First Pass Yield is an important manufacturing metric for measuring quality and production performance and there are many benefits to including first pass yield in the manufacturing executive's dashboard. First pass yield is a good measure of the effectiveness of a process and the elimination of waste from that process. Many other measures of productivity and efficiency fail to account for the cost of rework and in many facilities rework can be a significant portion of the time and value added to final production.

Overall Equipment Effectiveness (OEE) is an important metric for many companies' initiatives in Operational Excellence. As of September 5th, 2012 we have now benchmarked over 350 different companies across a number of different strategic objectives, metrics, and operational excellence capabilities in the areas of people, process, and technology.

If you're responsible for managing operations, the following scenario won't be new to you: You have a meeting with the executive team tomorrow and you are running around to get information on metrics for your presentation. The next day, you're expected to report on the overall performance of your plant to several department heads.

In Part 1 of this series we gave a detailed explanation of how LNS Research thinks the OEE Formula is best applied to a given asset or production line to both maximize local production efficiency as well as overall supply chain performance. In Part 2 we will go through a fictional example to start applying real numbers to all the OEE Formula terms mentioned previously. Hopefully this will help answer any questions you may have to using our OEE formula in your own plant.

In this post, part 1 of 3, we will give an overview of the OEE Formula. In future posts we will go through an example of the formula, discuss how to use it for improved decision making, and examine what the OEE Software vendor landscape looks like today.