Lean thinking affects all facets of an organization. Every person, activity, product, service, process, system, or method represent an opportunity for continuous improvement.
If the devil is in the details, then lean thinking extends to understanding and improving the “little things” we do every day, not just as teams, but as individuals too. Lean thinking embraced at a personal level can collectively bring significant change to the company as a whole.
Lean companies are not immune to complacency. If it is indeed a journey, the pursuit of perfection through the elimination of waste never ends. Unfortunately, significant improvement opportunities also fall victim to Pareto’s law as the “low hanging fruit” becomes harder to find.
Lean initiatives identify and address high dollar opportunities at the onset. As time passes, the motivation and interest to pursue the minor and few remaining opportunities begin to dwindle.
Lean thinking at the micro-level gives us cause to become aware of, and to review, the activities and habitual routines we perform every day. Many small steps can make for a much-improved workplace. “The Best Way To Measure Your Personal Brand Success,” by Pia Silva (Forbes contributor – August 1, 2018) also supports this manner of thinking.
The “little things” from a company perspective may represent “big things” from an individual perspective. We can make the company a better place when we make improvements to our workspace.
Micro-lean for 2020 may be the next best thing. As has been said many times before, “There’s always a better way and more than one solution.”
I coined the phrase “What you see is how we think” to suggest that the principles of lean thinking are not only embraced by everyone but are also evident throughout the organization. In this context, becoming a lean organization requires effective leadership to create and foster an environment that allows lean thinking to flourish. Just as a teacher establishes an environment for learning in the classroom, leaders carry the responsibility for cultivating a lean culture in their organizations.
So how could it be that Lean Leadership is the missing link? I suspect and have observed that too many leaders have displaced the responsibility for lean into the middle management ranks rather than taking ownership of the initiative themselves. These same leaders often operate on the premise that lean is simply a matter of implementing a collection of prescriptive tools to improve efficiency and cut costs. It is clear they have failed to understand the most fundamental principles and basic tenets of lean. If this sounds familiar, I recommend reading “The Toyota Way: 14 Management Principles from The World’s Greatest Manufacturer” by Jeffrey K. Liker.
So where do we turn?
Toyota is one company that exemplifies what it means to be lean and the lessons learned through their trials, tribulations, and continued successes are well documented. I admire Toyota both through first hand experience as a supplier of products to all of their operations in North America and secondly through their willingness to openly share their experiences with the rest of the world. This is evidenced by the many books and articles that have featured them.
I recognize that Toyota has been the subject of many news stories in recent years, the most notable being the recession of 2008, the extremely high-profile recall crisis for Sudden Unintended Acceleration (SUA) in 2009, and most recently, the Japanese earthquake and tsunami. In turn however, we must also acknowledge and recognize that Toyota’s leadership was instrumental to guiding the company through these crisis and for directly addressing the diverse range of challenges they faced.
A sobering look at the crisis that challenged Toyota’s integrity and leadership as well as the many lessons learned are well documented in “Toyota Under Fire: Lessons for Turning Crisis into Opportunity” by Jeffrey K. Liker and is highly recommended reading. I am further encouraged that Toyota acknowledged that problems did exist and didn’t look to deflect blame elsewhere. Rather, Toyota returned to the fundamental principles of “The Toyota Way” to critique, understand, and improve the company.
“Lean is the pursuit of perfection and pure value through the relentless elimination of waste.”
As every lean practitioner will (or should) tell you, the process begins by defining value. Many companies operate under the false pretense that they are already providing the value that customers want or need. As such, they attempt to improve existing products or services by either adding features or making them faster and cheaper. From the perspective of Lean Thinking, the “secret” to making real change begins by finding:
“… a mechanism for rethinking the value of their core products to their customers.”
Lean Thinking challenges us to consider the value our customers are demanding. Accordingly, we must ensure that our infrastructure, business practices, and methodologies deliver that value in the most efficient and effective manner possible. Only when we focus on value from a customer perspective can we offer a solution that truly meets the customers’ needs.
Apple is one such company that continues to redefine and improve its product offerings to the point of anticipating and creating needs that never before existed. Apple’s iPad is just one example of their unique approach to creating niche products and solutions to address speed, connectivity, portability, and features that we as customers never thought possible.
The Leadership Challenge
Leadership is challenged to define and deliver “value” to the customer in the most effective and efficient manner. This is not as simple as it sounds and having leaders within the company that understand Lean Thinking is a requisite mandate for any company wanting to compete in today’s global market. The challenge exists for leaders to adopt lean thinking to deliver real value at prices we can all afford.
I continue to be frustrated by the notion that the only way to reduce spending is by cutting services. While the demand for change is high, few are willing to challenge tradition and conventional thinking to improve services and increase efficiencies that will enable us to do more with less, find new opportunities, and to create jobs instead of eliminating them.
On a global level, governments continue to grapple with increasing economic pressures brought on by the recession. Rather than demonstrating fiscal restraint however, governments have grown and spending has increased at rates that far exceed that of the public sector. The result is an unsustainable government and services that will either be cut or funded through newly created revenue streams.
Rather than challenging the infrastructure and systems that comprise the delivery of these services, the governments scramble to find new ways to reach further into our pockets to pay for inefficiencies, high paid union labour, and questionable entitlements. In some instances, services have been abandoned only to be properly managed by the private sector.
For example, when we consider the delivery of health care in Canada, we find a system plagued by excessive wait times and ever rising costs. Doctors and specialists continue to operate as a fragmented community of service providers, adding layers of bureaucracy, greater inefficiencies, and more cost.
These inefficiencies are further evidenced by patients who are sent into a frenzied schedule of appointments and tests in various locations without regard for the many inconveniences and disruptions they may incur in their personal lives.
On the other hand, emergency rooms do not present the same constraints and, though some waiting may be required, patients are examined and assessed immediately, a prognosis is determined, priorities are established, and resources are made available on demand as required.
Expedience does not jeopardize the level of care provided. While the emergency room may not present the ideal case, it is radically different from “standard” care.
In stark contrast to the government-political processes that continue to insult our intelligence, I am always encouraged by the innovative and entrepreneurial spirit of individuals who prove that there is always a better way and more than one solution:
The quicker we realize that truly radical changes are necessary, the sooner we can abandon traditional cost cutting practices and apply Lean Thinking to improve society as we know it, not cut it to shreds. My simplified definition of Lean Thinking follows:
Lean is the pursuit of perfection and pure value through the relentless elimination of waste.
As every lean practitioner will tell you, the process begins by defining value. Unfortunately, many governments and companies alike start by falsely assuming that they are already providing the value that customers want or need. As such, they attempt to improve existing products or services by either adding features or making them faster and cheaper. From the perspective of Lean Thinking, the “secret” to making real change begins by finding:
“… a mechanism for rethinking the value of their core products to their customers.”
In this same context, consider how our desire to “travel from Point A to Point B in the shortest time” has evolved and transformed our personal modes of transportation / communication into the following “value” propositions:
Personal: Crawl > Walk > Run > Tricycle > Bicycle
Roadways: Bicycle, Motorcycles, Cars, Buses
Railways: Passenger and Freight Trains
Seaways: Boats, Ships
Airways: Helicopters, Planes, Jets, Rockets
Telephone: Phones, Faxes, Internet (email, social media)
Each mode of transportation presents a unique solution to address a shared common value: “Short Travel Time”. Although changing technologies is inferred, lean does not require an investment in new technologies to be successful. To the contrary, Lean Thinking simply challenges us to consider the value our customers are demanding. Accordingly, we must ensure that our infrastructure, business practices, and methodologies deliver that value in the most efficient and effective manner possible.
Only when we focus on “value” from a customer perspective can we offer a solution that truly meets the customer’s needs. When we consider the premise for this example, the need to travel is implied. It does not answer the question “Why do we travel?
If the reason for traveling is simply to “communicate” with friends and family, then we can see that the telephone becomes a viable solution to eliminate the need to travel at all. From a similar perspective, fax machines and the internet were created to expedite data transfers and to communicate with the world in real-time.
The Challenge is On
It is time for all levels of government, business, unions, and society as a whole to acknowledge that our economy is in a state of crisis and demands real action. Real people are hurting at a time when others are pursuing their own agendas for self-preservation – all at the expense of society. We can not simply assume that everything is “just fine – only more expensive”.
Lean Thinking is a requisite mandate for any company wanting to compete in today’s global market. In this regard, the same challenges exist for governments and businesses alike to adopt lean thinking to deliver real value to the people they serve at prices we can all afford.
Unless government spending is brought under control and services are delivered effectively and efficiently, the system is sure to implode. It’s time for an extreme make over, engaging the best and sharpest minds to bring us to the cutting edge in business and technology, not to the cutting board where nothing remains but shattered hopes and dreams.
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I was recently asked to consider a modification to the OEE formula to calculate labour versus equipment effectiveness. This request stemmed from the observation that some processes, like assembly or packing operations, may be completely dependent on human effort. In other words, the people performing the work ARE the machine.
I have observed situations where an extra person was stationed at a process to assist with loading and packing of parts so the primary operator could focus on assembly alone. In contrast, I have also observed processes running with fewer operators than required by the standard due to absenteeism.
In other situations, personnel have been assigned to perform additional rework or sorting operations to keep the primary process running. It is also common for someone to be assigned to a machine temporarily while another machine is down for repairs. In these instances, the ideal number of operators required to run the process may not always be available.
Although the OEE Performance factor may reflect the changes in throughput, the OEE formula does not offer the ability to discern the effect of labour. It may be easy to recognize where people have been added to an operation because performance exceeds 100%. But what happens when fewer people have been assigned to an operation or when processes have been altered to accommodate additional tasks that are not reflected in the standard?
Based on our discussion above, it seems reasonable to consider a formula that is based on Labour Effort. Of the OEE factors that help us to identify where variances to standard exist, the number of direct labour employees should be one of them. At a minimum, a new cycle time should be established based on the number of people present.
OEE versus Financial Measurement
Standard Cost Systems are driven by a defined method or process and rate for producing a given product. Variances in labour, material, and / or process will also become variances to the standard cost and reflected as such in the financial statements. For this reason, OEE data must reflect the “real” state of the process.
If labour is added (over standard) to an operation to increase throughput, the process has changed. Unless the standard is revised, OEE results will be reportedly higher while the costs associated with production may only reflect a minimal variance because they are based on the standard cost. We have now lost our ability to correlate OEE data with some of our key financial performance indicators.
Almost every manufacturing facility has a method or means to measure labour efficiency. Some of these methods may include Earned versus Actual hours or perhaps they are financially driven metrics such as “Labour as a Percent of Sales” or as “Labour Variance to Plan”. As we have learned all too well through the latest economic downturn, organizations are quite adept at using these metrics to flex direct labour levels based on current demand. This suggests that almost every company has access to at least a financial model of some form that can be used to represent “ideal” work force requirements based on sales.
It is not our intent to discuss how these models are created, however, I can only trust that the financial model is based on a realistic assessment of current process capabilities and resources required to support the product mix represented by the sales forecast. At a minimum, the assessment should include the following standards and known variances for each process: Material, Labour, and Rate. You may recognize these standards as they form the basis of our OEE cost model that we have discussed in detail and offer in our Free downloads page.
Analyzing the Data
Many companies use both Labour Efficiency and Overall Equipment Effectiveness to measure the performance of their manufacturing operations. We would also expect a strong correlation to exist between these two metrics as the basis for their measurement is fundamentally common. As you may have already observed in your own operations, this is not always the case in the real world. The disconnect between these two metrics is a strong indicator that yet another opportunity for improvement may exist.
For example, it is not uncommon to see operations where OEE is 60% – 70% while labour efficiencies are reported to be 95% or better. How is this possible? The simple answer is that labour is redirected to perform other work while a machine is down or, in extreme cases, the work force is sent home. In both cases, OEE continues to suffer while labour is managed to minimize the immediate financial impact of the downtime.
Set up and / or change over may be one of the reasons for down time and another reason why there is a perceived discrepancy between labour efficiency and overall equipment effectiveness. Some companies employee personnnel specifically trained to perform these tasks and are classified as indirect labour.
Redirecting labour to operate other machines presents its own unique set of problems and is typically frowned upon in lean organizations. Companies that follow this practice must ensure that adequate controls are in place to prevent excess inventories from building over time. I reluctantly concede to the practice of “redeployment during downtime” if it is indeed being managed.
Some would argue that the alternate work is being managed because the schedule actually includes a backup job if a given machine goes down. If we probe deep enough, we may be surprised to learn that some of these backup jobs are actually “never” scheduled because the primary scheduled machines “always” provide ample downtime to finish orders of “unscheduled” backup work. As such, we must be fully aware of the potential to create the “hidden factory” that runs when the real one isn’t.
Pitfalls of Redirected Labour
This practice easily becomes a learned behavior and tends to place more emphasis on preserving labour efficiency than actually increasing the sense of urgency required to solve the real problem. In all too many cases the real problem is never solved.
Too many opportunities to improve operations are missed because many planners have learned to compensate for processes that continually fail to perform. Experience shows that production schedules evolve over time to include backup jobs and alternate machines that ultimately serve as a mask to keep real problems from surfacing. From a labour and OEE perspective, everything appears to be normal.
Redirecting labour to compensate for Process deficiencies may give rise to excess inventory. “Increased inventory” is an extremely high price to pay for the sake of perceived efficiency in the short-term. Higher inventory has an immediate negative impact to cash flow in the short-term as real money is now represented by parts in inventory until consumed or sold. Additional penalties of inventory include carrying and handling costs that are also worthy of consideration.
Three Metrics – Working Together
You will note that we deliberately used the term labour efficiency throughout our discussion and presents an opportunity to demonstrate that efficiency and effectiveness are not synonymous. Efficiency measures our ability to produce parts at rate while effectiveness measures our ability to produce the right quantity of quality parts at the right time.
Overall Equipment Effectiveness, Labour Efficiency, and Inventory are truly complementary metrics that can be used to determine how effectively we are managing our resources: Human, Equipment, Material, and Time. Our mission is to safely produce a quality part at rate, delivered on time and in full, at the lowest possible cost. Analyzing the data derived through our metrics is the key to understanding where opportunities persist. Once identified, we can effectively solve the problems and implement corrective actions accordingly.
The price tag for Toyota’s recent recall campaigns is estimated to be more than $2 Billion and the loss in share holder value is likely many times more than this. Yet we remain optimistic and anticipate that Toyota will make it through this crisis. We can only imagine what this kind of money could buy if wasn’t spent on repairing vehicles.
In our previous posts we differentiated between design and process failures. Today we learned of yet another Toyota recall issued yesterday. This time 8,000 0f the 2010 four-wheel drive Toyota Tacoma pickup trucks are being recalled for possible cracks in the front drive shaft. In this case the supplier, Dana Corporation, discovered a problem with their manufacturing process that may also have affected parts supplied to Nissan and Ford as well. Click here to read the full story.
We are reminded of the book titled “Quality is Free” written by the late Philip B. Crosby. Many manufacturers around the world have learned that the cost of failure knows no bounds. While it is possible to calculate the costs to repair defective products, the losses incurred due to lost sales, law suits, pending investigations, public relations, and reduced consumer confidence in general will never be known.
Because businesses are not charities, we can only expect that the price of future product offerings will include a portion of the company’s latest financial liabilities. Naturally, if every product sold performed as expected or better and without flaw or incident, we could continue to focus on improving the quality of both products and processes.
It has been said that success breeds failure. Success creates contentment, giving rise to complacency, and in turn results in lost focus. So, what is the value of a process that yields perfect products? In today’s global economy quality isn’t just a given – quality is priceless.
Coincidentally, we are having a first hand experience with the Blue Screen of Death or BSOD with one of our laptops today. The completely unexpected critical system error that renders Windows completely helpless. If this isn’t on your list of IT concerns, it should be.
In our case the error appears to be video related – driver or card. Most IT specialists know how to deal with these types of errors but for the average user, the message that appears is enough to make you sweat. If the system can’t fix the error, you may very well end up staring at a Black Screen – just as we are.
How is it that we were still able to produce this POST? Well, we are currently executing our contingency plan and using another system that is operated independently. Most companies back up their data to prevent or minimize loss. Another concern that is often overlooked is accessibility to that back up data in the event the system goes down.
What have we learned?
We are not the first to experience this problem. We did a Google search using some brief terms such as “Computer Black Screen”, “Laptop Black Screen”, and we even Googled parts of the error message that appeared on the screen. The result? Thousands of people have experienced this same error.
The point of this post is to demonstrate that you do not have to re-invent the wheel to determine potential solutions or to discover problems that may occur. Quite likely, they may already have happened and solutions are already developed and available.
There are two probable solutions to our video issue:
Update the video device driver (Free)
Replace the video card (Cost $)
Hopefully, the first solution is the answer to our problem. Video cards are not sitting on our shelf and the downtime may be extended if we can’t find something locally.
It is noteworthy that we have not yet identified the root cause of this failure. We haven’t loaded any new software or experienced problems in recent history. This may be the topic for a future problem solving post.
Regardless of the outcome of our present dilemma, we have learned that it is a good idea to keep device drivers up to date. As a planned activity, this may prevent some of you from having to experience the BSOD as we have today.
The loss incurred for this event is more than just the cost to repair. This computer may be down for a few days. How much is the down time worth? Unless we play out the scenarios that may threaten or pose a risk to our business, we may never have the opportunity to prepare for the event until it actually happens.
Keep an open mind and use the resources available to you to help solve the problem. In some cases a simple Google search could confirm your concern in a matter of seconds.
Contingency Planning for Lean Operations – Part III
“Deaths spark huge crib recall” was the main headline of today’s Toronto Star (24-Nov-09). This recall was the result of 4 infant deaths and affects up to 2.1 million units sold. Click here to access the full article. This announcement has made headlines throughout North America and is certain to be featured on all of the major network news stations.
Managing a major product recall is likely one of the more significant events where contingency plans are fully executed and developed. As tragic or unfortunate as the events may be, it is imperative for a company to manage the recall event in professional and responsible manner. While it may seem difficult to prepare for an event that has not yet occurred, learning to anticipate the sequence of events to recovery and to script are necessary steps to developing an effective contingency plan.
What are the elements of an effective contingency plan?
We will be covering the elements of an effective contingency plan over the next few posts. Before we get too far into the process, it is important to recognize that one of the critical skills required as part of the contingency planning process is the ability to perform an effective risk assessment.
It is not our intent to cover all aspects regarding risk assessments and analysis as this would require a book in itself.
A newly released book, The Failure of Risk Management – Why It’s Broken and How to Fix It, by Douglas W. Hubbard (copyright 2009) and published by John Wiley & Sons, Inc., provides extensive insight and resources to perform effective Risk Management Assessments and Analysis. The reasons why some risk management methods fail or are susceptible to failure are also covered in detail.
As exemplified in the opening article, there is no real means to measure the net effect or impact of a recall campaign of this magnitude. Elements such as Consumer Confidence, Brand Loyalty, Loss of Life, or Warranty are difficult to value in tangible terms.
Unfortunately, there are too many examples of crisis events where the knowledge was available to rectify or fix the situation before any tragic event occurred. As heard in many workplaces, “Why is that nothing is done until something bad happens?”
An effective contingency planning is not only designed to manage tragic or crisis events, it should also aid to identify potential failure modes that can be captured and addressed before a product is ever released for mass production or to market. Consider the following two scenarios:
Scenario 1: (Highly unlikely …)
Jill: What if the part fails?
Jack: We’ll recall it.
Jill: How will we do that?
Jack: We have an excellent recall management process
What if the dialogue took a different turn as follows:
Scenario 2: (More likely …)
Jill: What if the part fails?
Jack: What could possibly go wrong? It’s perfect.
Jill: Engineering said it barely passed the tests.
Jack: Well, maybe we should take another look at the design.
Jill: Great, you know we can’t risk a recall.
Developing a Contingency Plan – The Process
1. Corporate Responsibilities – Charter
If contingency planning ever concerns an individual person in the company directly, it is the Chief Executive Officer or the president who are personally at risk of significant legal ramifications and also the greatest level of exposure.
This past year Maple Leaf Foods experienced a major Listeria outbreak at one of their food processing facilities. Contaminated product reached the market place resulting in illness and loss of life. A major recall was initiated and the company immediately initiated corrective actions. During this crisis, the CEO took personal responsibility for public relations, communicating the strategy, and ultimately overseeing the recovery process.
The CEO or President should be leading the charge for the development of contingency plans and to assure their effectiveness. To this end, it is also imperative that the team responsible for formulating the plan includes a cross-section of people from across the company.
The CEO or President will also want to assure that everyone is trained to respond to events that pertain their specific areas of responsibility.
2. Contingency Planning – Form a Team
As we mentioned in our previous posts, contingency planning is an enterprise-wide process. The collective intelligence of the team is greater than that of any team member.
You should consider the skill sets that may be required to support the team. Although we are not suggesting that you need to be an expert in probability theory or statistics, someone having exposure to these types of assessment tools or an outside consultant may be worth the effort.
It is not possible for one committee to prepare contingency plans for every area in the company. When forming teams, how the skills and levels of expertise required to support the team in one area may be vastly different for another area. For example, Product Engineering and Operations will have different failure modes to contend with.
To ensure the appropriate resources are available, we recommend that executive management or a steering committee are assigned to oversee the contingency planning and development process.
Based on some of the scenarios cited in this post, it would stand to reason that most CEO’, Presidents, and / or owners are primary stake holders in the Contingency Planning process.
Lean operations are driven by effective planning and efficient execution of core activities to ensure optimal performance is achieved and sustained. The very nature of lean requires extreme attention to detail through all phases of planning and execution. Upstream operations simply cannot tolerate any disruptions in product supply or process flow without the risk of incurring significant downtime costs or other related losses.
Effective risk management methods, contingency plans, and loss prevention strategy are critical components of successful operations management in a lean operation. Risk management and preventing disruptions is the subject of contingency planning and requires the participation of all team members.
Successful contingency planning assures the establishment of an effective communication strategy and identification of core activities and actions required. Contingency plans may require alternative methods, processes, systems, sources, or services and must be verified, validated, and tested prior to implementation.
Understanding and assessing the potential risks to your operation is the basis for contingency planning with the objective to minimize or eliminate potential losses.
Inventory represents the most basic form of contingency planning. Safety stock or buffer inventories are typically used to minimize the effects of equipment downtime or disruptions in the supply chain.
The levels of inventory to maintain are dependent on a number factors including Lead Time, Value, Carrying Cost, Transit Time (Distance), Shelf Life, Minimum Order Quantities, Payment Terms, and Obsolescence.
Why is this relevant?
Material and Labour represent two key resources that may be influenced by external factors that are beyond the control of any company policy or practice. Internally controlled or managed resources such facilities, equipment, and tooling are less susceptible to unknown elements. For the purposes of this discussion, we will examine Labour in a little more detail.
The H1N1 virus, originally known as the Swine Flu, is the latest potential health pandemic since the outbreak of SARS only a few years ago. The government has been struggling to organize mass immunization clinics and to engage the media to aid in the cause. In the meantime, the potential impact of the H1N1 virus on your operation remains to be an unknown.
Experts have commented to the media that the lessons from the SARS outbreak have still not been learned. One would expect that past practices would have already been adopted into new best practices from our experiences with other similar events in our history.
Government agencies at all levels (Federal, Provincial, and local) have mismanaged the activities required to procure and distribute the vaccine, and failed to provide an effective communication and immunization strategy to ensure the risk to public health was minimized and the at the very least understood.
The lack of coordination and accountability for the success or failure of the communication strategy, procurement and distribution of the vaccine, and other related activities are strong indicators that the planning process did not consider the infrastructure requirements and relationships needed between levels of government.
The lack of an effective communication strategy introduced confusion and speculation in the media and the general public. Mass education only seemed to become more aggressive as incidents of severe H1N1 complications and related deaths were reported in the media.
If this really was a pandemic event, many operations today would (and may still) be adversely affected due to direct or indirect (supply chain) labour shortages. Do you have contingency plans in place to address this concern?
It could be argued that “if we are affected to this extent, then our customers will be as well.” This is not necessarily true unless your customers and / or suppliers are located in the same immediate area or region of your business.
People travel all the time, whether they are commuting to work from out-of-town or traveling to or arriving from a foreign country on business. The source of exposure is beyond your immediate control.
What other elements can directly impact labour? We will explore some of these in our next post. In the meantime, keep your hands washed and remember to cough into your sleeve.
Until Next Time – STAY Lean!
Unexpected and Appreciated – Uncommon Courtesy: This morning, a person cut into the drive through lane ahead of us – not realizing the gap in the line was there for thru traffic. Recognizing the error in drive through etiquette and to make amends, we were pleasantly surprised by the “free” coffee at the pick up window. Thank you ladies!
We are often asked what companies (or types of companies) are using OEE as part of their daily operations. While our focus has been primarily in the automotive industry, we are highly encouraged by the level of integration deployed in the Semiconductor Industry. We have found an excellent article that describes how OEE among other metrics is being used to sustain and improve performance in the semiconductor industry.
Somehow it is not surprising to learn the semiconductor industry has established a high level of OEE integration in their operations. Perhaps this is the reason why electronics continue to improve at such a rapid pace in both technology and price.
The article clearly presents a concise hierarchy of metrics (including OEE) typically used in operations and includes their interactions and dependencies. The semiconductor industry serves as a great benchmark for OEE integration and how it is used as powerful tool to improve operations.
While we have reviewed some articles that describe OEE as an over rated metric, we believe that the proof of wisdom is in the result. The semiconductor industry is exemplary in this regard. It is clear that electronics industry “gets it”.
As we have mentioned in many of our previous posts, OEE should not be an isolated metric. While it can be assessed and reviewed independently, it is important to understand the effect on the system and organization as a whole.
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