Is OEE a Useful Key Performance Indicator? | Jeffrey Liker

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“For manufacturing that is equipment-intensive, how the equipment works is often the main factor in productivity. Total Productive Maintenance (TPM) has become a buzzword in lean and a generally accepted metric is Overall Equipment Effectiveness (OEE). This is measured as the product of three factors:

  • OEE = Availability x Performance x Quality
  • Availability = run time/total time
  • Performance = Total count of parts/target count (based on a standard)Quality = Good count/Total count

Ignacio S. Gatell questions whether companies using OEE really understand it, can explain it clearly to their customers, and understand what it means to compare OEE as a KPI across plants. He questions whether even plant managers understand how it is calculated and what it means.

The only good argument for OEE is that at a macro-level in a plant it provides a high level picture of how your equipment is functioning.”

Michel Baudin‘s insight:

About 15 years ago, a summer intern came to work at a client plant in aerospace machining. I thought a great project for him would have been to identify a common tooling package for machining centers that were grouped in a “Flexible Manufacturing System” (FMS). It was challenging, but it would have actually given the FMS the flexibility it was supposed to have. It was a real engineering project that would have improved performance.

Management, however, decided that a better use of his time was to collect data and calculate OEEs for another set of machines. It did keep the student busy all summer, but resulted in no change, and no improvement bragging rights for the student.

I have had a problem with OEE ever since. It is an overly aggregated and commonly gamed metric that you can only use by breaking it down into its constituent factors; you might as well bypass this step and go straight to the factors.

Among these factors, I find Availability to be most often confused with Uptime. The availability of a device is the probability that it works when you need it, and the total time in the denominator has to be the time you need it for. For example, if you work two shifts a day, the availability of a machine is not affected by your taking it down for maintenance on third shift. There have been cases of managers overproducing to increase run time and thereby boost the OEE of their machines…

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