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Volume 7   Issue 1               January 2006


Overall Equipment Effectiveness: 
A Measurement to Help Your Company Get Lean 
by Darcy Meyer

We all know the plant that has two 
“identical” lines running side by side, usually 
with the same people and the same processes, yet 
the two machines often have different outputs. You 
can use the OEE measure to compare the two machines.

It’s a real honor for me to be invited to write a small number of articles for Door and Window Manufacturer magazine in 2006. My articles this year will focus on lean manufacturing. I hope to demonstrate some tools that link lean manufacturing and lean equipment operation.

A great deal has been written on the topic of lean manufacturing and much of it has to do with measuring and monitoring processes and improving those processes and training the people who drive them. But, don’t forget that equipment can be a significant source of improvement.

OEE is a lean measurement that many manufacturing professionals use to great advantage. It can help your organization focus on improving the performance of machinery. By focusing on uptime quality and speed it allows you to focus on the most significant and relative support processes. In other words, it will let you know where to look to get the biggest bang for the buck.

Overall Equipment Effectiveness (OEE)

Here is the formula:

OEE = Machinery Availability x Performance Rate x Quality Rate

And here is what each factor represents:

Machinery Availability. This is the percentage of scheduled time a piece of equipment is available to produce product. You might think of this as a percentage of uptime to “crewed” hours. 
Performance Rate. This is also a percentage measurement. It is calculated by dividing the actual run speed by the maximum run speed as stated by your OEM.
Quality Rate. This is the percentage of “conforming” units compared to the total output. This is an important ratio to measure because it shows you the real value in your output. It is the inverse of the waste percentage.

For example: Let’s calculate the OEE of a machine that operates for a week at 12 percent downtime, runs at 75 percent of the OEM’s rated speed and produces 7 percent defective units (waste):

• Machinery availability is 88 percent (100 percent minus 12 percent downtime).
• Performance rate is 75 percent.
• Quality rate is 93 percent (100 percent minus 7 percent waste).
• OEE = 88 percent x 75 percent x 93 percent = 61 percent. That means that the machine produced 61 percent of its potential output. 

Why measure OEE? The answer is simple and obvious. It allows for visibility of troubled machines. And, in turn, it allows you to drill down to the real problems associated with ineffective operations. 

Long term, as you accumulate a history of OEE, you can track the improvement of your equipment and be alerted when effectiveness degrades. Also, since it balances uptime, run-speed and quality equally, if one factor improves at the expense of others, the effectiveness will continue to balance.

Here is an example. Let’s say you retrofit a new set of nozzles on a glazing table and those nozzles will reduce your scrap rate by one percent. But, lets say that they slow your machine down, reducing your performance rate by three percent. Is it a good decision? Probably not since the overall effectiveness of the equipment has been reduced. 

Additional OEE Advantages

A report delivered to the maintenance department weekly showing each piece of major equipment and their respective OEE’s for the week is a great way for maintenance to understand where to spend most of its time. In your maintenance work-order system, you can set up rebuild thresholds or call for p.m. checks on a machine when the OEE is down below a predetermined level. It’s a terrific measure to keep all the resources focused on improving the most ineffective operations.

Teach operators to understand OEE. If you have “friendly internal competitions” based on OEE there can be no “cheating” by turning machinery speeds up at the expense of quality or uptime. There is real benefit to having teams of operators who use OEE as a part of their daily scorecard to know when things are going well and when they are not.

You can use this measure to benchmark two different lines in your plant. We all know the plant that has two “identical” lines running side by side, usually with the same people and the same processes, yet the two machines often have different outputs. You can use the OEE measure to compare the two machines. And more importantly, it can be used to drill down to find the real differences between the machines and fix the issue.

Where to start? Try conducting an OEE study on your bottlenecks. Even small bottlenecks can be validated and managed toward increased effectiveness.

As equipment is managed, the OEE is indicative of how effectively your machinery is being used and it is indicative of all of your improvement efforts. 

The words “what gets measured, gets done” apply directly to overall equipment effectiveness. 

Darcy Meyer serves as the general manager of Besten Equipment Inc. He is a professional engineer, a certified Lean Sigma and a Six Sigma Black Belt.

© Copyright 2006 Key Communications Inc. All rights reserved. No reproduction of any type without expressed written permission.