Measure of Equipment Effectiveness Often Misused
By Robert M. Williamson, president of Strategic Work Systems
Overall equipment effectiveness (O.E.E.) has been used as one of the more important “maintenance metrics” since Total Productive Maintenance (TPM) came to the U.S. in the late 1980s. O.E.E. is the primary measure used in TPM to identify and quantify the major equipment-related losses and a metric for rating “equipment effectiveness.” O.E.E. has become widely used in many plants with or without the elements of TPM in place since the early years of TPM to quantify equipment effectiveness losses. This usage has also caused some confusion and has led to many misuses of the O.E.E. percentage calculation.
The early Toyota Production System focused on “eliminating waste to reduce cost.” O.E.E. was initially developed to identify the “major losses” in equipment performance and reliability. TPM then became a “company-wide approach to eliminating the major equipment losses.” O.E.E. addressed whether the equipment was doing the right things. Here is a list of 11 major losses:
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Availability losses
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Planned shutdown losses
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No production scheduled (1)
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Planned maintenance (2)
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Downtime losses
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Breakdowns & failures (3)
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Changeover (product, size) (4)
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Tooling or part changes (5)
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Startup or adjustment (6)
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Performance efficiency losses
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Minor stops (jams, circuit breaker trips, etc.) (7)
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Reduced speed, cycle time, or capacity (8)
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Quality losses
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Defects/rework (9)
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Scrap (10)
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Yield/transition (from changeover, startup/adjustment) (11)
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O.E.E. as a metric, a calculated rating of equipment effectiveness, is as follows:
Availability % (x) Performance Efficiency % (x) Rate of Quality % (=) O.E.E. %
O.E.E. grew out of the “Japanese Quality Revolution” in the 1950s, 1960s, and beyond. The Deming cycle (plan - do - check - act), based on the “scientific method,” required the collection of data to define and characterize the nature of the problem to be solved.
Let the Confusion Begin
This is where all the confusion begins. O.E.E. percentages became a metric to compare current equipment performance to world-class performance. The measure of 85% equipment effectiveness became known as “world-class O.E.E.” Once used as a benchmarking score for “world-class”, O.E.E. became used as a way to compare one piece of equipment to another, even though the equipment performed different functions in a different process, or even in a different plant. Once this basic calculation became more widespread, O.E.E. started being used to specify “Overall Plant Effectiveness” (O.P.E.) by using an aggregate score for all equipment in the plant. O.E.E. and then O.P.E. have become widely used to compare current levels of maintenance effectiveness and equipment performance to “world-class” levels, and even a “club” to punish those whose O.E.E. slips. All of these uses are inaccurate, unfair comparisons, and they are a gross misuse of the original purposes of O.E.E.
O.E.E. Data
O.E.E. was designed and developed to characterize and communicate the major equipment-related losses as stated in the first part of this article. By capturing equipment performance and reliability data and classifying it as a specific “availability, efficiency, or quality loss,” Pareto charts could be developed to communicate the “major losses” for focused improvement. This O.E.E. data could then measure and communicate the effectiveness of the focused improvement efforts, the countermeasures put in place to eliminate the major loss, or problem, and to tap the “hidden capacity.”
O.E.E. Percentage Rating
The O.E.E. percentage calculation (O.E.E. rating) served no purpose other than a very high-level indicator of performance improvement or degradation. Today, entirely too much emphasis is placed on trending and analyzing the “calculated O.E.E. rating.” The original intent is lost in many cases.
O.E.E. is a process for characterizing and communicating the major equipment-related losses. If it is only used as a “calculated rating,” it cannot be used by reliability professionals, operators or mechanics to quickly determine and eliminate the root causes of poor performance - as it should be used.
O.E.E. as a calculated rating is not entirely accurate. The basic factors of “availability, efficiency, and quality losses” assume that each of these losses is equally important. This is not universally true. It is a rare situation in manufacturing that a 1% downtime loss has the same business or financial impact as a 1% efficiency loss or a 1% quality loss. The O.E.E. calculation assumes equal weight of each factor - a dangerous assumption in return-on-investment calculations.
O.E.E. should not be used to compare machine-to-machine or process-to-process unless they are identical. O.E.E. should not be used to compare plant to plant or to specify “world-class” performance and reliability. There is no credible “world-class” O.E.E. percentage threshold - only a misconception.
O.E.E. is Not a Maintenance Measure
O.E.E. is not a measure of “maintenance effectiveness.” It is a measure of the factors that determine “equipment effectiveness.” For example, of the 11 major losses listed above, “maintenance” is typically in direct control of only two: planned maintenance and breakdowns & failures. And quite often, these two major losses are also impacted by the operations roles. Maintenance alone cannot address all of the major losses captured for O.E.E. This is why O.E.E. is used in Total Productive Maintenance where the entire organization focuses on eliminating the major losses.
Summary
O.E.E. data collection, analysis, reporting, and trending provide the fundamental underlying basis for improving equipment effectiveness by eliminating the major equipment-related losses. O.E.E. data very quickly leads to root-cause identification and elimination. O.E.E. data then answers the question, “Did we eliminate the root cause of poor equipment performance?” O.E.E. data is the means to an end: improving overall equipment effectiveness.
Calculating O.E.E. removes our efforts further from eliminating the major losses to comparing O.E.E. scores and the related punishment and praises as O.E.E. falls or improves. O.E.E. scores are neither a means to an end or an end. Be careful: It is a measure of “equipment effectiveness,” not a measure maintenance effectiveness. Don’t be misled by O.E.E.
Comments (3)
In the first few years of our Global Equipment Reliability effort we had several areas that took ownership of the measure and several that elected to make excuses. Then things changed when we pointed out to our VP that those areas that embrased OEE and elected to learn from the measure an look for ways to improve their business based on losses all demonstrated an improvement in OEE and more important a reduction in unit cost of product.
I think the important thing about OEE is to use the measure to understand your business and equipment. Don't get hung up in the number (I hate the 85% thing) but rather locate your losses and look for ways to improve.
1) Posted 9:20 pm, 05 February 2009 by Doug Plucknette
While it is possible to determine the cost implications of each of the three factors, OEE provides a measure how effectively an asset is utilized to produce a quality part where time (not cost) is the baseline unit of measure.
The article points out that of the 11 major losses only 2 may be directly attributed to maintenance. It does not identify or state the contribution of these 2 factors to the typically less than satisfactory availability factor. The numbers do infer an 80/20 rule that seems consistent with our experience.
As suggested in your article, availability is variable due to the operating patterns and changeover mix between machines and varying demand on the parts produced (volume). Changeovers and setups do take time, however, our improved OEE, and availability in particular, have shown dramatic improvements over time.
The objective for any manufacturer is to produce a quality part at rate. OEE provides an indication of our ability to do so. We also recognize that OEE is not a measure of how efficiently we achieve this objective.
I would agree that the "number thing" can get out of control. The key is to understand the OEE number (and its factors) as a relative reference to your operation and, more importantly, resolve the root causes.
The overall tone of the article seems to disqualify OEE as an effective metric - perhaps directed more specifically at maintenance effectiveness. I would only hope that the data available for analysis is sufficient to present enough evidence to determine and resolve the root cause(s).
2) Posted 9:43 pm, 22 April 2009 by Redge
Having been a maintenance professional and supervisor manager now for 30 years, I still find the "Production vs Maintenance" mentality where a Production Manager will utilize OEE as a "Club" as mentioned in the article, to bludgeon the maintenance group with. That's why I keep Mean Time To Respond and Mean Time To Repair data on all of the work that we do in my group now. When I can demonstrate <5 Minute response times and Mean Time to Repair of <1 Hour in all cases, we can then begin to drill into the issues and get the level of detail we need to ID problems and correct them.
OEE is A metric, but it's not THE metric, or the ONLY metric, particularly where maintenance groups are concerned. We need to look at the entire picture and "react" to a single metric, but use it as an indicator to lead on our journey of discovery in plant improvement.
3) Posted 6:24 pm, 03 February 2010 by Michael Meehan