* This article originally appeared as a guest post on the OFS blog.
Overall Equipment Effectiveness (OEE) isn’t just for the big guys. Small and medium businesses can get the edge by getting smart with OEE. Here’s how.
Overall Equipment Effectiveness (OEE) has long been associated with larger businesses, mainly because it was created during the development of the Toyota Production System.
But measuring to improve isn’t the sole realm of large businesses – OEE is just as applicable to SMEs.
In fact, measuring OEE can deliver a long list of advantages for smaller manufacturers who are fighting to stay competitive in a growing market.
OEE helps you understand what’s working in your production line and what’s not. It highlights weak spots and barriers to efficient production. It lets you see quality issues causing rejects by customers and the processes slowing down your operators.
The best part? Software solutions like iDSnet Manager powered by OFS, mean that these benefits are more accessible to SMEs than ever before.
In this article, we’ll cover the tangible benefits of measuring OEE so you can weigh up whether it’s worth implementing an OEE system for your facility.
But first, let’s go back to basics:
What is OEE?
OEE stands for Overall Equipment Effectiveness. It isa best-practice metric for measuring the effectiveness and efficiency of a manufacturing process.
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.”
OEE is calculated as the product of these three factors:
OEE = Availability x Performance x Quality
The result is a score that shows the percentage of planned production timethat is actually productive.
A score of 100% represents perfect production. In other words, you are manufacturing only good parts, as fast as possible, with no downtime.
In this way, you can use OEE both as a benchmark and a baseline.
- Benchmark: Compare the performance of one piece of equipment to similar equipment, industry standards, or even to results for different shifts working on the same equipment.
- Baseline: Track progress of eliminating losses/waste from a piece of equipment.
Top OEE benefits for SMEs
#1. OEE shows you where to improve manufacturing processes
OEE provides a big-picture indication of how well your manufacturing processes are doing. Yet, to realise the real advantages of OEE, you need to go a step further and use those metrics to improve.
It’s only by understanding whether a production process or asset is efficient or inefficient that you can take steps to improve it. The OEE metric quantifies efficiency into a simple score and reveals the actual effectiveness of the production process.
The performance limitations of machinery can often be the bottleneck on capacity. OEE helps you recognise bottlenecks in the process and instigate continuous improvement projects. By measuring OEE improvement, you can also track the impact of process changes, and other improvement initiatives.
#2. OEE helps you manage the Six Major Losses
The goal of OEE is to identify, reduce or even eliminate the Six Big Losses of Total Production Management. These are the most common causes of equipment-based productivity loss in manufacturing:
- Availability: breakdowns and failures
- Availability: setup and adjustments
- Performance: small stops
- Performance: reduced speed
- Quality: start-up rejects
- Quality: production rejects
Simply put, this means OEE can help you reduce the costs of downtime, rejects and defects. This alone can unleash powerful advantages over the competition.
#3. OEE helps you achieve a faster ROI on equipment
Consider every piece of equipment on your production line as an investment. When you invest in that equipment, you weigh up how long it will take to achieve a return on investment (ROI). The quicker you can achieve an ROI, the better for your bottom line.
To achieve the maximum ROI in the shortest possible time, you need to ensure the equipment is used to its optimum efficiency and effectiveness.
That’s precisely what OEE Utilisation (OEEu) sets out to do. OEEu measures OEE effectiveness against calendar hours (24 hours a day, 365 days a year) to report the bottom-line utilisation of assets.
You can then make the required changes to get the best performance from new and existing machinery or invest in additional equipment.
#4. OEE helps you visualise performance
Better visibility is a huge advantage of OEE. It lets you see the real factors behind production issues, rather than relying on gut instinct.
Where OEE really helps SMEs is by filtering the most important sources of productivity losses into a single percentage score. So, you can easily see what’s working and where your long-term and short-term priorities should be.
#5. OEE helps maximise workforce productivity
Think of OEE as a management tool. An OEE system like iDSnet Manager powered by OFS lets you:
- Identify reasons for operator downtime.
- Uncover lengthy changeovers or set up times.
- See productivity data.
Using these insights, you can better allocate resources, identify where there may be extra capacity or where new hires are needed, and provide operators with a real-time, achievable target.
#6. OEE gives you a competitive edge
By reducing production losses (and therefore costs), OEE is a tool to help SMEs gain a competitive edge.
Let’s say you know that your production line is capable of making 100 units per hour but is only producing 70 units. The OEE score indicates why there are losses so you can make changes to increase production capacity.
OEE also helps you improve quality. Defective products can be one of the biggest causes of expense for any sized manufacturer, and when you’re a smaller fish in a big pond, it’s critical to maintain exceptional quality to win customers and build an excellent reputation.
This OEE quality metric is measured as a percentage of good parts producedagainst total parts produced. This can help you work out the root causes of issues and eliminate costs associated with rework and scrap.
OEE is not just a tool for big businesses; it can help manufacturers of all sizes drive improvement by providing a better understanding of losses, so you can make the right decisions to improve efficiency and reduce operating expenses.
The best part is OEE can be implemented using a single system, such as iDSnet Manager powered by OFS, so it’s easier than ever for SMEs to unlock the benefits.
To learn more about OEE and what actionable steps you need to take, download the free whitepaper by Matthews Australasia.