MODERN APPROACH TO

OVERALL EQUIPMENT EFFECTIVENESS (OEE)

SEMINAR REPORT

Submitted by

KAILAS SREE CHANDRAN

S7N, 27432

To
The University of Kerala
In partial fulfilment of the requirements for the award of the degree
Of
Bachelor of Technology in Mechanical Stream Industrial Engineering

DEPARTMENT OF MECHANICAL ENGINEERING

COLLEGE OF ENGINEERING, THIRUVANANTHAPURAM – 16
October 2009
 DEPARTMENT OF MECHANICAL ENGINEERING
COLLEGE OF ENGINEERING
THIRUVANANTHAPURAM – 16

CERTIFICATE

This is to certify that the report entitled “Modern approach to Overall Equipment
Effectiveness (OEE)”, submitted by “Kailas Sree Chandran, S7N, 27432” to the
University of Kerala in partial fulfilment of the requirements for the award of the Degree of
Bachelor of Technology in Mechanical Stream Industrial Engineering, is a bonafide record of
the seminar presented by him, under our guidance and supervision.

SRI. V. REGI KUMAR SRI. K. SABU SRI. E. ABDUL RASHEED

Senior Lecturer Senior Lecturer Professor
Dept. of Mechanical Engg; Dept. of Mechanical Engg; Dept. of Mechanical Engg;
(GUIDE) (CO-ORDINATOR)

PROF. P. VINCENT
HEAD OF THE DEPT OF MECHANICAL ENGINEERING
COLLEGE OF ENGINEERING
THIRUVANANTHAPURAM
 ACKNOWLEDGEMENT

It is with great pleasure, I place on record my deep sense of gratitude and

indebtedness to my guide Sri. V. REGI KUMAR, Senior Lecturer, Department of

Mechanical Engineering, College of Engineering, Thiruvananthapuram, for helping me to

carryout this work successfully.

I take this opportunity to express my most sincere thankfulness to Prof. E. ABDUL

RASHEED, Senior Staff Advisor and Seminar Co-ordinator, Department of Mechanical

Engineering, College of Engineering, Thiruvananthapuram, for his valuable directions.

I am also thankful to Prof. P. VINCENT, Head of the Department of Mechanical

Engineering, Sri. K. SABU, Senior Lecturer, Department of Mechanical Engineering, and

Smt. MINI R.S., Lecturer and Staff Advisor, Department of Mechanical Engineering,

College of Engineering, Thiruvananthapuram for their direct and indirect helps for the

success of this seminar.

Last but not least, I am grateful to my parents, friends and classmates for their help

and co-operation for the successful presentation of this seminar.

KAILAS SREE CHANDRAN

 ABSTRACT

Under current economic conditions, severe global competition and postponement of new

equipment purchases are causing business executives to be sensitive about all aspects of

manufacturing operational costs. In this context Overall Equipment Effectiveness (OEE) has

become a hot topic among many manufacturers. It provides a simple way to “keep score” of

manufacturing performance, and lean manufacturing initiatives.

Overall Equipment Effectiveness (OEE) is a hierarchy of metrics which focus on how

effectively manufacturing equipment is utilised. The results are stated in a generic form

which allows comparison against benchmark defined for the industry. Comparisons can also

be made in between shifts, products, machines, departments, lines and plants etc. In simple

words, “Overall Equipment Effectiveness shows the effectiveness of a machine compared to

the ideal machine as a percentage.”

OEE breaks the performance of a manufacturing unit into three separate but measurable

components; Availability, Performance and Quality. Each component points to an aspect of

the process that can be targeted for improvement. OEE may be applied to any equipment.

This tool also allows for drilling down for very specific analysis, such as a particular part

number, shift, or any of several other parameters. It is unlikely that any manufacturing

process can run at 100% OEE. Many manufacturers benchmark their industry to set a

challenging target, 85% is not uncommon.

 CONTENTS

1. Introduction 1

2. Definition of Overall Equipment Effectiveness 2

3. Six Big Losses 3

4. Components of Plant Operating Time 8

5. OEE Factors 10

6. World Class OEE 15

7. OEE Calculation Methods 16

8. Sample Problem 20

9. Objectives of OEE 23

10. Cautions for using OEE 24

11. Modified Overall Equipment Effectiveness 25

12. Sample Problem using Modified OEE 29

13. Conclusion 30

14. References 31
1. INTRODUCTION

There are many different approaches for measuring manufacturing efficiency and generally

most companies will have some measures already in place. Many now argue that none of

these are as comprehensive or far reaching as the Overall Equipment Effectiveness (OEE)

score which should be considered as a fundamental key performance indicator.

OEE was first used by Seiichi Nakajima, the founder of Total Productive Maintenance

(TPM), in describing a fundamental measure for tracking production performance. He

challenged the complacement view of effectiveness by focusing not simply on keeping

equipment running smoothly, but on creating a sense of joint responsibility between operators

and maintenance workers to external and optimize Overall Equipment Performance.

OEE embodied in the first of the original pillars of TPM, guided all TPM activities and

measured the results of these loss-focused activities. The use of OEE evolved into the current

focused improvement pillar, one of eight TPM pillars.

1
2. DEFINITION OF OVERALL EQUIPMENT EFFECTIVENESS

Overall equipment effectiveness is a measure of total performance- the degree to which the

asset is doing what it is supposed to do [1]. The effectiveness of equipment is the actual

output over the reference output [4]. Equipment Effectiveness shows how effectively the

equipment is utilized. The value of the OEE is a measure for the effectiveness of the

equipment in the available time for production. Overall Equipment Effectiveness shows the

effectiveness of a machine compared to the ideal machine as a percentage. Ideal machine

means the machine that produce maximum output at best quality. It doesn‟t have any loss or

breakdowns. So it is only an imaginary machine. OEE compares the equipment with the same

ideal equipment gives a numerical value as a percentage.

The OEE is quantified as

OEE = FULLY PRODUCTIVE TIME (1)

PLANNED PRODUCTIVE TIME

Planned Productive time is the time in which normally production is planned or realized.

Fully productive time is the time which remains after subtracting all losses in a production

system. Therefore OEE is the ratio between Fully Productive Time and Planned Production

Time.

2
3. SIX BIG LOSSES

One of the major goals of TPM and OEE programs is to reduce and/or eliminate what are

called the SIX BIG LOSSES- the most common causes of efficiency loss in manufacturing.

This was put forwarded by Nakajima in 1989. There are 3 OEE loss categories; Down Time

Loss, Speed Loss and Quality Loss. Each of these categories have been divided into two.

These are called Six Big Losses. OEE is generally measured in terms of these six losses.

They are

i. Breakdown Losses

ii. Setup and Adjustments Losses

iii. Small Stop Losses (Idling and Minor Stop Losses)

iv. Reduced speed Losses

v. Startup Rejects (Reduced Yield Losses)

vi. Production Rejects (quality defects and Reworks)

3.1 Down Time Losses

For a longer period, if the output is zero, the installation produces nothing. The unused

segments of time, during the examined period are down time losses. Down Time Losses are

divided into two; Breakdown losses and Setup & Adjustments losses.

3.1.1 Breakdown Losses

Breakdown Losses are by far the biggest of the “Six Big Losses”. The breakdown is often

referred to as sudden, dramatic failure in which the equipment stops completely [1]. Such

unexpected breakdowns are clearly losses, because production is stopped. Even if the cause

lies in a single specific function, the break down results in cessation of all equipment

3
functions. Problems and losses related to deterioration are also considered as break down

losses.

Eliminating unplanned Down Time is critical to improving OEE. Other OEE factors cannot

be addressed if the process is down. It is not only important to know how much Down Time

your process is experiencing but also to be able to attribute the lost time to the specific source

or reason for the loss.

3.1.2 Setup and Adjustment Losses

Setup and Adjustment occurs when the production of one product ends and the equipment is

adjusted to meet the requirements of another product. The loss of time during this delay is

known as Setup & Adjustments.

Setup and Adjustments time is generally measured as the time between the last good part

produced before setup to the first consistent good parts produced after setup. This often

includes substantial adjustments and/or warm-up time in order to consistently produce parts

that meet quality standards. Usually the loss of time should be less than 10 minutes.

3.2 Speed Losses

The output is smaller than the output at reference speed, these are called speed losses. When

considering speed losses, one does not check if the output conforms to quality specifications.

Speed Losses are divided into two; Small stops and Reduced speed.

3.2.1 Small Stops Losses

Small stops losses occur when equipment stops for a short time as the result of a temporary

problem. For example, a minor stoppage occurs when a work-piece is jammed in a chuck or

when a sensor activates and shuts down the machines. As soon as someone removes the

jammed work-piece or resets the sensor, it operates normally again. These losses also include

4
idling losses that occur when equipment idles. i.e. that it continues to run without producing.

Since idling and minor stoppages interrupt functions, they can also be categorized as

breakdowns. Even so, the two are essentially different in that a minor stoppage and the

duration are usually less than 10 minutes.

3.2.2 Reduced Speed Losses

Reduced speed refers to the difference between designed speed and actual operating speed

[3]. Equipment may be run at less than designed speed for various reasons: non-standard or

difficult raw materials, mechanical problems, history of past problems, or fear of overloading

the equipment. This loss of speed is converted into time during OEE calculation.

3.3 Quality Loss

The produced output either does or does not conform to quality specifications. If it does not

comply, this is considered a quality loss. Quality loss is divided into two; Startup Rejects and

Production Rejects.

3.3.1 Startup Rejects

Some equipment requires warm-up time and certain adjustments to obtain optimum output.

Startup losses are yield losses that occur in the early stages of production, from machine

setup to stabilization of product quality. The volume of losses varies with degree of stability

of processing condition, maintenance level on equipment, operator‟s technical skill, etc.

3.3.2 Production Rejects

Production Rejects are quality losses that are not attributed to startup. These losses occur

when products produced are not conforming to the specifications. Parts that require rework of

any kind should be considered rejects. These losses occur during steady-state production.

5
Six big losses with three categories are shown in Figure 1. Six big losses are categorized with

examples in Table 1.

Figure 1. Classification of Six Big Losses.

6
 Table 1. Categories of SIX BIG LOSSES with examples.

OEE Loss Category Six Big Loss Category Event Examples

Tooling Failures
Unplanned Maintenance
Break Downs
DOWNTIME LOSS

General Breakdowns
Equipment Failure
Setup/ Changeover
Material Shortages
Setup and Adjustments Operator Shortages
Major Adjustments
Warm-Up Time
Obstructed Product Flow
Component Jams
Miss-feeds
Small Stops
Sensor Blocked
SPEED LOSS

Delivery Blocked
Cleaning/Checking
Rough Running
Under Nameplate Capacity
Reduced Speed Under Design Capacity
Equipment Wear
Operator Inefficiency
Scrap
Rework
Startup Rejects In-Process Damage
QUALITY LOSS

In-Process Expiration
In-correct Assembly
Scrap
Rework
Production Rejects In-Process Damage
In-Process Expiration
In-correct Assembly

7
4. COMPONENTS OF PLANT OPERATING TIME

OEE analysis starts with Plant Operating Time. It is the amount of time the facility is open

and available for equipment operation. It is the maximum amount of time and is a constant. A

day always consists of 24 hours of 60 minutes. A week always consists of 7 days of 24 hours.

A year always consists of 52 weeks. It is also called Theoretical Production Time. This Plant

Operating Time consists fully productive time and different losses like speed and quality loss.

4.1 Planned Production Time

When a category of time called Planned Shut Down is subtracted from Plant Operating Time,

the remaining is Planned Production Time. The planned shut down includes all events that

should be excluded from efficiency analysis because there was no intension of running

production [3]. E.g. Breaks. Lunch breaks, scheduled maintenance or periods where there is

nothing to produce. Planned Production Time is also known as Available Production Time.

OEE begins with Planned Production Time and scrutinizes efficiency and productivity losses

that occur, with the goal of reducing or eliminating these losses. OEE starts with Plant

Operating Time and end up at Fully Productive Time, showing the sources of Productive loss

that occur in-between.

4.2 Operating Time

From Planned Production Time, Down Time loss is subtracted to get Operating Time.

Downtime losses includes any events that stop planned production for an appreciable length

of time (usually several minute-long enough to log as a traceable event). Examples include

equipment failures, material shortages, and changeover time. Change over time is included in

OEE analysis, since it is a form of downtime. While it may not be possible to eliminate

8
changeover time, in most cases it can be reduced. The remaining available time is called

operating time. It is also known as Gross Operating Time.

4.3 Net Operating Time

From Operating Time, speed loss is subtracted which includes any factors that causes the

process to operate at less than the maximum possible speed while running. Examples include

machine wear, substandard materials, miss-feeds, and operator inefficiency. The remaining

available time is called Net Operating Time.

4.4 Fully Productive Time

From Net Operating Time, Quality Loss is subtracted which accounts for produced pieces

that do not meet quality standards, including pieces that require rework. The remaining time

is called Fully Productive Time. The goal is to maximize Fully Productive Time. It is also

known as Valuable Operating Time.

Plant operating Time= Fully Productive Time + Quality Loss + Speed Loss + Down Time

Loss + Planned Shutdown. A graphic representation of components of Plant Operating Time

is shown in Figure 2.

PLANT OPERATING TIME

PLANNED
PLANNED PRODUCTION TIME SHUTDOWN
DOWN TIME
OPERATING TIME
LOSS

NET OPERATING TIME SPEED LOSS

FULLY
QUALITY LOSS
PRODUCTIVE TIME

Figure 2. Components of Plant Operating Time.

9
5. OEE FACTORS

The OEE calculation is based on the three OEE factors; Availability, Performance and

Quality. They are also called Effectiveness Factors.

5.1 Availability

The availability portion of the OEE Metric represents the percentage of scheduled time that

the equipment is available to operate[1]. The Availability Metric is a pure measurement of

Uptime that is designed to exclude the effects of quality, Performance, and scheduled

Downtime Events.

It is calculated by

Availability = Operating Time

Planned Production Time (2)

When downtime losses are zero, the availability is 1or 100%, the gross operating time equals

the available time for production. i.e. Operating time equals Planned Production time. 100%

availability means the process has been running without any recorded stops.

5.2 Performance

Performance takes into account Speed loss. Performance is the ratio between Net Operating

Time and Operating Time.

Performance = Net Operating Time

Operating Time (3)

The performance portion of the OEE Metric represents the speed at which the equipment runs

as a percentage of its designed speed. The Performance metric is a pure measurement of

speed that is designed to exclude the effects of Quality and Availability [1].

10
Performance does not penalize for rejects, which means even if the work is rejected or it‟s a

rework, it will be included in the planned and actual hours accordingly.

It is calculated as:

Performance = Ideal Cycle Time

(Operating Time / Total Pieces) (4)

Ideal Cycle Time is the minimum cycle time that your process can be expected to achieve in

optimal circumstances. It is sometimes called Design Cycle Time, Theoretical Cycle Time or

Nameplate Capacity.

Since Run Rate is the reciprocal of Cycle Time, Performance can also be calculated as:

Performance = (Total Pieces / Operating Time)

Ideal Run Rate (5)

Performance is capped at 100%, to ensure that if an error is made in specifying the Ideal

Cycle Time or Ideal Run Rate, the effect on OEE will be limited. 100% Performance means

the process has been consistently running at its theoretical maximum speed.

5.3 Quality

The Quality portion of the OEE metric represents the Good Units produced as a percentage of

the total units produced [1]. The Quality metric is a pure measurement of process yield that is

designed to exclude the effects of Availability and Performance. Quality is the ratio of Fully

Productive Time to Net Operating Time.

Quality = Fully Productive Time

Net Operating Time (6)

11
It is calculated as

Quality = Good Pieces

Total Pieces (7)

100% Quality means there have no reject or rework pieces.

The three effectiveness factors offer a second way to quantity the OEE;

OEE = Availability x Performance x Quality (8)

Therefore OEE is the product of its effectiveness factors; Availability, Performance and

Quality. The individual value of the three effectiveness factors lies between 0 and 1. The

study of each of these effectiveness factors will improve the Overall Equipment

Effectiveness.

During analysis, the analyst can concentrate each category of losses separately. As shown in

Figure 2, Availability takes into account Downtime losses, Performance takes into account

speed losses and quality factor takes into account Quality loss. The main aim of OEE

measurement is to reduce these losses and by analysis and improving the factors, the losses

can be reduced or eliminated and OEE can be improvement. The use of effectiveness factors

helps with prioritizing the size, but does not indicate the financial consequences that can

differ per factor. Overall Equipment Effectiveness calculation and Losses are shown in

Figure3.

12
Figure 2. OEE Factors and its losses.

13
 EQUIPMENT EFFECTIVENESS LOSS OEE FACTORS

PLANNED OPERATING TIME

BREAK DOWN

DOWN
TIME
LOSS
OPERATING TIME AVAILABILITY

SETUP & ADJUSTMENT

SMALL STOPS
OVERALL
SPEED
LOSS

NET OPERATING PERFORMANCE EQUIPMENT

TIME EFFECTIVENESS
REDUCED SPEED

STARTUP REJECTS
QUALITY

FULLY
QUALITY
LOSS

PRODUCTIVE
TIME
PRODUCTION REJECTS

Figure 3. Overall Equipment Effectiveness calculation and losses [1].

14
6. WORLD CLASS OEE

World class OEE is a standard which is used to compare the OEE of the firm. The percentage of

World Class OEE is given in Table 2.

Table 2. World Class OEE levels

OEE Factors WORLD CLASS

Availability 90%

Performance 95%

Quality 99%

OEE 85%

These values of OEE factors are generally accepted but the values are different for different

industries. For Manufacturing, the value of World Class OEE is 85% but for Paper Industry and

Cement Industry, the value is 95% and 80% respectively. The aim of the firm is to achieve this

value of OEE by continuous improvement.

15
7. OEE CALCULATION METHODS

OEE is a percentage of an equipment which shows its efficiency or effectiveness. Different

input data is needed for calculating OEE. The aim of OEE measurement and analysis is to

reduce the equipment losses to zero and has been recognized as a necessity for many

organizations [3].

There are mainly 3 methods for finding OEE.

7.1 Direct Method

7.2 OEE Factors Method

7.3 Software Method

For all these methods, the input data is same. The difference is the approach to the problem.

basically Software Method also uses OEE Factors Method.

7.1 Direct Method

Direct Method uses the basic formula for finding OEE.

OEE = Fully Productive Time

Planned Production Time (9)

It involves finding the Planned Production Time and Fully Productive Time from the given

input data. Planned Production Time can be found out by subtracting Planned Shutdown from

Plant Operating Time. Plant Operating Time: Calendar time 24 hours/day, 7 days/week, 365

days/year, 60 minutes/hour, 60 seconds/minute.

Planned Shutdown includes lunch breaks and tea breaks, shift change, planned maintenance etc.

Fully Production time can be found out by subtracting Downtime loss, Speed loss and Quality

loss from Planned Production time. Downtime loss should be given in the input data. Speed loss

16
can be calculated from ideal production rate and actual production rate. Quality loss can be

calculated from no. of defective products. All of these are losses.

This method is a little complex and is not used practically. The main disadvantage of this

technique is that analysis from the results is very limited. Because the output is the OEE

percentage alone. In other two techniques, the result has more information which aids in further

analysis.

7.2 OEE Factors Method

This method is used as a standard method for calculating Overall Equipment Effectiveness. It is

simple and uses minimum input data. This method uses the three effectiveness factors to

quantify the OEE.

OEE = Availability x Performance x Quality (10)

Therefore by using this method, three individual effectiveness values are calculated which can

be used for further analysis. Overall Effectiveness is the product of these effectiveness factors.

7.3 Software Method

This is an automated method. This involves the use of computers in calculating OEE. The basic

approach is same as the OEE Factors Method but Software Method is more accurate and more

flexible. All modern firms use this method. Software method can be done with the same input

data which is required for other two techniques.

There are two types of OEE Softwares:

7.3.1 Spreadsheets

7.3.2 System Softwares

17
7.3.1 Spreadsheets

Spreadsheet makes calculating OEE easier but unfortunately, it won‟t help with collecting the

data. Manual collection and processing of data for OEE calculation is time consuming and

ensures that it is always out of date.

7.3.2 System Softwares

System software collects data in real-time directly from the equipment. It saves the time needed

to manually collect the data leaving staff available to do more productive work. The data is

highly accurate compared to manually collected data and it is available immediately. The

analyst can analyze OEE continuously and display it on the shop-floor so the staff can see

exactly how they are performing. OEE IMPACT, VISUAL OEE, OEE TOOLKIT, PROVIDEAM

are examples for System Software. These softwares not only calculate OEE, but also analyze

and report on key production information; machine setup times, product analysis, product

tracking, wastage, rework, maintenance times etc. They produce reports in the form of graphs,

charts etc. some screenshots of System Softwares is given in Figure 4.

18
Figure 4. Screenshots of OEE System Softwares.

19
8. SAMPLE PROBLEM

Some data about an equipment is given. Calculate Overall Equipment Effectiveness using all

three methods.

Shift Length = 8 hours

Tea breaks = 10 minutes x 2

Meals break = 1 hour

Downtime = 10% of shift (48 hours)

Idle Run rate = 5 pieces/minute (Cycle time = 0.2min/pieces)

Total pieces produced = 1600

Rejected pieces = 52

Assure the equipment works only under the supervision of its operator.

8.1 Direct Method

According to Direct Method,

OEE = Fully Productive Time / Planned Production Time

Planned Production Time = Plant Operating Time – Planned Shutdown

Plant Operating Time = 8 hours x 60 = 480 minutes.

Planned Production Time = 480-80 = 400 minutes.

Fully Productive Time = Planned Production Time – (Downtime+Speed+Quality losses)

Downtime loss = 10% of shift length = 480 x 0.10 = 480 minutes

Speed loss = (Ideal Production- Actual Production) x Cycle time

Ideal Production = Ideal run rate x Operating Time

Operating Time = Planned Production Time – Downtime loss = 400-48 = 352 minutes.

20
Ideal Production = (5 pieces/min) x 352 minutes = 1760 pieces.

Speed loss = (1760 – 1600) x 0.2 minutes = 160 x 0.2 = 32 minutes

Quality loss = No. of rejected items x Cycle time = 52 x 0.2 minutes = 10.4 minutes.

Fully Productive Time = 400 – (48+32+10.4) = 309.6 minutes

OEE = 309.6/400 = 0.774

Overall Equipment Effectiveness = 74.4%

8.2 OEE Factors Method

According to this method,

OEE = Availability x Performance x Quality

Availability = Operating Time / Planned Production Time

Operating Time = 352 (Calculated earlier)

Planned Production Time = 400 (Calculated earlier)

Availability = 352/400 = 0.88

Performance = (Total pieces / Operating Time ) / Ideal Run Rate =(1600/352)/5 = 0.9091

Quality = Good Pieces / Total Pieces = (1600-52) / 1600 = 0.9675

OEE = 0.88 x 0.9091 x 0.9675 = 0.774

Overall Equipment Effectiveness = 77.4%

8.3 Software Method

A sample spreadsheet is used for calculating OEE. The input data is entered into the required

fields of the worksheet. The spreadsheet calculates OEE factors simultaneously while entering

data. The three factors Availability, Performance, Quality are calculated and OEE is also

calculated. These values are also compared with World Class OEE so that the analyst can know

the present condition of the equipment. The screen shot of the Excel Calculator is given in

Figure 5.

21
Figure 5. Screenshot of Excel Calculator.

22
9. OBJECTIVES OF OEE

 OEE data (information) is used to identify and categorize major losses or reasons for

poor performance.

 OEE provides the basis for root cause analysis.

 OEE percentage is used to track and trend the improvement, or decline, in equipment

effectiveness over a period of time.

 OEE percentage can point to hidden or un-trapped capacity in a manufacturing

process and lead to balance flow.

23
10. CAUTIONS FOR USING OEE

i. The calculated OEE is not included for use as a corporate or plant level measure.

OEE percentage is a rough measure of selected equipment effectiveness only.

ii. Calculated OEE is not valid for comparing or benchmarking different assets,

equipment or processes. OEE is a relative indicator of a specific single asset

effectiveness compared to itself over a period of time. However, OEE can be used to

compare like equipment in like situations producing like products or output.

iii. There appears to be no valid specifications of “World-Class OEE”. In manufacturing

industry, 85% is World-class OEE at the same time, in process industry, it is 90%.

In Total Productive Maintenance, 85% OEE is considered to be World Class

Manufacturing.

iv. OEE percentage calculations are not statistically valid. A calculated OEE percentage

assumes that all equipment – related losses are equally important and that any

improvement in OEE is a positive improvement for the business. This is generally

not the case. For example, the calculation of OEE of same equipment at different

intervals are given below.

Availability rate : 80% Availability rate : 95%

Performance rate : 99% Performance rate : 98%

Quality rate : 95% Quality rate : 89%

OEE = 80% x 99% x 95% = 75% OEE = 95% x 98% x 89% = 83%

In the second case, OEE increased by 8% but at the same time the quality reduced

by 6%. This will have a negative impact on the business.

24
11. MODIFIED OVERALL EQUIPMENT EFFECTIVENESS

In the Six Big Losses, Setup & Adjustments and Small time losses, both will create a loss of less

than 10 minutes. But both are given under different categories. So by combining these two

losses into one category, Stop Time Losses can be defined. The advantage is that it will be more

helpful during analysis to take initiative to reduce these small losses.

So by modifying the Six Big Losses as shown in Figure 6, a new category called Stop Time

Losses are created.

Figure 6. Modified classification of Six Big Losses.

By removing this Stop Time Losses from operating time, a new category of time called Running

Time is created. Based on this Running Time and Stop Time Losses, a new factor for OEE, ie

Usability is derived. Components of Plant Operating Time including Running Time are shown

in Figure 7. The inclusion of the Usability factor leads to more detailed categorization of

equipment losses leading to specific identification of equipment losses in terms of Availability

and Usability [1].

25
As shown in figure 8, the Usability factor takes into account Stop Time Losses. Now the

advantage is that, four factors are available for analysis. So a better analysis can be done

compared to the former. But this Modified OEE is still in proposal stage. No firms have

implemented this and no software is using this for standard calculations and analysis. The

modified classification of Six Big Losses is shown in Figure 9.

PLANT OPERATING TIME

PLANNED
PLANNED PRODUCTION TIME
SHUTDOWN
DOWN
OPERATING TIME
TIME LOSS
STOP TIME
RUNNING TIME LOSS
SPEED
NET OPERATING TIME
LOSS
FULLY QUALITY
PRODUCTIVE TIME LOSS

Figure 7. Components of Plant Operating Time including Running Time.

Figure 8. Modified OEE factors and its losses.

26
11.1 Availability

There is no difference in calculating Availability. The only difference is that when calculating

Operating time, only breakdown losses are subtracted.

Availability = Operating Time

Planned Production Time (11)

11.2 Usability

Usability is calculated by dividing Running Time by Operating Time.

Usability = Running Time

Operating Time (12)

Running time is calculated by subtracting Setup & Adjustments and Small Stops losses from

Operating time.

11.3 Performance

Performance takes into account Reduced Speed losses only. It is the ratio between Net

Operating Time and Running Time.

Performance = (Total Pieces / Operating Time)

Idle Run Rate (13)
11.4 Quality

Quality is calculated by subtracting the output during Running time and rejects (including

reworks) and then dividing it by the output.

Quality = (Output – Rejects)

Outputs (14)

Therefore Modified Overall Equipment Effectiveness is the product of 4 factors;

Modified OEE = Availability x Usability x Performance x Quality (15)

27
 EQUIPMENT EFFECTIVENESS LOSS OEE FACTORS

PLANNED OPERATING TIME

DOWN
TIME
LOSS
OPERATING TIME BREAK DOWN AVAILABILITY

SETUP & ADJUSTMENT

STIOP
TIME
LOSS

RUNNING TIME USABILITY

SMALL STOPS MODIFIED

OVERALL
EQUIPMENT
EFFECTIVENESS
NET
SPEED
LOSS

OPERATING REDUCED SPEED PERFORMANCE

TIME

STARTUP REJECTS
FULLY
SPEED
LOSS

PRODU QUALITY
CTIVE
TIME
PRODUCTION REJECTS

Figure 9. Modified Overall Equipment Effectiveness calculation and losses [1].

28
12. SAMPLE PROBLEM USING MODIFIED OEE

Use the previous problem itself for calculating Modified OEE. The Downtime loss of 48

minutes is divided into 20minutes of warm-up time and 28 minutes of equipment breakdown

(tooling failure). Rest is same.

Availability = Operating Time / Planned Production Time

Planned Production Time = 400minutes (Calculated earlier)

Operating Time = Planned Production Time – Breakdown = 400 – 28 = 372 minutes.

Availability = 372/400 = 0.93

Usability = Running Time / Operating Time

Running Time = Operating Time – Warm-up Time = 372-20 = 352 minutes

Usability = 352/372 = 0.9462

Performance = (Total Pieces / Operating Time ) / Ideal Run Rate = (1600/352) / 5 = 0.9091

Quality = Good Pieces / Total Pieces = (1600-52) / 1600 = 0.9675

Modified OEE = 0.93 x 0.9462 x 0.9091 x 0.9675 = 0.774

Modified Overall Equipment Effectiveness = 77.4%

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13. CONCLUSION

The definition and use of Overall Equipment Effectiveness over the years has been widely

debated. Many practitioners have found that OEE has several uses and definitions which have

led to considerable confusion when comparing machine-to-machine, plant-to-plant or company-

to-company. Unfortunately, OEE was not designed to make comparisons from machine-to-

machine, plant-to-plant, or company-to-company, but it has evolved to these common levels of

misuse. OEE is not a statistically valid metric, but it has been used as such for years.

OEE does not diagnose a specific reason why a machine is not running as efficiently as possible,

but it helps to categorize the areas for initiating the equipment improvement.

Modified Overall Equipment Effectiveness helps to analyze short time losses and long time

losses separately. Also it adds one more factor in calculation, Usability. It helps in more specific

analysis of losses and for initiatives to reduce these losses. But Modified OEE is still in

development stage.

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14. REFERENCES

[1] Anil S. Badiger, „A proposal: evaluation of OEE and impact of six big losses‟, Int. J. Process

Management and Benchmarking, Vol.2, No. 3, 2008, pp 234-248.

[2] Ravikumar M. M., „Improving Equipment Effectiveness‟, Int. Business Management, Vol. 3,

No.2, 2008, pp 91-96.

[3] Francis Wauters, „White Paper on Improving Plant Performance: OEE‟, ABB Inc, June

2002. www.abb.com

[4] „The Fast Guide to OEE‟, Vorne Industries, 2008. www.vorne.com

[5] Robert M. Williamson, „Whitepaper on OEE Implementation‟, Strategic Work Systems Inc,

2004. www.swspitcrew.com

[6] http://www.bestmanagementarticles.com

[7] http://www.maintenanceworld.com

[8] http://www.managementparadise.com

[9] http://www.oee.com

[10] http://www.oeetoolkit.com

[11] http://www.scribd.com

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