In this article, LNS Research discusses the OEE metric in further detail, and seven common misconceptions.
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.
Our goal is to benchmark over 1,000 companies by the end of the year and make this data available to our clients through an interactive benchmark data web portal. Through this portal clients will be able to compare their performance to peers in metrics like: OEE, On Time and Complete Shipments, Successful New Product Introductions, and Cost of Quality just to name a few. The portal will also have the capability to dynamically filter results in real time across many different demographics, including: Company Revenue, Geography, Role in Supply Chain, and more.
However, we want to provide our readers a sneak peak into the data prior to the full portal launch.
Overall Equipment Effectiveness Histogram and Box Plot
The above figure contains a deep set of rich data. It shows the distribution of performance in OEE across a number of different discrete manufacturing industries. If your company is in A&D, Automotive, Semiconductor, Electronics, Industrial Equipment, or Medical Devices you can use this analysis to compare your performance against the median as well as top quartile performance in OEE. If you aren't sure how to calculate OEE you can follow this link to the OEE Formula.
As you conduct your own analysis, a few important observations to consider by industry include:
- Aerospace and Defense has the lowest median performance but also has a broad distribution with performance well above the median in the middle two quartiles. There is lots of room for improvement on average but also some impressive performance out of the top quartile.
- Semiconductor also has a low median but a much tighter distribution. As an asset intensive industry all companies could improve profits by improving asset utilization in OEE.
- Automotive is surprisingly low compared to all respondents as well as some of the other performers. There is also an impressive distribution of performers well into the top and bottom tails in performance. As with A&D lots of room for improvement among some companies.
- Electronics is dead even with the median for the overall population. However there aren't a lot of companies performing at the median, rather there are large groupings around 90% and 70%.
- Industrial Equipment is a leading company in OEE and impressively out performs other discrete industries like A&D and Automotive. An impressive share of respondents is in the top two quartiles and is performing above 90%
- Medical Devices is the real surprise of this analysis. Many people assume since it is a highly regulated industry with high margins that efficiency is low. Our analysis shows otherwise. More analysis is needed to determine why performance is so strong but our guess is that it has to do with maturity around systems managing quality and change control. Companies in this industry are at a severe competitive disadvantage if performance isn't well above the overall average.
We hope you find this data valuable from a benchmarking perspective and we are looking forward to expanding our coverage in this area over time. This data set will only grow and improve over time but we already know of no other source in the market today offering such a rich set of benchmark data on OEE.
Next Steps in Benchmark Data
As mentioned above, over the next several months we will be providing interactive drill down analysis in additional demographic areas as well as correlation analysis highlighting which Operational Excellence capabilities across people, process, and technology drives improved performance in the metrics.
However, we are still interested in your input as to what matters for your business. We are still in the process of building these analytical applications and can incorporate your feedback and/or needs. If you have ideas or requirements, please be sure to share it with us, we would love to hear about what you are working on.
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All entries in this Industrial Transformation blog represent the opinions of the authors based on their industry experience and their view of the information collected using the methods described in our Research Integrity. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.