OEE measures the percentage for planned production that is considered to be truly productive. The gold standard for overall equipment effectiveness is known as OEE world class or world class OEE.
The Three Factors Of OEE
In the manufacturing industry, OEE refers to the ratio of fully productive time to planned production time.
The OEE formula refers to three factors. These are Availability, Performance, and Quality.
Availability will take into account availability loss. This covers any event that stops planned production for an appreciable length of time. This includes planned stops such as changeover time as well as unplanned stops like equipment or machine failure. So, this is the percentage of actual production time compared with planned production time.
Performance will take into account speed loss and any factors that prevent a process from operating at the maximum possible speed. Reasons for speed losses could include:
- Material shortages
- Equipment failures
- Small stops – usually considered to be a stoppage that lasts five minutes or less.
Quality will take into account quality loss. This factors out any manufactured pieces that do not meet quality standards required.
To calculate OEE, you need the sum of all these factors.
What Is A World-Class OEE Score?
OEE is measured as a percentage. With that in mind 100% is considered to be a perfect OEE production score. By achieving this, you will be only manufacturing good parts as quickly as possible without any stop time. 100% is also referred to as a perfect production process.
85% OEE is the percentage that is considered world class for discrete manufacturers. However, most discrete manufacturing companies do not achieve this OEE target.
Instead, OEE scores are usually going to be closer to 60%. This is a fairly typical standard however, it also suggests that there is room for improvement in the manufacturing process.
40% is low but not considered to be uncommon in the manufacturing industry.
The reason why it’s difficult to achieve a world class OEE score is that to do so, manufacturers have to achieve an exceptionally high score in all three factors. This means that even if you achieve 90% in all three, the OEE score will only be 73%.
That’s why most experts recommend that you don’t focus on achieving a world class store. Instead, most manufacturers should aim to make improvements wherever possible. Remember more companies have OEE scores close to 45% than 85% and there’s a few reasons for this.
You also should avoid setting just one OEE target as this may not yield the best results. Most manufacturers will set multiple OEE targets.
The Origins Of OEE World Class
The origins of the OEE world class standard date back to 1970 by Seiichi Nakajima while at the Japanese Institute of Plant Maintenance. He introduced both the six big losses and the world class percentages referenced above when explaining OEE as well as total productive maintenance. The numbers are based on his individual practical experience. Seiichi states that the 85% world class figure was based on:
- No breakdowns
- 10% time on setups
- 5% performance loss due to speed losses
- 1% quality defects
He also suggested that all companies winning the Distinguished Plant Prize in Japan awarded annually had OEE scores that exceeded 85%. These companies had also successfully implemented TPM (total productive maintenance). However, it’s important to note that a metric like this has different weights when used in different industries, sectors and even countries. Essentially, these numbers are from a particular place and a particular time.
Is World Class OEE Obtainable?
World class OEE might be obtainable, but it depends on your industry.
For instance, businesses operating in the food manufacturing industry will find it easier to hold themselves to world class OEE standards. In contrast, manufacturers of metal, discrete and plastics will find their OEE target varies dramatically. The reason for this is that OEE here will factor in specific machinery that they are using. As such, the actual number achieved will be significantly lower.
Realistically, the 85% OEE target will only be achievable by a select minority of manufacturers. Most manufacturers should not aim for world class OEE numbers and should instead focus on somewhere close to 60%.
Is It Always Best To Aim For World Class OEE?
World class OEE should not always be the desired goal and could harm a business model. For instance, large mix manufacturers that produce a wide range of goods with customizable options will be better off favoring flexibility instead of speed and efficiency. This means that an OEE calculation can result in a score that’s far lower.
Small mix or high volume manufacturers are focused on producing a lot of the same parts at low cost as well as a low defect rate. As such, they are far more likely to achieve higher OEE targets closer to world class.
Setting The Right OEE Target
It’s important to set the right OEE target for a variety of reasons. One of the main points to consider is team morale. If you set an OEE target that is unrealistic, then it’s going to have a negative impact.
Instead of reaching for a world class OEE score – which may not even be applicable in your particular industry – you should aim for incremental improvement.
Ultimately, you shouldn’t be focusing on your absolute value when looking at OEE scores. Instead, you need to look at the best ways to improve your OEE in the right areas that match your specific needs.
There are lots of ways that you can set an OEE target. For instance, you may want to set a daily OEE target that matches that best recorded OEE score in your baseline data. This means that you can continuously repeat the process and keep moving forward towards newly set goals.
Or, you could set an OEE target based on a fixed, small number of daily misses. This will mean that you can pass the target most days but not all the time. This will help you focus on times when your performance is lowest and make the right improvements.
How To Improve Your OEE
The first step to improving your OEE is to measure it accurately. Using our OEE Software, PerformOEE, it’s possible to get an accurate OEE measure that will benefit various teams throughout your business. You will also be able to complete a root cause analysis that will ensure you can drive continuous improvement in your business model and move steadily towards whatever OEE target you have set in your business.
There are lots of steps that you can take to improve your OEE. One of the best steps that you can take is to reduce downtime. All machines experience different periods of downtime. You won’t be able to avoid it completely but you can ensure that downtime is planned and controlled, minimizing levels wherever possible. This is often a case of setting up the right maintenance schedule to keep a machine running effectively.
Performing smart maintenance is a real possibility if you invest in real-time machine condition monitoring known as CPC in PerformOEE™. This will provide real, actionable data that you can use to your advantage in your business. It also means that if your OEE calculation is showing an unacceptable value, then you can quickly make the improvements that you need.
When you are completing an OEE assessment, make sure that you are putting a focus on the machines and equipment that are truly business critical. These will be the assets that are more likely to cause significant repercussions if they fail, slow down, or produce low-quality products. If you do this, you are more likely to generate real improvements in your business model beyond a single or individual machine.
Finally, you should make sure that you are focusing on the six big losses. This is an option that dates back to the 70s to manage and categorize waste and loss which can be an issue in a plant. These are:
- Planned stops
- Micro stops
- Slow cycles
- Start-up rejects
- Production rejects
- Unplanned stops
If you eliminate these areas of loss, then you can make sure that you are providing a far better framework that will improve overall levels of efficiency and productivity.
We hope this helps you understand world class OEE. The big idea that’s important to keep in mind here is that there is no one ideal OEE score. It’s about finding the best benchmark for each company.
You shouldn’t view OEE as an end number. Instead, you should look at it as a tool that you can use to improve individual metrics which contribute to your final result. If you focus on OEE as an end number or fixed goal, then you will be focused on what is already working and not on what you can improve over time.
At OEEsystems we are committed to helping manufacturers achieve their desired overall equipment effectiveness targets by using the right automated tools. Get in touch today to learn more about how we can help you.