Tag: OEE Formula

OEE – Reporting Live Part 1

How do you report Overall Equipment Effectiveness?

The next greatest challenge after learning how to calculate Overall Equipment Effectiveness (OEE) is reporting it.  This is often a topic of great debate and likely a reason why so many avoid discussing it at all.

Note that we have prepared several Excel spreadsheets to help you get started and they are available free of charge from our downloads page.

The question is, “What do we report?”  Some will argue that you can’t compare OEE between plants, departments, shifts, or processes. While we tend to agree with them in some respects, there is relevance to understanding the differences in the results.  In a comparative context, we would also add that we never intended to use OEE as competing metric, rather …

Our objective is to continually improve OEE over time.

Our objective is to provide a report that calculates OEE for multiple parts and processes such that a “summary OEE” can be determined from any combination of factors included in our production report.

Our report can be further extended to include other factors derived from the reporting system itself.

How to Report OEE

While technologies exist that offer instantaneous OEE reporting on the shop floor, they do little to help you in the boardroom.  Over the next few posts, we will create a relatively simple reporting structure using Excel as our development platform.

Before we get started with our spreadsheet, lets first understand what data we need to collect.  We can then decide what elements to add to our spreadsheet accordingly.

Data Collection

We need a method for collecting the minimum amount of data that will satisfy our requirement to establish a robust OEE reporting system.  For now we will consider collecting the following data using a very simple production shift report::

  • Date
  • Shift
  • Employee (Name / Number)
  • Start Time
  • Finish Time
  • Part Number
  • Work Order (Job Number)
  • Sequence (Step Number)
  • Work Center (Machine)
  • Quantity Good
  • Quantity Scrap

This basic report can easily be enhanced by adding columns for setup, material changes, breaks, or other events to better understand what transpired over the course of a given shift.  We recommend keeping it short and simple.  Only add more rigorous reporting requirements as needed and if the results demand it.  A simple format encourages people to complete the forms more readily.

Reporting OEE

In our next post, we will introduce a spreadsheet where we can input our data and generate our OEE report.  Our spreadsheet will allow you to calculate OEE for any combination of the above data entries.

Until Next Time – STAY lean!

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OEE and Human Effort

A girl riveting machine operator at the Dougla...
Image by The Library of Congress via Flickr

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.

Until Next Time – STAY lean!

Vergence Analytics

Seasons Greetings

Holly, attributed to the Drummonds, MacInneses...
Image via Wikipedia

On behalf of the Lean Execution Team here at Vergence Analytics, I wish everyone a safe and enjoyable holiday! I wish you all the best of success in the new year.

I would also like to thank our many subscribers for your kind comments, suggestions, and many questions.

Merry Christmas and Happy New Year!

RedgeVergence Analytics

Differentiation Strategies and OEE (Part II): The Heart of the Matter

An article published in Industry Week magazine comprises part of our pursuit of differentiation strategies and OEE.  This will serve as the topical element of our post for today.

Enjoy the article, OEE:  The heart of the matter, and we’ll provide our thoughts and insights as well.  If the above links do not work, you can copy and paste the following link into your browser:

http://www.industryweek.com/articles/oee_the_heart_of_the_matter_18211.aspx

Until Next Time – STAY lean!

Vergence Analytics

Going DEEP with OEE

Does anyone actually look at their daily equipment availability? Instead of using TEEP that is typically based on calendarized availability, looking at the Daily Equipment Effectiveness Performance of your operation may provide some interesting insights.

Working overtime due to material or equipment availability occurs many times.  Unfortunately, we find that sometimes these very same machines are idle during the week.

A detailed explanation for calculating DEEP can be found in one of our earlier posts, “OEE, Downtime, and TEEP.”  Understanding machine utilization patterns may provide greater insight into the actual versus planned operating pattern of your process.

Just something to invoke some thoughts for your operation and to perhaps identify another opportunity to improve performance.

FREE Downloads

We are currently offering our Excel OEE Spreadsheet Templates and example files at no charge.  You can download our files from the ORANGE BOX on the sidebar titled “FREE DOWNLOADS” or click on the FREE Downloads Page.  These files can be used as is and can be easily modified to suit many different manufacturing processes.  There are no hidden files, formulas, or macros and no obligations for the services provided here.

Please forward your questions, comments, or suggestions to LeanExecution@gmail.com.  To request our services for a specific project, please send your inquiries to Vergence.Consulting@gmail.com.

We welcome your feedback and thank you for visiting.

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!

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“.

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Until Next Time – STAY lean!

Vergence Analytics