OVERALL EQUIPMENT

EFFECTIVENESS

OEE
Quality
Performance
Availability

Hasan Waqar

What Survival Tool for

Manufacturing?
Pressured by current economic conditions and global
competition,
manufacturers are becoming increasingly sensitive about
operational
costs.
In this environment, it pays to consider both creative and
proven
methods that you can use to bring your product to market at
minimum
cost and can be guaranteed by an effective maintenance
system.
What method meets this objective.
What captures the reasons for downtime (e.g. machine
conditions,
material status, production personnel, or quality issues) and
can
deal with the individual machine level, a line level or the

What is Overall Equipment Effectiveness

(OEE)?
In an ideal factory, equipment would operate 100% of the time at
100% capacity, with an output of 100% good quality.

In real life, however, this situation is rare.

The difference between the ideal and the actual situation is due to
losses. Calculating the overall equipment effectiveness (OEE) rate
is a crucial element in any serious commitment to reducing
equipment & process related wastes.

The key strategy towards improving

performance is reducing equipment & process
related losses.
These losses are known as - THE SIX BIG LOSSES
Breakdowns
1. Downtime Losses
(Availability rate)
There are 3
Major
categories

2. Speed Losses
(Performance rate)
3. Defect Losses
(Quality rate)

Changeovers
Minor
stoppages
Reduced
speed
Rework
Rejects

Downtime Losses (Lost Availability)

Downtime refers to time when the machine should be
running,
but it stands still.
Downtime includes two main types of loss:
1. Equipment failures,
2. Setup and adjustments.

1. Equipment Failures Loss

Sudden and unexpected equipment failures, or breakdowns,
are an obvious cause of loss, since an equipment failure
means that the machine is not producing any output.

2. Setup & Adjustments Loss.

Most machine changeovers require some period of
shutdown so that internal tools can be exchanged.
Time between the end of production of the last good part
and the end of production of the next good part is downtime.
This downtime loss often includes substantial time spent
making adjustments until the machine gives acceptable
quality on new part.

Speed Losses (Lost Performance)

A speed loss means that the equipment is running, but it is
not running at its maximum designed speed.
Speed losses include two main types of loss
1. Idling and minor stoppages
2. Reduced speed operation.

1. Idling and Minor Stoppages

When a machine is not running smoothly and at a stable
speed, it will lose speed and obstruct a smooth flow.
The idling and stoppages in this case are caused not by
technical failures, but by small problems such as parts that
block sensors or get caught in chutes.
Although the operator can easily correct such problems when
they occur, the frequent halts can dramatically reduce the
effectiveness of the equipment.

2. Reduced Speed Operation.

Reduced speed operation refers to the difference between
the actual operating speed and the equipments designed
speed (also referred to as nameplate capacity).
There is often a gap between what people believe is the
maximum speed and the actual designed maximum speed.
The goal is to eliminate the gap between the actual speed
and the designed speed.
Significant losses from reduced speed operation are often

Defect Losses (Lost Quality)

A defect loss means that the equipment is producing
products that do not fully meet the specified quality
characteristics.
Defect losses include two major types of loss:
1. Scrap and rework
2. Startup losses.

1. Scrap and Rework

Loss occurs when products do not meet quality
specifications, even if they can be reworked to correct the
problem.
The goal should be zero defects - to make the product right
the first time and every time.

2. Startup Losses
Startup losses are yield losses that occur when production is
not immediately stable at equipment startup, so the first
products do not meet specifications.
This is a latent loss, often accepted as inevitable, and it can
be surprisingly large.

Six Loss and Counter Measures

The following table explains the Six Losses and how they can be addressed:

The 3 major categories of equipment related losses are also

the main ingredients for determining the OEE of the
cubicle.
OEE is calculated by combining all 3 factors.

Availability rate

Performance rate

Quality rate

1. Availability rate
The time the equipment or process is really running, versus the time it
could have been running.

2. Performance rate
The quantity produced during the running time, versus the potential
quantity, given the designed speed of the machine or process

3. Quality rate.
The amount of good products versus the total amount of products
produced.

Elements of OEE

QUALITY

PERFORMANCE AVAILABILITY

Total Operating Time

A

Planned
Downtime

Net Operating Time

Breakdown
s

Running Time

Changeove
rs

Target
Output

OVERALL

Actual
Output

Good
Outpu
t

OEE

EQUIPMENT

Minor Stops

Actual
Output

HOW DO WE
CALCULATE

Running Slow

EFFECTIVENESS

Rework
Rejects

B/A

AVAILABILITY

D/C

PERFORMANCE

F/E

QUALITY

QUALITY

PERFORMANCE AVAILABILITY

Total Operating Time

A

Running Time

Target
Output

Planned
Planned
Downtime
Downtime

Net Operating Time

Breakdown
Breakdowns
s
Changeovers
Changeove
rs

OVERALL

Actual
Output

Good
Outpu
t

OEE

EQUIPMENT

Minor Stops
Minor Stops
Running Slow
Running

Actual
Output

HOW DO WE
CALCULATE

Rework
Rework
Rejects
Rejects

B/A

AVAILABILITY

EFFECTIVENESS

LOST
EFFECTIVENES
S

D/C

PERFORMANCE

F/E

QUALITY

Elements of OEE
Availability rate is the time the equipment
is really
running, versus the time it could have
been running.
A low availability rate reflects downtime
losses:
Equipment failures
Setup and adjustments
Performance rate is the quantity
produced during
the running time, versus the potential
quantity, given
the designed speed of the equipment.
A low performance rate reflects speed
losses:
Idling and minor stoppages
Reduced speed operation
Quality rate is the amount of good
products versus
the total amount of products produced.

Availability Rate = Running

Time / Planned Production Time

Performance rate = Ideal Cycle Time /

(Operating Time / Total Pieces)
= (Total Pieces / Operating Time) /
Ideal Run Rate

Quality rate = Good Pieces /

Total Pieces

Calculation of OEE

alculate OEE, we multiply the three factors together:

= Availability Rate x Performance Rate x Quality Rate

The diagram shows graphically

how the losses in availability,
performance, and quality work
together to reduce OEE of a
machine.
The top bar, total operating
time, shows
the total time a machine is
available to
make a product.
This is usually considered to be
480
minutes per 8-hour shift.

Calculation of OEE

Bars A and B show Availability

Bar A represents the net operating
time, which is the time available for
production after subtracting planned
downtime (no scheduled production)
such as a holiday, no orders, or no
personnel.
Bar B shows the actual running
time after subtracting downtime
losses such as equipment failures
and setup and adjustments.
Bars C and D show
Performance
Bar C represents the Target
Output of the machine during the
running time, calculated at the
designed speed of the machine.
Below it, a shorter fourth bar, D,
represents the actual output,
reflecting speed losses such as minor
stoppages and reduced operating
speed.

Calculation of OEE

Bars E and F show Quality

As you can see, the actual
output (E) is reduced by defect
losses such as scrap and startup
losses, shown as the shaded
portion of bar F.
As this diagram shows, the
bottom-line good output is only a
fraction of what it could be if losses
in availability, performance, and
quality were reduced.
The diagram also suggests that
to maximize effectiveness- to grow
the good output on the bottom
line- you must reduce not only
quality losses, but also availability
and performance losses.
The three factors work together,
and the lowest percentage is
usually the constraint that most
needs addressing.

Example of OEE Calculation

The table below contains hypothetical shift data, to be

used for a
complete OEE calculation, starting with the calculation of
the OEE
factors of Availability, Performance, and Quality.
Note that the same units of measurement (in this case
minutes and
pieces) are consistently used throughout the calculations.
Item

Data

Shift Length

8 hours = 480
min.

Short Breaks

2 15 min. = 30
min.

Meal Break

1 30 min. = 30
min.

Down Time

47 minutes

Ideal Run
Rate

60 pieces per
minute

Total Pieces

19,271 pieces

Reject Pieces

423 pieces

Planned Production Time

= [Shift Length - Breaks]
= [480 - 60] = 420 minutes

Operating Time
= [Planned Production Time - Down
Time]
= [420 - 47] = 373 minutes
Good Pieces
= [Total Pieces - Reject Pieces]
= [19,271 - 423] = 18,848 pieces

Example of OEE Calculation

Availability

= Operating Time / Planned Production Time

= 373 minutes / 420 minutes

= 0.8881 (88.81%)

Performance

= (Total Pieces / Operating Time) / Ideal Run

Rate

= (19,271 pieces / 373 minutes) / 60 pieces per

minute
=
(86.11%)
= 0.8611
Good Pieces
/ Total Pieces

Quality

= 18,848 / 19,271 pieces

= 0.9780 (97.80%)

OEE

= Availability Performance Quality

= 0.8881 x 0.8611 x 0.9780
= 0.7479 (74.79%)

World-Class Goal of OEE

In practice, generally accepted world-class goals for each

factor
are quite different from each other, as is shown in the
table below.
Of course, every manufacturing plant is different.
Worldwide studies indicate that average OEE rate in
manufacturing
plants is 60%.
As you can see from the table, a World Class OEE is
considered to
be 85% or better.
There is room for improvement in most manufacturing
OEE Factor World Class
plants
Availability

90.0%

Performanc
e

95.0%

Quality

99.9%

Overall OEE

85.0%

Goal & Benefits of OEE Measurement

Goal of measuring OEE is to improve the effectiveness of
your equipment.
Since equipment effectiveness affects shop-floor
employees more than any other group, it is appropriate for
them to be involved in tracking OEE and in planning and
implementing equipment improvements to reduce lost
effectiveness.
Recommend that the operator collect the daily data about
the equipment for use in the OEE calculation.
Collecting this data will
Teach the operator about the equipment
Focus the operators attention on the losses
Grow a feeling of ownership of the equipment

Goal & Benefits of OEE Measurement

The shift leader or line manager is often the one who will
Receive the daily operating data from the operator and
Process it to develop information about the OEE.
Working hands on with the data will;
Give the leader/manager basic facts and figures on the
equipment
Help the leader/manager give appropriate feedback to the
operators
and others involved in equipment improvement
Allow the leader to keep management informed about
equipment
status and improvement results

A Survival Tool for Manufacturing

Managers can monitor OEE plant metrics and drill down
to find the root causes of problems, getting minute-by-minute
updates to enable real-time process improvement.
Downtime reductions can be readily achieved by using OEE
to gain
visibility into machine status and to analyze problems.
Facility operators and supervisors spend an enormous
amount of time
recording, analyzing, & reporting on downtime, then further
explaining
these reports to management.
OEE system captures & reports downtime and efficiency
automatically.
This eliminates the time wasted in non-value-added
reporting and
allows personnel to focus on more valuable tasks.
With OEE, everyone from the plant floor to the boardroom is

A Survival Tool for Manufacturing

OEE also enables predictive maintenance, which can
dramatically reduce repair costs.
As the information on factors contributing to downtime
grows in the
historical database, the maintenance department can
classify trends
and predict impending failures.
Also, by interfacing OEE system with a Computerized
Maintenance
Management System (CMMS), the maintenance department
can
take proactive steps to do predictive maintenance.
For example, maintenance can order the necessary part in
advance
and get better rates.
It can allocate repair personnel from an existing pool of
resources

A Survival Tool for Manufacturing

All this can result in huge savings compared with repairing a

machine
after the breakdown has happened.
The net effect of reduced machine downtime, higher
productivity of
operators, and reduced defects is the ability to achieve
higher
production levels with the same amount of resources.

Plant Utilization Statistics

Generally, operations of most manufacturing plants are
running at only
60% efficiency during uptime. The other 40% of the total
equipment time
are lost due to various downtime.
Among which, 15% of plant utilization are lost to scheduled
downtime.
Scheduled downtime can be preventive maintenance, setup,
change of
consumables/materials, production test and so on.
Unscheduled downtime accounts for 10%, which is usually
difficult to quantify
but preventable if proper preventive measures are taken.
The remaining significant 15% of the total utilization is lost as
hidden downtime.
Hidden downtime can be due to shift
interruptions, minor maintenance issues,
operator not available and so on, which
Hidden
Downtime

Unscheduled
Downtime

Uptime

Scheduled
Downtime

Importance of OEE in the Strategic planning process

OEE can save companies from making wrong investment

decisions
OEE can also be used to ensure that equipment suppliers
deliver what they promised!

In essence, OEE is the missing link

between money and machines!

OEE gives you answers to the following questions

How confident were you about the investment when you

signed the cheque ?

Exactly how well is the new plant performing now?

Do WE use an appropriate measure of

machine performance ?

In the absence of the OEE

measure, how will WE ever
know?

Any Question

Thanks EVERYONE