The manufacturing industry is more competitive now than ever before. Customers are limiting their spending, yet the costs of operating and materials remain high. This is pushing companies to re-evaluate how they work and improve their levels of efficiency.
One way of measuring this is by using OEE as a Key Performance Indicator. OEE (Overall Equipment Effectiveness) has been used as a metric in manufacturing for decades to measure the overall effectiveness of your equipment.
What are the benefits to your business of tracking OEE as a KPI?
What Is OEE?
OEE measures the total economic performance of a machine, process, or entire business. This is then compared against its full potential.
It tells a business how efficiently it is working by measuring the percentage of time spent operating at a standard capacity, and the capability it has to meet customer demand.
What this does is identify any productivity gaps in processes.
Do you have too much unplanned downtime?
Is your waste higher than it should be through poor quality?
In calculating OEE, the metrics considered are equipment availability, product quality, and process performance. Together they can tell you how well your facility is performing.
How To Calculate OEE
The formula for calculating OEE is:
OEE = Availability X Performance X Quality
This refers to the number of hours that the machine has been in operation during a given cycle period. It is calculated by dividing Total Operating Hours (hours) by Planned Operating Hours (hours).
Performance rate is used as the output divided by Total Output (hours) and multiplied by 100.
The quality of the machine is calculated using the number of defects or rework divided by the total output (hours). It is then multiplied by 100 to get a percentage.
Why Should You Track OEE?
Manufacturers use OEE as a KPI to improve production. This is done by improving each of the three metrics measured.
It shows business owners where they are working efficiently and where there is room for improvement.
Businesses can also use this information to identify losses and opportunities to improve productivity.
Benefits Of Having OEE As A KPI
OEE can help you to identify areas of improvement in your business.
The only way to make your output better is to evaluate the processes you already have and see where you are not operating to your full potential.
Through gathering OEE information you can identify any problems that are costing you time and money and find a solution to increase efficiency.
Some of the benefits of measuring OEE and having it as a KPI are:
- Process improvement. By analyzing each element of OEE (i.e. availability, performance, and quality), you will be able to see how each process can be improved. For example, comparing production capacity against actual production can be indicative of a training issue or inefficient staff and/or equipment.
- Reduced downtime and maximizing productivity levels.
- Gives actual measurements of productivity. Measuring OEE takes away the need to assume how well your operations are performing. Instead, you can properly measure efficiency, giving you a better understanding of what’s working well and what needs improvement.
- Identify training opportunities for staff.
- Performance Comparison. You can also use this performance indicator to compare different equipment within a certain time frame, for example, how well new equipment is performing relative to the old equipment it was meant to replace
- Benchmarking, Tracking, and Improving. You can use OEE to determine how effective a certain department or a group of employees are on an hourly basis. For example, if you notice that one particular work center is performing well while another one is not then you can start investigating what exactly needs to be changed in order for the unsuccessful department to start performing well also.
- Increase competitiveness in the market. As mentioned above, manufacturing is a highly competitive area to be in. Measuring OEE can help businesses stay competitive by improving quality and reducing costs.
What is an OEE Dashboard?
An OEE Dashboard is a production visibility tool that displays real-time metrics in an easy-to-understand visual format.
At Freedom, we offer real-time OEE dashboards that give insights on your machine’s operations and automated data analysis.
To get started with a free trial, please fill out the form on the following page to get started.
Benefits of an OEE KPI Dashboard
There can be many different benefits to using an OEE dashboard. However, the greatest benefit is that it can save time, reduce manual tasks, and give your team time back to manage your operations. An OEE dashboard quickly provides full transparency into your operational results so you can take immediate action and drive continuous improvement.
The OEE KPI dashboard helps you monitor your business processes to ensure they are working efficiently and improving over time.
It helps fine-tune the operations of a manufacturing unit/facility.
Other benefits of an OEE dashboard are:
- Full digital transparency into your operational results
- Reducing manual tasks such as time studies and paperwork
- Help track uptime and downtime of machines
- Fully customizable digital dashboard
- No coding is required. Freedom’s dashboards offer a simple drag and drop feature
The process of calculating OEE is relatively easy, and the information it gathers can be hugely beneficial in improving your processes.
Many businesses overestimate their levels of productivity. This is because they don’t have any real figures to work with in knowing how well they are performing. They simply go by what they see happening.
Measuring OEE as a KPI allows you to see exactly how your business is performing. In turn, this lets you make the changes you need to be working to your full potential.