We’ve finally arrived at the third leg of the Overall Equipment Effectiveness (OEE) journey: product/output quality. At this point, if we’ve been calculating the first two components of OEE correctly, we should have accurate measures of equipment availability and the performance of that equipment when it’s operating, which is typically expressed in terms of total output.
By themselves, the first two measures of OEE provide important insight into the impact of your maintenance operations on the overall performance of the company. But they are incomplete without an understanding of product/output quality, which plays a major role in customer satisfaction, revenues, etc.
In OEE, quality is calculated as:
Quality = Good Pieces / Total Pieces
As with equipment performance, quality is easiest to measure in manufacturing settings where physical products are being produced. But this does not mean businesses or organizations that provide services need to be left out—it just takes some creative thinking to come up with ways to measure the overall quality of the services you provide (measuring in terms of positive reviews or customer complaints and tying those back to equipment performance are a good start).
In ManagerPlus, a separate cycle count for quality can be set up in much the same way we described in our earlier entry on performance. If you already have a cycle count set up for total output, all you have to do is add another for the number of rejected pieces and you’re all set—simply subtract the latter from the former and divide the result by the total output.
The key with OEE is to bear in mind that all three components—availability, performance, and quality—need to be in balance with one another. As this oee.com guide points out, few companies would accept a substantial increase in availability if it meant that quality declined in equal measure.
Great, so now you know how to calculate OEE, the question now becomes, where do you start implementing it? The oee.com guide suggests selecting an area in your company in which to begin your test, and then finding a bottle neck in the production process to perform your cycle counts.
Once you’ve implemented these measures, you can start to check your numbers against the world class benchmarks:
Overall OEE: 85.0% (remember, OEE = Availability x Performance x Quality)
Don’t panic if your numbers don’t initially measure up—these are world class benchmarks. Studies indicate the average overall OEE for most manufacturing plants sits in the 60% range.
You can’t improve what you can’t measure, so just by adding these OEE measures to your operational review process, you’ve taken a major step in the right direction. Once you’ve got that locked down, you can start to prioritize your initiatives.
From there, systems like ManagerPlus provide the operational flexibility to implement these initiatives. Since OEE is an equipment-centered measure, it is closely related to your maintenance routines. If you’re not currently using a CMMS system, implementing one should be your first priority before pursuing OEE measurement and improvement.
Have any questions about OEE, CMMS, maintenance, or equipment optimization in general? Be sure to let us know!