They say that if you can measure it, then you can improve it. In manufacturing today, measurement is critical to success. You need to have a strategy in place to measure and improve your performance (and your bottom line). OEE should be a part of that plan.
So, what does OEE stand for? What is OEE? And why do you need it?
The ultimate OEE definition
What is OEE? OEE stands for “Overall Equipment Effectiveness”. Here’s a good OEE definition by Lean Production:
“It measures what could have been made – should every piece of equipment have operated effectively – against what has actually been produced, providing the result as a percentage. The higher the percentage, the better the production line has performed.”
So as a benchmark, what is considered a “good” OEE score?
The simplest way to understand OEE is as a measure of a manufacturer’s efficiency and productivity. As a calculation of the availability, performance and quality of output from a given piece of equipment or production line, it tells you how much “right first time” product the machine/line produced compared with what it could have produced in the scheduled time.
In this way, OEE can tell you exactly what is happening in the production line.
A short history of OEE
OEE is not a new idea. It was the formulated by Seiichi Nakajima, who pioneered the Total Productive Maintenance (TPM) system, back in the 1960s. (How important is TPM to Australian manufacturers? Find out here.)
OEE is a central element in TPM – though it’s important to note that they are not the same thing. The potential of OEE in production was famously highlighted by car manufacturer Toyota in the 1980s. Today it’s used by manufacturers of all types and sizes around the world as a best practice measure and key performance indicator.
Are you making these common mistakes with OEE?
OEE in production: a tool for improvement
The best way to think about OEE in production is as a yardstick for measuring improvement. When you look at one production line, there are hundreds of variables that can affect efficiency. How do you work out what to change and what impact it will make to efficiency? After all, by improving a single element in one area, you might be causing inefficiencies further down the line.
That’s where OEE comes in. By looking at Overall Equipment Effectiveness, you can determine the performance of the operation, benchmark it, highlight areas to be improved, and make informed decisions. The more you improve your OEE score, the higher profits and lower manufacturing costs you achieve. In other words, OEE is more than a calculation – it’s a strategy for continuous improvement. It’s not enough to simply capture the data on OEE in production, you need to use the information to drive change.
When using OEE in production, it’s best used on a single piece of equipment or single production line. It’s not much help to calculate OEE for a whole plant, as it can only give you an approximate idea of equipment performance and not much more. OEE is far more valuable when used to measure the performance (and losses) on a specific piece of equipment or synchronised line. That way, when there’s a problem, you can see the breakdown of performance, availability and quality and can take steps to improve.
Explore the benefits of implementing OEE
Check out available resources on implementing OEE
Here’s how to calculate OEE
Do you measure and apply OEE across your business? Is OEE being used to successfully monitor and drive improvements and diagnose issues? Tell us your challenges and goals, and find out how we can help.
Check out these blogs in “lean manufacturing & OEE” for more information.
Looking for highly informative case studies, whitepapers and infographics for manufacturing? Or videos showing solutions in action and lots of detailed of brochures? Find all that and more in Matthews’ large resource library. It also has presentations we’ve done to industry bodies and articles from our thought leaders. Plus, it’s all free to download!
Image credit: iStock / gustavofrazao