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How to Measure and Improve Your Overall Equipment Effectiveness

by Byrne Anderson
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Are you managing a manufacturing business?

Ensuring the success of your manufacturing operations lies in how effective your old and new equipment are.

Poor equipment performance can lead to costly losses. Companies lose close to $1 trillion on unplanned downtime. Thankfully, you can avoid losses by measuring and improving your company’s overall equipment effectiveness (OEE).

OEE is one of the most critical production KPIs to implement. Our guide can help you get started. Continue reading below for a breakdown of the dynamics of OEE:

Equipment Availability

Three key elements comprise overall equipment effectiveness. These are availability, performance rate, and quality rate.

The equipment’s availability revolves around three questions. When do you plan to run the equipment? How much did you lose to downtime?

What do you need to ensure the equipment’s availability? To compute the availability rate, take the scheduled operating time minus any downtime and divide it by the scheduled operating time.

For example, the scheduled operating time of your compressor is 12 hours, but it had a four-hour downtime. You deduct four hours from the 12 hours and get an availability rate of 66.67 percent.

Machine reconfigurations, changeovers, and breakdowns are some of the most common forms of downtimes. You can use the downtime hours to calculate the availability rate. It applies whether it’s planned or unplanned.

Interestingly, you can achieve 100% availability through continuous operation during scheduled operating times.

Performance Rate

Performance rate shows how long it takes for a machine to complete a process compared to its ideal cycle time. It also measures how fast it produces goods and why it runs slower than expected.

To get a machine’s performance efficiency, multiply the number of processed goods by the equipment’s ideal cycle time and divide the product by the actual operating time.

For example, a machine produces 500 units with 0.6 minutes of ideal cycle time. If the operation time is 480, the performance rate is 62.5%.

By measuring the performance rate, you can tweak the equipment to reduce cycle times and increase the equipment’s output.

A machine’s performance rate goes down if small downtime events happen. Slower process cycles will also do the same thing.

The key is to invest in equipment offering efficient solutions. For tasks like forestry lifting, HIAB handles loaders can help lighten the burden.

Quality Rate 

Quality rate measures how many produced units passed the standards for good quality. It deals with the output’s quality after the first production run without reworks.

Measuring the quality rate tells you how many items come off the line. It also shows the machine’s total output. More importantly, it helps you develop steps to reduce sub-par products.

Compute the quality rate by dividing the number of units with acceptable quality by the total number of produced units. For example, 4,500 pairs of shoes passed quality standards out of the 5,000 pairs. Divide 4,500 with 5,000 to get a 90 percent quality rate.

Calculating the OEE Ratio

To compute the OEE ratio, take the product of the three key elements. Taking the examples above, you multiply 0.667 by 0.625 by 0.90 to get a 37.51 percent OEE rating.

The Value of OEE

Total OEE evaluation helps you maximize the production of goods. It helps you plan, schedule, and forecast your products. In turn, you can deliver the goods to your customers on time.

You’re boosting your brand’s competitiveness in the process. Producing more quality output than your competitors enables you to win over new clients.

You can also maximize your machine’s performance. Working on weaknesses means developing a manufacturing system with uninterrupted output.

An OEE evaluation also helps facilitate the duties of everyone in the manufacturing process. It gives real-time information that workers can use as a guide to improve their output.

You can also reduce your repair expenses by understanding your machines’ actual performance. You can address mechanical issues faster and reduce any downtime.

The Nature of Losses

One of the keys to improving your business’ OEE is understanding the nature of losses. A piece of equipment becomes unproductive if you sustain losses in any of the six primary loss areas:

  • Downtime
  • Speed reduction
  • Set-up
  • Machine stops
  • Start-up losses
  • Scrap, rework, yield

These can affect the equipment’s availability, performance, and quality.

Use these areas to plan your OEE determination. Identify the machines that you think need OEE evaluation. These are machines that often cause bottlenecks or overproduction.

Create a cross-functional team that will conduct the evaluation. Include the machine operators who can give valuable insights on the equipment’s performance. Secure all data and let your employees do the data-gathering.

Discuss the data with different teams and formulate new measures after the evaluation. Track the results of the OEE and see if the numbers improve in the coming months.

Tips To Improve Overall Equipment Effectiveness

Develop solid preventative measures to reduce equipment defects. When investing in new machinery, implement the measures from day one. Conduct regular equipment maintenance and make spare parts available all the time.

Assign a digital champion for OEE implementation who will be accountable for the evaluation’s success. Whenever technical issues appear, he will take over and provide a resolution.

Automate your data collection and reporting. It will cut your expenses and save a lot of time on paperwork.

Create real-time charts that measure the OEE of the machines. Make the charts visible on the production floor.

Lastly, comment on each production stop. Talk to the supervisors at the end of the day and discuss the reason behind them. Ask for their suggestion or if they need any assistance to address the problems if they happen again.

Perform daily reviews and discussion sessions to ensure everyone’s on the same page.

Discover More Business Solutions Now

Working on your overall equipment effectiveness means boosting your productivity without compromising quality. You can cater to more customers and minimize your operational costs.

Learn about other business solutions for growing your brand. Check out our other articles for more helpful topics today.

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