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OEE Raises Long-Term Competitiveness

“OEE is one of the most recognized KPIs (key performance indicators), if not the most recognized,” observes Craig Resnick, a research director at ARC Advisory Group Inc., in Dedham, Mass.

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Resnick and his colleagues encourage end-users to take advantage of today’s technology to more quickly calculate the metrics of OEE, or overall equipment effectiveness, a performance metric that equals the sum of a process’ availability times its performance times the quality of products produced.

“It’s imperative for manufacturers to collect data automatically and in real time,” declares Resnick. They should then tie that data together and get it to the enterprise, which then allows plant production data to be compared with true operating time, he advises. Do this and use OEE as a dynamic optimization tool, Resnick says, and positive results follow. “I think they’ll be surprised about how fast they see results.”

But using today’s technology means overcoming some things. “First, you cannot have ‘islands of automation.’ To rectify that, everything on the plant floor needs to be interoperable,” Resnick says. To him, that means all devices communicate with one another, which allows data sharing by all manufacturing disciplines and production management.

Having the real-time data gives end-users actionable data.“The OEE calculation is a management tool to see where you are, compared to where you’d like to be,” Resnick observes. He notes that OEE can prevent a company from having insufficient rawmaterials inventory. Another element of dynamic OEE is that it’s
a preventive and predictive maintenance tool, he remarks.

But OEE is just as much a supply-chain tool and sales forecaster, Resnick adds. With traditional OEEs, though, which incorporate historical rather than real-time data, “by the time you have it, it’s history,” he observes.

With real-time data, however, manufacturers can compare those against goals to find out how well production performed in a particular period. For example, if someone sets a target of 100 widgets per month, they can set daily production at X. Suppose the OEE metric is less than X, which means the production yield is poor, he says. “What that metric might be saying is that there are problems that need correction. Maybe a second shift can be added.” But if OEE exceeds X, that means the company is producing ahead of schedule—and that may mean production could be slowed, he states.

Resnick notes that companies’ chief financial officers fancy OEE. “When it comes to deployment of capital, companies can look at the OEE scores and find where the problem is, and then put an ROI [return on investment] on the capital deployed.”

Fix and improve

That focus matches Mark Brownhill’s view of OEE’s utility, which he says is to tell those who use it where chronic problems exist. “If you fix problems, you see improvement.” But during the firefighting drills, OEE is less important, believes Brownhill, product manager of machine-tool productivity solutions for automation vendor GE Fanuc Intelligent Platforms, in Charlottesville, Va. “Dynamic OEE may just make you better firefighters—but continuous improvement is the way you’re going to be competitive in the long haul.”

Concerned about OEE’s use, Brownhill asks, “How many people use it for continuous improvement?” His experience shows many don’t. They use the metric because they’ve been ordered to do so, or they focus on a big value, sometimes to make their operations appear successful, he comments. What they should be asking? “Am I better today, or this month, than before?”

But first, businesses must actually use OEE to know that. “Fundamentally, OEE is a great, comprehensive metric,” Brownhill asserts. “If you have a good score with it, then you’re probably doing things right in your business.”

C. Kenna Amos,, is an Automation World Contributing Editor.

Image from Artville

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