Tag: How to work with OEE

OEE in the Automotive Industry

The automotive industry appears to be rebounding at a faster rate than most (if not all) experts may have anticipated.  Many OEM’s and their suppliers are attempting to boost production to replenish inventories and support renewed demand for their products.  Reduced inventories throughout the supply chain are creating demand that is difficult to replenish at the rate required.  Short runs to bootstrap the “pipeline” are taking their toll on OEE rates but also provide the opportunity to identify new improvement initiatives.

General Motors and Toyota have both announced that increased demand for their product is anticipated for the next few months.  The increases are exciting for all involved, however, the ramp up to recovery may be more painful to achieve for some.  How is your company performing?  Those with fixed “cells” or processes may not be experiencing the same degree of frustration as those having flexible processes running multiple part numbers.

Overall Equipment Effectiveness (OEE) typically suffers during these times due to the frequent changeovers and short volume runs.  If there was a time when you can’t change over or setup and run fast enough, this may be it.  Hang on and enjoy the ride.

Until Next Time – STAY lean!

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OEE For Manufacturing

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.

To get a better understanding of how the semiconductor industry has integrated OEE and other related metrics into their operational strategy, click here.

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.

We appreciate your feedback.  Please feel free to leave us a comment or send us an e-mail with your suggestions to leanexecution@gmail.com

Until Next Time – STAY lean!

Benchmarking OEE

Benchmarking Systems:

We have learned that an industry standard or definition for Overall Equipment Effectiveness (OEE) has been adopted by the Semi Conductor Industry and also confirms our approach to calculating and using OEE and other related metrics.

The SEMI standards of interest are as follows:

  • SEMI E10:  Definition and Measurement of Equipment Reliability, Availability, and Maintainability.
  • SEMI E35:  Guide to Calculate Cost of Ownership Metrics.
  • SEMI E58:  Reliability, Availability, and Maintainability Data Collection.
  • SEMI E79:  Definition and Measurement of Equipment Productivity – OEE Metrics.
  • SEMI E116:  Equipment Performance Tracking.
  • SEMI E124:  Definition and Calculation of Overall Factory Efficiency and other Factory-Level Productivity Metrics.

It is important to continually learn and improve our understanding regarding the development and application of metrics used in industry.  It is often said that you can’t believe everything you read (especially – on the internet).  As such, we recommend researching these standards to determine their applicability for your business as well.

Benchmarking Processes:

Best practices and methods used within and outside of your specific industry may bring a fresh perspective into the definition and policies that are already be in place in your organization.  Just as processes are subject to continual improvement, so are the systems that control them.  Although many companies use benchmarking data to establish their own performance metrics, we strongly encourage benchmarking of best practices or methods – this is where the real learning begins.

World Class OEE is typically defined as 85% or better.  Additionally, to achieve this level of “World Class Peformance” the factors for Availability, Performance, and Quality must be at least 90%, 95%, and 99.5% respectively.  While this data may present your team with a challenge, it does little to inspire real action.

Understanding the policies and methods used to measure performance coupled with an awareness of current best practices to achieve the desired levels of  performance will certainly provide a foundation for innovation and improvement.  It is significant to note that today’s most efficient and successful companies have all achieved levels of performance above and beyond their competition by understanding and benchmarking their competitors best practices.  With this data, the same companies went on to develop innovative best practices to outperform them.

A Practical Example

Availablity is typically presented as the greatest opportunity for improvement.  This is even suggested by the “World Class” levels stated above.  Further investigation usually points us to setup / adjustment or change over as one of the primary improvement opportunities.  Many articles and books have been written on Single Minute Exchange of Dies and other Quick Tool Change strategy, so it is not our intent to present them here.  The point here is that industry has identified this specific topic as a significant opportunity and in turn has provided significant documentation and varied approaches to improve setup time.

In the case of improving die changes a variety of techniques are used including:

  • Quick Locator Pins
  • Pre-Staged Tools
  • Rolling Bolsters
  • Sub-Plates
  • Programmable Controllers
  • Standard Pass Heights
  • Standard Shut Heights
  • Quarter Turn Clamps
  • Hydraulic Clamps
  • Magnetic Bolsters
  • Pre-Staged Material
  • Dual Coil De-Reelers
  • Scheduling Sequences
  • Change Over Teams versus Individual Effort
  • Standardized Changeover Procedures

As change over time becomes less of a factor for determining what parts to run and for how long, we can strive reduced inventories and improved preventive maintenance activities.

Today’s Challenge

The manufacturing community has been devastated by the recent economic downturn.  We are challenged to bring out the best of what we have while continuing to strive for process excellence in all facets of our business.

Remember to get your free Excel Templates by visiting our FREE Downloads page.  We appreciate your feedback.  Please leave a comment an email to leanexecution@gmail.com or vergence.consultin@gmail.com

Until Next Time – STAY Lean!

OEE: Frequently Asked Questions

We added a new page to our site to address some of the more frequently asked questions (FAQ’s) we receive regarding OEE.  We trust you will find this information to be of interest as you move forward on your lean journey.  We always appreciate your feedback, so feel free to leave us a comment or send an e-mail directly to LeanExecution@gmail.com or Vergence.Consulting@gmail.com

We have had an incredibly busy summer as more companies are pursuing lean manufacturing practices to improve their performance.  OEE has certainly been one of the core topics of discussion.  We have found that more companies are placing a significant emphasis on Actual versus Planned performance.  It would seem that we are finally starting to realize that we can introduce a system of accountability that leads to improvements rather than reprimands.

Keep Your Data CLEAN

One of the debates we recently encountered was quantity versus time driven performance data when looking at OEE data.  The argument was made that employees can relate more readily to quantities than time.  We would challenge this as a matter of training and the terminology used by operations personnel when discussing performance.  We recommend using and maintaining a time based calculation for all OEE calculations.  Employees are more than aware of the value of their time and will make every effort to make sure that they get paid for their time served.

Why are we so sure of this?  Most direct labour personnel are paid an hourly rate.  Make one error on their pay or forget to pay their overtime and they will be standing in line at your office wondering why they didn’t get paid for the TIME they worked.  They will tell you – to the penny – what their pay should have been.  If you are paying a piece rate per part, you can be sure that the employees have already established how many parts per hour they need to produce to achieve their target hourly earnings.

As another point of interest and to maintain consistency throughout the company, be reminded that finance departments establish hourly Labour and Overhead rates to the job functions and machines respectively.  Quite frankly, the quantity of parts produced versus plan doesn’t really translate into money earned or lost.  However, one hour of lost labour and everyone can do the math – to the penny.

When your discussing performance – remember, time is the key.  We have worked in some shops where a machine is scheduled to run 25,000 parts per day while another runs a low volume product or sits idle 2 of the 5 days of the the week.  When it comes right down to the crunch for operations – how many hours did you earn and how many hours did you actually work.

Even after all this discussion we decided it may be an interesting exercise to demonstrate the differences between a model based on time versus one based (seemingly) only on Quantitative data.  We’ll create the spreadsheet and make it available to you when its done!

Remember to take advantage of our free spreadsheet templates.  Simply click on the free files in the sidebar or visit our free downloads page.

We trust you’re enjoying your summer.

Until Next Time – STAY Lean!

Vergence Business Associates

OEE and the Quality Factor

Many articles written on OEE (ours being the exception), indicate or suggest that the quality factor for OEE is calculated as a simple percentage of good parts from the total of all parts produced.  While this calculation may work for a single line part number, it certainly doesn’t hold true when attempting to calculate OEE for multiple parts or machines.

OEE is a measure of how effectively the scheduled equipment time  is used to produce a quality product.  Over the next few days we will introduce a method that will correctly calculate the quality factor that satisfies the true definition of OEE.  The examples we have prepared are developed in detail so you will be able to perform the calculations correctly and with confidence.

Every time a part is produced, machine time is consumed.  This time is the same for both good and defective parts.  To correctly calculate the quality factor requires us to start thinking of parts in terms of time – not quantity.

If the cycle time to produce a part is 60 seconds, then one defective part results in a loss of 60 seconds.  If 10 out of 100 parts produced are defective then 600 seconds are lost of the total 6000 seconds required to produce all parts.  Stated in terms of the quality factor, 5400 seconds were “earned” to make quality parts of the total 6000 seconds required to produce all parts (5400/6000 = 90%).  Earned time is also referred to as Value Added Time.

As we stated earlier, for a single line item or product, the simple yield formula would give us the same result from a percentage perspective (90 good / 100 total = 90%).  But what is the affect when the cycle times of a group or family of parts are varied?  The yield formula simply doesn’t work.

The quality factor for OEE is only concerned with the time earned through the production of quality parts.  Watch for our post over the next few days and we’ll clear up the seemingly overlooked “how to” of calculating the quality factor.

Until Next Time – STAY lean!

We appreciate your feedback.  Please feel free to leave a comment or send an e-mail with suggestions or questions to leanexecution@gmail.com

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How to Improve OEE – Any Questions?

Ask any Quality or Engineering manager and they will tell you that measurement systems are valuable tools to identify problems and opportunities.  The measurement system itself is not the answer – it is the data source, the EVIDENCE that drives the questions.  It is a part of the discovery and validation process to confirm the opportunity or problem and the effectiveness of the solutions to resolve it.

A well integrated OEE system should provide the data to answer the questions on everyone’s mind, “What do we need to do to improve?” or “Why aren’t we improving?”  The simple answer is, “We need to fix it.”  Of course the real question may not be, “What do we need to fix?” but, “Why did it break?”

Yes, we will likely have to replace the part(s) that failed to get the line back up and running, but what really caused the failure to occur?  What was the real root cause?  This introductory post to problem solving and root cause analysis will kick start some of the techniques used to solve problems effectively.

The Problem Statement:

The key to effective problem solving starts with identifying the problem to be solved.  This is typically a brief statement describing the problem.  For external concerns, the problem is usually stated in customer terms.

This post presents some simple examples of problems to be solved.  You will quickly discover that defining the problem may not be as simple as it looks.  We will discuss this in more depth in our future posts.

Root Cause Analysis

Identifying the real root cause(s) for the failure is the secret to successful problem solving.  The method you use to arrive at the root cause should allow you to confirm and validate your solution before taking action.  Here is an important point to remember:

Do not confuse symptoms with root causes.  

For example, you are driving down the road and suddenly find yourself struggling to maintain control of your vehicle.  Your expert driving skills allow you to pull over and stop on the side of the road.  You get out of the car and walk around to discover that you have a flat tire.  The flat tire is a symptom – not the root cause.

As luck would have it, a police officer who just happened to be following you in an unmarked car, notices your sudden erratic driving behavior and charges you with recklessness and careless driving.  Since none of the tires on the police car are flat, the officer presumes the condition of your vehicle is the direct result of your poor driving skills and bad habits after many years on the road.  Another point to remember:

Do not jump to conclusions

You, like many people, would argue that your many years of driving provided you with the experience necessary to avert danger.  The officer quickly recognizes that your many years of experience have caused you to lose perspective of the potential hazards of driving.  The officer advises that your driving record shows no record of any tickets or accidents and clearly suggests that you have had very few “experiences” with the law and minimal exposure to poor road conditions.

The officer proceeds to charge you, the operator, because you simply weren’t paying attention to the conditions and potential hazards of the road.  You are given a ticket to serve as a reminder to pay more attention to the road and to be mindful of your driving habits in the future.  Then to add insult to injury, the officer advises you to fix your tire and drive carefully. 

Unforgiving of the circumstances and since quota’s have to be met, the charges stand and you find yourself on your way to court.  As you sit in your vehicle, stunned that you just got a ticket for getting a flat tire, you are conflicted and fuming because the officer blamed you, your poor driving skills, and your bad habits for driving recklessly down the road!  The following tip will help you remember:

Operator Error is not a Root Cause

Many times, management is too quick to attribute the root cause to operator error.

5 WHY Analysis

One of the best methods for identifying the real root cause is the 5-Why approach.  The concept of asking the question “WHY?” five times is quite simple.  In practice though, you will find it may not be that easy.  Why?  Because the wrong answer will lead you through a continuing series of wrong answers that ultimately lead to the wrong conclusion.

There is always more than one answer – Which one is correct?

Referring back to our example of the flat tire, you now need an argument to absolve yourself of any blame for the incident on the highway.  In court, the judge asks, “How you plead to the charges before you?”  You answer, “Not Guilty your honor.”

  1. Why?  While I was driving down the road, I got a flat tire.
  2. Why?  Because all the air ran out of my tire.
  3. Why?  Because there was a hole in it.
  4. Why?  Because the tire didn’t have anti-puncture technology.
  5. Why?  Because the manufacturer didn’t design it properly.

Were it not for my expert driving skills, this situation could have been much worse.  As it was, using my superior driving skills, I successfully managed to maneuver my vehicle, without incident, to the side of the road, averting what could have been a disastrous crash.  Therefore, I request to be completely absolved of any and all wrongful doing and I am filing a class action suit against the tire manufacturer to cover court costs, lost wages, and damages as well as my emotional stress.

Clearly not satisfied, the judge requests you to take a 10 minute break to rethink your case.  On your return to the courtroom, you are prepared to present the following argument:

  1. Why?  While I was driving down the road, I got a flat tire.
  2. Why?  Because all the air ran out of my tire.
  3. Why?  Because there was a hole in it.
  4. Why?  Because there was a nail on the road.
  5. Why?  Because the government refuses to keep the highways clean.

Were it not for my expert driving skills, this situation could have been much worse.  As it was, using my superior driving skills, I successfully managed to maneuver my vehicle, without incident, to the side of the road, averting what could have been a disastrous crash.  Therefore, I am filing a class action suit against the government to cover for court costs, lost wages, and damages as well as my emotional stress.  To resolve this matter quickly, I request that all charges be dropped and I in turn will drop my counter-claim.

The purpose of the above example was to demonstrate how the answer to the question – WHY? – can lead to completely different conclusions.  On one hand we’re ready to sue the tire manufacturer and on the other, we’re ready to take on the government.  If there was indeed a nail on the road, how did it get there?

Don’t Assign Blame

Solving problems and getting to the root cause is not about assigning blame to someone or something.  You can’t blame the government or the tire company for the fact that there was a nail on the road.  It is to easy to assign blame and it happens everywhere, everyday.  Perhaps the nail manufacturer should be sued as well for failing to provide adequate protections should the nail become lost or misplaced.

The question that wasn’t asked is, “Why was the nail on the road?”  The answer may be that it likely fell out of a board or from a truck or trailer that may have been carrying construction materials.  Again, being careful with the answer, we don’t want to come to the conclusion that nails should be banned completely.

On the other hand, it may be worthwhile to advise that all companies and contractors must make a reasonable effort and take appropriate precautions and measures to ensure that all loads are secure and free from loose raw materials.  Any nails must be placed in a sealed container and secured to the vehicle for the purpose of transport.  A maximum fine of $2,000.00 may be imposed and made payable to the “Operator Error Trust Fund.”

Leading the Witness:  The solution BIAS

STOP! – if you think you already know the answer – Stop!  We know that the right question doesn’t always lead to the right answer as we attempted to show in our example.  Another major pitfall is thinking we already have the answer and we just need to frame the questions and answers to support that conclusion.  This isn’t problem solving, this is creative story telling.  Don’t lead your team into following what “appears” to be a logical conclusion – be prepared to prove it.

Don’t Assume Anything – Follow the EVIDENCE

At a minimum, follow the evidence.  What is the data telling you?  It’s time to start thinking like a crime scene investigator (CSI) or good lawyer.  Asking questions and continuing to probe for answers is the secret to uncovering the less obvious and, more than likely, real solution.

Many OEE equipment / software integrators provide the ability to record and track downtime events in real time.  This data is extremely valuable for trouble shooting and problem solving; however, they are not necessarily root causes.  The integrators provide the capability to readily identify what part of the process failed or what is broken.  While this may be the cause of the line down condition, it is not the root cause of the problem.

Do not confuse the Point of Failure (Source) with the Root Cause

Don’t fall into this trap:

  • Supervisor:  “The OEE system report showed that we lost two hours on the paint line last night.”
  • Maintenance:  “Yeah, I saw the report too.  This OEE system tracks everything!”
  • Supervisor:  “Why did the line go down?”
  • Maintenance:  “The A-Tank feed pump overheated.  The OEE system told us exactly which pump failed.  It saved us a ton of time.”
  • Supervisor:  “What did you do?”
  • Maintenance:  “Oh, we replaced it.  The line is running fine now.”
  • Supervisor:  “OK, that’s good.  Thanks.”

End of conversation.

So, WHY did the pump overheat?  Some questions just never get asked, but I’m sure the OEE will be just fine on the next shift.  We recognize that most effective TPM managers are sharper than this.  Our point is that not everyone is looking at the data from the same perspective.

We’ll discuss “How to Improve OEE” in more detail in our next post:  “How to use the 5 Why Approach.”

Until Next Time – STAY lean!

OEE Integration: Can you fix it?

As we are all aware, inspecting or measuring parts does not change the quality of the product.   Likewise, measuring and reporting OEE alone does not solve problems or improve performance.  While it is fair to say that increased focus and measurement of any process usually results in some degree of improvement, these are typically attributed to changes in human behavior due to observation and not necessarily real process improvements.

Using OEE to identify opportunities in your operation is the equivalent of turning the light on in a dark room.  Although the room hasn’t changed, we certainly have a better understanding of what it looks like.  As such, OEE is a vantage point metric that can be used to illuminate our understanding of the process and identify opportunities to drive improvements.

It is essential for your team to develop and utilize effective problem solving skills to successfully identify systemic and process root causes for failure and to develop and execute permanent corrective actions to resolve them.  Our experience suggests that the lack of solid and proven problem solving skills coupled with poor execution is the leading cause of failure for new initiatives such as OEE.

We introduced an approach to improving OEE in our “Improve OEE:  A Hands On Approach“, post (03-Jan-09).  Although we identified some of the tools that could be used to solve of the problems, we didn’t spend much time going into the details.  Over the next few posts, we’ll discuss some of the ideas in a little more detail.

The real problem for most companies is identifying what the real underlying root cause of the current “failure” mode is.  Without a good understanding of the root cause, the solutions developed and implemented will not be effective, only serving to temporarily cure the immediate superficial symptoms.

Using effective problem solving skills to analyze the OEE data and to develop and execute permanent corrective actions will assure sustainable and ever improving performance.

Until Next Time – STAY lean!