivity Improvement gcvEikenlaan 51B-2275 Lille (BELGIUM)
Department of Industrial ManagementGhent UniversityTechnologiepark 903
Email: dirk@vangoubergen.com B-9052 Zwijnaarde (BELGIUM)
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 1
Who am I?Prof. dr. ir. Dirk Van Goubergen – Email: dirk@vangoubergen.comEducation:* MS in Mechanical Engineering (1991) – Royal Military Academy, Brussels (B)* MS in Industrial Management (1997) – Ghent University/Vlerick Management School (B)g ( ) y g ( )* PhD in Industrial Engineering (2004) – Ghent University (B)
Professional experience:1992-2004 Lecturer in Industrial Engineering at HORITO College Turnhout (B)2000-2004 Research Associate at Ghent University – Dept. of Industrial Management (B)* Grad. classes on Design of Production Systems and Operations Management
2004-… Professor at Ghent University – Dept. of Industrial Management (B)* Grad. classes on Design of Manufacturing and Service Operations, Operations Management, Method Engineering and Work Measurement.
2000 Guest lecturer at the Grado Dept of Industrial and Systems Engineering at Virginia Tech Blacksburg VA (USA)2000-… Guest lecturer at the Grado Dept. of Industrial and Systems Engineering at Virginia Tech, Blacksburg VA (USA)2002 Examiner for the US Senate Productivity and Quality Award for the State of Virginia (USA)2004-2010 Program Director ‘Fellow in Industrial Engineering’ program from the Flemish Engineers Chamber VIK (B)2005-… Guest Professor at the Antwerp University (B)* Grad Class on Cost and Performance Benchmarking Grad. Class on Cost and Performance Benchmarking
2005-… Program Director of the “Master in Industrial Management” program at the Ghent University (B)2005-… Founder and Coordinator of the ‘Black Belt in Lean’ training and certification program at the Ghent University (B)2009-… Guest lecturer at the Vlerick Leuven-Gent Management School (B) 2010-… Member of the Advisory Board of the Institute of Industrial Engineers – Process Division (USA)y g ( )
1993-.. Founder and president of VAN GOUBERGEN P&M Productivity Improvement (www.vangoubergen.com) * +15 years of international experience in the area of set-up reduction, lean management and productivity improvement
in different manufacturing and service industries throughout Europe, North America and Asia (a.o. Volvo, Akzo, Atlasg g p , ( , ,Copco, Masterfoods/Mars, Danone, Philips, Coca Cola, Imperial, Lays, Belgian Railways, …)
2006-.. Founder and President of the CENTER FOR PRODUCTIVITY IMPROVEMENT ROMANIA (www.productivity.ro)
Senior Member of the Institute of Industrial Engineers, Member of the International Society for Occupational Ergonomics and Safety
AgendaIndustrial Management
AgendaTh GOODThe GOOD• What is Lean?• Waste on Equipment – OEEWaste on Equipment OEE• What is OEE?• OEE as an improvement tool
Th BADThe BAD• Wrong use and manipulation of OEE• OEE within Lean: efficient processes vs efficient valueOEE within Lean: efficient processes vs. efficient value
streams• Trade off between capacity and flexibility
Th UGLYThe UGLY• OEE linked with pay and bonus systems
To Remember© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 3
To Remember….
Industrial Management
Part One
THE GOODPart One
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 4
WhatWhat is ‘Lean’?is ‘Lean’?Industrial Management
WhatWhat is Lean ?is Lean ?
A business strategy for organizing and improving the• A business strategy for organizing and improving the operational activities of companies– Improved competitivenessImproved competitiveness– Flow of value (-added activities)
• Adapted from Toyota Production Systemp y y• Based on 5 steps
1. Correctly specify value for the customer2. Identify the value stream and remove waste3. Make the product flow4 S th t ll4. So the customer can pull5. By managing towards perfection
• Tools and techniques (Womack, Jones – Lean Thinking)
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 5
• Tools and techniques
TPSTPSIndustrial Management
Best Quality - Lowest Cost - Shortest Lead TimeThrough shortening the Production Flow by Eliminating Waste
TPSTPS
Through shortening the Production Flow by Eliminating Waste
J i Ti Jid kJust in Time“The right part
at the right time
Jidoka“Built in Quality”
in the right amount”
• Continuous FlowP ll S t
• Manual / AutomaticLine Stop
• Labor-MachineEfficiency
• Pull System• Level Production(Heijunka)
• Error Proofing – Poka Yoke
• Visual ControlFlexible, Capable,Highly Motivated
P lPeople
Standardized WorkTotal Productive Maintenance
Robust Products & ProcessesSupplier Involvement
Operational Stability
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 6
Total Productive Maintenance Supplier InvolvementStability
Waste Waste onon EquipmentEquipmentIndustrial Management
q pq p
TPM – Seiichi Nakajima (1986)TPM – Seiichi Nakajima (1986) 6 major losses on equipment
• Defects/stoppages• Set-ups• R idl i t t iti• Run idle, minor stoppages, empty positions• Lower speed• Startup lossesStartup losses• Process scrap and rework
You Can’t Manage What You Don’tYou Can t Manage What You Don t MeasureWh t i REAL t ti l it ?
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 7
What is your REAL potential capacity ?
OEEOEEIndustrial Management
Overall Equipment EffectivenessOverall Equipment Effectiveness
Overall Equipment Efficiency
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 8
OEE CalculationOEE CalculationIndustrial Management
OVERALL EQUIPMENTEFFECTIVENESSEFFECTIVENESS
Availability Efficiency QualityAvailability(%)
Efficiency(%)
Quality(%)
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 9
Part 1: AvailabilityPart 1: AvailabilityIndustrial Management
yy
LOADING TIME
AVAILABILITYLoading Time - Downtime
Loading Time x 100=
1. DEFECTS/STOPPAGES
OPERATING TIME
460 min – 60 min460 min
x 100= = 87 %(e.g.)2. SET-UPS
Machine was down (not operating) although it could have been available
Operating time vs. Loading time
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 10
Part 1: AvailabilityPart 1: AvailabilityIndustrial Management
yy
C l l tiCalculation:Loading Time = (Normal work time + Over time)
(Pl d St E it )– (Planned Stoppages + Excess capacity) – Remark: Stay critical for “planned stoppages” !
Operating Time = Loading Time - Stoppages– Machine defects, no energy, no personnel, no basic
t i l t l t l imaterial, no tools, setups, cleaning– line constraints (no input, output buffer full)
100×=timeloadingtimeoperatingtyAvailabili
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 11
timeloading
Part 2: EfficiencyPart 2: EfficiencyIndustrial Management
yyOPERATING
TIME
PROCESSEFFICIENCY
Cycle Time x Qty of ProductsOperating Time
x 100=
0,5 min x 704
3. IDLING, MINORSTOPPAGESNET
OPERATING TIME 0,5 min x 704
400 min x 100= = 88 %(e.g.)4. REDUCED
SPEED
Machine operating, but no or not enough productionMachine operating, but no or not enough productionPossible causes
– Empty, wear and tear, empty positions, interferences, lower speed, adjustments tests minor stoppages trainingadjustments, tests, minor stoppages, training,…….
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 12
Part 2: EfficiencyPart 2: EfficiencyIndustrial Management
yy
CalculationCalculationCycle time per productMaximum speed machine (Name Plate Capacity)Maximum speed machine (Name Plate Capacity)
– Determined by specs machine
Maximum is always 100%Maximum is always 100%Correct determination cycle time or maximum speed
( ) 100××
=timeoperating
producedQtyproducttimecycleEfficiencyp g
100/
×=htthtiti
producedQtyEfficiency
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 13
/.× hourqtytheortimeoperating
Part 3: QualityPart 3: QualityIndustrial Management
Q yQ yNET
OPERATINGTIME
% GOOD PRODUCTS
Qty Produced –WasteQty Produced
x 100=
704 pcs – 28 pcs
5. PROCESSWASTE
6 SET UP
QTY OFGOOD
PRODUCTS 704 pcs 28 pcs704 pcs
x 100= = 96 %(e.g.)6. SET-UP WASTE
Products : scrap – bad qualityDuring productiong pAfter setup: at startup production
In doubt : NO good productReworkable products: NO good product
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 14
Part 3: QualityPart 3: QualityIndustrial Management
Q yQ y
Calculation:Quantity of products madeQuantity of products madeQuantity of direct sellable products
- Planned customer- Planned customer- Planned quality
d d 100×−
=producedqty
scrapproducedqtyQuality
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 15
OEE OEE SummarSummaryyIndustrial Management
yyOVERALL EQUIPMENT EFFECTIVENESS6 LOSSESLOADING TIME
AVAILABILITYLoading Time - Downtime
Loading Time x 100=
460 min – 60 min
1. DEFECTSOPERATING
TIME460 min – 60 min
460 min x 100= = 87 %(e.g.)
PROCESSEFFICIENCY
Cycle Time x Qty Producedx 100=
2. SET-UPS
3. IDLING, MINORSTOPPAGES EFFICIENCY Operating Time
x 100=
0,5 min x 704400 min
x 100= = 88 %(e.g.)
STOPPAGES
4. REDUCEDSPEED
NET OPERATING
TIME
% GOOD PRODUCTS
Qty Produced – WasteQty Produced
x 100=5. PROCESS
WASTEQTY OFGOOD
704 pcs – 28 pcs704 pcs
x 100= = 96 %(e.g.)6. SET-UPWASTE
GOODPRODUCTS
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 16
OVERALL EQUIPMENT = AVAILABILITY x PROC. EFFIC. x GOOD PRODUCTSEFFECTIVENESS = 0,87 x 0,88 x 0,96 = 73,5 %
TEEPIndustrial Management
T t l Eff ti E i t P fTotal Effective Equipment PerformanceMeasures usage of total available capacityPlanning loss– No demand (overcapacity)– R&D production– R&D production– No energy– Other stoppage reason not under control of the company
U d ti (i th f t i l d)Unused time (i.e. the factory is closed)Planning Loading Time lossesLoading Time
NotusedTotal Operations Time
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 17
Total Time (365d x 24h)
SummarySummaryIndustrial Management
yyTotal Time (365 days x 24 hours)
Total Operations Time
Loading Time
O ti Ti
Unscheduledtime
Unplannedtime
LineStoppageDefectOperating Time
Expected Output
Real Output
restraintStoppageDefect
Minorstops
Reducedspeed
ReworkScrapGood Products
OEE
Net Utilisation (=TEEP*)
Gross Capacity Utilisation(adapted from Koch 2003)
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 18
OEE as Impro ement Tool Industrial ManagementImprovement Tool
Where is the biggest loss?Where is the biggest loss?Drill down analysis for continuous improvement
40%60%80%
100%
54%
88%98%
47%
0%20%40%
Av Eff Q OEE
Root Cause AnalysisCountermeasuresCountermeasures
PDCA
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 19
Industrial Management
Part Two
THE BADPart Two
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 20
OEE can be misused and manipulated Industrial Managementmanipulated
OEE is a relative measure for one or multipleOEE is a relative measure for one or multiple identical equipment
Machine A vs B : higher OEE = more output ?Machine A vs. B : higher OEE = more output ?• What about NPC? • What about product mix?
What abo t ‘World Class’ benchmarks ?What about ‘World Class’ benchmarks ?
OEE as an overall figure offers no insight in O as a o e a gu e o e s o s g timprovement opportunities and can be misleading
Analyse the 3 factorsWhat is the relative cost of 1% availability loss vs. 1% efficiency loss vs. 1% quality loss?• Is OEE = 90% x 90% x 80% the same as OEE = 90% x 80% x 90% ?
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 21
Is OEE 90% x 90% x 80% the same as OEE 90% x 80% x 90% ?
OEE can be misused and manipulated Industrial Managementmanipulated
OEE registration can be manipulatedOEE registration can be manipulated, especially if manual
‘Estimating’ downtimesEstimating downtimesCount all products as ‘OK’‘Abnormal’ vs. ‘Normal’ downtimeUse lower figure as nominal speed
OEE can work against Lean !OEE can work against Lean !OverproductionSuboptimizationp• Efficient processes vs. Efficient value streams
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 22
Efficient Processes vs.Efficient Value Streams Industrial ManagementEfficient Value Streams
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 23
LEAN = Improving Value Streams Industrial ManagementImproving Value Streams
Total Lead Time vs.
Total Process Time
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 24
(Learning to See Mike Rother John Shook Lean Enterprise Institute 1998)
Is it always goodIndustrial Management
y gto increase OEE ?
YES but only if it impliesYES but only if it implies reducing downtimes due to technical or organisational lossesorganisational lossesReducing efficiency lossesImproving product qualityp g p q y
BEWARE if it is due to reducing overall setup g pdowntime without reducing setup times
Setup performance determines the EPEI* in the p pvalue stream
(EPEI = Every Part Every Interval)
OEE improvement = trade off between need for capacity
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 25
OEE improvement = trade off between need for capacity and need for flexibility
OEEOEE ImprovementImprovement??Industrial Management
OEE OEE ImprovementImprovement??
OEE increase
Lesschangeovers
WIP/FG Overall Value increase
EPEI increase
Stream cost?
LT increase
Flexibility ?Competitiveness?
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 26
Trade Off A Set-Up Reduction Example
Industrial ManagementA Set-Up Reduction Example
OVERALL EQUIPMENT EFFECTIVENESS6 LOSSESLOADING TIME
AVAILABILITYLoading Time - Downtime
Loading Time x 100=
460 min – 60 min
1. DEFECTSOPERATING
TIME460 min – 60 min
460 min x 100= = 87 %(e.g.)
PROCESSEFFICIENCY
Cycle Time x Qty Producedx 100=
2. SET-UPS
3. IDLING, MINORSTOPPAGES EFFICIENCY Operating Time
x 100=
0,5 min x 704400 min
x 100= = 88 %(e.g.)
STOPPAGES
4. REDUCEDSPEED
NET OPERATING
TIME
% GOOD PRODUCTS
Qty Produced –WasteQty Produced
x 100=5. PROCESS
WASTEQTY OFGOOD
704 pcs – 28 pcs704 pcs
x 100= = 96 %(e.g.)6. SET-UP WASTE
GOODPRODUCTS
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 27
OVERALL EQUIPMENT = AVAILABILITY x PROC. EFFIC. x GOOD PRODUCTSEFFECTIVENESS = 0,87 x 0,88 x 0,96 = 73,5 %
Extra Capacity neededIndustrial Management
p y6 LOSSESLOADING TIME OVERALL EQUIPMENT EFFECTIVENESS
AVAILABILITYLoading Time - Downtime
Loading Time x 100=
460 min – 10 min
1. DEFECTSOPERATING
TIME460 min – 10 min
460 min x 100= = 97.8 %(e.g.)
PROCESSEFFICIENCY
Cycle Time x Qty Producedx 100=
2. SET-UPS
3. IDLING, MINORSTOPPAGES EFFICIENCY Operating Time
x 100=
0,5 min x 797450 min
x 100= = 88.5 %(e.g.)
STOPPAGES
4. REDUCEDSPEED
NET OPERATING
TIME
% GOOD PRODUCTS
Qty Produced –WasteQty Produced
x 100=5. PROCESS
WASTEQTY OFGOOD
797 pcs – 15 pcs797 pcs
x 100= = 98.1 %(e.g.)6. SET-UP WASTE
GOODPRODUCTS
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 28
OVERALL EQUIPMENT = AVAILABILITY x PROC. EFFIC. x GOOD PRODUCTSEFFECTIVENESS = 0,978 x 0,885 x 0,981 = 84,9 %
No extra CapacityIndustrial Management
p y6 LOSSESLOADING TIME OVERALL EQUIPMENT EFFECTIVENESS
AVAILABILITYLoading Time - Downtime
Loading Time x 100=
410 min – 10 min
1. DEFECTSOPERATING
TIME410 min – 10 min
410 min x 100= = 97.5 %(e.g.)
PROCESSEFFICIENCY
Cycle Time x Qty Producedx 100=
2. SET-UPS
3. IDLING, MINORSTOPPAGES EFFICIENCY Operating Time
x 100=
0,5 min x 704400 min
x 100= = 88 %(e.g.)
STOPPAGES
4. REDUCEDSPEED
NET OPERATING
TIME
% GOOD PRODUCTS
Qty Produced –WasteQty Produced
x 100=5. PROCESS
WASTEQTY OFGOOD
704 pcs – 15 pcs704 pcs
x 100= = 97.8 %(e.g.)6. SET-UP WASTE
GOODPRODUCTS
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 29
OVERALL EQUIPMENT = AVAILABILITY x PROC. EFFIC. x GOOD PRODUCTSEFFECTIVENESS = 0,975 x 0,88 x 0,978 = 83,9 %
FlexibilityIndustrial Management
y6 LOSSESLOADING TIME OVERALL EQUIPMENT EFFECTIVENESS
AVAILABILITYLoading Time - Downtime
Loading Time x 100=
460 min – (6x10 min)
1. DEFECTSOPERATING
TIME460 min – (6x10 min)
460 min x 100= = 87 %(e.g.)
PROCESSEFFICIENCY
Cycle Time x Qty Producedx 100=
2. SET-UPS
3. IDLING, MINORSTOPPAGES EFFICIENCY Operating Time
x 100=
0,5 min x 704400 min
x 100= = 88 %(e.g.)
STOPPAGES
4. REDUCEDSPEED
NET OPERATING
TIME
% GOOD PRODUCTS
Qty Produced –WasteQty Produced
x 100=5. PROCESS
WASTEQTY OFGOOD
704 pcs – 15 pcs704 pcs
x 100= = 97,8 %(e.g.)6. SET-UP WASTE
GOODPRODUCTS
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 30
OVERALL EQUIPMENT = AVAILABILITY x PROC. EFFIC. x GOOD PRODUCTSEFFECTIVENESS = 0,87 x 0,88 x 0,978 = 74,8 %
Industrial Management
Part Three
THE UGLYPart Three
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 31
OEE linked with Pay and Bonus Systems Industrial ManagementPay and Bonus Systems
The Uncertainy Principle of HeisenbergThe Uncertainy Principle of HeisenbergMeasurement systems should
drive the desired behaviornot focus on only one aspect of performance but should be balanced
OEE, if wrongly used, can driveOverproduction (too much, too early)Suboptimization
Effi i t Effi i t l t• Efficient process vs. Efficient value stream
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 32
Industrial Management
CONCLUSION
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 33
To RememberIndustrial Management
OEE is the only ‘complete’ measure ofOEE is the only complete measure of machine performanceOEE makes waste visibleOEE is a relative measure that isOEE is a relative measure that is designed to be used for continuous improvementimprovementOEE can fit perfectly within a Lean strategyBeware of the Bad and Ugly !
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 34
g y
Industrial Management
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 35
Van Goubergen P&M Industrial ManagementProductivity Improvement
Training/Education (15%) Implementation (85%)Training/Education (15%) - Implementation (85%)
SomeSome ofof ourour referencesreferencesSomeSome of of ourour referencesreferences……
© 2009-2010 Prof.dr.ir. Dirk Van Goubergen – www.vangoubergen.com 36