Review of Operational Effectiveness, Part 2
In Part 2 of this series, I described the remaining five of the “six big losses” which limit equipment effectiveness in a manufacturing environment. Following breakdown losses, which I explained in Part 1, they were setup and adjustment losses, reduced speed, idling and minor stoppage losses, quality defect and rework losses, and startup (yield) losses.
How to measure availability, performance rate, and quality rate
In Part 3 of this series, I will show how these six losses relate to our measure of equipment effectiveness and the components of availability, performance rate, and quality rate.
I will then show you how to measure these three components. 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,  The Ultimate Improvement Cycle – Maximizing Profits Through the Integration of Lean, Six Sigma and the Theory of Constraints.
What’s the connection between components and types of loss?
So how do these six losses relate to our measure of equipment effectiveness and the components of availability, performance rate, and quality rate? Perhaps even more importantly, how do we measure these three components? The table below summarizes the six losses and provides us with the answer to the first question.
|OEE Component||Loss Type|
Formulas for calculating our components
Overall Equipment Effectiveness (OEE) is the product of the Operating Rate (OR, or Availability), the Performance Rate, and the Quality Rate. The formulas for each of these three components are:
Availability = (Loading Time – Downtime) / Loading Time
Loading Time = Total Time = Scheduled Time – All Planned Downtime
Note: Planned downtime includes time allotted for preventive maintenance, breaks, lunches, scheduled meetings, and any other routines during which the machines are non-operational.
Performance Rate = ((Output x Actual Cycle Time) / (Loading Time – Downtime)) x (Ideal Cycle Time / Actual Cycle Time)
Output = Total Product Produced
Actual Cycle Time = Total Run Time / Total Product Produced
Ideal Cycle Time = Planned Cycle Time
Quality Rate = Number of Good Parts / Total Parts Produced
Number of Good Parts = Number of Parts Produced – (Startup Defects + Process Defects + Trial Products)
Now that we have these formulas, how do we use them and what do they tell us?
Coming in the next post
In the next post, I will provide an example to demonstrate how we calculate each of the three components of OEE and then discuss what these calculations mean to us.
Until next time.
 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
 Seiichi Nakajima, TPM Development Program – Implementing Total Productive Maintenance, Productivity Press, 1989
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