Posted by: productivityinc | November 2, 2009

The Use and Abuse of OEE

measureOverall Equipment Effectiveness (OEE) is fast becoming a widely used measure for the manufacturing industry, but it is also one of the more misunderstood and misused measures and causing much confusion.

What is OEE for?

The simple answer is “Improvement”.  OEE is an improvement measure and is used as part of the improvement cycle.  Unfortunately, much is made of the 85% ‘World Class Standard’ an arbitrary target found in the original TPM literature.  Not only is this target out of date (Nissan in Sunderland are running welding lines at 92-93% OEE) it gives the wrong message.  A customer has no interest in your OEE – that is an internal measure which relates to your efficiency and costs.  The customer is far more interested in a measure such as On Time In Full (OTIF) i.e. did I get my order?  Running a manufacturing business on an arbitrary efficiency measure rather than a customer satisfaction measure is a recipe for disaster.  The best use of an OEE target such as 85% is to recognize that if you are reaching that level and the customer is still not getting his orders on time, then you may have a capacity constraint.

OEE does not tell us if we have a problem, the customer does.  What OEE does do is help us analyze the problem and make improvements.  This is why Toyota uses it as a spot measure on a particular machine where there is a capacity or quality problem.  Calculating the OEE of anything other than a discrete machine or automated line is pointless; we have far better measures of the efficiency for a factory or department as a whole.

OEE developed out of the need for improvement groups to have a way of measuring and analyzing equipment problems as part of their Define, Measure, Analyse, Improve, Control cycle.  OEE defines the expected performance of a machine, measures it and provides a loss structure for analysis, which leads to improvement.  It can then be used as a tracking measure to see if improvement is being sustained i.e. if control is sufficient.

What does OEE measure? …

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  1. I’m quite certain that OEE measures Equipment Effectiveness – NOT efficiency.

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