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Overall Effectiveness

Guest post by: John Heap

Article Overview: The big guys use OEE (Overall Equipment Effectiveness) to measure how well they use the expensive equipment they own. Can small businesses and entrepreneurs use the same measure?

Overall Effectiveness

OEE (Overall Equipment Effectiveness)

The big guys (in manufacturing) use OEE as a measure of performance …. how well they are using the expensive equipment they own. Can you?

OEE is a simple concept …. It says that how well you are doing is a combination of:

the AVAILABILITY of equipment (what percentage of time it is actually available for work and not being set-up, cleaned, maintained or repaired)

the PERFORMANCE of the equipment (even though a machine or piece of equipment is ‘available’, it does not mean it is running at 100% … it might be running slower than it should be … perhaps because of faulty materials, an untrained worker or …)

the QUALITY of the stuff coming off or out of the machine (affected by things which have to be scrapped or redone .. and cost us money).

So, OEE represents the total of downtime losses, speed losses and quality losses.

The big guys – with their teams of analysts, lean experts and so on - would set up measures for availability, performance e and quality and calculate OEE as the product of these factors.

i.e. OEE = availability% x performance% x quality%

If all factors were at 90%, then OEE = 90% x 90% x 90% = 72.9%

The generally accepted levels of world class performance are:

Availability 90%

Performance 95%

Quality 99.9% and these together would give an OEE of 85%.

In practice, most companies operate at something nearer 60%.

The great thing about the measure is that it helps you understand how well you are doing .. and whether you need to be thinking about trying hard to improve.

I am not suggesting that you set up such a measurement regime.... but I am suggesting that - whatever kind of business you are in - you think about those factors of availability, performance and quality and think about how effective your business is when you combine them. If you think you might be running at less than 60% (and lots of people are), you are incurring lots of losses you should be worried about.

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Article Tags: OEE, overall equipment effectiveness, performance, quality



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