Tag: Overall Equipment Efficiency

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!

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!

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.

Make or Break with OEE

Reward systems, bonuses, and other forms of compensation have been the topic of many newspaper articles and news broadcasts as of late.  Although attention has turned toward the viability and sustainability of the manufacturing sector, there are many of us who question how the performance of these companies is measured and, even more so, rewarded.

While executive compensation is typically subject to scrutiny in and outside of most organizations, those rewards that are internal to an organization are seldom challenged or checked.  How do we really measure the effectiveness of our leaders and management?

Our industry leaders are truly being tested as today’s economy has further challenged many organizations to make additional substantive cuts to their operating budgets.  These times all but test our own survival strategies as well.

Executives and management at all levels continue to look at where and what to cut – this usually translates into “WHO should be cut”.  It is time for leadership to recognize that current management methodologies and infrastructure must change – the organizational structure must become seamless in its approach.

In the late 1940’s and early 1950’s, Toyota was faced with the same dilemma our current North American auto manufacturers are facing.  They didn’t just try to figure out how to build a better car they also figured out how to build them more efficiently and effectively.  Toyota  didn’t replicate the existing North American systems, they re-invented them.

Consumers want a quality product.  The what, where, when, and how it is built are not really their concern – as long as it’s available when they want it!

Discussions should be focused on the METHOD or the HOW things get done (systems and / or processes) not necessarily WHO does it.  Rationalizing the current business structure and what can be done to improve it is required.  It is difficult to get your team involved in problem solving and strategy meetings when the only thing on their minds is “who is left after the storm blows through”.

The Axe Falls … on operations

Typically, operations becomes the focus of most cost cutting endeavours.  In the automotive industry, plant closures are devastating communities and the ripple effect of these closures puts us on the brink of another wave of closures at the supplier level.  The most recent example supporting this trend is Chrysler’s announcement to close several of it’s major plants in North America.

Unfortunately, eliminating excess capacity is only a short term solution.  The true change events will occur when the infrastructure challenges are addressed and a new “fresh” culture is introduced and embraced by the “new” management.

If we learn anything during these times, we quickly discover the difference between the things that matter most and those that don’t.  Now is the time to find out what is really necessary and matters most to your operations.  A corporate, system level, 5S process is required to really clean up and move forward.

Bankruptcy can make the discovery process very quick and easy.  Liquidators are also very quick to give you the real value of your assets.  Peter F. Drucker suggested that abandonment was a necessary part of the management process.  The timing, however, is much better when it is on your terms and not those of the bank.

OEE – does it work?

Overall Equipment Efficiency, or OEE, is one of those metrics that should survive the test of time.  We have discussed the many positive attributes of using OEE as an effective metric for managing your manufacturing operations.  If the culture in your company is one of candor and open and honest communication, then OEE can definitely be used as a metric to help drive change and improvements.

In the wrong culture (selfish versus company gain), metrics such as OEE can be used and abused quite readily.  We would caution you to think about how improvements to OEE are rewarded.  At a minimum:

Reward the action or the change – not the result.

Rewarding the action allows you to identify what has been changed or improved and will encourage others to duplicate this type of activity.  The OEE result serves to validate the effectiveness of the change or improvement.  This strategy also ensures that people are focused on solutions and tangible actions as opposed to “tweaking the system” to make the numbers look better.  Getting a better stop watch may improve the accuracy of the measurement, unfortunately it won’t save you a dime unless something else changes.

What’s next

Visioneering and Innovation are imperative to our continued future successes.  The electronics industry continues to churn out new ideas and technologies at an amazing rate of change.  Some argue that it’s easier with electronics because …

Is it really?  Or is it that we have learned by the very practices of leaders in the electronics field that change is inevitable, encouraged, embraced, and most importantly expected.

The automotive industry and manufacturers in general need real and true competition.  There is absolutely no room for complaceny.  If the automotive industry was anything but close to embracing this type of culture, cars would be much different today.

Perhaps this is a bit of a rant, however, we seem to be too set in our ways.  Protecting past methods, preserving old cultures, and confusing complexity with genius.  Museums and memorials have their place, just not in today’s manufacturing facilities and management practices.

Until next time – Stay LEAN!

OEE – A Vantage Point Metric

The automotive industry has recently been plagued by doom and gloom as the economy continues to erode any chances for a rebound.  Chrysler has already met with the reality of an uncertain future and has subsequently filed for bankruptcy.  Unfortunately, as Chrysler plants shut down and cease operations for the next 30 – 60 days, suppliers will also feel the impact as well.  This will affect other OEM’s such as GM, Honda, and Toyota, as the remaining suppliers will not have the sales to keep their doors open to support these demands.

These times demand extremely effective use of resources to minimize waste and reduce losses in all facets of the business.  For this reason, it is a good time to revisit the metrics you use to manage your organization and to make sure that they are providing the right information, at the right time to manage your business effectively.  This post was also presented on our companion blog.

We use the term Vantage Point Metrics to identify those metrics that are core to the day to  day management of your business.  The objective is to distinguish these metrics from the “noise” that is easily created by other less significant metrics.  (While it is important to measure everything that is important to your business, not all measurements are equally important at all times or at the same time.)

Determining Vantage Point Metrics is simply a matter of identifying those metrics that are critical to the profitability of your operation.  A few simple examples include Safety, Overall Equipment Effectiveness (OEE), Labour Efficiencies, Profit, Absenteeism, Cost of Non-Quality, Delivery Performance, Performance to Schedule, and Inventory Turns.

Climate Control

Keep the number of vantage point metrics to a minimum.  Note that we are NOT suggesting that you stop measuring.  There is a difference.  Too many metrics can create noise and loss of focus.  What we are suggesting is that metrics that are critial to the day to day operation must be reported more frequently than others.  What is important to who.  Can the metric be measured in real time?  Can the people reviewing the data make changes in real time?  If the data being collected cannot be used to make decisions to correct a current trend then why is it being measured?

Although we can’t control the weather, we certainly spend a signficant amount of time, money, and resources to get up to the minute data and short term forecasts.  Only the few key metrics are reported with an explanation of the various environmental influences that may affect the forecast in the short term.

In a similar way, Vantage Point Metrics are those few that have a direct relationship or impact on the current business climate.  Changes in the weather may cause us to alter both personal and business plans.  Agriculture, NASA, and Aerospace companies rely on the weather as a dynamic component of their business.  Vantage Point metrics should assimilate the same sensitivity to climate change in your business.

Measuring for measurement’s sake is waste.  Measure critical to success factors that can be used to alter or change the course of business as required.  Real time data collection in conjuction with short response-control loops is the key to using these metrics successfully.

Consider managing your personal cash flow in real time versus performing a month end summary.  Anyone who has purchased fuel for their vehicle this past year is keenly aware of the fluctuations in pricing and the cost of filling the tank.  As the variation in price increases, we in turn become more sensitive to our purchasing habits.

What is the Vantage Point Metric that would allow you to manage your fuel purchases?  Is it the price per gallon or litre at the gas station?  Could it also be worthwhile to monitor the price of a barrel of oil?  Our logic suggests that a direct correlation between price at the pump and the cost of barrel of oil should exist although our experience strongly suggests otherwise.  Repair costs, refinery costs, weather, and the value of the dollar, all seem to have an impact on the price at the pump.

Fortunately, gas pumps display the price in real time as the tank is being filled.  Knowing our current cash position allows us to fill our tanks to such an amount that we don’t exceed our ability to pay for it.  This is measuring and managing in real time.  The Vantage Point metric in this case is CASH.  It is possible to manage cash flow in real time to determine what and how much can be purchased.  If cash is the Vantage Point metric, it becomes clear that many business transactions can be controlled and understood from this one simple metric.

Consider what Vantage Point Metrics can do for your business.  Focus on the few metrics that provide the greatest level of control and management of your business.  Keep it simple and keep it real.  Keep measuring and be prepared to drill down when you have to.

Overall Equipment Effectiveness or OEE provides a single metric that combines Availability, Performance, and Quality into one unique index.  It is very possible to drill down into the details of the metric as required.

Inventory turns is another Vantage Point metric that tells a story much greater than just how well material is moving through your organization.

Training

Turning ordinary metrics into Vantage Point metrics requires training all employees, associates, or business partners.  They need to clearly understand what the metric is measuring and the various aspects or elements of the business climate that can affect positive change.

When the weather is reported on the news, the forecast is typically accompanied by an explanation of the reasons for the current weather conditions and future forecast.  They don’t just post a weather map on the screen and leave it for the viewer to determine the emerging weather patterns.  Similarly, Vantage Point Metrics require supporting details and explanations to educate the team on the meaning of the data and how to respond to the current conditions and what the effects will be if we don’t.

Metrics can be extremely valuable if selected and used wisely.  Easy data is not necessarily meaningful data.  Collecting and analyzing the data is the beginning not the end of the process.  Measuring absenteeism for example is not a difficult task.  Understanding why certain behavior patterns exist and affecting change to produce positive results is the journey to be pursued.

The Six Sigma DMAIC model (Define, Measure, Analyze, Improve, and Control) suggests that we already know that a problem exists.  This model does not support Vantage Point Metrics in that a defined outcome or goal has been established.  The data is analyzed to determine and define the root cause for the current trend.  Improvements are then formulated into an action plan, implemented, and monitored accordingly.  The metric continues to serve as continual feedback as actions are taken.

You can either wait for the problem to define itself or implement Vantage Point Metrics that will prevent the problem from occurring all together.

Most people have had the opportunity to drive a car or truck and know that we need to obey the rules of the road.  A speeding ticket is a problem that is readily defined.  It is a problem not only because it could cost you some money but repeated occurrences could also result in the loss of your licence to drive.  To avoid this dilemma from happening you can monitor your Vantage Point Metric (the speedometer) and respond to the current conditions – all in real time – and avoid the ticket.

When or if we do receive a speeding ticket, it is the result of a conscious decision to speed, not mere fate or bad luck.  As such, the issue, like many, becomes that of not adhering to policy or standard operating procedure.

Focus on the vital few Vantage Point Metrics to achieve stability in your organization.  As problems are resolved and opportunities to improve are pursued, new metrics will begin to surface that will bring even more positive results to the bottom line.

Until Next Time – STAY lean!

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OEE Integration – Where do we Start?

Where do we Start?

We mentioned in our previous post that OEE may be an initiative that your company chooses not to do. We doubt that too many corporations would support that view entirely, however, it may certainly influence how extensive the implementation / integration strategy is.

So, where do we start?  Start with an assessment of some of your key processes to determine which one(s) may be good candidates for a deeper OEE review and analysis.  The purpose of the initial assessment is simple – just as healthy patients don’t need to see the doctor on a daily basis, perhaps a high performance process doesn’t necessarily need an overly complex OEE system.

Our most recent experience was working with a fully integrated and customized in-house solution.  The data available at any instant in time was incredible and the number of reports available was even more extensive.

The short story is, the greatest opportunities for improvement extended to the elimination of stock outs during production and the development of a more effective maintenance program.  We recommended and implemented a modified visual inventory management system and a more rigorous maintenance program that could be performed on the non-production shift.

The improvements to the net OEE were noticeable immediately and continue to show positive trends.  Maintenance work could now be performed more thoroughly and problems could be resolved with permanent corrective actions as opposed to patches and short term repairs that were implemented during the production shift.

So getting started now is as simple as collecting baseline production data using whatever reporting system you already have.  Hopefully you are able to access data by hour, or at least by shift.  We recommend downloading one or all of our spreadsheets available in our free downloads BOX on the side bar.

If you have access to your downtime sheets or a data base that can provide this information, now would also be a good time to start reviewing what data is available to you.  You should be ready to perform an initial assessment as fast as the data can be entered and reviewed.

Your initial data assessment will provide at least a small glimpse of the current process and it’s potential.  We have discussed OEE calculations in depth in our previous posts.  Please review our post categories if you need a refresher.

Until Next Time – STAY lean!

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 and LEAN

Incorporating and tracking performance using Lean metrics doesn’t make a company Lean any more than tracking weight puts you on a diet.  Measurements are like decisions, nothing changes unless actions are taken.

How does this apply to OEE?  How does OEE apply to LEAN?  As we’ve mentioned in previous posts, many companies invest a significant amount of time, money, and effort to develop exorbitant OEE data collection systems.  Data collection and analysis methods are in place, improvement / action plans are developed and executed, and the measurement cycle continues.

To some, this process may appear to be correct.  More formally, a Plan-Do-Check-Act (PDCA) or Define-Measure-Analyze-Improve-Control (DMAIC) process improvement methodology may be used.  So what is wrong with this picture?

OEE Improvements are RELATIVE

OEE does not distinguish between poorly designed and well designed processes.  A poorly designed process may have significant flow constraints and excessive labour but still yield a high OEE index.  The reason for this is simple, the base line or process standards are based on the current known process.  Standard cycle times and quality expectations are based on the current “achievable” performance standards that the process can provide.

Changes to the current process, rates, and quality levels will be reflected in the OEE index.  However, LEAN is not necessarily concerned with effective asset utilization.  The focus of LEAN is to increase or optimize the value added to the product or service being provided while reducing the time required to achieve it.

Implementing OEE is not LEAN

Racing cars and regular street cars may each perform at 100% of their optimum performance levels but clearly they could not compete in a race against each other.  From a LEAN perspective, the racing car will certainly out-perform a regular street car in a head-t0-head speed contest.

Similarly, OEE can provide insight into the performance of the current process, however, it does not provide an indication of how LEAN the process actually is.  A process that is plagued with multiple stations and inherent Work In Progress inventory will never compete against a properly balanced single piece flow process.

The OEE index for any group of processes may be above 85% as defined by design, it doesn’t mean they are equally lean.  Lean should aspire us to achieve a 100% value added process, safely producing the highest quality product in the shortest amount of time.  Although this could never be achieved in the today’s manufacturing environment, VALUE STREAM mapping is the technique used to evaluate our current capabilities in this regard and to determine what a lean future state process could achieve.

So why measure OEE?

OEE measures how effectively an asset or group of assets is being utilized as defined or described by the current standards and process constraints.  Of course, we want to make sure that we are utilizing our assets effectively.  The message here is simple.  Don’t confuse effectiveness with efficiency – they are not the same.

Even efficiency can mean different things to different people.  As we’ve mentioned in previous posts, understand WHAT you are measuring and WHY.  Metrics don’t make a company LEAN although many can help you achieve increasing levels of LEAN.

OEE is an excellent tool to help manage and improve our processes and even more so when the process is optimized using LEAN principles.

The next time someone says they are going LEAN, listen closely.  Usually the statement is met with the typical, “We did 5S and we’re working to improve our OEE.”  The real LEAN practitioner may just share the plan to reduce the cash to cash time and increase or improve the percentage of Value Added activity.

Until Next Time – Stay LEAN

OEE For Dedicated – Single Part – Processes

OEE For Dedicated – Single Part – Processes

Definition: 

Dedicated – Single Part – Process:  A process that produces a single product or slight variations on a theme and does not require significant tooling or equipment changeover events.

A single part process is the easiest application for a OEE pilot project.  The single part process also makes it easier to demonstrate some of the more advanced Lean Thinking tools that can be applied to improve your operation or process.  In our “Variation, Waste, and OEE” post, we introduced the potential impacts of variance to your organization.  We also restated our mission to control, reduce, and eliminate variation in our processes as the primary objective of LEAN.

We need to spend more time understanding what our true production capabilities are.  The single part process makes the process of understanding these principles much easier.  The lessons learned can then be applied to more complex or multipart processes.  In multipart or complex operations, production part sequencing may have a significant impact on hourly rates and overall shift throughput.  How would you know unless you actually had a model that provided the insight?

Process Velocity:  Measuring Throughput

Let’s start this discussion by asking a few simple questions that will help you to get your mind in gear.  Do you measure variation in production output?  Do you measure shift rates?  Do you use the “average” rate per hour to set up your production schedules?  How do you know when normal production rates have been achieved?  Does a high production rate on one shift really signify a process improvement or was it simply a statistically expected event?

Once again an example will best serve our discussion.  Assume the following data represents one week of production over three shifts:

Machine A:  Production Process Performance Report

Cycle Time (Seconds):   57      
Shift Standard (440 minutes) 440      
             
Day Shift Planned Quantity
Production Time Total Test Scrap Accept
Mon 1 440 420 1 2 417
Mon 2 440 390 1 1 388
Mon 3 440 320 1 3 316
Tue 1 440 361 1 1 359
Tue 2 440 392 1 5 386
Tue 3 440 365 1 2 362
Wed 1 440 402 1 7 394
Wed 2 440 317 1 6 310
Wed 3 440 430 1 1 428
Thu 1 440 453 1 5 447
Thu 2 440 419 1 3 415
Thu 3 440 366 1 1 364
Fri 1 440 400 1 2 397
Fri 2 440 411 1 4 406
Fri 3 440 379 1 2 376
Totals 15 6600 5825 15 45 5765

The following table is an extension of the above table and shows the unplanned downtime as well actual, standard, and ideal operating times.

Day Shift Unplanned Operating Time
Down Time Actual Standard Ideal
Mon 1 25 415.0 399.0 396.2
Mon 2 55 385.0 370.5 368.6
Mon 3 122 318.0 304.0 300.2
Tue 1 84 356.0 343.0 341.1
Tue 2 65 375.0 372.4 366.7
Tue 3 82 358.0 346.8 343.9
Wed 1 45 395.0 381.9 374.3
Wed 2 130 310.0 301.2 294.5
Wed 3 30 410.0 408.5 406.6
Thu 1 5 435.0 430.4 424.7
Thu 2 40 400.0 398.1 394.3
Thu 3 90 350.0 347.7 345.8
Fri 1 45 395.0 380.0 377.2
Fri 2 45 395.0 390.5 385.7
Fri 3 60 380.0 360.1 357.2
Totals 15 923 5677 5533.8 5476.8

The table below shows the OEE calculations for each day and shift worked.  Note that this table is also an extension of the above data.

Day Shift Overall Equipment Effectiveness (OEE)
Availability Performance Quality OEE
Mon 1 94.3% 96.1% 99.3% 90.0%
Mon 2 87.5% 96.2% 99.5% 83.8%
Mon 3 72.3% 95.6% 98.8% 68.2%
Tue 1 80.9% 96.3% 99.4% 77.5%
Tue 2 85.2% 99.3% 98.5% 83.3%
Tue 3 81.4% 96.9% 99.2% 78.2%
Wed 1 89.8% 96.7% 98.0% 85.1%
Wed 2 70.5% 97.1% 97.8% 66.9%
Wed 3 93.2% 99.6% 99.5% 92.4%
Thu 1 98.9% 98.9% 98.7% 96.5%
Thu 2 90.9% 99.5% 99.0% 89.6%
Thu 3 79.5% 99.3% 99.5% 78.6%
Fri 1 89.8% 96.2% 99.3% 85.7%
Fri 2 89.8% 98.8% 98.8% 87.7%
Fri 3 86.4% 94.8% 99.2% 81.2%
Totals 15 86.0% 97.5% 99.0% 83.0%

The results from the table above suggest that the process is running just short of world-class OEE (83% versus 90% for dedicated processes.  Note that 85% is considered world-class for multipart variable processes).  As you can see from the daily and shift results, a lot of variation is occurring over the course of the week.  This is the opportunity that we need to pursue further.  A quick scan of the data suggests that Wednesday 2nd shift and Monday 3rd shift are the main contributors to the reduced OEE.  We will investigate the data a little further to really understand what opportunities exist.

A dedicated, continuous process should yield a higher OEE since the process is not subject to continual setup and change over.  Although some model changes or variations to the existing product may exist, they are typically less disruptive.  A OEE of 90% may be an achievable target and is typical for most dedicated operations.

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.

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Until Next Time – STAY Lean!

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