Improving Manufacturing Performance with a Few Simple Numbers

Business leaders are constantly in search of data regarding their business. Manufacturing professionals especially value so-called "hard" business data as a means of completely understanding and separating profitable operations from unprofitable ones. In today's Information Age, there seem to be as many different ways of measuring manufacturing performance as there are types of equipment in the manufacturing industry.

Efforts to measure what a machine or work center is doing, however, sometimes obscure what is not being done, lost opportunity that if corrected would yield significant returns and may only require little investment. But how can "lost opportunity" be measured, let alone understood? Fortunately there is one metric that concisely and easily communicates multiple opportunities in a comprehensive manner - OEE.

OEE is an acronym for Overall Equipment Effectiveness. OEE is expressed as a percentage, with 0% representing no effectiveness and 100% the equivalent of manufacturing perfection. The OEE calculation is the product of three other percentages - one each for Availability, Performance, and Quality. The formula

can be written like this:

(A%) x (P%) x (Q%) = OEE%

Implemented properly, OEE is an ideal indicator of an area's current work rate compared to its absolute potential and drives focus to the areas of greatest opportunity. Understanding and implementing OEE requires a thorough understanding of its three basic elements.

Availability: Work center Availability essentially measures the amount of time the machine was in use, compared to the time it should have been in use. An important (and somewhat confusing) component of Availability is Net Operating Time. What is Net Operating Time? It is the time left after subtracting