However, the use of OEE is still wrongly used by some. At times, it ends up giving the management a twisted angle of the real performance. This post will point out the common mistakes people do when computing for OEE. But first, let’s discuss on how important OEE is.

Basically, it is computed based on three factors. The first one is availability, which measures the percentage of the scheduled time the machine has actually operated. The second factor is performance, which measures how fast the machine runs and how close it is to the ideal speed. The last factor affecting the calculation is quality, which measures how many of the product is in good quality.

These factors are still affected by other elements which we call “6 key losses.” To easily define key areas for improvement, we also consider changeovers, unplanned downtime, reduced speed, minor stops, and rework.

The importance of accurately calculating OEE can bring competitive advantages for a certain company. This includes reducing the overall time require to operate a demand thus reducing operating cost, decreasing inventory levels to lower working capital, and increasing incremental profit.

But these benefits can be slashed off if OEE is miscalculated. The common mistakes are:

1. Using the wrong speed basis
2. Improper roll-up
3. Reclassifying unplanned downtime as planned

These mistakes can stir up entirely the results of OEE. But this can still be changed to enjoy the advantages the metric can give.

OEE calculation has three factors. These factors are important ratio to fully determine the time of ideal production and time of actual production. Even though they always go together, each of them has fairly different characteristics on calculations.

They are identified as (1) availability, (2) performance and (3) quality.

Each manufacturing plant has variations. It depends on the plant’s quality program of Six Sigma. According to a research, manufacturing plants usually imply an average rate of 60 percent OEE. Based on the standards of world class OEE, it must be at least 85 percent.

Generally, the standard availability factor must be at least 90 percent. Performance must have a minimum of 95 percent while quality must acquire 99.9 percent. With these percentages, OEE is summed up to 85 percent.

Loss of Down Time is taken account into availability. In order to calculate it, time of operation is divided to time of planned production. Thus,

Availability= Actual time of Operation / Time of Planned Production

Speed Loss is within the scope of performance. Time of operation is divided to the number of pieces produced. Time of ideal cycle is divided to its quotient. Thus,

Performance= Time of ideal cycle (Time of Operation/ Number of Pieces)

Lastly, Quality Loss is taken account into quality. The total of well-made pieces is divided to the total number of pieces produced. Thus,

Quality= Well-made pieces/ Number of pieces

OEE is then calculated with the amount of three factors.

OEE= Availability x Performance x Quality

Some of the measurements that monitor the overall usage of facilities are:

1. Overall Equipment Effectiveness (OEE) shows how well a manufacturing department performs relatively to the designed capacity, during the time it is supposed to run.

2. Total Effective Equipment Performance (TEEP) will measure Overall Equipment Effectiveness against hours on the calendar for example 365 Days and 24 Hours per Day.

The four metrics that help understand why and where TEEP and OEE gaps do exist are :

1. Quality- which is also known as Fast-Pass-Yield (FPY), this is part of OEE metric that represents Good Unit which are produced as a percentage of all the total units that started.

2. Performance- is part of the OEE metric and stands for the speed at which the work center is ran of the designed speed.

3. Loading- is the part of TEEP that stands for the percentage of the total time of the calendar that is planned for the operation.

4. Availability- this is part of the OEE that stands for the percentage of the planned time that the operation has to operate. This is also known as Uptime.

Calculations for TEEP and OEE.

The following calculations are easy to do at the same time much concentration must be given since they are used as the basis. When rolling them to aggregate levels, they may become complicated.

1. When calculating loading: Loading = calendar time/ scheduled time

Given work will run 5 days per week and 24 hours per day

A whole week has 7 days for 24 hours

Loading= (5days by 24hours)/ (7days by 24hours)= 71.4%

2. When calculating performance: Performance=(produced parts*ideal cycle time)/ available time

Work is ran on 8 hour shift, 480 minutes and 30 minutes break

Available time = 450 scheduled minutes – 60 unscheduled downtime =390 minutes

Standard rate for produced part 40 Units per hour or 1.5 minutes per Unit
Total of 242 Units is produced the whole shift

Time for parts produced 242 Units*1.5 minutes/unit = 363 minutes

Performance = 363 minutes/390 minutes = 93.0%

3. When calculating availability: available time/scheduled time

The company runs 8 hour shift which is 480 minutes

30 minutes break and 60 minutes of unscheduled downtime

The scheduled time = 480 minutes – 30 minutes= 450 minutes

Available time = 450 minutes – 60 minutes = 390 minutes

Availability = 390 available minutes/450 scheduled minutes = 87%

4. When Calculating quality: Quality = good units/units started

A company produces 230 good units on one shift

242 were used to produce the 230 good units produced on one shift

Quality = 230 good units/ 242 units started = 95.0 %

Systems of Automated OEE.

These systems have been developed to make calculations more easier and accurate. Systems such as Ampla, AssetManager, Ojective, Mess, CSD4, OEE and Zarpac Performance Index have come up to ease in calculations. This are simple-single sensor systems and high-integrated systems making calculations of equipment accurate and effective.

Before you get stressed out with your company’s productivity or the lack thereof, you have to assess what you’re missing. Every company has it, may it be ineffective marketing strategy, disorderly organization, unproductive equipment etc. If you’re having problems with the hardware or equipment used by the firm for manufacturing then a good system is needed to be put in place. This is the moment when smoothly operating equipment is crucial to make substantial returns for the company.

Many experts believe that a lot of processes employ machines to add value to what clients pay for and this is true in a setting that is widely competitive. For instance, a toy company that produces thousands of products daily for the local and international market requires factory machines to work dependably and at their optimum pace to supply products when customers or the industry needs them. But it’s evident that factories throughout the globe are plagued with equipment problems of one kind or another. So it’s essential that company owners understand and evaluate their business’ Overall Equipment Effectiveness or its OEE. Generally, OEE measures how well the equipment is running. It can specifically show how much of the time the machine is actually doing well and what percentage or portion of the output is of good quality, not just the amount of products or output the machine is turning out.

What’s more, OEE is not just for maintenance anymore since the approach can help predict problems in the future and may allow some monitoring of the equipment’s health as well. It involves a step-by-step computation which is part of the general framework. Of course, if you want to know more about the system and how it mainly works then consulting experienced trainers or consultants is the best way to understand the key components and its application.

Apparently, every company wants to add value to their products and services and what better way to have this value increased is by putting machines for production to good use and run them with as little misuse as possible. Through the OEE computation, you can measure the performance of your company’s equipment and identify potential problems as a way to improve or eliminate them. This measurement tool basically connects three elements together and yield an overall percentage. When you multiply the availability time the machine is operating, the quantity of products the machine is producing and the number of quality output of the total production, you get the overall equipment effectiveness.

But how do you get the rate of each element? You can get the availability rate or the time of the machine’s operation by dividing the running time by the expected manufacturing time. For instance, if your equipment was running for 300 mins and the expected manufacturing time was 450 mins, your availability rate would become 300/450 or 67%. For its output performance, the rate is determined by dividing planned cycle time by the existent cycle time. One cycle refers to the total amount of time it needs to create one product. If the company’s planned cycle time is 50 products every minute, for example, and the existent cycle time is only 25 products every minute, you would have a performance rate of 25/50 or 50%. Lastly in computing for the number of quality products made, find out by dividing the figure of quality pieces created by the entire production line. Let’s say, if your equipment manufactured 100 items yet 30 of the items were found to be malfunctioning or flawed, it could indicate that out of the total 100 items, just 70 were first-rate giving you the quality rate of 70%. Then, you can go ahead and multiply the rates of the three elements, giving you the OEE product in percentage which means multiplying 0.67 by 0.5 by 0.7, or 23%. Potentially, the purpose of this measurement is improvement and understanding why the number is where it is helps to raise the standard of the company’s production.