In the context of increasingly competitive markets, it is imperative to maintain adequate records of the level of asset utilization. On this occasion, we would like to present a systematic way of monitoring the use of productive resources known as OEE. We believe this concept is the best indicator for measuring productive efficiency, based on two fundamental principles:
- You can't manage what you don't measure, and
- It is useless to measure what is not managed
This calculation method is one of the most effective for improving productivity, minimizing inputs, maximizing outputs, and identifying the gap between the current and ideal situations.
In a simple way, it allows us to identify the sequence of activities linked to product transformation, as well as the hidden loss in the process—the one we recognize as the "hidden factory" generating losses. One of the most obvious losses, although paradoxically not always the one of greatest concern or the one most sought to avoid, is the loss of efficiency in the production facility.
On countless occasions, clear concepts of efficiency loss, such as cleanings, planned maintenance, format or product changes, are simply removed from the final efficiency calculation, citing such absurd reasons as "that was planned," attributing it to external factors, as if planning an event would prevent the associated minutes from being lost. This is the fundamental technical myopia, and this paradigm must be eradicated in order to address all those events that, even if planned, could be radically optimized.
Let's focus on the meaning of OEE to discuss how to improve facility effectiveness. To do this, we'll break down how it's calculated and explain how we can improve it. To begin, let's look at the illustration.
In short, OEE indicates how many parts have been produced as a correct product, with the machine operating at the theoretical speed and without any breakdowns. This concept includes all sources of inefficiency, whether planned or not, since the only way to improve is to start by identifying everything and then working on what can be improved. To obtain an OEE equal to 85%, each multiplicand (quotient) in the OEE formula must be greater than 95%, or, in other words, the level of demand regarding breakdown and downtime management, speed and capacity losses, and defects must be extremely high.
For example, world-class manufacturing companies are achieving OEE values above 85% and companies in early stages of improvement commonly have values between 40 and 50%, which demonstrates why it is not advisable to invest in a new production line in these instances.
When measuring production efficiency this way, productivity percentages are reduced by between 10 and 20% compared to the values normally reported. This should not be considered a catastrophe, but rather a very important source of motivation for improvement and elimination of losses.
The first large block of losses affects the Availability and is generated by breakdowns and downtime. To address these issues, it is essential to have a system or at least a simple spreadsheet that allows us to obtain this information with the desired frequency. This is used to collect data, stratify it, create cause-and-effect diagrams and the well-known Pareto chart, as well as use other more sophisticated tools such as histograms or control charts. The main objective is to identify the problems that generate breakdowns and downtime in order to address their causes and thus systematically eliminate them.
For this task, it is essential to have a multidisciplinary working group that is not tempted to solve problems from a desk and that masters the concepts and calculation methods. In turn, the different disciplines within the group allow for the resolution of the situations presented for the different root causes of each of the losses, always prioritizing those with the greatest impact in terms of time, cost, or ease of execution.
The second large block of losses affects the Performance Operational issues, such as speed losses, are often caused by repeated performance drops that frequently occur after changeovers and setup. This can be addressed in the same way as availability, using SMED (Single Minute Exchange of Dies) techniques. SMED proposes outsourcing or bringing to running operations those activities that previously required equipment to be stopped.
For the third block of losses, Quality performance for defects and losses, we can reuse the techniques from the first block by adding some statistical tools such as process capability studies based on dispersion (Cp, CpK, etc.).
Some of the advantages of addressing OEE improvement in a facility or process are that it yields results in the short term, allows the improvement program to be self-financed with the resulting benefits, and, crucially, it allows us to highly motivate staff by leveraging our "Workplace Brains." Staff are engaged through training and coaching, so that with their active participation, they achieve results, employ the associated tools, and are able to apply them autonomously and consistently and systematically.
Operators will be the most affected by this measurement methodology, so it is vital that, after being trained in the concepts and calculation methods, they themselves carry out the measurement, monitoring, and improvement planning. This reinforces the sense of ownership over the equipment they work on during their shifts. It is highly recommended to support this type of approach with 5S processes, TPM development, and Suggestion Systems. This way, the cultural change required for continuous improvement is managed.
Continuing with the advantages, it's worth emphasizing that sources of inefficiency are being uncovered that would have been hidden with another measurement system. To this end, it is essential to use visual management systems, placed in a location easily accessible to those who apply this information, allowing everyone to monitor progress and see trends.
Finally, we want to reemphasize the need to take metrics at the scene and apply the aforementioned tools to prioritize opportunities for improvement. The true key to success lies in the level of conviction management has on this issue and their ability to convey to their managers the importance of dedicating time from their schedules and their people to such a critical issue for companies.
At first glance, calculating OEE may seem difficult, but once you understand the mechanics, the benefits of its implementation are formidable.
We invite you to calculate your company's OEE and tell us about your experience.
