What is OEE
In the most general sense, OEE (Overall Equipment Effectiveness) can be described as a universally accepted set of metrics that bring clear focus to the key success drivers for manufacturing enterprises. The OEE strategy is considered “best practice” and dovetails well with the Lean Manufacturing philosophy. In fact, the OEE set of metrics can provide the key indicators of progress on the Lean journey.
OEE should not be viewed as a fad or flavor of the month; the measurement technique has been in practice for many years, albeit with a narrower purpose. Historically, OEE was used as a toplevel summary view of capacity and it’s utilization. In recent years it has reappeared but with amore valuable multi-level view of the business, placing emphasis on the underlying issues that limit performance. The resurgence of OEE is doubtless related to its ability to plainly portray the opportunities for improvement that exist for all manufacturers.
Functionally, these metrics provide the basis by which excellent manufacturers may
systematically direct their business towards attainment of critical objectives…
• Ever-Improving Operating Margins
• Optimized Competitive Position
• Maximized Utilization of Capital
More specifically, OEE can be best illustrated by a brief discussion of the six metrics that comprise the system. The hierarchy consists of two top-level measures and four underlying measures.
The Two Top-Level Metrics
Overall Equipment Effectiveness (or OEE) and Total Effective Equipment Performance (or TEEP ) are two closely related measurements that report the overall utilization of facilities, time and material for manufacturing operations. These top view metrics directly indicate the gap between actual and ideal performance.
• Overall Equipment Effectiveness (or OEE) quantifies how well a manufacturing unit
performs relative to its designed capacity, during the periods when it is scheduled to run.
• Total Effective Equipment Performance (or TEEP) measures OEE effectiveness
against calendar hours, i.e.: 24 hours per day, 365 days per year.
The Four Underlying Metrics
In addition to the above measures, there are four underlying metrics that provide understanding as to why and where the OEE and TEEP performance gaps exist. A comprehensive OEE measurement system, such as OEE Management by Capstone Metrics, allows this data to be the primary driver for improvement at all levels of the enterprise.
The measurements are described below:
• Loading: The portion of the TEEP Metric that represents the percentage of total calendar
time that is actually scheduled for operation.
• Availability: The portion of the OEE Metric represents the percentage of scheduled time that the operation is available to operate. Often referred to as Uptime.
• Performance: The portion of the OEE Metric represents the speed at which the Work
Center runs as a percentage of its designed speed.
• Quality: The portion of the OEE Metric represents the Good Units produced as a
percentage of the Total Units Started. Commonly referred to as First Pass Yield.
Visualizing OEE/TEEP by use of a Cascade Chart
To more clearly understand the metrics and their roles, a Cascade Chart is useful. An example of comprehensive OEE/TEEP presentation is shown below in a sample report from Capstone
Metrics OEE Management Software.
The left three bars indicate what is presented to the production team in terms of scheduled time and/or booked business volume. This combination is also referred to as Loading.
The three bars on the right side display how effectively that scheduled capacity is utilized. This is the OEE performance. Note that the blue OEE Goal Line depicts plant OEE targets based on the actual Loading.
In total, the six bars signify the progressive erosion of ideal capacity and the categories of loss that are responsible. The remaining utilized capacity, after losses, is reflected by the TEEP metric.
It can now be seen that TEEP = Loading x OEE.
Study of the Cascade Chart reveals that each category of loss in the Capacity Stream can now be identified. Ownership of each loss will naturally flow to specific functional areas.