Overall Equipment Effectiveness (OEE) has been discussed a lot in the LNS Research blog from both an Asset Performance Management (APM) and a Manufacturing Operations Management (MOM) perspective. This time I thought I’d explore OEE as a quality metric since nearly a third of our Quality survey respondents ranked it as a key metric (third only behind customer complaints and on-time delivery).We have cautioned users about using it incorrectly as well talking about how to correctly calculate OEE. We have also exposed some of the key myths around using OEE. Yet we still see OEE as a very important metric and obviously popular among respondents to the Quality survey, so it warrants further discussion.
OEE is calculated as the product of availability, performance, and quality. Availability is traditionally thought of as an asset performance metric while productivity is generally considered a key operations metric. Quality is obviously the quality metric. In OEE quality is defined as a percentage calculated by dividing the number (or quantity) of good units produced by the total number (or quantity) of product started in the manufacturing process.
Matt Littlefield’s blog post from February 2013 pointed out that businesses that have an Enterprise Quality Management System (EQMS) achieve better OEE numbers than those that do not. Much of this can be attributed to the phenomenon observed by quality and performance improvement guru H. James Harrington, “Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”
There are a number of factors that influence quality on the plant floor. Some of them are related to the manufacturing environment and some are supply chain related. Clearly, if raw materials do not meet quality specifications producing quality finished goods becomes a far more difficult task, if not impossible. While ensuring the quality of the incoming raw materials is not a direct operational activity, verifying that only quality checked and conformant products are introduced into the manufacturing process certainly is. Ensuring other operationally related activities that directly impact quality include:
Just as there are direct linkages between operational performance and quality, so too do these exist between asset performance and quality. Production assets that are operating outside their normal parameters due to malfunctions, misalignment, or outright failure cannot be expected to produce goods that meet quality specifications. A machine tool that has excessive play can’t possibly hold tolerances just as a process reactor that cannot maintain proper temperatures or pressures cannot produce quality products. This is why asset performance is so closely linked to quality.
If an asset needs to be frequently shut down for repair or adjustment due to maintenance issues, there is likely a negative impact on quality as well. Quality production is more readily maintained during steady-state operation. Startup or shutdown cycles produce greater product variability, further reducing quality. Likewise raw materials introduced into the manufacturing process that far exceed normal design parameters can cause equipment damage. Trying to stamp a 3 mm piece of sheet metal in a machine with a 2.5 mm capacity will likely lead to breakage, sooner if not later. Another case would be where operationally a machine is operated at pressures or temperatures that are too high due to poor operational work instructions. Maintaining process quality is important.
OEE is the product of these three variables. All three are closely interrelated and, to some degree, dependent on each other. The failure of any one will cause a drastic effect on OEE. This is one of the reasons we hold the position that Operational Excellence requires the balancing of quality, asset performance, operations and energy management and EHS. A poorly performing asset will not only directly impact availability, it will also indirectly impact both quality and productivity. Since poor quality or operational issues can impact asset reliability this becomes a cascading problem that can quickly lead to disastrous results.
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