I tweeted a link to an Automation World article on OEE in Packaging Machines and immediately started getting dissed by @RickBullotta and @simonfkj.
I’m well aware that OEE leaves a lot to be desired–but it all depends upon what your objective is. @simonfkj worries that there is no link to profitability. He’s right. But that whole thing is going to require a lot more software than most companies have. Heck, I think most are still using Microsoft Excel.
My problem with OEE (overall equipment effectiveness) is that many companies use it for comparison metrics and most do not apply it well. If they are going to use it as one, I hope, KPI, I would hope that they implement it well.
OEE is the product of three ratios: availability, quality and throughput. Even when I first heard about it in the early 90s (my customer, a Ford plant, had an OEE specialist of all things), I thought it was too vague. Then when I heard that people were using it to compare machine to machine, vendor to vendor, plant to plant, I thought “uh oh” this could lead to problems.
The thing is, each of the terms in the equation is subject to interpretation. For example, when is the machine available? Should you not count certain downtimes–say for scheduled maintenance? What is quality? Actually, even what is throughput? Unless management can define those terms and enforce the measures, then the OEE number is essentially meaningless. At best it could measure performance of one machine over time–and if I were plant manager, I’d even be suspicious of that.
But like I said, if people are going to use it, at least they should try to use it well. And even then, only as one metric among several.
In fact, I just finished interviewing an SVP of Schneider Electric North America on Lean and he said something that was cool. At the end of every line is a white board. If a line is not making numbers, the barriers to making the numbers must be determined. Anyone can go to the whiteboard and write down what they see as that barrier. If it is something that can be fixed immediately, it is. If not, then it is taken to the people who can make it happen.
When I was a rookie, I was taught that accounting was “ancient history.” What this person told me, in effect, is that even “real-time” information going into an MES is really “ancient history.” The white board is the actual real time. I like that–even if I am editor of Automation World.
Hi Gary
There was no intention to diss at all. OEE triggers so many thoughts. The concern is several companies gravitate towards it as the be-all-end-all metric. It's necessary, but not sufficient on its own contrary to what some lean practicioners will argue. The focus on OEE in some cases optimizes manufacturing capabilities at the expense of the rest of the supply chain and orders might not get to the customer…companies should focus on perfect orders (right product to the customer at the right time at the right price) , not orders with good OEE. Specifically, increasing OEE might not be always necessary for profitability. The frequency of changeovers that occur in a high-mix environment might translate into a lower OEE, but if the product is sold at a premium, there could be higher margins with a lower OEE. Additionally, gains in OEE might drive some efficiency and compliance, but don't necessarily translate into significant reductions of inventory or risk, as we've seen in the life science industry (back to the suboptimization comment).
I do like that this has spurred debate. I've been presenting the hierarchy of manufacturing metrics a bit to clients lately and people are starting to come around to the fact that OEE is a panacea of sorts.
Simon
Oh, I wasn't offended, Simon. I am terrible at SEO, so just thought I'd create a little controversy. I'd like to get more comments, because I'm going to assign a writer to this topic for a future issue of AW. I need to see what's out there to discuss.
I'm also keenly interested in how people define their key metrics–and I've never heard a satisfactory answer. Drives me crazy.
We need to talk sometime. Going to RSTechEd?
Simon,
I believe you meant to say
…"and people are starting to come around to the fact that OEE is NOT a panacea of sorts" ?
John