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OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 1
OEE - 1
OEE: Overall Equipment(Service) Effectiveness
Presented to Section 1124 of theAmerican Society for Quality
OEE - 2
We’ve learned about …
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 2
OEE - 3
• Learn about OEE and how to use it toimprove our overall efficiency, throughput,and quality in a plant, office, or service environment
• Gain an understanding of the financial opportunitiesavailable
• Learn how to use OEE to
1) Improve real-time efficiencies
2) Ensure compliance to budget
3) Evaluate capital expenditures
4) Compare one operation to another
Goals for Tonight
OEE - 4
Imagine a new car …
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 3
OEE - 5
Ideally …
We want our systems tooperate 100% of the time
at 100% of our bestdemonstrated speed
producing 100% goodquality product/services
OEE - 6
Reality is …
Our systems are notideal … it’s
unreasonable toexpect to operate allthe time at best ever
speeds producingnothing but goodproduct/services
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 4
OEE - 7
Soooo …Why is OEE so important?
• Companies make money by adding value to materialsand services to make products customers want
• As most companies use machines, people, andproduction lines to add value to their products, it’simportant they perform efficiently
• Overall Equipment/Service Effectiveness (OEE) is ametric used in Lean and Six Sigma to indicate howefficiently business systems are performing
• OEE promotes openness in information sharing and ano-blame approach in handling system-related issues.
OEE - 8
The Dollars: Overall Equipment Effectiveness (OEE)• Software simulations
can help vividlyillustrate the value ofincreasing the OEEcomponents ofPerformance, Avail-ability, and Yield
• In this example,improving OEE one (1)percentage point from28.1% is worth $120,000per year … note this isabout a $30M businessand the profit per piece isonly $10
• Similarly, improving thecurrent sigma value of3.27 by 1 is worth over$1.1M per year!
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 5
OEE - 9
Overall Equipment Effectiveness (OEE)
• OEE helps us to maximize
1. Performance … speed and/or utilization
2. Availability … uptime
3. Yield … quality
• On a real-time and budgeting basis
• Allows us to compare processes across plants,divisions, offices, and companies
OEE - 10
Time Available (24/7/365)
Time running
Time Operating
(1) Breakdowns, minor stops, offline PM’s,meetings, no sales
(2) Changeovers & adjustments
Availa-
bility
Losses
AVAILABILITY
Time Avail-Downtime
Time Available
x 100%
Availability (Uptime)
Availability: A comparison of the potential operatingtime and the time in which the system is actually
making products or providing services
For ExampleFor Example: We operate7 hours during an 8 hour shift
… our Availability wouldbe 7 divided by 8 or 87.5%
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 6
OEE - 11
Time running
Amount Produced/Served
Good Material/Services
Quality
Losses
(5) Quality defects in process, rework,callbacks, returns, …
(6) Start up and Transition losses
YIELD
Actual output - Defects
Actual inputx 100%
Yield (Quality)
Yield: A comparison of the raw materials (oroccurrences) put in to the process and the number of
products/services that meet the customer’s specifications
For Example: We input
3 divided by 100 or 97%
For Example: We input100 parts of which 3 are bad at
output … our yield is 100 minus3 divided by 100 or 97%
OEE - 12
Performance (Utilization or Speed)
Time operatingat maximum
rate
Perfor-mancelosses
Utilization
Actual Output
Max output in timerunning
x 100%
(3) Idling, Breaks, Minor Stops …
(4) Rate Losses (including ramp up)
Speed
Actual Speed
Best DemonstratedSpeed
x 100%or
Performance: A comparison of the speed/actualoutput with what the system could be consistently
producing in the same timeframe
For Example: We produce 80For Example: We produce 80units versus a best ever of 100 …
our Performance would be80 divided by 100 or 80%
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 7
OEE - 13
“6 Big Losses”Time Available (24/7/365)
Overall Equipment/Service Effectiveness (OEE)
OEE for World Class Manufacturers is 80+ %
Availability
(2) Set Ups, Changeovers & AdjustmentsTime Operating
Time Avail-Downtime
Time Available
x 100%
(1) Breakdowns, Minor Stops, OfflinePM’s, Meetings, No SalesAvaila-
bility
Losses
Time Operating atMaximum Rate
x
Performance
Actual Output
Max Output in TimeRunning
x 100%
(3) Idling, Breaks & Minor Stops
(4) Rate Losses (including ramp up)
Perfor-mancelosses
Time Operatingat
Maximum Rateand
Good Quality
x
Yield
Actual Output - Defects
Actual Inputx 100%
Quality
Losses
(5) Quality defects in process, rework,callbacks, returns, …
(6) Start up and Transition losses
OEE - 14
OEE: How it’s CalculatedOEE is the product of Three Components:
1. PERFORMANCE (Speed/Utilization) = Percentage of the output (# of parts oroccurrences) that the process actually produced, while it was running or the actualspeed vs. the best demonstrated speed for a given product, product family, service, ortransaction
X2. AVAILABILITY (Uptime) = Percentage of the total available time that theprocess/equipment was actually operating vs. 7/24/365
X3. YIELD = Percentage of the total parts/services produced that were good
OEE = Performance x Availability x Yield
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 8
OEE - 15
What is our OEE?
OEE: How it’s Calculated (Cont.)
Let’s look at an example:
We have a good plant. It averages 90% uptime on a7/24 basis. Production for the last month was 12,500
pallets versus a best ever month of 14,000 pallets.Scrap ran about 1.5%.
OEE = Overall Equipment Effectiveness
= Performance x Availability x Yield
= (12,500/14,000) x (0.90) x (.985)
= (0.893)(0.90)(.985)
= 0.792
OEE - 16
What is our OEE?
OEE: How it’s Calculated (Cont.)Let’s look at an example:
We have a good plant. It averages 90% uptime on a7/24 basis. Production for the last month was 12,500
pallets versus a best ever month of 14,000 pallets.Scrap ran about 1.5%.
OEE = Overall Equipment Effectiveness
= Performance x Availability x Yield
= (12,500/14,000) x (0.90) x (.985)
= (0.893)(0.90)(.985)
= 0.792
by attacking performance and availability issues
This is a good plant, yet the OEEcalculation gives us insight that even
better results might be achievedby attacking performance and availability issues
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 9
OEE - 17
Let’s look at service/transactional example:
An Accounts Payable Department for a Fortune 100 company operates 2 8-hourshifts Monday through Friday. For a given month they processed 256,126 invoicesversus a best ever of 278,309. During the 28-day month they had 12,004 invoicespaid after the due date, 58,732 paid 5 or more business days before the due date, and38 that were missed/paid incorrectly.
OEE: How it’s Calculated (Cont.)
OEE = Overall Equip (Service) Effectiveness
= Performance x Availability x Yield
= (256,126/278,309) x ((16 x 5) / (24 x 7))
x (256,126 - 12,004 - 58,732 - 38)
/ 256,126
= (0.92)(0.48)(.72)
= 0.318
What is the OEE?
OEE - 18
The last example isconsistent with mostbusinesses having an
opportunity to increasecapacity and/or
productivity by 25 to over100%!!
Overall Equipment Effectiveness (OEE)
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 10
OEE - 19
To compare OEE …
For comparison purposes… everyone should use 24/7/365as the basis for their availability
and best demonstrated (versus planor design) performance (speeds/
utilization)Counting unscheduled
time will encouragecreative ideas forreducing the time!
OEE - 20
Budgeted Production Efficiency (BPE)
“It’s not fair” to a business thatis limited by sales to take a “hit”
for not being able to run 24/7… for this reason a
Budgeted Production Efficiency (BPE)should be calculated to compare the
business to budgeted/planned productionschedules, line speeds, etc.
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 11
OEE - 21
Before expanding abusiness or adding a
line, we should ensurewe’ve maximized
current production;i.e., performance,
availability and yield!
Capital Appropriations
OEE - 22
Realtime Production Effectiveness (RPE)
For comparison and trendingpurposes, “OEE” should be basedon at least a week’s worth of data,
and ideally, a month or more … forrealtime trending, calculate insteada Realtime Production Efficiency
(RPE) using availableperformance, availability, and yield
information
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 12
OEE - 23
Real-time Work Area Scoreboard
95.6 SPEED
00:22:29 DOWNTIME
97.5 YIELD
89.0 EFFICIENCY
PERFORMANCE:PERFORMANCE:Compare current operations
against best ever
AVAILABILITY:AVAILABILITY:Track in “seconds” to create
a sense of urgency
to estimate…
YIELD:Ideally “weighed/counted” ... Might have
to estimate… include everything!
RPE:Realtime Prod Efficiency
… reset each shift/day
OEE - 24
Improving OEE• We use OEE to monitor the condition
of our equipment … similar to the waya nurse takes your temperature to seewhether you’re health has improved
• The point of using OEE is to drivesystem improvement
• Some improvement will occur from“awareness” when you start to measureOEE
• Sustained improvement requires adedicated approach
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 13
OEE - 25
Improving OEE
• Your approach should incorporatequantitative expectations, milestones,and a firm schedule for improvement
• A proven, effective way of quicklyimproving OEE is through a kaizenimprovement event … the kaizen isalso a great way to also increaseworker/supervisor buy-in
OEE - 26
Summary• OEE helps maximize throughput efficiency
• It focuses on Performance, Availability, and Yield
• OEE should be based on data for at least a week, andideally, a month to wipe out the effects of product mix
• Use Realtime Production Efficiency (RPE) tomaximize realtime/current operations
• Before capital expansions, check your OEE!
• To account for circumstances “beyond your control”… i.e., don’t have enough sales to run 24/7 …calculate a Budgeted Production Efficiency (BPE) tocompare your business to budget/plan
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 14
OEE - 27
Recognized Leadershipin ContinuousImprovement
Over 6000 individuals fromNorth America, Europe, andAsia have attended ourworkshops, presentations,and improvement events.Abidian has been recognizedby the American Society forQuality, United StatesCongress, and U.S.Commerce Association.
ABIDIAN: Business-Speak for Excellent Change
OEE - 28
• 97% of the attendees at Abidian's workshops and kaizens haverated the knowledge of their workshop facilitator as excellent.
• 94% of all workshop and kaizen attendees rated the hands-onexercises and practicality of the illustrations provided as verygood or better.
• 100% of all attendees have given their kaizen improvementevent or workshop an overall rating of very good or excellent.
• Projected savings identified by our clients from our recentworkshops, kaizens, and onsite efforts are well over $80million.
The Numbers …
OEE Presentation for ASQ 1124
Abidian, Inc. [email protected] 843-536-0942 Page 15
OEE - 29
Questions?
… or looking for helpto get started?Contact Abidian today. You can reach usat 843-536-0942 or [email protected].
Abidian, a recognized leader in productivity improvement,provides hands-on training in Lean, Six Sigma, Maintenance
Excellence, Theory of Constraints, and Total ProductiveMaintenance/Manufacturing.
Learn more about us at abidian.com.