"Hidden capacity" and overall equipment effectiveness, Solutions!, Online Exclusives, May 2004

"HIDDEN CAPACITY" AND OVERALL EQUIPMENT EFFECTIVENESS

By Tita Ouvreloeil, HSB Reliability Technologies

When designing an overall strategy for achieving a World Class Reliability™ (WCR) organization, one goal is to increase equipment effectiveness so each piece of equipment can be operated to its full potential and maintained at that level. To maximize equipment effectiveness, it is essential to understand equipment problems and the steps that must be taken to eliminate them. A significant component in this process is the understanding of Overall Equipment Effectiveness (OEE). Ultimately, OEE is a tool that teaches us about the “hidden capacity” of an organization just waiting to be explored.

OEE is a crucial measure in a WCR organization that gives information on how well the equipment is running. It links six major equipment losses (listed below) within three categories: availability, performance (speed), and quality.

Six major losses indicated by OEE

1. Equipment failure causes production downtime. Equipment failure requires maintenance assistance and can be prevented with the use of appropriate preventive maintenance actions, developed and applied operating procedures, and design changes. Most importantly, equipment failure requires an improvement effort that should be the result of a successful partnership between production and maintenance.
   
   Predictive maintenance techniques such as vibration, oil, and thermographic analysis can be used to anticipate equipment failure. If the failure occurs, it is important to use root cause failure analysis (RCFA) techniques to identify the root cause of the problem and effective and applicable solutions that will eliminate or mitigate the failure occurrence and impact.



2. Setup and adjustments: this refers to loss of productive time between product types, and includes the warm-up after the actual changeover. Changeover time should be included in this loss opportunity and it should not be part of the planned downtime.



3. Small stops are typically less than 5-10 minutes and they are typically minor adjustments or simple tasks such as cleaning. They should not be caused by logistics.



4. Speed losses are caused when the equipment runs slower than its optimal or designed maximum speed. Examples include machine wear, substandard materials, operator inefficiency, equipment design not appropriate to the application, etc.



5. Losses during production include all losses caused by less-than-acceptable quality after the warm-up period.



6. Losses during warm-up include all losses caused by less-than-acceptable quality during the warm-up period.

The three major categories of OEE
The first category is availability. Availability can be expressed with these formulas:

Availability = (Planned production time – unscheduled downtime)
Planned production time

Production time = Planned production time – Downtime

Gross available hours for production include 365 days per year, 24 hours per day, 7 days per week. Planned downtime includes vacation, holidays, and not enough loads. From a pure economic perspective, all available hours are used for a true measure of OEE; however, from a business and management view, equipment may not be used at all times. This usually happens due to market conditions or issues associated with allocation of operating units in a multi-site corporation with multiple operations capable of producing the same products.

Availability losses include equipment failures and changeovers indicating situations when the line is not running although it is expected to run.
The second category of OEE is performance. The formula can be expressed in this way:

Performance (Speed) = (Cycle time x Number of products processed)
Production time

Net production time is the time during which the products are actually produced. Speed losses, small stops, idling, and empty positions in the line indicate that the line is running, but it is not providing the quantity it should.

The third OEE category is quality. Quality losses refer to the situation when the line is producing, but there are quality losses due to in-progress production and warm up rejects. We can express a formula for quality like this:

Quality (Yield) = (Number of products processed – Number of products rejected)
(Number of products processed)

Therefore: OEE = Availability x Speed x Quality

OEE tells how efficiently the equipment produces during the time of its planned use. The challenge of using OEE as a tool remains the proper design of OEE to the specific plant, production unit, and critical equipment level, and the quantification and prioritization of these losses that will ultimately become major opportunities for the entire organization.

An example of OEE calculation
Table 1 contains examples of shift data to be used for a complete OEE calculation, including calculation of the three contributing factors of availability, performance, and quality.

• Planned production time = Shift length – breaks = 480 – 15 – 15 – 30 = 420 Minutes
• Operating time = Planned production time – Downtime = 420 – 50 = 370 Minutes
• Good pieces = Pieces produced – Reject pieces = 20,225 – 503 = 19,722 Pieces
• Availability = Operating time / Planned production time = 370 Minutes / 420 Minutes = 0.881 (88.1%)
• Performance (Speed) = Pieces produced / (Ideal rate x Operating time) = 20,225 / 70 x 370 = 0.781 (78.1%)
• Quality = Good pieces / Pieces = 19,722 / 20,225 = 0.975 (97.5%)
• OEE = Availability x Performance x Quality = 0.881 x 0.781 x 0.975 = 0.671 (67.1%)

Is this OEE value good enough?

World Class Reliability organization
The calculation of OEE as the product of availability, performance, and quality is a severe test. For example, if all three contributing factors were 90.0%, then the OEE would be 72.9%. In reality, the general accepted world-class goals for each factor are different from each other, as illustrated in Table 2.

Every plant is different. For example, if the plant has an active six-sigma quality program, the 99.9% for quality might not be good enough. Worldwide studies indicate that the average OEE in manufacturing plants is about 60%. A World Class Reliability organization is considered to be 85% or better.

The basis for building an OEE model is the business mapping for the company. OEE can be calculated at the plant, production unit, or critical equipment level. The level of detail for OEE calculation depends on the interest for information for the improvement decision process. Figure 1 illustrates an OEE example model built for a smelter operation.

Figure 1. Example OEE Model

Conclusion
OEE is one of the best ways to monitor and improve the efficiency of the manufacturing processes at the equipment, manufacturing cell, assembly line, and plant level. OEE borrows the principles of WCR by creating a joint responsibility between operations and maintenance personnel to achieve zero product defects, zero equipment failures, zero abnormalities, zero accidents, and greatly reduced unproductive times. Ultimately, OEE is a tool that teaches us about the “hidden capacity” of an organization just waiting to be explored.

About the author:
Tita Ouvreloeil is a Project Manager with HSB Reliability Technologies. For more information, call 281.358.1477 or e-mail touvreloeil@hsbrt.com.