OEE Systems Drives Down Manufacturing Costs

With the economic climate still skirting around on the edge of recession, and more recent talk of a further drop, many manufacturing businesses are approaching crisis levels. To stay afloat, competition amongst rivals is becoming stronger, and the need to cut costs whilst maintaining quality, and using existing levels of resources, has never been stronger. The new OEE (Overall Equipment Effectiveness) software systems, play a significant role in optimizing manufacturing production efficiency using the same plant resource. This has fuelled significant interest from many manufacturers and is rapidly being adopted as the tool of the first choice to improve the cost profit ratio.

Companies that employ OEE systems in their most simple form are able to monitor how efficiently their plant is performing in terms of throughput and contribution to sales. But that is only scratching the surface in terms of what the real power is when it comes down to seeking and implementing significant profit-enhancing changes.

The truth of the matter is that very few manufacturing companies are able or even willing to dip into their capital reserves and invest large sums of money in new plants, especially when the business economy is still in such a fragile state. But OEE software is a fraction of the cost of retooling, yet still offers crucial savings in production costs because it significantly improves the overall effectiveness of the existing plant.

To be cost-effective, production processes have to be "lean". Wastage and scrap must be minimized by adopting a zero-tolerance philosophy, and material must be available on a just-in-time basis. The new OEE monitoring programs have revolutionized the change process by facilitating accurate measurement of equipment performance at all stages of the production cycle. They actually measure 3 different disciplines.

• • Capacity: The systems record how long the plant was available to produce the product, as opposed to the number of outstanding orders in terms of manufacturing time. Any increases in lost or "down" time are registered and can be categorized as equipment failure, or setting up a time for example.
  • Turnover or throughput: This measures the actual rate at which the product is manufactured (e.g. units per hour, meters per hour, etc) as against the optimum time allowed and cost in.
• Reject rate: A measurement that shows exactly how much wastage is incurred through rejection during the production cycle. Whether the product is scrapped, or recycled for rectification, this constitutes a major additional and unwanted increase in production cost.

The clever thing about the OEE software like this is that it will then perform what can be described as a "gap analysis", measuring the overall length of any cycle (or part of the cycle) versus the benchmark allowance.

These reports enable and empower management to take effective countermeasures to bring the actual time taken closer to the benchmark time, by honing in on those areas that are underperforming. This is OEE in action - fostering and championing the change process.

OEE is Kaizen in action in the production environment. It is the way forward for any manufacturing business, (no matter what the end product), to cut production costs by minimizing "down" time, and wastage, and providing efficiencies that will go straight to the bottom line.