273 – Understanding and Leveraging OEE with Ron Moore
Welcome Ron back to the podcast. Ron is an author and the founder of RM Group.
In this episode we covered:
- What is OEE?
- Do companies use OEE simply because it is strategic and tactical?
- Why does maintenance get blamed for poor OEE?
What is OEE?
OEE refers to overall equipment efficiency. It is availability*Rate*quality. The concept was developed by Shinji Nakajima who wrote the book “Total Preventive Maintenance”. Reliability is not only about pieces of equipment in a production system.
Reliability is the ability of a system to produce a product: in time, in full, and at the lowest sustainable cost.
Pay attention to demand issues such as: changeover, transition losses, short stops, or equipment not being run properly.
Wasn’t that the original intent of OEE?
Yes. If you consider the formula availability*Rate*quality. However, Nakajima did not consider or encourage the inclusion of demand issues such as transition losses, changeover, planned downtime, upstream supply failures.
He only focused on planned production time. But I say it is important to put the demand issues into consideration.
Think of OEE as a tactical means to count and manage losses.
It is also strategic in optimization of market opportunities’. Can be used to justify budget increment by showing what a system can best produce to maximize market opportunities.
Do companies use OEE simply because it is strategic and tactical?
Often OEE is misused by operations to look good and by management a club to put pressure on operations.
Does every company follow the availability*rate*quality?
A lot of organizations try to include more issues such as utilization then they give up and focus on one aspect or loss. This is wrong as the production system will always experience losses.
It is important to identify, measure, and decide if the losses are acceptable or not. Then manage them.
Is that how OEE should be used instead of the “club approach”?
If used as a club, people will hide, become reactive and start gaming the system. Should only be used as a tool to manage losses. Any percentage of OEE is acceptable as long as the losses are being managed.
How do people game the system? How can they be stopped?
The system can be gamed by perhaps cutting short the breaks to compensate for the losses.
To stop the losses:
- Identify and account for the losses
- For losses you can’t explain put them in miscellaneous
- Use maximum demonstrated sustainable rate to gauge your performance
- Improve your performance
- Measure losses at the bottleneck
- For a complex plant, start for a single line then replicate on all the other lines
Why does maintenance get blamed for poor OEE? How can they leverage OEE?
Maintenance is blamed because of visibility: People see them working on breakdown. However, on average, maintenance only accounts for 3-10% of losses. They can leverage by:
- Accurately identifying where the losses come from and addressing
Can maintenance use OEE to measure ROI on activities such as profit?
Yes. Gross profit, managing costs, and strategic improvements often demonstrate the worth of improved OEE. You will also see reduced safety incidents with improved OEE. The company shall also have less reactive maintenance, use less energy and be more environmentally friendly.
Where do we start?
- Pick a line to measure and manage before expanding across the company.
- You can bring an external resource to help set it up
- The operators should put in the production and losses data in real time to improve ownership
- The data has to be correct
- Read “OEE” by David Brown
Ron Moore Links:
- Past Ron Moore Episodes
- Ron Moore Email: email@example.com
- Book: Introduction to TPM: Total Productive Maintenance by Seiichi Nakajima
- Book: Overall Equipment Effectiveness by Robert Hansen
- Book: Making Common Sense Common Practice by Ron Moore
- Book: What Tool? When? by Ron Moore
- Book: A Common Sense Approach to Defect Elimination by Ron Moore
- Book: Where Do We Start Our Improvement Program? by Ron Moore
- Book: Business Fables & Foibles by Ron Moore
- Book: Our Transplant Journey: A Caregiver’s Story by Ron Moore
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