Manufacturing ERP Software
Manufacturing Processes—Production and Business: Operational Effectiveness, Part 4

Manufacturing Processes—Production and Business: Operational Effectiveness, Part 4

By Bob Sproull

Review of Operational Effectiveness, Part 3

In Part 3 of Operational Effectiveness, I demonstrated how the “six big losses” relate to our measure of equipment effectiveness and the components of availability, performance rate, and quality rate. Then I provided the formulas for how to calculate each component.

To refresh your memory, the following table is a summary of the three components of Overall Equipment Effectiveness (OEE) and a description of each loss type.

OEE Component Loss Type
  • Breakdown losses
  • Set-up and adjustment losses
Performance Rate
  • Idling and minor stoppage losses
  • Reduced speed losses
Quality Rate
  • Quality defect and rework losses
  • Start-up losses

Calculating the three components of OEE

In Part 4 of this series, I will provide examples for how to calculate each of the OEE components and explain what our results mean to us. As in the last two series of posts, much of what I will be presenting in this series of posts is taken from my second book, [1] The Ultimate Improvement Cycle – Maximizing Profits Through the Integration of Lean, Six Sigma and the Theory of Constraints.

Now that we have the formulas, how do we use them and what do they tell us?

Let’s suppose that today, your plant’s working hours are 60 min/hr x 8 hours or 480 minutes. You also have lunches and breaks, but let’s assume that you relieve your machine during these times so that you don’t lose any throughput. You have planned 30 minutes of downtime for scheduled maintenance, so your loading time is 480 - 30 minutes or 450 minutes. Let’s also suppose that you experience only 30 minutes of unscheduled equipment downtime on this day.

Your availability on this day is:

Availability = (Loading Time – Downtime) / Loading Time
= (450 minutes – 30 minutes) / 450 minutes
= 0.9333 or 93.33 %

Now let’s look at performance rate. Assume that your output on this day is 360 parts and that your actual cycle time is 0.8 minutes per part. Also assume that your ideal cycle time is 0.7 minutes per part.

Your performance rate is:

Performance = ((Output x Actual Cycle Time) / (Loading Time – Downtime)) x (Ideal Cycle Time / Actual Cycle Time)
= ((360 parts x 0.80 minutes/part) / (480 min – 30 min)) x (0.7 min/part / 0.8 min/part)
= 0.640 x 0.875
= 0.560 or 56.0 %

Now let’s look at your quality rate. We know that you are producing a total of 360 parts today, but let’s suppose your defect rate is 2%. So you actually produce 353 parts that are acceptable.

Your quality rate is:

Quality Rate = Number of Good Parts / Total Parts Produced
= 353 parts / 360 parts
= 0.981 or 98.1 %

So how are you performing from an OEE perspective? OEE is the product of these three components, so let’s calculate it:

Your OEE is:

OEE = Availability x Performance Rate x Quality Rate
= 0.9333 x 0.560 x 0.981
= 0.5127 or 51.3 %

So how did you perform? The answer is coming in the next post

In the next post, I will answer this question from our OEE example and explore ways we can positively impact each of the individual components of OEE for improved operational effectiveness.

Until next time.

Bob Sproull

Post References:

[1] Bob Sproull, The Ultimate Improvement Cycle – Maximizing Profits Through the Integration of Lean, Six Sigma and the Theory of Constraints, CRC Press, Taylor & Francis Group, 2009

[2] Seiichi Nakajima, TPM Development Program – Implementing Total Productive Maintenance, Productivity Press, 1989

Bob Sproull

About the author

Bob Sproull has helped businesses across the manufacturing spectrum improve their operations for more than 40 years.

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