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Transcript of OEE - An Introduction
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Parsec Automation Corp.3000 East Birch Street; #104
Brea, CA, 92821 USA
+1 714 996-5302
+1 714 996-1845www.parsec-corp.com
© Parsec Automation Corp 2010. All rights reserved. Parsec Automation Corp., Parsec logo,
and Parsec product names are trademarks of Parsec Automation Corp. References to other
companies and their products use trademarks owned by the respective companies and are for
reference purposes only.
An Introduction:
OVERALL EQUIPMENT
EFFECTIVENESS (OEE)
Driving Continuous Improvement and EnablingOperational Excellence
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TABLE OF CONTENTS
1. OVERVIEW .................................................................................................................................................... 1
2. DEFINITION OF OEE ...................................................................................................................................... 1
3. UNDERSTANDING OEE TERMINOLOGY ......................................................................................................... 2
3.1. OEE CATEGORIES ............................................................................................................................................ 2 3.2. DEFINING OEE EVENTS .................................................................................................................................... 4 3.3. WHAT IS CONSIDERED WORLD CLASS OEE? ......................................................................................................... 5
4. A REAL EXAMPLE .......................................................................................................................................... 6
5. CONCLUSION ................................................................................................................................................ 7
6. FREQUENTLY ASKED QUESTIONS ABOUT OEE ............................................................................................... 8
7. OEE GLOSSARY OF TERMS........................................................................................................................... 11
ABOUT PARSEC ........................................................................................................................................... 11
TERMS AND CONDITIONS OF USE ............................................................................................................... 11
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AN INTRODUCTION TO OEE
1. OverviewIt has become increasingly clear that the financial markets put a premium on a company’s
ability to maximize productivity and utilization of CURRENT assets. This will result in a net
reduction in cost of operation, which directly and positively affects the bottom line. In order to
do this, you have to CONTINUALLY measure, analyze and adjust your output. This is a complex
process that affects labor, equipment, consumables, procedures, quality and capital
investment.
As part of the plan to maximize productivity, the following is a list of goals common to most
manufacturers:
Reduce operating costs
Increase true capacity / Decrease time to produce
Reduce fixed-asset base (increase return on assets)
Better manage, allocate and spend capital
Increase total shareholder returns
But how do you accomplish these. Overall Equipment Effectiveness (OEE) has emerged as a
powerful method of evaluating the productivity of production systems. This document will
provide a brief guide to the concept of OEE.
2. Definition of OEE
OEE is an effective methodology to help improve the efficiency of manufacturing processes.
Increasingly since the early 1990s, OEE has emerged as a leading approach for accurately
measuring the true plant productivity. Although, initially, OEE was regularly associated with
Total Productive Maintenance (TPM) programs, it is now being looked at as a powerful means
of evaluating the key productivity indicators.
By definition, OEE is the product of Availability, Performance and Quality category percentages:
OEE = Availability * Performance * Quality
Where:
Availability is a measure of Downtime Losses,
Performance is a measure of Speed Losses, and
Quality is measure of Defect Losses.
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3. Understanding OEE TerminologyThe following Sections describe the various OEE terms used.
3.1. OEE Catego ries There are three Categories that make up OEE:
Availability
Performance
Quality
Each one of these categories represents losses that result in loss of productive Operating Time.
We begin with Total Available Time and subtract time lost to Availability (Downtime),
Performance (Speed) and Quality (Reject/Rework) issues. Very quickly, one can see the effects
of these losses on production time. Clearly, the Productive Time becomes a fraction of Total
Available Time. Obviously, by using OEE, the goal is to increase the Productive Time as much as
possible.
FIGURE 1, below, demonstrates the time losses due to various OEE Categories.
FIGURE 1 – Time Losses
Please note that the Planned Shutdown Time is not included in the OEE calculation.
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Total Available Time – This is the time that the plant is open and could be used for production.
Planned Production Time – This is the Total Available Time minus the Planned Shutdown Time.
Planned Shutdown could include meal breaks, holiday shutdown and scheduled maintenance.
Operating Time – This is the difference between Planned Production Time and the time lost to
downtime. Downtime events include equipment breakdown, unscheduled maintenance, setup
time and changeover. This is included in the OEE calculations.
Net Operating Time – This is the difference between the Operating Time and time lost to Speed
reduction. Speed reduction events include operating equipment at below rated speed
(increased cycle time), frequent short-lived stoppages not requiring maintenance and certain
operator errors. This is included in the OEE calculations.
Productive Time – This is the difference between the Net Operating Time and the time lost toQuality issues. Quality losses include rejected and reworked products. This is included in the
OEE calculations. TABLE 1 describes how each OEE Category is calculated.
OEE Category How it is Calculated
Downtime
Losses
Availability is the ratio of Operating Time to Planned Production Time
(Operating Time is Planned Production Time less Downtime Loss).
Availability of 100% means the process has been running with no stops.
Availability = Operating Time / Planned Production Time
Speed Losses Performance is the ratio of Theoretical/Ideal Speed to Actual Speed.
Performance of 100%means the process has been consistently running at
its theoretical maximum speed.
Performance = Parts Produced / (Ideal Speed * Operating Time)
Quality Losses
Quality is the ratio of Good Parts to Total Parts. Quality of 100% means
there have been no reject or rework parts.
Quality = Good Parts / Parts Produced
TABLE 1 – OEE Calculations
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3.2. Defining OEE Events
Within each OEE Category, there are several events that must be identified, and correctly
measured and analyzed. There are situations (or events) that may require further thought to
decide which category they belong to. For example, Short-lived stops and operator errors could
be recorded as either Availability (Downtime) or Performance (Speed) losses. The correct
categorization will be made based on the specific manufacturing process and plant. It is
important to be consistent and uniform in categorizing events in order to get reliable results.
As stated above, there are many events that affect OEE. However, there are those which are
considered the most common causes for efficiency loss in the manufacturing environment.
Naturally, by implementing an OEE practice, you must aim to reduce these commonly occurring
loss events to increase the overall plant/manufacturing productivity. TABLE 2 provides a list of
the Common Loss Events, and the categories to which they are attributed.
Common Events OEE Category Comment
Equipment
Breakdowns
Availability Loss Depending on the specifics of the production
environment, certain variety of breakdowns not
requiring maintenance could be categorized as
Performance/Speed Losses.
Process Setup and
Adjustments
Availability Loss Includes certain operator errors and product
changeovers.
Short Stops and
Idling
Performance
Loss
Short stops are typically those which do not require
maintenance. Generally, problems with consumables
could be categorized as Performance/Speed Losses.
Reduced Speed Performance
Loss
Factors such as equipment age or production anomalies
that keep the operation from running at the maximum
theoretical speed would be included in this category.
Startup Rejects Quality Loss Products lost (Rejected) during initial stages (transition)
of startup prior to reaching steady state (regularly
producing good products).
Production
Rejects
Quality Loss Products lost (Rejected due to defect) during the normal
production stages.
TABLE 2 – Common Loss Events
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3.3. What is Cons idered World Class OEE?
The purpose of implementing an OEE program is to improve productivity. As we have already
described, OEE his three main components (categories). It is important to know what you are
aiming at achieving. What is considered to be World Class OEE? Are the components of OEE
important by themselves? These are very significant questions.
By general consensus, World Class OEE is 85% or higher. By contrast, most manufacturing
plants have an OEE in the range of 30% to 60%. Additionally, it is not unusual for these plants to
experience daily fluctuations of about 10%. Obviously, there is a lot of room for improvement.
The components of a world class OEE are as shown in TABLE 3:
OEE & its Components World Class
Overall OEE 85.0%
Availability 90.0%
Performance 95.0%
Quality 99.9%
TABLE 3 – World Class OEE Components
Achieving world class OEE is quite challenging and requires a rather rigorous program that is
consistently and religiously followed. This means regular measurements, analysis and takingaction based on the findings.
An important point to keep in mind is that you must look at all four numbers (OEE, Availability,
Performance and Quality) together and individually. It is possible to have a reasonable OEE
without having an acceptable productivity score. For example, if achieving higher OEE has been
at the expense of lower quality (more reject/rework), in most cases the outcome is
unacceptable.
The OEE percentage by itself may not provide the right answer. You must
scrutinize its components.
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4. A Real ExampleIt is good to know what OEE and its components are. However, in order to have a good
understanding of the concept, it is very helpful to look at a real example. Consider a beverage
plant with the following production schedule for the Bottling Area:
Item Data
Days of Operation Planned 5
Number of Shifts 15 (3 per day, 8 Hrs, each)
Total Planned Shutdown 2400 minutes (160 minutes/shift)
Downtime 1250 minutes (for all shifts)
Theoretical (Ideal) Rate 600 bpm (bottles per minute)
Total Bottles Produced 1,656,502Rejected Bottles 1,207
TABLE 4 – Production Data for Calculation of OEE and its Components
Planned Production Time = Total Available Time – Total Planned Shutdown
= 7,200 – 2,400
= 4,800 minutes
Operating Time = Planned Production Time – Downtime
= 4,800–
1,250= 3,550 minutes
Good Bottles = Total Bottles Produced – Rejected Bottles
= 1,656,502 – 1,207
= 1,655,295 Bottles
Availability = Operating Time / Planned Production Time
= 3,550 minutes / 4,800 minutes
= 0.7396 (or 73.96 %)
Performance = Bottles Produced / (Ideal Rate * Operating Time)
= 1,656,502 / (600 bpm * 3,550 minutes)
= 0.7777 (or 77.77%)
Quality = Good Bottles / Total Bottles Produced
= 1,655,295 Bottles / 1,656,502
= 0.9993 (or 99.93%)
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OEE = Availability * Performance * Quality
= 0.7396 * 0.7777 * 0.9993
= 0.5748 (or 57.48%)
Considering that OEE can also be defined as:
OEE = Productive Time / Planned Production Time
Then:
Productive Time = OEE * Planned Production Time
= 0.5748 * 4,800 minutes
= 2,759.04 minutes
Also, consider if downtimes and short-lived stoppages were reduced by 10% or 125 minutes,then the same factory would be able to produce 58,327 more bottle during the same 5-day
period (assuming the same effective performance). With the wholesale price of each bottle at
$0.85, during each 5-day period, the Bottling Area can produce $49,578 more sellable product.
If the Bottling Area is operated 350 days during the year, the extra production will be worth
$3,470,486.
5. ConclusionToday’s economy favors companies that boost revenue without sacrificing profitability and
remain strong even when the financial markets decline. Increasingly, the financial analystsfactor in a long-term debt-to-capital ratio to acknowledge those companies that achieve growth
without accruing heavy debt. It is interesting to note that these companies manage to have
higher revenues even when sales are lower. This feat, among others, is accomplished by a
rigorous practice of productivity gains cost-cutting through increased efficiencies and
maximizing returns on fixed assets. OEE can play a critical and increasingly valuable role in
driving this bottom-line driven practice.
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6. Frequently Asked Questions about OEE1) Do you define everything in numbers of parts, or units of time?
The answer depends on what's most intuitive for you and your operators. You can
actually mix and match. Availability is usually described in terms of hours or minutes.
Performance is usually described in terms of parts per minute or hour. Other quantity-
related measurements like pounds, kilos or meters per unit of time may also be used.
Most people talk about Quality as a ratio of good product to total production. But all of
these are converted to a % that shows actual vs. potential. These numbers are naturally
very revealing.
2) Is the final OEE composite number a "magic formula"?
No - you definitely should not think of it that way! Let's say you have a process that
gives you 89% availability, 86% performance and 98% quality, for a 75% total. Is that
good or bad? Only you can decide. Now let's say that you played musical chairs with thenumbers - 98% availability, 89% performance and 86% quality. Is a quality drop from
98% to 86% worth the dramatic improvement in availability? Most manufacturers would
consider this tradeoff to be totally unacceptable.
The beauty of OEE is not that it gives you one magic number; it's that it gives you three
numbers, which are all useful individually as your situation changes from day to day.
And it helps you visualize the total resources of your manufacturing in relation to what it
actually produces - a very practical simplification.
3) Is OEE data subject to misinterpretation?
Yes, without a doubt. The answer to the previous question is a great example of that.OEE tells you nothing about how much your resources actually cost in dollars, what the
easiest improvement actually is, or how much it will cost you to make that
improvement. What you should look for in OEE is losses and bottlenecks that can be
eliminated for minimal cost. In most cases that is possible. OEE data is only meaningful
in the context of your situation and your efforts to improve it.
4) How do you determine the "Theoretical Capacity" of a machine?
The simple answer is the "name plate capacity" - the stated capacity given by the
manufacturer of the machine. But like the speedometer in your car, this number may
only be an approximation and may vary considerably with machine age and other
circumstances. Ideally you should experiment, take measurements and come up withyour own number.
5) For the purpose of measuring productivity, how do you define whether a machine is
"producing" or not?
If the machine is producing anything at all, then the production clock is running.
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6) How do you minimize number crunching, spreadsheets and reports and make OEE
truly simple?
Data isn't very useful if you don't get to see it until tomorrow. The printout in the
engineering office isn't nearly as helpful as a display you can see from fifty feet away,right on the shop floor. We recommend use of OEE oriented visual displays, which can
be plugged into a parts counting sensor and quickly configured to show relevant, real-
time OEE data, already digested into a form that is useful to you and your operators.
7) What period of time do you use for an OEE test?
You can choose any period you want. Most commonly it's based on the working cycle of
the factory, i.e. one shift (8 hours or 480 minutes).
8) Is it possible to have processes that exceed 100%?
No. If you obtain readings greater than 100%, then at some point you are not definingsomething correctly. It means that you were underestimating the capacity of a process
when you input your parameters.
9) If you have a series of machines or stages in a cell with different capacities, which
stage do you base your Theoretical Capacity on?
The fastest stage (not the slowest). This forces you to recognize all other bottlenecks
and strive to improve them - to do Kaizen, the Japanese philosophy of continuous
improvement.
10) Do OEE benchmarks, i.e. Theoretical Capacity, ever change?
Yes, but only if the fastest process or machine is improved.
11) Can OEE become a political football?
Yes, to the extent that it is misinterpreted interpretation and to the extent that it is used
for political purposes rather than genuine Kaizen. Of course that's true of all numbers
and measurements. The important thing is to keep the core objective in mind: To
produce more quality product with less waste and fewer headaches. Therefore you
should be very clear about exactly what you want and make sure you are measuring it.
Then you can create incentives for operators to deliver that result.
12) If there are several interpretations for the cause of a problem, where do you start? Always look for the simplest and most direct explanation. Obviously there are
exceptions, but here's what's important: Rather than ponder and discuss 50 different
causes, start with the most straightforward hypothesis and test it. Use a process of
elimination until you are certain.
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13) Should preventative maintenance downtime be allowed to penalize an OEE
performance calculation?
If the preventative maintenance happens during production (rather than during
scheduled downtime) then it is interfering with production and should be counted. This
does not mean that you should not do preventative maintenance at that time; it onlymeans that over a period of time, OEE will tell you whether this maintenance results in
less overall downtime, because of fewer "surprises," or more downtime, because of the
lost productivity while maintenance is done. In this way, OEE gives you solid answers to
complex questions by attaching them to simple measurements.
14) Should re-worked parts be counted as good or bad in the OEE calculation?
In OEE, any part that doesn't come out right the first time is a bad part. It's an
equipment issue. Your strategy for improving original part quality vs. reworking old
parts is a separate management and financial issue.
15) If a process can run during scheduled breaks, then is that break time factored into
equipment availability?
A personnel break is not necessarily the same as a machine break. If the machine is
running (i.e. producing anything at all) then regardless of whoever is or isn't eating
lunch, OEE considers the machine to be on - the clock is running.
16) How does OEE relate to the management function of helping machine operators?
The true value of OEE is in helping you and your operators make systematic
improvements. Therefore everything you do with OEE, including the visual display of
OEE data, should be designed with operators in mind and stated in whatever terms they
most easily understand.
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7. OEE Glossary of Terms
Term Definition Implication
Adjustment Time Productive time lost while tweaking
equipment
Can be a significant loss factor
Availability Possible production time after all
shut downs, planned and
unplanned, are subtracted. The
ratio of Operating Time to Planned
Production Time
Theoretical maximum benchmark
that OEE is measured against
Best Practice Methods that are considered “stateof the art” by the most respected in
an industry
Successful companies usedifferent methods than
unsuccessful companies
Breakdowns Lost time due to equipment failure,
a Downtime Loss
Cost of maintenance must be
weighted against production
losses & optimized
Changeover Time Lost time due to swapping of
equipment, connections or
materials
A prime candidate for
improvement for most people
Downtime Loss Production time lost to unplanned
shutdowns
Major focus area for
improvement
Event In OEE, a production loss which
must be categorized
OEE’s purpose is to clarify the
nature and effect of Events
Fully Productive Time Actual productive time after ALL
losses are subtracted
The true bottom line of your
facility's use of time
Ideal Cycle Time Theoretical minimum time betweenparts
A crucial calculation for settingOEE values
Ideal Run Rate Theoretical maximum production
rate
The inverse of Ideal Cycle Time
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Term Definition Implication
Kaizen Continuous improvement Japanese concept so important,
it's now part of the Englishlanguage
Lean Manufacturing Quality philosophy that minimizes
consumption of resources that add
no value to the finished product
Focus is eliminating waste:
unnecessary motion,
overproduction and Work In
Progress
Minimum Cycle Time The rate at which the fastest stage
in production can produce products
OEE measures against the fastest
stage. What is measured varies
with product/process
Net Operating Time True productive time before product
quality losses are subtracted,Operating time minus Speed Loss
Equipment time losses normally
are much larger than defectlosses
OEE (Overall
Equipment
Effectiveness)
Framework for measuring the Six Big
Losses for continuous equipment
improvement
OEE helps you see and measure a
problem so you can fix it
Operating time Productive time available after
unplanned shutdowns are
subtracted
Does not include Downtime Loss,
does include Speed Loss
Performance The rate at which equipmentconverts available time into product
Calculation excludes availabilityand quality losses
Planned Production
Time
Total time that equipment is
expected to produce
Only excludes planned
downtime, i.e. lunches & breaks
Planned Shut Down Deliberate unproductive time Excluded from all OEE
calculations
Plant Operating Time The time the factory is open and
capable of equipment operation
Theoretical maximum benchmark
that OEE is measured against
Production Rejects Parts which do not meet quality
standards
OEE views defects in terms of lost
time
Reduced Speed See Speed Loss
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Term Definition Implication
Quality % of parts which meet spec OEE recognizes quality as only
one aspect of equipmentutilization
Quality Loss % of parts which do not meet spec OEE views defects in terms of lost
time
Setup/Adjustments Time lost configuring equipment Typically a major target for
improvement
Major Losses The major categories of equipment
production loss: Breakdowns,
Setup/Adjustments, Small
Stops/Idling, Speed Loss, Startup
Rejects, Production Rejects
One of the reasons OEE is so
practical is that it clearly isolates
these six different issues so they
can be addressed individually
Six Sigma Systematic quality program that
strives for 6 standard deviations
between the mean and the nearest
specification limit
In extremely high quality
processes, rejects will be the
smallest of the Six Big Losses
Small Stops/Idling Brief pauses not normally thought of
as downtime, a Speed Loss
Idling is an "insidious" as
opposed to "obvious" loss of
time, but still costs you money
Speed Loss Lost productivity due to equipment
running below maximum speed
see "minimum cycle time"
Standby Time spent during setup,
adjustment & breakdowns
Not to be confused with "idle
time"
Startup Rejects Rejects produced while equipment
is adjusted for production, a Quality
Loss
OEE views this as a major loss to
be reduced
Theoretical Cycle
Time
See "Minimum Cycle Time"
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Term Definition Implication
Total Productive
Maintenance (TPM)
Maintenance system covering life of
all equipment: planning,manufacturing, and maintenance
and improving performance via
elimination of the six major types of
waste
OEE is the formula for defining
equipment effectiveness in aTPM program
World Class OEE 95% Availability, 95% performance
& 99.9% quality, with total of 85%
effectiveness
A composite OEE number means
very little without the total
context
TABLE 5 –
OEE-Related Terms
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ABOUT PARSEC
Parsec Automation Corp. (Parsec) is the developer of TrakSYS™, the leading real-time operations &
performance management software. Manufacturing companies worldwide rely on Parsec for flexible
and configurable tools to quickly track, record, analyze, and report the events critical to productivityenhancement. Without production disruption TrakSYS™ helps manufacturers to significantly improve
asset utilization and efficiency, increase capacity with no new capital equipment, reduce production
costs, and improve profitability. With measureable ROI TrakSYS™ fuels Lean, Six Sigma, TPM, and
Operational Excellence efforts. For more information about Parsec please visit the corporate web site at
www.parsec-corp.com.
© 2010 Parsec Automation Corp. All rights reserved. TrakSYS™, LOGICTrak™, MODELTrak™, INTELLITrak™,
GLOBALTrak™, EVENTTrak™, ALERTTrak™, SENSORTrak™, LEANTrak™, PRODUCTTrak™, WEBTrak™, HISTORITrak™,
AUDITTrak™, IMPROVETrak™, SPCTrak™, BATCHTrak™, and any other Parsec products and services mentioned
herein as well as their respective logos are trademarks or registered trademarks of Parsec Automation Corp. All
other products and service names mentioned are the trademarks of their respective companies. Data contained in
this document serve informational purposes only.
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