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Benefits of Implementing OEE

Mar 03, 2021 by Mark Dingley

See how OEE software is benefiting one of Australia’s most loved brands

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Ever wondered why Overall Equipment Effectiveness (or OEE) is such a popular manufacturing-operation metric? For the simple reason that it delivers manufacturers accurate and actionable information, resulting in significant improvements in productivity.

Let’s get back to the basics

OEE is a best-practice metric that is used to measure the effectiveness and efficiency of a manufacturing process. It is calculated as the product of three factors (availability, performance and quality) and shows, via percentage, the planned production time that is truly productive. An OEE score of 100% indicates perfect production – in short, you only manufacture good parts (and do so as fast as possible, without any downtime).

But why should you care about this?

OEE is actually useful, both as a benchmark and as a baseline:

  • Benchmark – You can use OEE to compare performance (such as a piece of equipment with similar equipment, industry standards or even with results for different shifts using the same piece of equipment).
  • Baseline – You can use OEE to track your progress in eliminating losses or waste from a piece of equipment.

The benefits of OEE

It shows you where manufacturing processes can be improved One of the biggest OEE myths is that it provides a big-picture indication of how well your manufacturing processes are doing. Whilst this is true, the real value of OEE is only realised when you use these metrics to make improvements.

Before you can take steps to improve a production process or asset, you need to know whether it’s efficient or inefficient. OEE can quantify efficiency into a simple number at the same time as uncovering the production process’ actual effectiveness.

The bottleneck on capacity is often a result of performance limitations on machinery. OEE can help you to recognise bottlenecks in your process and initiate continuous improvement projects. Measuring OEE improvement will also allow you to track the impact of process changes, as well as any other improvement initiatives.

It helps you manage the Six Major Losses

The goal of OEE is to identify and reduce (or – even better – eliminate) the Six Big Losses of Total Production Management. The most common causes of equipment-based loss of productivity in manufacturing include:

In short, this means that OEE can help you to reduce costs when it comes to downtime, rejects and defects. It also makes lean manufacturing a realistic target.

It helps you to achieve ROI on equipment

Remember that every single piece of equipment on your production line represents an investment. To achieve the maximum return on investment (or ROI) in the shortest possible timeframe, equipment must be used to its optimum efficiency and effectiveness.

This is exactly what OEE Utilisation (or OEEu) sets out to do – it measures OEE effectiveness against calendar hours (24 hours day, 7 days a week, 365 days a year) in order to report the bottom-line utilisation of assets. As such, OEE provides insights into where and how manufacturers can make changes in order to achieve the best performance from both new and existing machinery. It also helps you to determine whether investing in additional equipment would be advised.

It helps you to achieve ROI on equipment

Remember that every single piece of equipment on your production line represents an investment. To achieve the maximum return on investment (or ROI) in the shortest possible timeframe, equipment must be used to its optimum efficiency and effectiveness.

This is exactly what OEE Utilisation (or OEEu) sets out to do – it measures OEE effectiveness against calendar hours (24 hours day, 7 days a week, 365 days a year) in order to report the bottom-line utilisation of assets. As such, OEE provides insights into where and how manufacturers can make changes in order to achieve the best performance from both new and existing machinery. It also helps you to determine whether investing in additional equipment would be advised.

It helps you to easily visualise performance

OEE puts a big emphasis on visibility – it lets you know the real factors behind production issues (rather than leaving you to rely on your gut instincts). Most importantly, filtering the most important sources of productivity losses into a single percentage helps you to visualise these issues in the simplest terms. Everyone, from those on the factory floor to top-tier management, can easily see what’s working and what OEE improvements could be made.

It provides real-time targets

Did you know that OEE is also a management tool? It provides operators with real-time, achievable targets. Armed with these metrics, operators are able to tweak and fine-tune the process to ensure that they hit production targets. In simple terms, it enables them to make proactive improvements.

It helps to maximise workforce productivity

An OEE system can help to identify reasons for operator downtime, as well as highlight any lengthy changeovers or setup times. It also reveals necessary productivity data. Armed with this information, management will be able to better allocate resources and pinpoint where there might be extra capacity or where new hires may be required.

It helps you to remain competitive

OEE is a tool that helps manufacturers remain competitive by reducing production losses (and, therefore, costs). If you know that your production line is capable of making 100 units per hour but it’s only producing 70, your OEE score can indicate why these losses are occurring and give you an opportunity to make changes that increase your production capacity.

OEE also helps with competitiveness by improving quality. Defective products are often a manufacturer’s biggest expenses. With OEE, quality is measured as a percentage of good parts produced versus the total parts produced. Using the OEE quality metric, you can identify the root cause of issues, as well as eliminate any costs associated with rework and scrap.

Keep in mind that the quality metric is a pure measurement of the process yield – an OEE score of 100% means that there aren’t any defects and that only good parts are produced.

Let’s do a little recap

OEE is intended to help manufacturers drive improvement by providing a better understanding of the losses they’re experiencing. It’s a metric that reduces seemingly complex production problems into simple, accessible information that helps you to make the right decisions for improving efficiency and reducing your operating expenses. As OEE can be implemented on a single machine, you’ll find that there’s no limit to the size or type of manufacturers it can benefit.