As a core metric, Overall Equipment Effectiveness or OEE has been adopted by many companies to improve operations and optimize the capacity of existing equipment. Having completed several on site assessments over the past few months we have learned that almost all organizations are measuring performance and quality in real-time, however, the availability component of OEE is still a mystery and often misunderstood – specifically with regard to Set Up or Tool Changes.
We encourage you to review the detailed discussion of down time in our original posts “Calculating OEE – The Real OEE Formula With Examples” and “OEE, Down time, and TEEP” where we also present methods to calculate both OEE and TEEP. The formula for Overall Equipment Effectiveness is simply stated as the product of three (3) elements: Availability, Performance, and Quality. Of these elements, availability presents the greatest opportunity for improvement. This is certainly true for processes such as metal stamping, tube forming, and injection molding, to name a few, where tool changes are required to switch from one product or process to another.
Switch Time
Set up or change over time is defined as the amount of time required to change over the process from the last part produced to the first good part off the next process. We have learned that confusion exists as to whether this is actually planned down time as it is an event that is known to occur and is absolutely required if we are going to make more than one product in a given machine.
Planned down time is not included in the Availability calculation. As such, if change over time is considered as a planned event, the perceived availability would inherently improve as it would be excluded from the calculation. Of course, the higher availability is just an illusion as the lost time was still incurred and the machine was not available to run production.
If we could change a process at the flip of a switch, set up time would be a non-issue and we could spend our time focusing on other improvement initiatives. While some processes do require extensive change over time, there is always room for improvements. This is best exemplified by the metal stamping industry where die changes literally went from Hours to Minutes.
To remain competitive and to increase the available capacity, many companies quickly adopted SMED (Single Minute Exchange of Dies) initiatives after recognizing that significant production capacity is being lost due to extensive change over times. Overtime through extended shifts and capital for new equipment is also reduced as capacity utilization improves.
Significantly reduced inventories can also be realized as product change overs become less of a concern and also provide greater flexibility to accommodate changes in customer demand in real-time. Significantly increased Inventory Turns will also be realized in conjunction with net available cash from operations.
Redefining Down Time
The return on investment for Quick Tool Change technologies is relatively short and the benefits are real and tangible as demonstrated through the metrics mentioned above. Rather than attempt to categorize down time as either planned or unplanned, consider whether the activity being performed is impeding the normal production process or can be considered as an activity required for continuing production.
We prefer to classify down time as either direct or indirect. Any down time such as Set Up, Material Changes, Equipment Breakdowns, Tooling Adjustments, or other activity that impedes production is considered DIRECT down time. Indirect down time applies to events such as Preventive Maintenance, Company Meetings, or Scheduled IDLE Time. These events are indeed PLANNED events where the machine or process is NOT scheduled to run.
Redefine the Objective
Set up or change over time is often the subject of much heated debate and tends to create more discussion than is necessary. The reason for this is simple. Corporate objectives are driven by metrics that measure performance to achieve a specific goal.
Unfortunately, in the latter case, the objectives are translated into personal performance concerns for those involved in the improvement process. Rather than making real improvements, the tendency is to rationalize the current performance levels and to look for ways to revise the definition that creates the perception of poor performance. Since availability does not include planned down time, many attempts are made to exclude certain down time events, such as set up time, to create a better OEE result than was actually achieved.
Attempts to rationalize poor performance inhibits our ability to identify opportunities for improvement. From a similar perspective, we should also be prudent with. and cognizant of, the time allotted for “planned” events.
It is for this reason that some companies have resorted to measuring TEEP based on a 24 hour day. In many respects, TEEP eliminates all uncertainty with regard to availability since you are measured on the ability to produce a quality part at rate. As such, our mission is simple – “To Safely Produce a Quality Part At Rate, Delivered On Time and In Full”. Any activity that detracts from achieving or exceeding this mission is waste.
Remember to get your OEE spreadsheets at no charge from our Free Downloads Page or Free Downloads Box in the sidebar. They can be easily and readily customized for your specific process or application.
Please feel free to send your comments, suggestions, or questions to Support@VergenceAnalytics.com
Until Next Time – STAY lean!
Vergence Analytics
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Thanks for clarifying this. We debated this for hours because we had long set ups and short runs and the argument was made that we really weren’t that bad because the machine was running at rate when it did run.
Its obvious that we need to focus on improving our set up time but the machine itself has more than enough capacity to handle the parts that are running in it. We don’t see much growth or future demand so it was decided not to make the investment.
Terry, thank you for your comment. Based on your statements, it appears that the process is running as it should when the set up is complete. To invest money or resources to improve or reduce the set up time is a financial decision. If the return on investment can be demonstrated, perhaps the expenditure can be justified. At least the team recognizes and understands why the OEE is as low as it is.
I would challenge the reasons for measuring OEE at this process other than for the purpose of collecting data and monitoring performance or quality. OEE is best deployed at bottle neck processes where constraints can greatly influence or impact the flow of materials through the process. It sounds to me like this is not one of them.
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Great Article! Thank you for sharing such a valuable piece of information. All the points are valid and beautifully described. At our manufacturing plant, we have adopted the preventive maintenance program and the results were amazing. Cheers!!