What would a 1% improvement in OEE mean to your company?

Most companies will achieve a significant increase of 10% or more after implementing Idhammar's OEE System. However, to assess what this might actually mean, we will examine what an increase of just 1% might mean to the bottom line.

Imagine a factory where a particular production line experiences 2.5 hours down time during 10 hours of planned production time; this would give us an availability figure of 7.5/10 hours or 75%.

At the same time the line, capable of a cycle time of 1000 pieces an hour, is only producing at 70% of its rated output.

Supposing that 250 of the products are rejects, the resulting quality element is equal to 95.24%.

Click on OEE table 1 to the left, to see OEE score table.

Separately we may not regard each element as too significant, but together they result in an OEE of 50%, or half of what should be expected, giving rise to 50% potential for improvements.

Working further on this example we would then need to address the two weaker elements, firstly the major breakdowns which appear to result in low availability, and secondly the causes of the poor performance rate. We must however, take care not to reduce the high quality in our efforts to improve slow running.

It will be useful to add at this point, (at least to reassure manufacturing engineers), that accurate performance measurement with OEE should also be used to uncover the issues behind each loss. Significant interruptions to production are just as likely to be the result of waiting for raw materials or changeovers as equipment breakdown. Frequently People or Process issues are quicker and cheaper to resolve than equipment re-designs.

The 1% Effect

Using the example above, let's make some assumptions to illustrate the savings which could be made with just a 1% improvement to the OEE score.

• Planned production time is 10 hours
• Planned output is 1000 units per hour
• Price per unit is 5

Click on OEE table 2 pdf (above, left) to see 1% Effect figures.

A 1% improvement has generated 525 € for this shift.

That's 7,560€ for a typical 24 hour shift, 6 day operation.

And it's 393,120 € of potential savings in a year...for just a 1% improvement.

Now just imagine what the company would achieve with a 10% improvement, the realistic figure we expect to see in the first 3 months of introducing an OEE system.

Beyond Spreadsheets

Companies who recognise the value of OEE usually begin with a simple spreadsheet for each production line. This approach enables the company to understand how OEE works and certainly generates the graphs required by production offices. However this approach is limited to a superficial level due to the following limitations:

1. Data handling - the more complex the process, the greater the number of lines/plants/sites the more complex and time-consuming the data handling becomes. It is not unusual to find manufacturing efficiency spreadsheets for OEE or other metrics that, printed out, could provide wallpaper for an entire room!
2. Manual reporting - spreadsheet-based reporting is yet another step in the process that can be complex to manage and requires more time to complete. Errors can also easily creep in.
3. Limited functionality - spreadsheets are not easily open to drill down, interrogation or analysis.

Companies who are serious about continuous improvement and lean manufacturing quickly out-grow their spreadsheets. To make the most of OEE, Idhammar provides a powerful dedicated OEE System.