Sharing real-time data with the production team via an easy-to-see display helps keep key performance metrics in mind throughout the shift.

If you work in manufacturing, you’ve heard the term “Overall Equipment Effectiveness” or its acronym “OEE.” Although widely used, I have found that many people don’t know what it is. Fewer understand it.

The first thing to know about OEE is that it is not about efficiency. It’s about effectiveness. These two terms are sometimes used interchangeably, but are quite different. Efficiency is about doing things right. Effectiveness is about doing the right things. A plant might be efficient at producing tomato soup. But when what the customer wants is clam chowder, the plant is not effective.

Traditionally, plants have focused on efficiency rather than effectiveness. Efficiency, in its simplest form, is the ratio of inputs to output. This is a useful metric but, by itself, does not tell much about how the plant is doing or where the challenges might be hiding. An additional complication is that there are many ways to calculate efficiency. This can make comparisons across different plants difficult.

OEE comes from lean manufacturing toolkit. It combines three key performance metrics to arrive at a single number. OEE is the product of (1) availability, (2) performance and (3) quality.

Availability is the percentage of time spent producing relative to the scheduled available time. A plant running an eight hour shift might schedule one hour for meals and breaks. If downtime from various causes is one hour, availability is six hours production divided by seven hours scheduled—or 86%.

Performance is actual relative to the standard production rate. A standard line speed of 200 parts per minute, over the six operating hours, should produce a total of 72,000 units. If it produces 68,000 units over the shift, its performance metric is 94%. Note that this is total production, not just good production.

Finally, because only good product really matters, quality must be factored in. Quality is the percentage of good production relative to total production. If there are 1,000 rejected products, the quality metric is 68,000 divided by 67,000—or 98%.

When these metrics are multiplied together, they give the Overall Equipment Effectiveness for the line.

 OEE = 86% (availability) x 94% (performance) x 98% (quality) = 79%

There are a number of benefits to the OEE metric. The greatest is its simplicity. Anyone can understand how it is calculated and what each of the three components means. It is simple enough that it can be manually calculated. If the data is captured automatically, it can be calculated continuously in real time for display on the line. It is a standardized metric which allows it to be used to compare performance across different processes, plants and even industries.

OEE is useful to give a quick indicator of line performance but is no substitute for analysis. If the line is speeded up at the expense of more rejects, the OEE might look good but few would argue that this is a good situation. Any changes in OEE, positive or negative, must always be evaluated. Identify and maintain positive changes. Find the causes and eliminate negative changes.

So, are you tracking OEE yet? F&BP

John Henry, Certified Packaging Professional (CPP), is renowned as the Changeover Wizard. His company, Changeover.com, specializes in improving line efficiencies for packagers by reducing downtime. Contact John at johnhenry@changeover.com or 787-550-9650.