Tag: oee best practices

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!

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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 Topics for 2009

We changed our theme!

Today was another day to do a little maintenance. We spent a little time revamping our look and feel. We hope you enjoy the changes and find our site a little easier to navigate.  We updated our Free Downloads page to present another easier and more direct venue to get your files instantly using Box.Net. If you’re already familiar with WordPress, you know how great this widget is. Downloads could never be faster or easier.

We also took some time to update some of our pages. We would suggest, however, that the best detailed content appears in the individual articles that we have posted.

Upcoming Topics for 2009

  1. Tracking OEE Improvements:  We have noticed an increase in the number of requests to discuss tracking OEE improvements.  We have been working on a few different approaches even for our own consulting practice and look forward to sharing some thoughts and ideas here.
  2. How OEE can improve your Cost of Non-Quality.  It’s more than yield.
  3. What OEE can do for your Inventory.  Improvements should be cascading to other areas of your operation – including the warehouse.
  4. Innovation – Defining your future with OEE
  5. OEE and Agile – Going beyond lean with OEE.
  6. Best Practices – OEE in real life, in real time

If you would like to suggest a topic for a future post, ask a question, or make a suggestion, please leave a comment or simply send an e-mail to LeanExecution@gmail.com or vergence.consulting@gmail.com.  We do appreciate your feedback.

Until Next Time – STAY lean!

Vergence Business Associates

We respect your privacy, your information will not be shared, sold, or distributed to any third parties.  We will only use your e-mail to communicate with you at your request.  You will not be subject to any advertising or marketing campaigns.

Welcome to LeanExecution!

Welcome! If you are a first time visitor interested in getting started with Overall Equipment Effectiveness (OEE), click here to access our very first post “OEE – Overall Equipment Effectiveness“.

We have presented many articles featuring OEE (Overall Equipment Effectiveness), Lean Thinking, and related topics.  Our latest posts appear immediately following this welcome message.  You can also use the sidebar widgets to select from our top posts or posts by category.

Free Downloads

All downloads mentioned in our articles and feature posts are available from the FREE Downloads page and from the orange “FREE Downloads” box on the sidebar.  You are free to use and modify these files as required for your application.  We trust that our free templates will serve their intended purpose and be of value to your operation.

Visit our EXCEL Page for immediate access to websites offering answers and solutions for a wide variety of questions and problems.  Click here to access the top ranking Excel Dashboards.  Convert your raw data into intelligent data to drive intelligent metrics that will help you to analyze and manage your business effectively.

Questions, Comments, Future Topics

Your comments and suggestions are appreciated.  Feel free to leave a comment or send us your feedback by e-mail to LeanExecution@gmail.com or VergenceAnalytics@gmail.com.  We respect your privacy and will not distribute, sell, or share your contact information to any third parties.  What you send to us stays with us.

Subscribe to our blog and receive notifications of our latest posts and updates.  Simply complete the e-mail subscription in the sidebar.  Thank you for visiting.

Until Next Time – STAY lean!

Vergence Analytics

OEE Training – Online

Getting Started

Online Training is more rampant now than ever.  If you want to learn about OEE and how to calculate it correctly then we have all the information you need right here.  Simply click on the categories of interest to you and research your specific topic or Click Here to get started.  This is the first article that got us started in November of 2008.  All of our online content is presently available at no charge.

Free Spreadsheet Templates

We offer several OEE Spreadhseet Templates that are available at no cost to our visitors and clients. Feel free to click on the “Free Downloads” template on the sidebar.  This is a new feature and trust that you will find this a much easier solution that provides immediate access to our documents.  If you can’t find what you are looking for, contact us by e-mail (leanexecution@gmail.com) or leave a comment with your suggestions for other templates that you would like to see available on our site.

Advanced Visitors

We trust that the content presented here is of interest to you as well.  We have provided many articles of interest related to OEE and Lean.  Simply review the categories and posts available or visit our pages for more information.  Our articles present detailed discussions and best practices applicable to the featured topic.

If you have any questions, comments, or suggestions for a future topic, simply leave a comment or send an e-mail to leanexecution@gmail.com or vergence.consulting@gmail.com.  We respect your privacy.  We will not share, disclose, sell, or distribute your e-mail or personal information with any third parties.  Your e-mail will only be used to contact you at your request.  You will not be subject to any advertising or marketing campaigns.  See our privacy policy for more details.

Until Next Time – STAY lean!

Vergence Business Associates

OEE Integration – Part V

Defining overall equipment effectiveness (OEE) criteria as part of the scope of work or purchase order agreement is quickly becoming standard practice throughout the automotive industry and manufacturing in general.

OEE Assessments

OEE criteria should be performed for every new purchase.  Often times, a high speed machine may be incorporated into a mixed technology production environment.  It is also possible that the machine or equipment under review is not the perceived production constraint or bottleneck.  This should not exclude the process from an OEE assessment.

Although LEAN manufacturing encourages single piece flow, it may be more feasible and cost effective for a machine to run independently.  This situation could occur in instances where business has grown within a commodity base and now the capacity of the machine must be shared across multiple product lines.

Engineering and Finance must consider the optimum production model that will yield the most cost effective strategy and subsequent process routing.  This assessment is best supported using Value Stream Analysis and Standardized Work procedures to fully understand the planned costs associated with inventory at all levels or stages of the process (raw, work in progress, and finished goods), labour (direct and indirect), and burden or overhead.

Lastly, it is important to understand the real or full potential of the equipment or process being purchased or developed.  Future business costs and opportunities for future growth are important considerations for any capital investment.  Press shops or metal stamping suppliers recognize open capacity to drive current and future business growth demands.  Idle machines don’t make money.  Open capacity is money lost.

The Purchase Agreement

To eliminate any misconceptions or lack of understanding, OEE expectations must become an integral part of the purchase agreement.  This can be accomplished by creating a Statement of Work, incorporating the requirements into a tooling, machine, or equipment standard, or, at a minimum, as purchase order line item stipulating the OEE criteria to be satisfied as a condition of purchase.

The objective of these tools is to ensure that all parties are aware of the their obligations and responsibilities to deliver a robust process that meets the OEE objectives.  We recall an incident (after the fact) where the scope of work clearly stated that machine setup or change over time was to be calculated as part of the availability factor.  For the most part, the equipment met the required performance and quality criteria, however, the supplier assumed availability only pertained to the downtime experienced while the machine was running.  This, coupled with downtime during the run, resulted in a less than satisfactory availability factor and resulting OEE index.

In this case, the equipment supplier lost a significant percentage of their final payment for failing to meet the OEE criteria defined in the purchase order and statement of work.  Setup is a planned activity directly related to the production of parts and greatly affects the available capacity of the machine or equipment.

We recommend defining the criteria for each individual factor and the overall equipment effectiveness (OEE).  The values you choose for each factor will depend on your operation or the process under review and may include considerations such as low versus high volume or inventory costs, make-to-order versus warehousing / storage.

For buy-off purposes, we expect a new process to provide a minimum of 90% Availability, 95% performance, and 100% Quality.  We will not accept any process that is less than 85% for a dedicated process.  Mixed model production equipment may be subject to different criteria, specifically regarding availability as tool change complexity increases.

Availability includes change over or setups.  Increased model mix and low volume production may reduce availability.  This assessment should be determined in conjunction with detailed change over / setup instructions.

Typically, Quick Die Change or Tool Change strategy is deployed for most, if not all, new programs.  The investment in these techniques increases your agility as a supplier and maximizes your machine up time.  A rapid change-over / setup strategy can significantly reduce the dependence on high volume production to sustain profitability.

Suppliers to the automotive industry have certainly felt the impact of low or significantly reduced volumes over the last quarter of 2008 and certainly the first quarter of 2009.  An effective tool change strategy to maximize up-time and support low volume runs has never been in demand more than now.

The 95% performance factor takes into account operator functions outside of the normal machine process cycle.  A standardized work process will enable you to determine what performance level is achievable.

If Six-Sigma is your objective, then anything less than 100% quality at machine buy-off is a formula for failure. 

In Conclusion

So when should OEE integration start?  At the onset of every new program and the OEE criteria should be incorporated into the purchase agreement.  This will ensure that OEE becomes and remains an integral part of the process.

In the past, many tools were bought-off by simply running 300 pieces or in other cases a minimum of 8 hours.  The only true measure was up time throughput and the quality of the product.  Today, there is more to running an efficient operation than simply having the ability to produce parts.  Safely producing a quality product at rate – effectively – is the mission.

More on this topic to follow.

Until next time – STAY lean!

OEE Integration – Part II

Training and Integration

Integrating OEE into your organization will take some time.  However, the benefits are definitely worth the effort.  Preparing an effective integration strategy will pay off dividends in the execution phase of your program and can serve as the core theme to launching many of your other lean manufacturing initiatives.

The challenge for many organizations is turning lean metrics, more specifically OEE, into part of the everyday language of the company.  The world of sports provides an excellent analogy to demonstrate how metrics are a necessary and integral part of the games we watch.  Baseball, football, basketball, hockey, cricket, and others all offer statistics or metrics that don’t necessarily determine the outcome of the game but certainly provide insight into the performance of the players and potential of the team.

While it may be a bit much to ask our employees to embrace lean performance metrics like OEE with the same energy and enthusiasm as they may have for sports, we can certainly encourage them by providing them with the education and training they need to better understand these metrics and why it is important to their future and the future of the company.

Defining the Need

It is imperative that you and your employees understand the need for an OEE system before even commencing with any physical implementation strategy.  It is even more critical to define and understand what is being measured and how the measurements will be used to improve your operation or processes.

To be effective, the team must have confidence and trust in the leadership coupled with a firm understanding of the practical intentions of the OEE system.  If employees perceive punitive intentions, you will most certainly lose.  How OEE data is used in your operation or processes will determine how successfully it can be integrated across the entire organization.

Understanding the rules of engagement is the key to making the metrics meaningful and effective.  Educating and training your team is at the very foundation of the lean journey.  Without it, the efforts are sure to fail.  Resistance to change is often fueled by lack of knowledge and understanding.

The VISE – Get the Commitment – Create the Charter

Vision:  We will manage in Real Time using metrics to measure our performance and effective use of capital and human resources;

Intelligence:  We will become students and teacher of our business, training and educating ourselves and each other;

Strategy:  We will develop effective, detailed plans to support our vision, goals, and objectives to be a viable, sustainable, and growing business enterprise;

Execute:  We will execute specific, detailed action plans in a timely and efficient manner, addressing all impediments to assure our success;

WHY:  to drive continual improvement, support our lean initiatives, and eliminate waste in our organization.

Using acronyms can be an effective way to communicate your expectations.  The VISE provides a strategic super-view that is easily embraced by any organization serious about their present and future business prospects.

More on this topic in tomorrow’s post.

Until next time – STAY lean!