10 Reasons Why OEE

1. 46% of manufacturers say it is extremely/very important to track Overall

Equipment Effectiveness (OEE) levels in real-time on a per machine basis to
improve production line efficiency.
54% of manufacturers consider increasing OEE accuracy to be extremely
important/very important. Our recent IQMS Manufacturing Survey validates the
journey manufacturers are on from measuring machine availability,
performance, and quality manually to adopting more automated approaches
including OEE as a benchmark for stabilizing production performance on the
shop floor.
2. Grow faster by stabilizing machine-level availability, performance,
and quality.
The more predictable production lines are, the greater the accuracy and on-time
delivery of customer orders. Improving on-time order performance and
achieving more perfect orders drives more sales by creating upsell, cross-sell
and reorder opportunities. OEE is now one of the catalysts of new revenue
growth in many manufacturers because it can help to create a more stable,
predictable production environment.

3. Tracking OEE over time is the foundation for improving line performance
and process quality at the same time.
In our field work with customers, four dominant goals keep emerging as critical
to keeping their businesses growing. These include decreasing costs, improving
productivity, increasing quality and increasing production capacity. At IQMS
we’re finding these goals lead manufacturers to concentrate on line performance
process quality. The roadmap below illustrates how OEE is helping
manufacturers to achieve their organizational goals by providing measurable
business outcomes.

4. Steps to improve line performance and process quality need to happen

every day, and OEE is the data fuel that makes achieving that goal possible.
The roadmap shown in step 3 needs fuel to make it work. OEE is the data fuel or
energy that propels manufacturers to improve line performance and process
quality gains. Further, manufacturers are now looking at the Cost of Quality’s
implications on monthly financial performance to the machine level in the hope
of further optimizing production line performance.

5. Improving production line performance using OEE leads to quality gains

that deliver more revenue. Tying back OEE performance to business gains and
outcomes improves product quality. And the higher the product quality being
 achieved on a daily basis, the lower the scrap, product rework, and RMA costs.
Making a solid connection between improving OEE performance and seeing
improved business outcomes is an excellent way to kickstart more revenue
growth.

6. The era of intelligent machines is here. Manufacturing machinery and assets

have had sensors for heat, vibration, throughput, and in the case of integrated
chip production, quality levels for years. What’s changing fast is the pace of
innovation on analytics and BI platforms capable of making the most of real-time
monitoring. OEE is one of several manufacturing metrics seeing increasing
adoption based on higher quality data from real-time monitoring across shop
floors.

7. Competitors are building manufacturing plants capable of fully automated

or lights-out manufacturing, relying on OEE as shop floor guard rails.
Every manufacturer competes globally every day against competitors who are
either chasing the lowest labor costs or brightest minds around the world.
Manufacturers who excel at time-to-market are chasing the latter, brilliant minds
because intelligence can scale into fully automated or lights-out manufacturing.
OEE is one of the main guardrails keeping advanced manufacturing running
efficiently, delivering orders on time and synchronizing production across the
shop floor.

8. Mobile apps built on ERP platforms are proliferating across the shop floor,
giving production managers flexibility and insight for fine-tuning
production daily.
OEE is becoming the metric of choice for production engineering, manufacturing
production management, operations management and senior management
teams who want to know how each machine’s availability, performance, and
quality impacts growth. Mobile ERP apps built on a single database architecture
as IQMS’ flagship suite EnterpriseIQ Version 16 is providing real-time data from
every machine on a production line. At IQMS we’re going a step further and
providing time series results by the calendar year and month, which is invaluable
for finding trends in each OEE component’s value over time.

9. OEE is gaining adoption because it is one of the more trusted metrics that
gets generated directly from shop floor data.
Keeping OEE from getting too skewed by removing it from compensation and
bonus plans and resolving to keep it out of any potential performance reviews.
OEE adoption is flourishing because it delivers results and can be used to
reinforce cooperation and collaboration across the shop floor to the top floor.
Make it a metric of shared ownership of machine performance, and it will pay
off.

10. OEE gives manufacturers the insight to prioritize production operations for
the greatest return.
 Combining OEE across production lines on a single dashboard enables real-time
monitoring that accelerates machine, production line, and plant performance
gains. Having his level of visibility further accelerates line performance and
process quality gains.

OEE Project Organizer > Stop Reason Tick Sheet > Stop Event Log Form >
Need help implementing OEE? Download and print a PDF form to organizing your
OEE project, a simple manual measurement tick sheet to collect stop time, or
alternatively a manual stop time recording sheet with reasons.

Define Project

Select Pilot Area

When implementing any new initiative, it is usually best to start small and expand from a base of
success. For OEE, that means starting with a pilot implementation on a single machine, cell, or
line.

Select a pilot area where your employees are engaged and motivated; ideally an area where
employees are interested in learning new things and applying ideas towards improvement.
Preferably, select a pilot area that manufactures either one part or multiple parts with the same
cycle time.

Pilot Area

Identify Constraint
OEE should be measured at the constraint step of your process (sometimes referred to as the
bottleneck). The constraint is the single step or machine that governs (i.e. limits) the throughput
of the overall process. Improving the constraint will improve the overall process.

Identify the constraint step of your process. Tip – WIP often accumulates at the constraint. On
lines where equipment is balanced to run at identical speed, measure OEE at the step that does
the primary work.

Constraint Step

Measurement Method
OEE measurement can be manual or automated.

We recommend starting with manual OEE measurement. It reinforces the underlying concepts
and provides a deeper understanding of OEE. Later, you may want to automate data collection to
improve accuracy, track the Six Big Losses, and to generate top losses and other reports.

Method

Manual Automated

Capture OEE Data

Only three pieces of information are needed to calculate OEE: Good Count, Ideal Cycle Time,
and Planned Production Time.

Good Count
Good Count should only include parts that are defect-free the first time through the process. This
is similar in concept to First Pass Yield, which defines good parts as units that pass through the
manufacturing process the first time without needing rework.

Identify how you will collect Good Count. For manual measurement look for a counter
immediately after the constraint that reliably counts good parts. For automated measurement
look for a sensor immediately after the constraint that is triggered only for good parts.

Count Source
Ideal Cycle Time
Ideal Cycle Time is the theoretical minimum time to produce one part (it is NOT a ‘budget’ or
‘standard’ time). It is important that Ideal Cycle Time be a true and honest measure of how fast
the process can run, even if the process currently runs slower due to product, material, or
equipment problems.

Determine the Ideal Cycle Time. The preferred method is to use Nameplate Capacity (the design
capacity specified by the equipment builder). An alternate method is to perform a time study
(measuring the absolute fastest speed the process can support).

Ideal Cycle Time

Planned Production Time

Planned Production Time is the total time that the manufacturing process is scheduled for
production. It is the yardstick against which Fully Productive Time is measured.

Start with shift time and decide if certain types of planned stops will be excluded (i.e., will not
count against OEE). Most companies exclude only breaks (including lunches) and meetings.

Exclude

Breaks Meetings Changeovers Planned Maintenance Other:

Capture Detailed Loss Data

In order to leverage OEE to improve manufacturing productivity it is essential to calculate the
three OEE factors: Availability, Performance, and Quality. This requires two more pieces of
information: Run Time and Total Count. Since in practice Run Time is calculated as Planned
Production Time less Stop Time, we need to collect Stop Time.

Stop Time
Stop Time is defined as all time where the manufacturing process was intended to be running but
was not due to unplanned stops (e.g., breakdowns) or planned stops (e.g., changeovers).
Decide how to record stop time. For manual measurement a tick sheet is usually the easiest way
to collect stop time (an alternative is to record start and end times for each stop). For automated
measurement the data collection system will automatically record these times.

Stop Reason Tick Sheet > Stop Event Log Form >
Decide the time threshold for recording stops. Any stop that reaches the threshold is recorded and
is included as Stop Time (an Availability Loss). Any stop shorter than the threshold is considered
a small stop (a Performance Loss) and is not recorded. A typical stop threshold is five minutes
for manual systems and two minutes for automated systems.

Stop Time

Tick Sheet Start and End Times Automated

The stop threshold is:

Total Count
Total Count is required to measure OEE Quality. It can be measured directly, or Reject Count can
be measured instead, and added to Good Count to calculate Total Count.

Decide if you will measure Total Count or Reject Count. For manual measurement of Total
Count look for a counter that counts all parts going into the constraint. For automated
measurement of Total Count look for a sensor before the constraint that is triggered for all parts.
Reject Count is measured in the same place as Good Count (see above).

Count

Total Count Reject Count Count Source:

Changeover Policy
Measure changeover time consistently by defining the start and end points of each event.

Document a policy for measuring Changeover Time. Three common options are:

 First Good Part is measured as the time between the last good part
produced (before setup) to the first good part produced (after setup).
 Consistent Good Parts is measured as the time between the last good part
produced (before setup) to the first instance of consistently producing
parts that meet quality standards (after setup).
  Full Speed is measured as the last good part produced at full speed
(before setup) to the first good part produced at full speed (after setup).

Policy

First Good Part Consistent Good Parts Full Speed Other:

Stop Reasons
Stop reasons provide insights as to why the process has stopped – especially for unplanned stops.
They are an essential part of any manufacturing improvement program.

Create a starting list of stop reasons. Here are some tips:

 Start simple (10 reasons).

 Create a catch-all reason (All Other Losses).

 Make sure every reason is clear and unambiguous.

 Make sure every reason describes symptoms.

 Remove reasons that aren't regularly used.

 Add reasons if ‘All Other Losses’ is in the top ten losses.