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News / June 08, 2011

How to Get Started Implementing an OEE Solution

You have probably heard the term OEE, the acronym for “overall equipment effectiveness,” and you may already have a sense about what it is all about, but implementing a successful OEE solution is not done in a heartbeat. So, you may be asking, “where do I start?”

Many organizations run into a lot of the same obstacles when they first start considering an OEE implementation plan. Knowing and understanding how to navigate through these hurdles will facilitate the process.

Understanding OEE
OEE is a tool to monitor the effectiveness of manufacturing facilities. Software commonly is used to implement OEE, but it can also be done manually using plain old pencil, paper, spreadsheets and elbow grease.

At the surface, OEE is just a couple of simple formulas used to monitor three isolated factors of availability, performance and quality. Below is a brief description of each component:

OEE Availability is the ratio between the actual run time and the scheduled run time. The scheduled run time does not include breaks, lunches and other pre-arranged time a production line or process may be down.

OEE Performance is the ratio between the actual number of units produced and the number of units that theoretically can be produced (standard rate). The standard rate is the performance rate for which the equipment is designed.

OEE Quality is the ratio between good units produced and the total units that were started.

As simple as these calculations appear to be on the surface, getting to those numbers and using them within your company to your advantage is the true challenge. There are technical details, capital expense, human factors and more. So where do you start? How do you begin setting up an OEE solution in your company?

Is OEE Right For Your Organization?
First off, you must determine if OEE is truly right for your company. Every company is different, so deciding if OEE is right for your organization will require you to answer a few questions:
  1. Does your company have competitors?
  2. Are the competitors implementing OEE?
  3. Are your competitors more profitable?
  4. Is profit important to your company?
  5. What can be done with the dollars saved by reducing operating cost?

One last deciding factor is whether your company may inherently be very efficient or possibly so profitable, that it really does not matter if you track OEE. If this is the case, then you should be thanking the manufacturing gods. If this is not the case, and your company could really benefit by focusing on increased efficiency, read on.

Does It Have To Be a Perfect Fit?
Sometimes it first appears that your process can’t benefit from OEE. For example, your process does not have straight forward production units. Such as, your production units are not discrete units such as cases, bottles, gallons, liters, widgets and so on. Also, if your process is not conducive to a regular production rate, then OEE Performance may not work.

But even in these situations, keep in mind that you can still benefit from implementing only one or two of the OEE factors. For example, for an irregular production rate, OEE Availability and Quality can still be used very effectively. Don’t throw out the baby with the bath water.

Be Prepared For a Variety of Responses
Typically, a key person—maybe you?—or group is trying to start an efficiency improvement initiative by collecting information from various departments. Now it gets interesting because of the variety of directions the information collecting process may go.

It may become overwhelming with all the different opinions, desires and considerations that some feel must be met in order to implement an OEE solution. There may be different groups pitching their solution. In some cases, no one will have ideas or opinions until you present a possible solution. In addition, there will always be the few people that have all the reasons why it will not work. All of these may possibly lead to political tension within your company.

Keep the Solution Focused
The best approach to minimize political tension arising between decision makers is to outline the basic requirements for your company’s OEE solution. Keep it more general with items like whether to use software or do it by hand, the departments that it will use it, the requirement for flexible analysis and reporting, whether or not to have operator terminals on production lines, whether it will or will not integrate into your ERP or other management systems, whether the screens should be configurable, who will be responsible for maintaining the OEE system over time, etc.

Once these key requirements are defined, determine the possible solutions that will accommodate them. This will weed out the solutions that will fall short and should keep you from getting bogged down in what data will appear on what report. It’s best to keep moving forward with a solution that is flexible and is accommodating to changes in requirements over time.

Start Small To Mitigate Risk
Determining the return on investment (ROI) can be difficult when there is no existing efficiency data. Many companies start by implementing OEE on one or two production lines within their facility. After shaking down the OEE system on the lines and gaining some experience on closing the loop to improve efficiencies, ROI will be much easier to estimate for your entire company.

Starting small and growing the OEE implementation helps mitigate the risk that an OEE solution may end up unsuccessful. If proven successful, the decision making of which other areas of your facility, or enterprise, to roll out the OEE system to will be much easier.

Recognize That OEE Is an Evolving Process
The best OEE implementations evolve over time as your companies learn more about the effectiveness of their manufacturing. The OEE implementation details will change as this learning happens. Also, manufacturing processes change over time, and an OEE implementation must be flexible enough to adapt to these changes. The reality is, it doesn’t have to be perfect from day one, and everyone can get what they want out of the system over time. This is true for everyone except for the few people with all the reasons why it will not work.

Put It All Together
Once you decide OEE is right for your company, define basic requirements, select a solution that meets the requirements and begin implementing OEE tracking, you will then need to take the final step. Your people!

OEE in and of itself will not improve the effectiveness of your company. You have to apply human brainpower. By looking at the OEE data, you and your staff have to use that OEE data to find correlations between different influences on your effectiveness.

You will want to look for correlations between operators, vendors, shifts, temperatures, etc., and the impact that they have on your effectiveness. Looking at these correlations can help in making business decisions; for example, seeing the OEE values by raw material vendor will help in determining if the lower cost vendor is worth it when the day is over. Also, feeding specific information back to the vendor may help them to provide a better product to your company.

When you discover these correlations, you are equipped with the knowledge of how to improve your operations. This is the ultimate reward for implementing OEE – knowing how and where to focus efforts to make changes that will really boost overall efficiency.