Overall equipment efficiency (OEE) is a method developed by JIPM that identifies manufacturing production losses in availability, yield rates, and quality rates. It provides loss data and improvement opportunities to reduce losses, optimize performance measures, and produce quality products. OEE measures common machinery and processes to indicate maximum utilization of current equipment and reduce bottlenecks. It analyzes equipment effectiveness to reduce manufacturing problems and waste, and improve product quality. The three categories of OEE are availability, rates of return, and quality rates.
Overall equipment efficiency (OEE) is an analytical method, developed by the Japan Institute for Plant Maintenance (JIPM), that produces transparency for possible manufacturing production losses in three categories: availability, yield rates, and quality rates. As a tool, OEE provides loss data and also indicates improvement opportunities that reduce losses in a lean manufacturing style to improve operating margins, optimize competitive performance measures that enhance company reputation, and produce product quality that yields a good return on investment. Using metrics that indicate production effectiveness, it can provide comparison values across different production types and products to elaborate on not only what improvements should be made, but how much the improvements will help bottom line.
By measuring and analyzing common machinery and processes, OEE indicates the maximum actual utilization of the current operational equipment in use and may discourage investment in more machinery. Making changes to how current equipment is used can remove bottlenecks, put excess capacity utilization, and prevent lost downtime. Comprehensive analysis of equipment effectiveness is invaluable in reducing seemingly complex manufacturing problems to simple informative presentations of options for improving each ongoing process. It effectively puts in the hands of management the measures they need to manage and, together with other lean manufacturing programs, can reduce waste in many areas and produce higher quality products as a result.
The first of the three categories, availability, is the reliable availability of scheduled production 24 hours a day, seven days a week, 365 days a year. This metric is uptime, accounting for lost downtime, and its formula is availability equals uptime divided by planned production time. Starting from obvious locations of bottlenecks in the line or bottlenecks, the overall effectiveness of the equipment is able to detect metrics there with which to compare with identical or similar machines and examine their maintenance records, apply multiple support systems to machine or increase the frequency of revisions.
The second of the categories is represented by rates of return. This factor represents the operating speed of a production work center as a percentage of its designed speed. It takes into account speed losses and its formula is calculated when performance is equal to the pieces produced multiplied by the ideal cycle time divided by the available time. In this calculation, the ideal cycle time is a minimum cycle time that a process can expect to achieve, and performance is limited to 100%. If breaks scheduled by operators leave machines idle, breaks may be staggered and employees shuffled so that no machine is ever idle.
The third and last of the three categories of overall equipment effectiveness are quality rates, the number of good units produced out of the total number of units sent for production. This is a process yield, and here sensitivity analysis can indicate the recommended measures of change. Product quality can be an opportunity for the greatest return on business, so improving the proportion of good units and reducing scrap can improve profits and the company’s reputation.
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