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Strong theory lies behind overall equipment effectiveness, or OEE, a practice that has become an integral part to total productive maintenance programs. However, extremely efficient equipment with a high OEE percentage isn't worth its salt if other metrics aren't brought into the mix. World-class OEE doesn't do any good if, say, the delivery date is missed due to logistical problems in the supply chain.
That's according to Paul Boris, director, business development, emerging solutions for IT provider SAP (www.sap.com) in Newtown Square, Pa.
"When we look at OEE as a metric, we tend to zero in on the asset; we ask how well that asset performed," says Boris. "But by definition OEE does not take into account other factors outside that equipment asset, like whether or not the product made it to the warehouse.
"This isn't to say OEE isn't significant," he adds. "It's just one component of the real-time picture of an operation."
THE BIG PICTURE
Consider an operator who finds that, by running extra parts at the end of the day, that machine will have a record week of OEE, with percentages that reflect a world-class facility. However, pushing those extra parts through may cause premature component wear in the machine (hence, maintenance costs rise), or more raw material may be used during a certain time period, also increasing costs.
Boris continues: "I could push the machine and blow right through the maintenance cycle. I'd log the highest OEE on record, but I would tear up the equipment, and now I have a big, drawn-out changeover on my hands as opposed to a normal machine cycle."
OEE equals the availability times the performance rate times the quality rate. That formula seems simple enough, at least until a plant engineer starts to dig. Different elements of OEE may mean different things to different plants, even in different facilities within the same organization.
"I feel the formula represents the academic view of OEE, yet everybody tweaks it depending on the facility," Boris explains. R&D and prototyping facilities may have very low OEE percentages, if measured just like a high-production facility. But the time spent during cycle times is extremely valuable. Such facilities may require long changeover times, which will affect the availability and throughput of that asset. Purchasing equipment that slashes the downtime with automatic tool changing may make OEE skyrocket, but it doesn't do any good if raw material isn't available to feed it, or the warehouse or loading dock can't handle the increased throughput.
He adds, "If a machine's purpose is to just churn out widgets all day long, then I can rely on OEE" as an effective snapshot of the operation. This works in high production in which the more a machine makes, the more revenue (and, hopefully, profit) that asset makes for the company.
However, this arrangement often doesn't add up, particularly with lean manufacturing gaining more of a foothold in American manufacturing. Boris explains: "In an environment where I need to schedule my asset, I may need to take more downtime on changeovers in order to get better scheduling and customer-service compliance. That impacts my availability of assets and the asset's throughput."
Domestic manufacturing's response to order changes and other unforeseen events becomes strategic to the supply chain. "In these situations, I still want good performance out of the machine," Boris explains, "but good performance out of that asset is really defined by OEE but in combination with that schedule compliance" and other variables.
"If you come to me as a plant manger at these kinds of plants and say, 'My OEE is the best as it has ever been,' my follow-up questions may include, 'Is that good or bad? How does that play in with all the other metrics?'" Put another way: Does that high OEE percentage give the most value for the customer and the most profit for the company?
MAKING THE MOST OUT OF OEE
Maximizing OEE data means that information must be integrated with plant-wide systems, including material and enterprise resource planning, Boris says.
Case in point: A supervisor realizes that to make the ship date, he will need to bring his machine operators in over the weekend and pay them time and half. On Monday, the supervisor finds that a nozzle needed for final assembly hasn't arrived from a supplier. So the ship date will be missed anyhow, and the company paid time and a half for labor over the weekend—for no reason.
On the other hand, with a solution that integrates OEE with plant- or even business-wide systems (MRP, ERP and the like), that supervisor would ideally have known about the delayed nozzle delivery and, hence, skip the weekend work.
ENTERPRISE-WIDE PLUG-AND-PLAY
An integrated system dovetails into another concept that emerged—and subsequently ebbed—during the tech boom of the late 1990s: e-manufacturing.
The term today has undergone a renaissance, evolving into a new buzzword: service-oriented architecture, or SOA. "SOA is about being able to bring assets online and offline very quickly," Boris says, "and plug them right into my enterprise." This plug-and-play characteristic will evolve from the machine level to clusters of machines within a cell—where these manufacturing assets can be "plugged" and "unplugged" among different operations. This concept, Boris says, will continue to evolve to the entire plant floor and, finally, the complete enterprise and supply chain—making the enterprise itself more "plug and play."
SOA will have dramatic effects within the industrial marketplace, he says. For instance, SOA will ultimately make business acquisition more "plug-and-play." During a traditional company acquisition, the merging of technologies and business practices, not to mention company cultures, takes months, years, or in some cases never occur (e.g., DaimlerChrysler).
Consider a successful firm that needs more capacity for making its widgets. "That company could acquire a mom-and-pop widget company that has a reputation for excellence and quality. Within weeks after the acquisition, the new parent company would 'plug in' to that mom-and-pop's IT infrastructure and reconfigure the operation to make new products. It's about knitting these different businesses together," Boris explains. "Today's world-class manufacturers are looking for ways to expand their capacity. They may contract with a company to perform the work, but they won't necessarily buy the company because (among other reasons) they can't make those connections."
In decades to come, OEE will remain a vital metric of machine efficiency, but "it will lose its importance as an individual metric," Boris believes. "What will be more important is how that OEE rolls up into the overall plant performance. Ultimately, I want to know how that asset is performing to my global objective. So if I have this facility or buy a company, and I want it to drive a certain level of market share, then it's going to be about customer responsiveness, it's going to be about shortening lead time. It will remain an important metric, but it won't be the overall way a plant gauges its performance."
Editor's Note: Artwork courtesy of SAP.