Overall equipment effectiveness (OEE) is a measure of how well a manufacturing equipment is utilized compared to its full potential, during the periods when it is scheduled to run. It identifies the percentage of manufacturing time that is truly productive as well as the time it is losing effectiveness. An OEE of 100% means that only good parts are produced (100% quality), at the maximum speed (100% performance), and without interruption (100% availability).
Introduction Measuring OEE is a manufacturing best practice. By measuring OEE and the underlying losses, important insights can be gained on how to systematically improve the manufacturing process. Technically, OEE is an effective metric for identifying and visualizing losses, and steering the improvement of the effectiveness of manufacturing equipment by eliminating 'waste'. Socially, OEE can provide a common language for groups speaking in different 'languages' such as shop floor (units), managers (money) or planners (time).
Origin of OEE The term OEE was first mentioned in Seiichi Nakajima's book 'TPM Tenkai' in 1982. OEE was described as a central part of the Total Productive Maintenance methodology. It is based on the Harrington Emerson way of thinking regarding labor efficiency.
Essence of OEE 100% OEE is considered to be a theoretical reference point where a machine would be permanently running, at its theoretical maximal speed, producing only good products. Anything hindering this is considered to be a 'loss'. To gain insight into which losses occur on the equipment and to target the areas that should be improved to increase the value-creating conversion (effectiveness), three questions are asked:
Is the machine running? If not: What was hindering? When running: Is the machine running at theoretical maximal speed? If not: What was slowing it down? Is the output meeting its specifications? If not: what DID come out? The first question leads to the 'availability rate' of the equipment, the second one to the 'performance rate' and the third one to the 'quality rate'. in this way, a cascade of effectiveness and effectiveness losses arises.
Loss cascade The quality rate refers to a part of the performance (the part that there was 'speed', the other part is lost in the performance rate). The Performance rate refers to part of the availability (the time there was output - the other part is lost in the availability rate).
Three 'rates' The OEE can now be calculated as the product of the three separate components:
Availability: percentage of scheduled time that the equipment is available to operate. The Availability Metric is a pure measurement of Uptime that is designed to exclude the effects of Quality and Performance. The losses due to wasted availability (time) are called availability losses. Performance: speed at which the equipment runs as a percentage of its theoretical maximal speed. The losses due to wasted speed (amount of output) are called performance losses. The performance rate is designed to exclude the effects of Quality and Availability. It will disclose: deliberately reduced speed deviation from the set speed due to minor stops (i.e., downtime smaller than a threshold and thus not included in availability) speed fluctuations. Quality: Good Units produced as a percentage of the Total units produced. It is commonly referred to as the first pass yield (FPY), First Time Right (FTR), or First Time Quality (FTQ). The losses due to wasted quality (good product) are called quality losses. Each of the three components of the OEE points to an aspect of the process that can be targeted for improvement. OEE may be applied to any individual equipment or line. This tool also allows for drilling down for very specific analysis, such as a particular Time frame, Shift, Team or any of several other parameters. Although the performance of a particular product can be determined from OEE data, OEE cannot be calculated for that product because this would require that all downtime (availability losses) should be correlated to specific products.
Six Big Losses OEE focusses on the 'if not' in the equations: Where did potential effectiveness got lost? These 'losses' of effectiveness are being subdivided further into what is known as the 'Six Big Losses' to OEE. In order to make this more universally applicable and also to better reflect the financial impact of the losses, the original six big losses were later adjusted slightly.
The reason for identifying the losses in these categories is so that specific countermeasures can be applied to reduce the loss and improve the overall OEE.
Calculation of OEE Multiplying the three underlying grades AxPxQ results in a percentage value that indicates the proportion of the scheduled machine running time during which production actually met the quality criteria. This value is always well below 100%, as 100% is a theoretical value. Even if a system runs continuously at maximum speed without causing a single defect, it will for example still need to be serviced at some point.
OEE is calculated with the formula:
O E E = A v a i l a b i l i t y ∗ P e r f o r m a n c e ∗ Q u a l i t y {\displaystyle OEE=Availability*Performance*Quality}
Example: (Availability= 86.6%)*(Performance=93%)*(Quality=91.3%)= (OEE=73.6%)
Alternative calculation Alternatively, the OEE as a number could be calculated by dividing the minimum time needed to produce the parts under optimal conditions by the actual time needed to produce the parts. However, in this way the losses are no longer known, meaning the most important part of OEE is missing.
Value Range The value range for OEE is between 0% and 100%. If an effectiveness level of more than 100% is displayed, this indicates an error in the definition. 100% time for OEE is the time when the machine is scheduled to be in operation: This is usually the "shift time."
Availability The Availability portion of the OEE Metric represents the percentage of scheduled time (also referred to as 'loading time') that the equipment is available to operate.
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