World-Class OEE: Set Targets To Drive Improvement

Author LineView Admin, January 27, 2023
What should be considered the ideal OEE score for your manufacturing process?

Ultimately, there’s no one-size-fits-all answer for this. Not only every business and every manufacturing process is unique, but the ideal OEE score to aim for by most companies is one that’s steadily improving over time.

However, many experts agree that while a 100% OEE score is downright impossible, 85% OEE is still considered doable, and companies that achieve this number are considered world-class factories or businesses. 

In this guide, we’ll learn how analyzing three core elements of OEE  and gradually improving them are the most effective ways to achieve a world-class OEE score.

This guide will cover:
  • The definition of “world-class OEE”
  • Is world-class OEE realistic to pursue?
  • How to improve your OEE score by improving the three key factors: availability, quality, and performance

Without further ado, let us begin right away.

What is a “world-class” OEE score?

To be technically accurate, a world-class OEE score is the ideal target suggested by the inventor of OEE (Overall Equipment Effectiveness), Seiichi Nakajima, in his book, Introduction to TPM, published in 1984. In this book, Nakajima defined a world-class OEE as a score of over 85%. 

However, achieving an 85% OEE score is actually more challenging than it looks, but to really understand this difficulty, we have to delve further into how OEE is calculated and what the number actually means. 

Three components of OEE

OEE comprises three key components: availability, performance, and quality:
  • Availability: refers to the percentage of time a machine or tool is available during the Planned Production Time while taking Stop Times (planned or unplanned) into account.
  • Performance: refers to the percentage of time a piece of equipment is running at the maximum possible speed during the Planned Production Time. The Performance takes into account Small Stops and Slow Cycles.
  • Quality: refers to the percentage of good/non-defective parts or products produced during the Planned Production Time.

The thing is, the formula for calculating OEE is as follows:

OEE= Availability x Performance x Quality

Meaning, with this formula, if a manufacturing process achieves a 90% score in Availability, 95% for Performance, and 92% for Quality—all three are very high scores and above the 85% “world-class: standard,” the resulting OEE would only be 78.66%.

As we can see, achieving an 85% OEE is significantly challenging. For example, to achieve 85.1% OEE, we can score 99.5% in Availability, 95% in Quality, and 90% in Performance. Furthermore, even the slightest improvement in each of these three components’ scores can significantly affect OEE.

Few factories actually achieve the 85% OEE score

Due to the formula of how OEE is calculated, the reality is that factories with “world-class,” 85% OEE score is very rare.

In fact, most companies and factories only have an average OEE score of between 40% and 60%, much lower than this technical definition of a “world-class” OEE score.

Thus, while the 85% OEE score is obviously desirable as a target, most factories and most manufacturing processes are unlikely to achieve such a score. Having a mindset of chasing this world-class OEE score is, most of the time, unhealthy, but instead, it’s better to focus on continuously raising your factory’s OEE through specific improvements.

How to set an ideal OEE target?

Since, as discussed, having the world-class OEE score as a target is, in most cases, unrealistic, how should you go about setting your OEE target?

The short answer is that you should set an OEE target that can help you achieve incremental and consistent improvement for your manufacturing process. Don’t focus on the absolute value of the OEE score number, but rather focus on your company’s ability to improve on this number.

We’d recommend setting short-term OEE targets that are achievable every three or four months rather than having only a single long-term number. Also, if your manufacturing plant has multiple production lines, the target OEE score should be unique for each production line.

For example, if there are two production lines that are otherwise identical, but one makes just one product while the other line manufactures two different products, most likely, the OEE scores will be different. The line manufacturing two different products is likely to have a lower Availability Score due to Setups or Changeovers, which will ultimately result in a lower OEE score. 

How to improve your OEE score?

Since, as discussed, you should focus on achieving incremental improvement rather than having a single number as your target, how can you achieve these improvements?

To do so, it’s crucial to take a deeper look at the three different OEE components and how to improve each of them.

Let’s start with Availability.

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Improving Availability score

Availability in OEE takes all factors and events that stop the manufacturing process long enough (above the agreed threshold, typically more than 10 minutes) causing downtime. Both Planned and Unplanned Stops are the reasons for Availability loss.

Availability score can be calculated with the following formula: 

Availability= Run Time/ Planned Production Time

Whereas: 

  • Planned Production Time is the time that the equipment or any other production asset is scheduled for a manufacturing process.
  • Run Time is calculated by subtracting Stop Time from Planned Production Time
  • Stop Time refers to the time when the manufacturing process was stopped due to Planned Stops (i.e., maintenance, changeovers) or Unplanned Stops (i.e., failure, machine breakdowns)

With that being said, Availability losses occur due to either Planned or Unplanned Stops; each can be caused by many different reasons.

The most common cause of Planned Stops is changeover time (or setup time), while Unplanned Stops typically occur due to equipment failures, unplanned maintenance, or material shortages.

Again, it’s important to clearly define the threshold between what constitutes an Unplanned Stop and what constitutes a Small Stop (which is a Performance issue rather than an Availability issue.)

Below are some actionable tips on how to minimize Planned and Unplanned Stops:

  • Above anything else, the best method to reduce Unplanned Stops due to breakdowns is to invest in high-quality equipment and support this investment with adequate training and a proper maintenance program
  • Evaluate. While the goal is to minimize and prevent downtime, make sure you do learn from the occurred downtime. Assess what the cause of the downtime was and what could be done differently to prevent the same issue from occurring in the future. 
  • Invest in the right equipment. Having the right equipment in the first place is essential in improving your OEE. There’s no perfect machine, and all machines would experience downtime and maintenance. However, your manufacturing process can greatly benefit from having equipment that can minimize this downtime whenever possible. There are newer “smart” machines that can identify their own issues and automatically notify operators when needed. This kind of automation can go a long mile in minimizing downtime.
  • Accurate and fast maintenance. Fast preventative maintenance to ensure the machine works optimally while preventing breakdowns (which will cause longer downtimes). Make sure your team is focused on keeping the equipment running and preventing needless downtime. Proper training on how to use the machine properly, as well as thorough regular cleaning, can be very effective in improving the Availability score. 
  • Minimize setups, changeovers, and adjustments. These are the main causes of Planned Stops, and when accumulated and not managed properly can significantly hurt your Performance score. Identify whether there’s anything you could do to reduce your setup and adjustment time, and actively aim to continuously reduce Planned Stops.

Improving Performance score

Within the OEE context, Performance takes into account any factors that cause the manufacturing process to run lower than the theoretical maximum speed during the Planned Production Time.

Performance score is calculated with the following formula:

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

Whereas:
  • Ideal Cycle Time is the theoretical maximum cycle time that the manufacturing process can achieve
  • Total Count is the total number of parts/products produced during any given time
  • Run Time is how long the process is running
  • Net Run Time= (Ideal Cycle Time x Total Count), the fastest possible time to manufacture the parts or products
A low Performance score can be caused by many factors: substandard materials used, operator’s error, machine wear, and so on. However, all these factors can be grouped into two major ones: Slow Cycles and Small Stops:
  • Slow Cycle is when a machine runs slower than its Ideal Cycle Time, for example, due to machine wear
  • Small Stop is when the machine is forced to stop for a short time (i.e., under 10 minutes) for example, due to the operator’s change of shift
Therefore, we can improve our Performance score by minimizing Slow Cycles and Small Stops, which can be achieved as follow:

Minimizing Small Stops

The actual threshold of when a Stop is considered a Small Stop or a Planned/Unplanned Stop (more on this when discussing the Availability score) can be subjective. To make things easier, let’s assume Stops under 10 minutes are considered Small Stops, and those that occur for more than 10 minutes are Planned Stops or Unplanned Stops depending on the cause.

Small Stops can be caused by various reasons, including but not limited to:
  • Required cleaning or checking (i.e., due to component jams)
  • Blocked sensors
  • Obstructed product flow
  • Blocked delivery
  • Equipment failure, in general

To minimize (or even eliminate) Small Stops, here are a few steps that could be taken:
  1. Accurately identify the cause of every small stop. You can assign codes (Reason Codes) for each of these causes and record them if you have to
  2. Assess whether the number of stops is considered manageable or has exceeded the level that you feel appropriate
  3. Identify ways to reduce or eliminate these Small Stops, whether through changes in the workflow or changes in staffing (i.e., assigning different operators.)
  4. Establish your downstream processes to work faster than your upstream processes to allow initial processes to continue working even when a Small Stop occurs. This way, the downstream process will catch up once the Stop is finished due to the faster production speed.
Minimizing Slow Cycle

Too many Slow Cycles in a manufacturing process will jeopardize the process’s overall speed, which will ultimately hurt its OEE.

There are various possible causes for Slow Cycles, including:
  • Equipment wear and tear
  • Operator’s error or inefficiency
  • Overcapacity
  • Rough running
  • Under nameplate capacity
Unlike Small Stops, Slow Cycles can be more difficult to detect, especially in busy day-to-day operations. Thus, the first step in minimizing Slow Cycles is to train your employees how to identify them and what symptoms to look for. 

Encourage operators to be more perfectionist in expecting how the equipment should run, so they can be more proactive in preventing slow cycles.

Other strategies to combat both Slow Cycles and Small Stops include:
  • Establish a comprehensive training regime. A strict training program will ensure employees and especially operators handle their tasks at a level equal to what’s expected to improve OEE. Consistency is also key in improving OEE and your process’s overall performance, and establishing strict training and policies can provide you the best chance of ensuring each operator performs their duties and operates the equipment in a similar fashion every time.
  • Use only high-quality materials. Using cheaper/lower-quality materials may be tempting at first, but in the long run, it can end up costing your business financially due to your manufacturing process running at less than the ideal speed. Not to mention, it can also hurt your Quality metrics.
  • Implement automation whenever possible. Automating parts, if not all, of your processes, can help reduce human errors while also improving the speed and consistency of operations. While investing in automation may cost you more at first, it can also result in savings in labor expenses on top of the improved OEE score. 

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Improving Quality score

The Quality score takes any defective parts that don’t meet quality standards, so they are (currently) of no value to the company. This includes any parts or products that need rework.

Regarding Quality score, Good Parts are any parts or products that comply with the agreed quality standard without needing any rework.

Quality is calculated with the following formula: 

Quality score = Good Count / Total Count

Whereas Good Count refers to the number of good parts/products produced in the manufacturing process, while Total Count refers to the total number of parts/products manufactured during the Planned Production Time.

A maximum Quality score of 100% happens when Good Count equals Total Count, meaning that all parts/products produced meet the quality standard.

Quality losses come in the form of Startup Rejects and Production Rejects. 

Startup Rejects include any parts or products rejected during the early stage of the production process (warmup, startup, etc.) and can happen due to improper warmup period, misconfiguration during setup, or faulty materials, among other issues. 

On the other hand, Production Rejects refer to rejects that happen during the stable (steady-state) production time. Production Rejects should be taken more seriously since they could hint at underlying issues, both in the form of human errors or equipment failures.

To lower Startup and Production rejects, here are some actionable tips you can do:

  • Evaluate and review. Collect and review production line performance data with a production line monitoring software so you can identify all causes of Startup and Production Rejects in your operation, both big and small instances. Ideally, you should keep detailed records of your process’s output during different shifts and times, so you can have a more thorough understanding of your process as a whole.
  • Be proactive and aggressive in addressing Quality issues. When you identify any Quality control issue, the problem isn’t going to go away by itself and is typically a symptom of a larger problem. It’s important to be aggressive and aim to solve the issue immediately before the problem can grow bigger and/or affect other aspects of the business.
  • Keep detailed records of the manufacturing process’s output during different shifts and times. Every piece of rejected products/parts can give you valuable information you can use to better understand how your manufacturing processes vary in trends, which can help you in accurately adjusting your financial expectation for any given month, quarter, or task.


Last but not least, keep in mind that constantly high Production Rejects numbers could mean your equipment is simply not adequate to do the job successfully. If you really want to improve your OEE and strive for world-class OEE scores, then probably investing in new machines will be the only viable solution.

Conclusion

While achieving a world-class OEE status with 85% or above OEE may not be realistic for your business at the moment, what’s important is for your manufacturing process to continue improving in productivity. 

With that being said, while there are a lot of risks and threats that can negatively affect your OEE score, the majority of them can be tackled with:
  • A serious plan to improve
  • The right improvements in the right areas (i.e., equipment changes, human resources, OEE software for manufacturing, management style)
  • A comprehensive training program to minimize human errors

With that being said, review the issues and losses we’ve discussed above, see how many are applicable to your current manufacturing process, and then use the solutions we’ve discussed above. You’ll be surprised how even small improvements can be very significant in improving your OEE incrementally.

 

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