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by Robert Baird

If your organization is like most using automation for productivity, then overall equipment effectiveness (OEE) is most likely being used as a key metric in determining where improvement efforts should be focused. If most of your production steps utilize production machines, then all the OEE factors, availability, performance and quality, apply. On the journey to be world-class, there also must be considerations about the complete production system.

Most organizations use an OEE of 85 percent as a world-class benchmark. But after tracking organizations and implementing some improvement efforts, the results of the OEE factors of availability, performance and quality have averaged 90 percent, 86 percent and 98.7 percent, respectively. This equates to an OEE of 76.4 percent, significantly short of the 85 percent benchmark. Even this world-class benchmark can be exceeded with a shift in focus of when and where improvements are made.

Improving production equipment while in situ incurs significant hidden costs over the lifetime of the equipment. These hidden costs can be defined as expenses not normally included in the purchase price of the production machine, such as for maintenance, supplies, device add-ons, poor quality, inefficient energy use and training time. There also can be unnecessary design costs, for example, needlessly increasing the speed without consideration of production system requirements (e.g., increasing the speed of a machine that will be feeding a bottleneck). The financial term for this is sunk cost.

Design for overall equipment effectiveness (DFOEE) is a new concept that shifts the equipment improvement focus to the design stage. The methodology accomplishes this by incorporating local knowledge, six big losses of total productive maintenance, seven wastes of lean manufacturing, energy conservation, theory of constraints (TOC) and Six Sigma into the design stage of production equipment.

The DFOEE methodology makes losses more transparent, highlighting areas for improvement during the design stage of new production equipment. With the losses known, there obviously can be improvements made when the equipment is in situ, but improvements at the design stage provide a significant reduction in hidden and sunk costs.

The basic steps of the improvement methodology DFOEE are:

  1. Define the Purpose - This is primarily the responsibility of the organization's leaders. This must include a review of the complete value stream. How will the equipment effectiveness improvements align with the overall strategy? How will this new equipment benefit the system? What are the direct and/or indirect improvements and how will they benefit your customers?
  2. Establish a DFOEE Team - It starts with the structuring of a diverse team and stakeholder involvement. Most operational departments are involved, including the original equipment manufacturer (OEM) supplier and its key component suppliers, engineering, value added workers who will be running the machine, a Lean Sigma practitioner, maintenance, purchasing and sales. They all bring both local and technical knowledge about what is required to make this new equipment the most effective within the value stream.

    With this diverse knowledge, you will be able to answer these critical for design questions:

    • Can we improve energy efficiency (servomotors versus pneumatics)?
    • What is the most effective throughput for the system?
    • How can we improve the six big losses?
    • Which components must improve to reduce scrap?
    • How can we minimize transportation within the machine?
    • How can we minimize changeover time?
    • How can we design for product flexibility?
    • What are the safety and ergonomic concerns?
    • How can we improve preventive maintenance (e.g., modular components)?
    • How can we simplify autonomous maintenance tasks?
    • Can the design combine the prior or next operation, or both?
    • Can the operation be simplified, improving training time?
    • How can we standardize the input and output for the prior and next operation?
    • Why is the flow left to right and the next operation right to left?
    • Can we optimize the footprint?
  3. Determine OEE Targets - The team reviews the current state data from existing equipment OEE measures and value stream mapping analysis. Next, there are discussions about applicable new technologies, current best practices and what needs to be developed to improve the OEE factors and flow. From this discussion, targets can be formulated.
  4. Determine Cost Saving Targets - Equipment effectiveness improvements must translate to the bottom or top line; it is why organizations are in business. From the OEE targets set in Step 3, financial ratio targets related to revenue gain, cost of goods sold and gross margin must be determined.
  5. Start the Design Stage - With the completion of the previous DFOEE steps, the OEM supplier and its key component suppliers take the team leadership role. However, this does not mean the other members are not participating within this step. The diverse knowledge of this team will continue to provide critical direction in the design of the equipment. The blueprint, some component prototypes, drive systems, ergonomics, energy efficiency and specifications are established. A prototype machine is then put together. Part of this stage is reviewing the design milestones with the stakeholders, who include the leaders who set the purpose.
  6. Conduct the Testing Stage - This involves operational replications of applicable products, with the DFOEE team members present. Capability (Cm and Cmk indices), quality (yield), downtime analysis, speed test, training time, changeover time (includes adjustments), energy use, operator motion (ergonomics) and noise studies are all part of the required measures. These studies must be conducted with the appropriate unit volume and with the range of products targeted for the equipment. Completing a test with small volumes will not capture all the variations required to determine the actual values of these indices and mentioned variables. A procedure to follow can be found at Finally, standard work documents are determined by the DFOEE team to include all operational important steps, task key points and reasons for the key points. All test procedures, documents and test results are stored and attached to the equipment in a format that can be efficiently used at the target destination. Any failures during this stage of variable tolerances must be corrected at this time.
  7. Perform the Acceptance Stage - With the new equipment set up and in situ, all the variable tests are repeated for all products with live production. The same test procedures conducted during the testing stage are followed and results are recorded and compared to the testing stage's results. If there are any unacceptable results related to specifications or variable deviations, it is the responsibility of the DFOEE team to correct them. These unacceptable differences have been outlined already within the equipment contract by the DFOEE team.

OEE is a key lean metric. To achieve world-class equipment effectiveness with system considerations, the new DFOEE methodology must be applied.

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