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, [1] 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
Availability	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

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:

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

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