reason to begin its own gold rush.
For change to take place, everyone in the work community must recognize the consequences of the current path. Without improvement, a serious crash will happen. And in today’s competitive environment, everything happens faster. Everyone must recognize the difference between “continuing as is” (the base case) and “what could be” if high OEE and TEEP levels existed,.
The next two chapters explain how the definitions categorize every minute of calendar time, how the three methods of computing true OEE reconcile, and how true OEE correlates to Operating Income (Earnings Before Interest and Taxes, EBIT) and Return On Assets (ROA). After understanding that each method reconciles to the same OEE, and that the hidden factory can be identified easily, your next step is to determine the size of the opportunity for your plant or work area. Even a small increase in OEE leverages a bigger increase in operating income.
A detailed analysis will bring into focus the areas where opportunities for major improvement exist. At that point, a broad range of tools and methods can be applied to these clearly defined targets. Be creative in developing solutions. Do not limit your vision to only internal resources. Think about bringing in people from other departments and disciplines as well as outside resources. In all cases, be sure to work from good data. Verify your actions with statistically designed experiments. The most important aspect is to get started now. Improved benefits will only be realized after changes are implemented. Every day counts.
Companies and factories often approach new processes by identifying a pilot area. In the selected area, they test and develop methods before applying the process to other areas or plants. This approach has a number of pitfalls relative to an aggressive OEE strategy. Most change involves educating the specific work center about the metric, collecting and analyzing information, and forming cross-functional teams to work on the major limiters. The experience of the pilot group is not easily transferred to other areas. Furthermore, if the pilot area is not of key importance to the plant or overall process, it may not get the resources and attention it needs to be completely successful.
Aggressive OEE strategy should be launched in conjunction with the five steps of constraint management methodology described by Eliyahu Goldratt in Critical Chain7.
1.The strategy should be implemented as a plant or factory objective using the prioritized list of bottleneck assets (Identify).
2.The strategy should focus the resources and the initial program on the top ranked bottleneck (Exploit).
3.All other areas of the plant should not only be informed of the key equipment OEE goals. They should also be supportive of the prioritized list and serve the key assets accordingly (Subordinate).
4.The selected bottleneck area should incorporate all necessary changes for high OEE (Elevate).
5.When this area is successful, the next prioritized key asset should implement the new methods, insuring that the greatest benefits are achieved quickly (Go Back).
Many companies have achieved tremendous improvement by launching such a strategy, including Reynolds Metals Company, as outlined in the June 1998 issue of Reliability magazine8. Reynolds Metals embraced a new process it called “Total Productive Manufacturing.” This process refocused its manufacturing at the plant level, from “Mission/Vision” all the way to best practices on the shop floor. Measuring its own progress was a vital part of the process of change. The backbone of these measures was OEE improvement.
*The word ‘factory’ can be replaced by ‘refinery’ throughout this book.
References:
1. Nakajima, Seiichi. Introduction to TPM: Total Productive Maintenance. Cambridge, Massachusetts: Productivity Press, 1988.
2. Allen, F. “How Do You Make Paper Clips?.” American Heritage of Invention & Technology, Volume 14/number 1, (1998): page 6.
3. Pray, Tom. “Decide II Simulation: A Full-enterprise Business Simulation.Tom Pray,” Rochester Institute of Technology, New York (1999).
4. Shingo, Shigeo. A Revolution in Manufacturing: The SMED System, Cambridge, Massachusetts: Productivity Press, 1985.
5. Moubray, John. Reliability-centered Maintenance. 2nd Edition, New York, New York: Industrial Press, 1997.
6. Cox III, J., Spencer, M. The Constraints Management Handbook. Boca Raton, Florida: The St. Lucie Press, 1998.
7. Goldratt, Eli. Critical Chain. Great Barrington, Massachusetts: The North River Press, 1997.
8. Holt, F., E. Myers, R. Underwood, and others. “Building and Sustaining Total Productive Manufacturing At Reynolds Metals Company.” Reliability Magazine Volume 5 Issue 2, (June 1998): pages 4-12.
LEARNING THE BASICS OF OEE METRICS
2.1 Definitions of OEE Categories
This chapter introduces definitions of OEE categories, a sample production report, summary results with OEE calculations, and a reconciliation of the various OEE results and losses. The categories that follow are suggested as a basic set for nearly every key manufacturing area. The purpose of the categories is to provide enough detail to focus priorities and reveal areas of major opportunity. All events must be categorized without using categories such as “miscellaneous” or “other.” At the same time, the categories should not be so detailed that they are overwhelmed by too much incremental information. Larger processes should accumulate information for each key step.
The categories should allow the company to identify its opportunities in a reasonable time frame. They should also form the baseline for detailed analysis. Using common categories enables a company to benchmark similar areas both internally and externally. To be successful at benchmarking, all events must be categorized; total reconciliation is then supported and credibility is maintained. More discussion on benchmarking can be found in section 8.10.
A sample product report of the important categories follows in section 2.3. This report, which covers a production period of 40 hours, looks at a full range of problems and includes a log sheet that categorizes the various events. A suggested report is attached along with the TPM (Nakajima) OEE formulas1 and three methods of computing OEE. Regardless of the approach used, the OEE and various Loss percentages should total 100 percent.
Key Definitions: