You started a job as an engineer in an industrial factory. You don’t know the factory and don’t know where to start. Do you think this factory has quality problems? Is the factory’s efficiency value good? I wonder if the machine breakdowns are too much? Here you can get the answer to all these questions with a single value. The magic formula is %OEE.
What is OEE?
OEE (Overall Equipment Effectiveness) is the gold standard for measuring manufacturing productivity. Simply put – it identifies the percentage of manufacturing time that is truly productive. An OEE score of 100% means you are manufacturing only Good Parts, as fast as possible, with no Stop Time. In the language of OEE that means 100% Quality (only Good Parts), 100% Performance (as fast as possible), and 100% Availability (no Stop Time).
Mr. Seiichi Nakajima
OEE was first described –as a central component of the TPM methodology- in Seiichi Nakajima’s book ‘TPM tenkai’ (1982, JIPM Tokyo).
Seiichi Nakajima
Nakajima was honored by the Emperor of Japan with the Ranju Ho-sho, or Medal with Blue Ribbon. The award recognizes individuals with significant lifetime achievements, and was given to Nakajima by the Emperor “to show gratitude for the dedication to improving the manufacturing industry through TPM
The potential of OEE in production was famously highlighted by car manufacturer Toyota in the 1980s. Today it’s used by manufacturers of all types and sizes around the world as a best practice measure and key performance indicator.
OEE Benchmarks
So as a benchmark, what is considered a “good” OEE score?
- OEE score of 100% is perfect production: manufacturing only good parts, as fast as possible, with no stop time.
- OEE score of 85% is considered world class for discrete manufacturers. For many companies, it is a suitable long-term goal.
- OEE score of 60% is fairly typical for discrete manufacturers, but indicates there is substantial room for improvement.
- OEE score of 40% is not at all uncommon for manufacturing companies that are just starting to track and improve their manufacturing performance. It is a low score and in most cases can be easily improved through straightforward measures (e.g. by tracking stop time reasons and addressing the largest sources of downtime – one at a time).
Although it is quite difficult to make a comparison between companies but most manufacturing companies have OEE scores closer to 60%
How OEE is calculated ?
OEE calculation is based on the three
OEE Factors: Availability, Performance, and Quality
%OEE = %Availability x %Performance x %Quality
Availability ; Include losses such as machine breakdown , setup and machine setting
Performance ; Include small stops, operator efficiency and machine speed losses
Quality ; Include rework and scrap
Let’s do an example ;
–Availability ; breakdown is almost zero and do quick setup, availability ; %95
–Performance ; operators produce at the exact target time and the machine has no small stops ; %96
–Quality ; all parts are good , you have almost no faulty parts ; %98
% OEE = 0,95 x 0,96 x 0,98 = %89
I want to explain with this example ; even if the 3 factors are high , it is quite difficult to increase the % OEE value.
I am sure you are applying this magical formula no matter what industry you are in. If you want to follow a production, the easiest way is to follow this magic formula % OEE.
Although there are minor changes in different companies, you can find detailed formulas for Oee calculation below.
References
https://en.wikipedia.org/wiki/Seiichi_Nakajima
https://oee.coach/oee-academy/oee-and-continuous-improvement/history-of-oee-and-tpm/
https://blog.matthews.com.au/
https://www.leanproduction.com/
https://www.oee.com/
https://www.oeesystems.com/
https://www.freepik.com/vectors/business
https://unsplash.com/@markusspiske
https://blog.opto22.com/optoblog/a-brief-overview-of-overall-equipment-effectiveness-oee
