Overall equipment effectiveness (OEE) has been used as one of the more important manufacturing metrics since Total Productive Maintenance (TPM) came to the U.S. in the late 1980s. It’s the primary measure used in TPM to identify and quantify the major equipment-related losses and a metric for rating equipment effectiveness.
OEE has become popular in many plants with or without the elements of TPM in place to quantify equipment effectiveness losses. This usage has also caused some confusion and has led to significant misuse of the OEE percentage calculation to compare machine or plant performance.
The early Toyota Production System focused on eliminating waste to reduce cost. OEE was initially developed to identify the major losses in equipment performance and reliability. TPM then became a company-wide approach to eliminating them. Here is a list of the original major losses:
Availability Losses
1. Planned shutdown—no production scheduled, planned maintenance
2. Unplanned downtime—breakdowns and failures, changeover (product, size),
tooling or part changes, startup or adjustment.
Performance-Efficiency Losses
1. Minor stops (jams, circuit breaker trips, etc.) and
2. Reduced speed, cycle time, or capacity output
Quality/Yield Losses
1. Defects/rework, scrap, and
2. Yield (changeover, startup losses)
OEE, as a metric, can also be calculated as a rating of equipment effectiveness represented by Availability x Performance Efficiency x Quality/Yield Rate, each expressed in percent.
LET THE CONFUSION BEGIN
This is where all the confusion begins. OEE percentages became a metric to compare current equipment performance to “world-class” performance that was pegged, erroneously, at 85%.
Once used as a benchmarking score for world-class, OEE then came to be applied for comparing one piece of equipment to another, regardless of function or operating environment. It has since been extended to specify overall plant effectiveness (OPE) by using an aggregate score for all equipment in the plant. These metrics have become widely used to compare levels of maintenance effectiveness and equipment performance to world-class levels, and even as a club to punish those whose OEE slips.
Beware! All of these uses are inaccurate, unfair comparisons, and a gross misuse of the original purposes of OEE.
OEE SECRETS REVEALED
Unfortunately, OEE morphed into a high-level metric or rating and became further removed from its powerful use as an equipment improvement tool. Let’s look at three “secrets” of OEE: Data, percentages, and use as an equipment-specific metric.
OEE Data: OEE was originally designed and developed to characterize and communicate the major equipment-related losses for further analysis and problem solving.
By capturing equipment performance and reliability data, and classifying it as a specific availability, efficiency, or quality loss, Pareto charts could be developed to communicate the major losses for focused improvement. This OEE data then could measure and communicate the effectiveness of the focused improvement efforts and the countermeasures put in place to eliminate the major loss, or problem.
OEE Percentage Rating: The OEE percentage calculation served no purpose other than a very high-level indicator of performance improvement or degradation for a piece of equipment compared to itself over a period of time. Today, entirely too much emphasis is placed on trending and analyzing the calculated OEE rating for multiple machines or processes and comparing them to each other.
OEE as a calculated rating is not entirely accurate. It assumes the basic factors of availability, efficiency, and quality losses are equally important. It is a rare situation when a 1 percent downtime loss has the same business or financial impact as a 1 percent efficiency loss or a 1 percent quality loss.
OEE percentages are statistically inaccurate. Availability is measured in units of TIME. Efficiency is measured as TIME and UNITS of output. Quality and yield are measured in UNITS of output and a QUANTITY of raw material. Think of an OEE percentage much like the thermometer taking the temperature of a sick child. The temperature can indicate ABOVE or BELOW normal. It will not tell us what or where the problem is.
OEE as An Equipment-Specific Metric: While OEE attributes origins to TPM we must remember that TPM is NOT a maintenance program. TPM focuses the entire organization on improving equipment effectiveness since equipment-related losses and solutions go well beyond the maintenance organization.
OEE does NOT measure maintenance effectiveness: It is a measure of the factors that determine equipment effectiveness. Maintenance alone can address limited types of the major losses captured for OEE. This is why OEE is used in Total Productive Maintenance where the entire organization, including operations and engineering, focuses on eliminating the major losses.
OEE data (Availability, Performance Efficiency, Quality/Yield) very quickly leads to root cause identification and elimination causes within the three major loss categories. OEE data answers the question—did we address or eliminate the root cause of poor equipment performance? OEE data is the means to an end: improving overall equipment effectiveness of a specific machine. However, calculating OEE ratings further removes our efforts from eliminating the major losses to comparing OEE scores. Be careful: OEE is a measure of equipment effectiveness, not maintenance effectiveness.
Consider this: A machine may not need to run a full shift to produce the materials needed for production flow. But when it runs it is expected to deliver defect-free output. While the equipment’s efficiency (rate of production) may be less than optimum for the machine, as long as it produces to match the takt time of the process, all is well. Changeovers can occur during scheduled (non-production) downtime and not be considered as “losses.”
Because some machines produce different parts, requiring setup and changeovers, the OEE will vary depending on the machine rate (efficiency) for each different part. Keep in mind that a single machine can have multiple calculated OEE ratings in a single shift or day. Why? Because OEE is metric for a machine that produces different parts with different cycle times, depending on the needs of production.
Remember, OEE is used to compare a machine’s performance to itself over a period of time, NOT to compare one type of machine to another. OEE is an equipment-improvement tool, NOT a maintenance metric. That said, welcome to the secret powers of OEE.TRR
ABOUT THE AUTHOR
Bob Williamson is a long-time contributor to the people-side of the world-class-maintenance and manufacturing body of knowledge across dozens of industry types. His background in maintenance, machine and tool design, and teaching has positioned his work with over 500 companies and plants, facilities, and equipment-oriented organizations. Contact him directly at 512-800-6031 or bwilliamson@theramreview.com.
