We are often asked what companies (or types of companies) are using OEE as part of their daily operations. While our focus has been primarily in the automotive industry, we are highly encouraged by the level of integration deployed in the Semiconductor Industry. We have found an excellent article that describes how OEE among other metrics is being used to sustain and improve performance in the semiconductor industry.
Somehow it is not surprising to learn the semiconductor industry has established a high level of OEE integration in their operations. Perhaps this is the reason why electronics continue to improve at such a rapid pace in both technology and price.
The article clearly presents a concise hierarchy of metrics (including OEE) typically used in operations and includes their interactions and dependencies. The semiconductor industry serves as a great benchmark for OEE integration and how it is used as powerful tool to improve operations.
While we have reviewed some articles that describe OEE as an over rated metric, we believe that the proof of wisdom is in the result. The semiconductor industry is exemplary in this regard. It is clear that electronics industry “gets it”.
As we have mentioned in many of our previous posts, OEE should not be an isolated metric. While it can be assessed and reviewed independently, it is important to understand the effect on the system and organization as a whole.
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We recently received an e-mail regarding OEE calculations for batch processes and more specifically the effect on down stream equipment that is directly dependent (perhaps integrated) on the batch process. While the inquiry was specifically related to the printing industry, batch processing is found throughout manufacturing. Our more recent experiences pertain to heat treating operations where parts are loaded into a stationary fixed-load oven as opposed to a continuous belt process.
Batch processing will inherently cause directly integrated downstream equipment (such as cooling, quenching, or coating processes) to be idle. In many cases it doesn’t make sense to measure the OEE of each co-dependent piece of equipment that are part of the same line or process. Unless there is a strong case otherwise, it may be better to de-integrate or de-couple subsequent downstream processes.
Batch processing presents a myriad of challenges for line balancing, batch sizes, and capacity management in general. We presented two articles in April 2009 that addressed the topic of where OEE should be measured. Click here for Part I or Click here for Part II.
Ideally, we want to measure OEE at the bottleneck operation. When we apply the Theory of Constraints to our production process, we can assure that the flow of material is optimized through the whole system. The key of course is to make sure that we have correctly identified the bottleneck operation. In many cases this is the batch process.
While we are often challenged to balance our production operations, the real goal is to create a schedule that can be driven by demand. Rather than build excess inventories of parts that aren’t required, we want to be able to synchronize our operations to produce on demand and as required to keep the bottleneck operation running. Build only what is necessary: the right part, the right quantity, at the right time.
Through my own experience, I have realized the greatest successes using the Theory of Constraints to establish our material flows and production scheduling strategy for batch processes. Although an in-depth discussion is beyond the scope of this article, I highly recommend reading the following books that convey the concepts and application through a well written and uniquely entertaining style:
In his book “The Goal“, Dr. Eliyahu A. Goldratt presents a unique story of a troubled plant and the steps they took to turn the operation around.
Another book titled “Velocity“, from the AGI-Goldratt Institute and Jeff Cox also demonstrates how the Theory of Constraints and Lean Six Sigma can work together to bring operations to all new level of performance, efficiency, and effectiveness.
I am fond of the “fable” based story line presented by these books as it is allows you to create an image of the operation in your own mind while maintaining an objective view. The analogies and references used in these books also serve as excellent instruction aids that can be used when teaching your own teams how the Theory of Constraints work. We can quickly realize that the companies presented in either of the above books are not much different from our own. As such, we are quickly pulled into the story to see what happens and how the journey unfolds as the story unfolds.
Please leave your comments regarding this or other topics. We appreciate your feedback. Also, remember to get your free OEE spreadsheets. See our free downloads page or click on the file you want from the “Orange” box file on the sidebar.
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
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.
How OEE can improve your Cost of Non-Quality. It’s more than yield.
What OEE can do for your Inventory. Improvements should be cascading to other areas of your operation – including the warehouse.
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.
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.
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
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As the days of summer are upon us, we thought it would be good idea to make it easier for you to access our free downloads so you can spend more time doing the things you want to do. We have updated our site and we are pleased to offer you four ways to download our OEE spreadsheet templates:
We also added a new Link List to the sidebar titled “Download Files”
We made the FREE DOWNLOADS orange Box file a little larger and easier to read.
We will include direct access links in the content of our posts.
Your OEE templates are literally a click away – saving you time and effort.
Cost Weighted OEE – Advanced OEE Template
We have received numerous requests for our “Cost Weighted OEE” template. Many people are starting to realize that the OEE factors for availability, performance, and quality are not directly correlated. Of course, we have also discussed our concerns in this regard on several occasions and will state again that OEE is not a stand alone metric. As a vantage point metric, it can provide a valuable perspective on operations in real time, however, it is only one part of the overall equation.
Rex Gallaher wrote an excellent article titled “OEE Oxymoron; Are all factors truly equal?” that was published by ReliablePlant.com on February 18, 2009. This article also conveys the premise that the OEE factors are not equal. Understanding the financial impact of each of the OEE factors will assure that efforts and energy are focused on activities that will provide the greatest return on investment for your company.
To celebrate our site updates, we thought we would give you at least one more reason to see how our download venues work. A copy of the Cost Weighted OEE Template is now available through all three of our download venues or you can Click HERE to get immediate access to the file.
For a detailed discussion of OEE and how it can (and should not) be used to identify opportunities to eliminate waste and reduce costs, click on one of the links below:
In light of the current economy, many companies have been forced to look inward to find “new” money. OEE is one of the few lean metrics available that can help your organization to focus on the greatest opportunities with measurable returns. We trust the templates and spreadsheet solutions that we offer here will help you in your quest.
For more information, click on the Categories section of the sidebar to search for other articles on our Blog that may be of interest to you. They can provide significant insight into the many aspects of operations and OEE and may serve as part of your ongoing training efforts.
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!
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We agree that collecting and tracking OEE data is a task best suited for a database, however, all the bells and whistles of an OEE system don’t serve much purpose if the calculations are wrong. Before you make a significant investment in your OEE data collection, tracking, and monitoring system, make sure the system you plan to purchase is calculating the OEE results correctly.
The ultimate system is one that supports automated data collection technology to minimize data entry costs, reduces the risk of entry errors, and provides reporting or monitoring of OEE in real time. These solutions may be purchased “off the shelf” or customized to your specific process application.
If a database is the best approach, you may ask why we use Excel spreadsheets to present our examples or why we supply templates to allow you to track and monitor OEE. We have four primary reasons:
Almost everyone is familiar with spreadsheets and most people have access to them on their computer.
We determined that a customized database solution being used was not calculating the weighted OEE factors correctly and the overall OEE index was also wrong. We found it necessary to develop a spreadsheet that made it easy to validate the database calculations.
Database enhancements were easier to develop and demonstrate using a spreadsheet. We encountered a production process that was equipped with automated data collection capability and provided an overwhelming amount of performance data in real time. It was easier to perform database queries and use the power of PIVOT tables to develop the desired solutions.
Spreadsheet templates allow you to start collecting and analyzing data immediately. It also allows the users to get a “feel” for the data. Although the graphs and drill downs offered by databases are based on predetermined rules, humans are still required to make sense of the data.
In summary, validate the software and its capabilities prior to purchase. We have observed installations where the OEE data is used to monitor current production performance and the reports generated by the system are used to support the results – good or bad.
We have also evaluated a number of other free OEE spreadsheet offerings on the web and observed that some of these also fail to correctly calculate OEE where multiple machines or part numbers are concerned. Take a look at our free spreadsheets offerings (see the sidebar). Our tutorial provides an in depth explanation of how to calculate OEE for single and multiple machines or parts.
The purpose of measuring OEE is to ensure sustained performance with the objective to continually improve over time. Don’t fall into the trap of setting up a system that, once installed, will only be used to generate reports to justify the current results.
Take the time to train your team and demonstrate how the results will be used to improve their processes. Involve all of your employees from the very beginning, including the system selection process, so they understand the intent and can provide feedback for what may be meaningful to them while, in turn, they can support the company’s goals and objectives.
We encourage you to visit our previous posts showing how to calculate OEE for multiple parts and machines.