The Use and Abuse of OEE

 The simple answer is "Improvement". OEE is an improvement measure and is used as part of the improvement cycle. Unfortunately, much is made of the 85% 'World Class Standard' an arbitrary target found in the original TPM literature. Not only is this target out of date (Nissan in Sunderland are running welding lines at 92-93% OEE) it gives the wrong message. A customer has no interest in your OEE - that is an internal measure, which relates to your efficiency and costs. The customer is far more interested in a measure such as On Time In Full (OTIF) ie did I get my order? Running a manufacturing business on an arbitrary efficiency measure rather than a customer satisfaction measure is a recipe for disaster. The best use of an OEE target such as 85% is to recognize that if you are reaching that level and the customer is still not getting his orders on time, then you may have a capacity constraint.


OEE does not tell us if we have a problem, the customer does. What OEE does do is help us analyze the problem and make improvements. This is why Toyota uses it as a spot measure on a particular machine where there is a capacity or quality problem. Calculating the OEE of anything other than a discrete machine or automated line is pointless; we have far better measures of the efficiency of a factory or department as a whole.


OEE developed out of the need for improvement groups to have a way of measuring and analyzing equipment problems as part of their Define, Measure, Analyse, Improve, Control cycle. OEE defines the expected performance of a machine, measures it, and provides a loss structure for analysis, which leads to improvement. It can then be used as a tracking measure to see if the improvement is being sustained ie if control is sufficient.
What does OEE measure?


At its simplest, OEE measures the Availability, Performance, and Output Quality of a machine.


A machine is available if it is ready to produce, as opposed to being broken down or having some changes or adjustments made. The definition of availability allows for planned maintenance when the machine is not meant to be available to production but makes no allowance for changeovers etc. No machine with changeovers can ever be 100% available. The reason for taking such a hard line is that changeovers are a major loss to both efficiency and flexibility, so the OEE analysis focuses attention on it by making no changeover allowances.


Performance efficiency measures the output during available time compared to a standard. Here there can be debate about what the standard output should be. A good rule of thumb is to make the performance calculation based on the best-known performance. This may be greater or less than design speed. My argument is that if a machine has never reached its design performance it is not helpful to measure against that. On the other hand, if it has consistently outperformed the design spec you can have (and I have seen) performance figures of 140%, which can hide poor availability. This is always remembering that one purpose of OEE is to help tell you if you can meet customer demand.


Output Quality is a First Time Through measure - what percentage of the output was right the first time, without any rework. FTT measures are always the best quality measures. The issue in OEE is that sometimes the quality feedback is not immediate. In FMCG businesses, a customer complaint can be received three months or more after production. In these cases, it is best not to include quality in the OEE calculation and use a more customer-focused measure for quality - the number of complaints, etc. If there is no way we can use the Quality component of OEE in a real-time improvement cycle, then it is pointless to measure it.


Loss Analysis
The next level of analysis is the seven (or six or eight or sixteen) losses. Within OEE we usually talk about seven losses, although TPM loss structures have been known to define 23 losses in all.


Availability losses are primarily Breakdowns and Changeovers. Changeovers can be separated into Tool changes, Material changes, and Reduced Yield at the start-up, but fundamentally these are the same issue. Further analysis reveals breakdowns to have two fundamental types, those due to deterioration because of inadequate maintenance and those due to inherent machine characteristics.


This gives us three basic responses to availability issues - improve changeovers through SMED, improve basic maintenance and improve machine characteristics. Depending on the Pareto analysis of losses we may need to act on one, two, or all three of these.

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