The stark simplicity of Overall Equipment Effectiveness

Posted on 13 Sep 2013 by Malcolm Wheatley

On the factory floor, Overall Equipment Effectiveness is a powerful improvement tool, one furthermore, which delivers improvements far beyond machine utilisation. Malcolm Wheatley explains.

To its many adherents, the charm of Overall Equipment Effectiveness (OEE) as an improvement metric is its sheer uncompromising starkness. Simply put, work out the theoretical maximum output from a piece of equipment or production line, and then express the actual output as a percentage of that theoretically achievable output.

The beauty of the calculation is its simplicity, and also the way that it automatically captures all the small losses of efficiency that conventional recording systems often miss – temporary stoppages of just a minute or so, for instance, or a short period of slow running.

“With OEE, there really isn’t anywhere to hide,” enthuses David Espley, a Staines upon Thames manufacturing consultant, who as operations manager, helped introduce the measure at Hoechst Trespaphan’s Swindon flexible packaging plant in the mid-1990s.

While comparable Japanese plants were achieving OEEs of around 85%, the Swindon plant had been struggling at around the 30% level – although some of the data from which to calculate the OEE figure was not actually recorded by the plant’s performance systems at the time.“This, of course, was something that was illuminating in itself,” observes Espley.

A bigger picture with better clarity

Today, the paper-based approaches to OEE systems that characterised many mid-1990s OEE implementations have largely gone. OEE calculations are now built into SCADA systems, for example, and most Manufacturing Execution Systems (MES) will deliver OEE as a standard report. For those who want just OEE, specialist dedicated factory-floor terminals offer an entrylevel capability.

And if the wherewithal to measure and manage OEE has evolved over time, so too has the understanding of what the technique can deliver. And it’s this broader remit for OEE that is increasingly setting the agenda today, say insiders.

“People tend to think about OEE as highlighting problems with equipment,” says Fraser Thomson, a consultant with Yorkshire-based MES provider Cimlogic. “In fact, OEE shines a light on an awful lot more than just downtime.” Energy efficiency, for one thing. Machinery or production lines don’t stop consuming power or compressed air just because they’re temporarily stopped points out Thomson. Boost OEE, goes the logic, and energy efficiency goes up as well.

Mark Carleton, services director at efficiency improvement specialist Mestec
Mark Carleton, services director at efficiency improvement specialist Mestec

Labour productivity also rises with OEE. While a production line or piece of equipment isn’t running, goes the argument, the people associated with it aren’t producing anything: improve OEE, and those people will spend more time producing, and less time standing idle.

“In fact, by improving the effectiveness of the equipment in your factory, you’re spreading all your overheads – not just energy and fixed labour – over more output, driving down the average cost of overhead per unit,” points out Mark Carleton, services director at efficiency improvement specialist Mestec, a provider of OEE-measuring equipment. Put like that, it’s difficult to see why OEE isn’t even more widely used.

Future imperfect

Cimlogic’s Fraser Thomson
Cimlogic’s Fraser Thomson

Some manufacturers are taking a short-sighted approach to systems designed to deliver improvement, reckons Cimlogic’s Fraser Thomson.

Cimlogic’s Fraser Thomson tells an interesting story. What’s more, says Thomson – who’s a long-serving consultant with the Yorkshire-based Manufacturing Execution System (MES) consultancy and implementation specialist – it’s a story that’s far from unusual.

When recently visiting a prospective customer, he heard at length about a number of manufacturing problems the business was facing; problems which manifested as below-target output levels, low productivity and poor due-date performance.

Which was why, of course, the company in question was looking for a production performance system, and recognised in Cimlogic’s TrakSYS MES offering, a potential solution to its problems.

Cimlogic model for collaborative problem solving through MES deployment.
Cimlogic model for collaborative problem solving through MES deployment.

But after talking to management at the company, Thomson suspected that the manufacturing performance problems he was hearing about were symptoms, not causes.

What seemed to be happening, in short, was that end-of-line rejects – over-weight and under-weight filled tubes of the ointment that the business produces – were being scrapped.

The result was not only waste in the form of the scrapped tubes, but also waste in the form of consequent re-work. Scarce capacity, in other words, was being dissipated on producing replacements for the scrapped tubes, thereby sapping productivity and causing lower-than-target effective machine utilisation.

“Cure the defect problem, and you would also cure the manufacturing performance problem – and TrakSYS could certainly handle the quality dimension as well as the manufacturing performance dimension, as any good MES solution can,” sums up Thomson.

“But the company didn’t see it that way: they had a manufacturing performance problem, for which they wanted a manufacturing performance solution. And they had a quality problem, for which they wanted a separate quality solution. If they had a single solution to do both, they told us, ‘it would open a whole can of worms’.”

Divided loyalties

For Thomson and his colleagues, such stories aren’t new. And in their view, they point to a deep-seated lack of appreciation of just what modern MES tools can deliver, as well as deep-seated structural and reporting problems within many manufacturing organisations.

In short, says Thomson: “Manufacturers know that they need to improve productivity and machine efficiencies, but each department within the business seems determined to deal with its own pain point in its own way.”

And in taking that attitude, he asserts, they’re failing to appreciate that tackling problems holistically, with an all-in-one solution, is not only more effective, but will also contribute more to the business than would a series of individual ‘point’ solutions.

“Deal with these issues together, within a single solution, and the overall gain is greater than the sum of the parts,” says Thomson. “Tackle them separately, and you tend to get wasted effort, duplication, and gaps.”

That said, it’s not difficult to see how such attitudes arise. It’s not uncommon, for instance, to see the quality and production functions within a manufacturing organisation reporting separately within the organisation structure. That way, goes the logic, production people aren’t tempted to waive or slacken quality standards in order to meet output targets.

But the flipside of such a structure is that the quality and production functions within a business aren’t necessarily motivated to tackle problems jointly, or to jointly deploy solutions that might be capable of tackling those problems. Worse, wrangles over budgets, cost-sharing and priorities can de-rail joint projects, even when the production manager and quality manager are otherwise willing to cooperate.

All of which may sound a little like sour grapes, concedes Thomson, given that Cimlogic is a business specialising in precisely such single solutions, in the shape of the TrakSYS MES. But it’s undeniably an approach that wouldn’t be tolerated elsewhere in the organisation, he asserts.

“We’ve had twenty years of ERP systems putting everyone on the same page, using the same system,” he points out. “These days, if the sales function wanted one system, and the finance function another, and the production function another, then heads would rightly be banged together. So why should plant floor-level systems, rather than enterprise-level systems, be any different?”

Opportunity knocks

It’s a logic that is certainly difficult to refute. Particularly when one considers that an effective MES will deliver actionable insights into more than just quality and production problems.

Improved energy efficiency is a big opportunity, for example, especially when energy costs are as high as they are now. It’s easy to forget that when an assembly line or filling line is stopped due to a breakdown, or due to materials shortages, it is still consuming energy: electricity for motive power, gas burners, and compressed air.

More than that, an MES solution not only provides insights with which managers can prevent problems from recurring, but also acts to prevent them from arising in the first place.

“Are the correct label and the correct packaging being used? Is the right batch code and ‘best before’ date being applied? Twenty minutes producing a product with the wrong label or batch code can be a very costly waste indeed,” points out Thomson.

In short, he sums up, the arguments for MES as a tool for factory floor improvement are compelling – provided managers can see the logic of a single solution, focused firmly on controlling and capturing plant-level events.

“From an improvement perspective, the advantage of an MES system is that it makes it crystal clear what your number one improvement opportunity is whether it be maintenance, quality, material availability, or faster setups,” concludes Thomson. “You have the information you need in order to focus your resources, delivering targeted improvements to meet the needs of the business.”