How to Improve OEE in Manufacturing

Author LineView Admin, January 24, 2023
OEE, or Overall Equipment Effectiveness, remains the gold standard for measuring the effectiveness of tools and machines in a manufacturing process.

Improvement in OEE score will directly affect the manufacturing processes’—and the company’s—effectiveness, efficiency, and productivity, so measuring and improving OEE is now very important for manufacturers and businesses.

Yet, what actually is OEE? How can businesses measure and calculate OEE? And especially, how can we improve our OEE score?
                                                                                                                                                                                                                                   
In this guide to improving OEE in manufacturing departments, we’ll answer those questions (and many more), and the article will cover:
  • What is OEE?
  • How to calculate OEE?
  • Actionable strategies to improve OEE score

And more.

Without further ado, let us begin this guide right away.

OEE: the definition

OEE, as we know, stands for Overall Equipment Effectiveness, which Is a metric used to measure the productivity of a piece of equipment.

OEE is regarded as the most important productivity metric in manufacturing, and so measuring—and improving—OEE should be the main focus for manufacturers if they want to improve the factory’s productivity and achieve growth.

Overall Equipment Activity consists of three different elements:
  1. Performance: refers to how fast a manufacturing process is currently running. A 100% Performance score means the equipment or process is running as fast as possible without any slowdown or sudden stops. 
  2. Availability: the percentage of stops (planned or unplanned) that happened during a planned manufacturing process time. An Availability score of 100% means the process is always running without any downtime (stops) throughout the Planned Production Time. 
  3. Quality: refers to the percentage of good (non-defective) parts/products manufactured during a manufacturing process. A Quality score of 100% means no defective products/parts are produced during 

Each of these three OEE components is measured on a scale from 0% to 100%. An OEE score of 100% means that the equipment or process in question scores 100% in Availability, Performance, and Quality, which is, admittedly, unrealistic in a real-world manufacturing process. 

Average factories typically score around 60% in OEE, and a factory with 85% OEE is considered world-class. 

How to calculate OEE

1. Simple calculation 

OEE can be calculated with a simpler formula as follows:

OEE= (Good Count x Ideal Cycle Time)/ Planned Production Time 

The definition of the terms used is as follows:
  • Good count: the total number of non-defective parts or products that are up to the manufacturing process’s standards
  • Ideal cycle time: the theoretical fastest possible time for the equipment to manufacture one part or product
  • Planned production time: the total time that the equipment or machine is scheduled for production
 
For example, if a piece of equipment can produce a product every minute (Ideal Cycle Time of 1 minute,) and can produce 1,000 non-defective products throughout the 10-hour (1200 minutes) Planned Production Time, then:

OEE=(1,000 x 1)/ 1200 = 83.33%

2. Detailed calculation

However, the preferred way to calculate OEE is to first calculate the score of each element: Availability, Quality, and Performance, and then simply use the following formula:

OEE= Availability x Quality x Performance

The individual element scores can be calculated as follows:

A. Availability 

Availability score= Run Time / Planned Production Time

Whereas Run Time= Planned Production Time - Stop Time

For example, if a manufacturing process is planned to run for an 8-hour shift (480 minutes) but in practice, there are 50 minutes of Stop Time (both planned and unplanned), then:

Run Time= 430 minutes
Availability= 430/480=0.895 or 89.5%

B. Performance

Performance score is affected by all factors that cause the equipment to operate at less than the maximum possible production speed when running, either slowdowns (Slow Cycles) or Small Stops. 

Performance score can be calculated as follows:

Performance Score= (Ideal Cycle Time x Total Count)/ Run Time

Whereas Total Count refers to the total quantity of parts/products manufactured during this Planned Production Time

For example, if a machine has an Ideal Cycle Time of 2 minutes and during a 6-hour shift can produce 150 products (defective and non-defective) with a Run Time of 330 minutes, then:

Performance= (2 x 150)/ 330 = 0.909 or 90.9%

C. Quality

Quality score is affected by any factors that cause the equipment to manufacture products/parts that do not meet the agreed quality standards. This includes parts/products that require reworks.

Quality score can be calculated with a rather simple formula:

Quality Score= Good Count / Total Count

If a machine can manufacture 300 products during the planned production time, but there are 30 defective products, then:

Quality = 270/300= 90%

oee-improvement

How to Improve OEE in Manufacturing: Key Principle

To summarize, an OEE score of 100% means:
  • Performance score of 100%, meaning the equipment Is operating as fast as possible
  • Quality score of 100%, meaning the process manufactures only good parts/products
  • Availability score of 100%, meaning the equipment is operating throughout the Planned Production Time without any stop time
This means that to improve OEE, we have to improve each of these three elements, or to be more exact, we’ll need to reduce or eliminate the issues surrounding these elements, which is where the Six Big Losses come in.

Six Big Losses

As with OEE, Six Big Losses is also an element of the Total Productive Maintenance (TPM) methodology, both developed by Seiichi Nakajima in 1971. 

Six Big Losses describes the six most common losses in manufacturing, 2 for each of the OEE factors:
  • Unplanned Stops as Availability Loss
  • Planned Stops as Availability Loss
  • Small Stops as Performance Loss 
  • Slow Cycles as Performance Loss
  • Production Defects as Quality Loss
  • Startup Defects as Quality Loss

Below, we will discuss them one by one.

A. Availability Losses

Two out of Six Big Losses affect Availability in OEE: Planned and Unplanned Stops.

1. Planned Stops

Refers to the period of time when the machine is scheduled for not operating during Planned Operation Time. Scheduled maintenance is the most common reason for Planned Stops, but there can be other reasons like operators’ shift changes, required calibration, quality instruction, and so on. In some factories, operators’ break time and meetings can also be considered Planned Stops. The biggest source of Planned Stops is typically the equipment setup (also called changeovers.)

2. Unplanned Stops

As opposed to Planned Stops, Unplanned Stops are periods of time (that are relatively long, more than 10 minutes) in which the equipment is scheduled for operation (Planned Operation Time) but cannot operate for one reason or another. Reasons for Unplanned Stops can be equipment failure, damaged tools, lack of available materials or operators, unplanned maintenance or cleaning, and so on. 

A crucial consideration when discussing Unplanned Stops is that they can be very similar to Small Stops (which are Performance loss rather than Availability Loss.) A general rule of thumb is that Small Stops are shorter (typically shorter than 10 minutes), but it’s best to set a clear threshold between the two based on your policy. 

B. Performance Losses

3. Slow Cycles

Slow Cycles happen when the equipment runs slower than its Ideal Cycle Time. As discussed, the Ideal Cycle Time is the theoretical maximum speed of the equipment to manufacture a single part/product. 

Reasons for Slow Cycles can be: 
  • Dirty or worn-out parts causing slowdowns
  • Poor lubrication
  • Sub-standard materials quality
  • Inexperienced operators

4. Small Stops

As discussed above, Small Stops as Performance loss are (typically unplanned) stops that occur in a relatively short time (under 10 minutes or according to a threshold agreed by your policy.) Small Stops may frequently happen, which may amplify its impact on losses further.

Typical Small Stops reasons include jammed material, non-optimal configuration, or regular fast cleaning among others.

C. Quality Losses

5. Startup Defects

Defective products/parts manufactured between the startup/setup time and the first instance of stable (steady-state) production. 

Equipment that requires a “warmup” or “changeover” cycle is especially prone to Startup Defects, and higher counts of Startup Defects often occur during operators’ shift changes. Some types of equipment naturally generate waste (that can be counted as defective products) right after startup or setup.

6. Production Defects

Production Defects, as opposed to Startup Defects, are defective products/parts produced during the stable production time (after Startup has finished.)

Production Defects can occur due to various reasons, such as misconfiguration of equipment, expired materials used (i.e., in food or pharmacy manufacturing,) broken equipment, human error, etc. 

Using the Six Big Losses to Improve OEE

Measuring Six Big Losses and knowing where your manufacturing process stands in each of these Losses will provide you with a concrete path to improve your OEE:
  • Reducing or eliminating Quality Losses by reducing the production of defective and unusable parts/products during setup/warmup/changeover and steady production time.
  • Reducing Slow Cycles and Small Stops to reduce and eliminate Performance Losses. Accumulation of minor stops and slow cycles can significantly hurt your OEE in the long run.
  • Reducing equipment failures (Unplanned Stops) and redundant setup/maintenance/adjustments (Planned Stops) to reduce and eliminate Availability Losses. Identifying preventable machine downtime (both planned and unplanned) and minimizing them as much as possible
Constantly working on eliminating the Six Big Losses should be your main and long-term focus in improving OEE. Below, we will discuss some actionable methods to achieve that.

Best Practices to Reduce Six Big Losses and Improve OEE

1. Establish reliable and automated data collection 

We won't be able to reduce Availability, Performance, and Quality losses if we don’t know what, where, and how much our losses are in real time.

Automating the collection and reporting of production data is crucial in any OEE improvement efforts, and in fact, you'd be surprised at how insufficient data collection is a very common cause of failure in improving OEE. 

We can use OEE Software by LineView to automate data collection from the shop floor equipment. With LineView, integrating automated real-time data collection is now much easier and more affordable.
Simply automating the data collection and reporting of equipment and operator data can almost immediately improve OEE and the manufacturing process’s overall productivity, which can especially help you in reducing Six Big Losses on your tools and machine on your shop floor.

In which areas should you collect and report data? Ideally, the answer is all of them, but you should especially monitor and evaluate data from three critical areas:
  • Equipment: review all pieces of equipment, tools, and technology solutions involved in the manufacturing process. Review whether these tools work at their optimal levels at the moment and whether they are contributing any bottlenecks to the manufacturing process. Evaluate how easy it will be to add new tools or to implement any hardware changes.
  • Processes: assess and evaluate current systems, policies, and processes to determine whether they are currently working as intended and evaluate their contributions. Again, evaluate for bottlenecks and inefficiencies. Use this data to develop an optimization/improvement plan accordingly.
  • People: human errors can be a major source of inefficiencies and productivity issues. Assess whether your human resources have the adequate skills and experience to execute their responsibilities in the manufacturing process. Monitor whether tasks are finished on time and whether they can be improved. Identify any bottlenecks and inefficiencies caused by human errors and fix them as soon as possible.

2. Establish a preventive maintenance schedule

One of the major sources of lower OEE scores is Planned Stops, but unfortunately, we won’t be able to completely eliminate them. Even the most advanced and expensive tools and machines will always require maintenance, which will translate into planned downtime.

So, one of the key ways to improve OEE is to find the delicate balance between performing regular maintenance and reducing planned downtime, and this is where establishing a comprehensive preventive maintenance program becomes crucial.

A preventive maintenance program will schedule maintenance based on the known schedule of failure and wear/tear of your pieces of equipment. This data-driven approach will eventually allow the factory to conduct maintenance on each piece of equipment before it becomes necessary while also ensuring maintenance doesn’t happen too often to minimize downtime. 

When planning a preventive maintenance schedule, try to be objective by analyzing collected data to assess and evaluate past failures and consult the equipment’s manufacturer to accurately gain each piece of equipment’s known schedule of wear.

3. Aim to standardize every element of your manufacturing process

Especially if your manufacturing process involves different operators and time members, keep in mind that different people may have different perspectives and approaches in executing each task. 

However, not only may their methods not be the most efficient, non-standardized efforts can be a major cause of human errors, which can result in Production Defects, Unplanned Stops, and other issues. 

With that being said, it’s important to establish clear and comprehensive policies to standardize every element of the manufacturing process to ensure efficiency at every level.

Once policies have been established, don’t forget to communicate them so that every operator and team member on the shop floor can understand and follow them. Standardizing your workflow processes alone can be very significant in reducing Planned and Unplanned Stops while also improving the Performance and Quality elements of OEE.

4. Effectively reduce Performance Losses

Addressing Performance Losses can be tricky. While it’s fairly easy to monitor and calculate Performance Losses (Small Stops and Slow Cycles) pinpointing the cause and fixing these issues can be very challenging. As discussed above, this is where having an automated data collection system that monitors individual cycles can be very important, if not crucial.

With that being said, here are a few tips on how to effectively address and reduce performance losses: 
  • Start by validating the equipment’s Ideal Cycle Time. Make sure Ideal Cycle Times represents the maximum theoretical speed of the equipment in question and not the “standard” speed used in the manufacturing process.
  • The Ideal Cycle Tame should act as the foundation for other information and/or measurements. Ideally, you should have Ideal Cycle Times for every piece of equipment used, but you can start small with your most important equipment (or alternatively, the simplest equipment to work with.)
  • Once you’ve established Ideal Cycle Times, assess your performance data and try to identify patterns of performance losses, which typically happen more often during certain scenarios like during a specific shift (thus, a specific operator/employee.)
  • For every identified pattern, apply Root Cause Analysis to accurately identify the cause of each problem.
  • Train operators on standardized work procedures to prevent human errors from causing slowdowns and minor stops
  • Tighten material quality standards. Expired/sub-optimal materials are also common culprits of slowdown and minor stops                                                                                                                                                                                                                                                                                                                         
5. Train your team 

Remember that even if your machines are already in perfect condition, human errors can also lower their effectiveness. 

Invest in real-world training to make sure your team is ready to execute your standardized policies. 

Make sure every team member has a clear understanding of their roles and responsibilities and how to execute their tasks from start to finish as effectively and efficiently as possible. 

Conclusion

In a real-world scenario, achieving a 100% OEE score is simply unrealistic, and an 85% score is the world-class gold standard to aim for. 

By following the tips and strategies we’ve shared above, you now have a solid foundation to start improving your process’s OEE and overall productivity. 

In general, you can improve efficiency by reducing or completely eliminating the Six Big Losses. By focusing on these Losses, you should be able to notice improvements in your overall efficiency almost immediately.

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