OEE for Process Improvement

1. How the use of OEE
can drive Operations
Excellence
Edward Brown
April 24, 2009 1

2. OEE for Process
Improvement Topics
Process Improvement
 Process Improvement
Why OEE?
The Science of OEE  Why OEE?
Guidelines
 The Science of OEE
The Technologies
The Culture of OEE  Guidelines
 The Technologies
 The Culture of OEE
April 24, 2009 2

3. OEE for Process
Improvement Processes for Improvement
Process
Process Improvement
Improvement Which of the following Improvement Initiatives is in
Why OEE? place, or formally planned to begin within 6 months, at
your company?
The Science of OEE
 Recent survey of executives
 85% - Asset Utilization or OEE Improvement
Guidelines
 61% - General Continuous Improvement
The Technologies  54% - Six Sigma
 46% - TPM
The Culture of OEE  38% - Lean Manufacturing
 38% - Predictive Maintenance
 8% – Other: Software Integration
April 24, 2009 3

4. OEE for Process
Improvement Making Process Improvement Work
Process
Process Improvement
Improvement The Processes only work when you have:
Why OEE?  Awareness
 Knowing what to measure
The Science of OEE
 Knowing how to measure it
Guidelines
 Knowing what’s important
The Technologies  Accuracy
The Culture of OEE
 Measurements in context
 What’s included
 What’s excluded
 Responsibility
 Actionable Issues Assigned
 Empowerment
 Follow-Up
April 24, 2009 4

5. OEE for Process
Improvement How well do you know that KPI?
Process
Process Improvement
Improvement Existing KPIs May Be Inadequate
Why OEE?
Failing to recognize the limitations of the existing plant
The Science of OEE
performance measurement system.
Guidelines
 What is included?
The Technologies
 What is excluded?
The Culture of OEE
 Standard across areas or plants?
 How are Management incentives structured?
 Is Management more concerned with reporting a high efficiency
value rather than focusing on improvement?
April 24, 2009 5

6. OEE for Process
Improvement Can We Believe Our Numbers?
Process
Process Improvement
Improvement How efficient do you think Most of these companies
Why OEE? your plant is? are really operating at only
Many mfg companies 30-60% of their true
The Science of OEE
believe they are 80-90% potential as measured by
Guidelines efficient Overall Equipment
 Andthey are… the way they Effectiveness (OEE)
The Technologies
have come to measure  85% OEE is “World Class”
The Culture of OEE themselves.

7. OEE for Process
Improvement The Way of OEE
Process Improvement
 OEE Identifies and Organizes KPI’s
Why OEE?
Why OEE?
 Equipment – Downtime, Speed, Quality
The Science of OEE  Materials – Availability, Quality
Guidelines  Labor – Availability, Speed, Quality
The Technologies  Ability to Measure or Compare at any Level
The Culture of OEE  Specific Machine or Working Cell
 Line or Group of Machines/Cells
 Production Area or Plant
April 24, 2009 7

8. OEE for Process
Improvement Why OEE?
Process Improvement Overall Equipment Effectiveness Provides a
framework for Manufacturing Process Improvement
Why OEE?
Why OEE?
 New Product Development
The Science of OEE
 Product Changes
Guidelines
 Reducing Non-Value Added operations
The Technologies
 Developing Equipment Maintenance Strategies
The Culture of OEE  Equipment Reliability Practices
 Personnel Training Effectiveness
 Improved Root Cause Analysis
 Improving Limiting Constraints
April 24, 2009 8

9. OEE for Process
Improvement Unlocking Your Inner Super Plant
Process Improvement
OEE can be used by Teams to unlock “Hidden
Why OEE?
Why OEE?
Capacity” found in almost every plant
The Science of OEE
OEE Savings Benefits
Guidelines  Reduce Capital Expenditures
 Justify Capital Expenditures
The Technologies
 Reduce Labor Costs
The Culture of OEE  Reduce Scrap and Rework
 Reduce Inventory Costs
April 24, 2009 9

10. OEE for Process
Improvement The Gold Standard
Process Improvement
Overall Equipment Effectiveness is becoming the de-
Why OEE? facto standard for measuring the efficiency and
capability of production processes with consistency
Science of OEE
The Science of OEE
Guidelines OEE Measures Three Critical Factors:
The Technologies Availability – Whether equipment, material, and
personnel are available for production
The Culture of OEE
Performance – Whether equipment and personnel
are performing to their capacity
Quality – Whether the product is being produced
correctly the first time (first pass yield)
April 24, 2009 10

11. OEE for Process
Improvement Capturing the TPM “Six Big Losses”
Process Improvement
OEE
Major Losses Notes
Why OEE? Category
Science of OEE Major There is flexibility on where to set the
The Science of OEE
Breakdowns threshold between a Breakdown
Availability Loss
(Availability Loss) and a Short Stop
Guidelines
(Performance Loss).
The Technologies Setup and
Availability Loss Includes changeovers.
Adjustments
The Culture of OEE Short Typically only includes stops that are
Performance
Stops/Idling under 5-10 minutes and that do not
Loss
require maintenance personnel.
Causes preventing the process from
Performance
Reduced Speed running at its theoretical maximum
Loss
speed (minimum cycle time).
Bad products during warm-up, startup
Startup Rejects Quality Loss
or other early production.
Production Bad Products during steady-state
Quality Loss
Rejects operation.

12. OEE for Process
Improvement In A Perfect World
Process Improvement
A line with an OEE of 100% runs
Why OEE?
 All of the time it is scheduled
The Science of OEE
The Science of OEE
Guidelines
 No time loss for Changeovers, Cleaning, Breakdowns
The Technologies
 Always runs at the full rated speed
The Culture of OEE
 No short stop failures
 Has a 1st pass Yield of 100%
April 24, 2009 12

13. OEE for Process
Improvement OEE – More than a Number
Process Improvement
Why OEE? OEE = Availability * Rate * Quality
The Science of OEE
The Science of OEE
Example: (.77)*(.65)*(.98)*100% = 49% OEE
Guidelines
OEE Element Components
The Technologies
The Culture of OEE
98% yield alone
is not enough
Availability Actual runtime / Available time
Production Rate Total production (good & bad) / theoretical
limit
Quality Good quantity / Total quantity
April 24, 2009

14. OEE for Process
Improvement World Class OEE
Process Improvement OEE = 85% is “World Class”
Why OEE?
 Very challenging for a company to operate at
this level when OEE is measured accurately.
The Science of OEE
The Science of OEE  We don’t see production lines that are
operating at 85% OEE
Guidelines
 But… we have seen lines operating in the 20 –
The Technologies 30% range!
The Culture of OEE
OEE Factor World Class
Availability 90.0%
Performance 95.0%
Quality 99.9%
Overall OEE 85.0%
April 24, 2009 14

15. OEE for Process
Improvement Reality Check
Process Improvement
 Majorityof Plants operating at 30 to 40%.
Why OEE?  Day to day variation can be +/- 15% or more
 Scheduling deviations
The Science of OEE
The Science of OEE  Labor overtime
 Inventory accumulation
Guidelines
The Technologies World Class Pharma OEE
The Culture of OEE Number of SKU's OEE
Low SKU Count (1-2) 83%
Medium SKU Count (3-5) 80%
High SKU Count (6-12) 73%
Very High SKU Count (> 20) 63%
April 24, 2009 15

16. OEE for Process
Improvement Overall Suggestions
Process Improvement If you can’t measure it, you can’t (won’t) improve it!
 Use OEE measurements as part of Process Improvement
Why OEE?
program
The Science of OEE
Create Downtime Reasons that are Meaningful
Guidelines
Guidelines  Machine Codes and Ad Hoc entries are a poor foundation
The Technologies Set performance targets at achievable levels
 When was theoretical ever reached?
The Culture of OEE
Develop an ability to calculate an Accurate Measure of
the true capability of a production line
 Include all significant losses
Develop a written factory performance spec that
precisely defines what is included, excluded, and
special cases.
 To compare other plant/lines, all OEE measurements must be
made in same way
April 24, 2009 16

17. OEE for Process
Improvement Divide and Conquer
Process Improvement
Set separate Improvement Targets for:
Why OEE?  Availability
 Performance
The Science of OEE  Quality
Guidelines
Guidelines
The Technologies
The Culture of OEE
April 24, 2009 17

18. OEE for Process
Improvement Set Separate Goals
Process Improvement  Reduce Availability Losses by 10-50%
on time basis
Why OEE?
The Science of OEE  Reduce Performance Losses by 5-20%
on time basis
Guidelines
Guidelines 25
The Technologies  Quality Improvement will vary depending 20
on the process and industry (0.5%?)
The Culture of OEE Defect Loss
Hours
15
Perf Loss
 Improve OEE by 5-10% per year (or Avail Loss
more) 10 Sch'd DT
Run Time
5
0
Line Line Line
1 2 3
April 24, 2009 18

19. OEE for Process
Improvement Return on Investment
Process Improvement
Baseline with 66.5% OEE
Why OEE?
19 cases/minute/line 18,194 cases/day/line
The Science of OEE
$ 14.00/case (wholesale) $ 254,722 day/line
Guidelines
Guidelines
Before After
The Technologies Availability 80% 85%
The Culture of OEE Performance 84% 86%
Quality 99.0% 99.2%
OEE 66.5% 72.5%
Revenue Improvement:
+1,641 cases/day or $22,974/day
$8.3 million/year

20. OEE for Process
Improvement Key Technologies
Process Improvement
 Automated Downtime
Why OEE?  Machine Downtime for emergency and short-stops
 Labor Tracking for personnel operation timing
The Science of OEE
 Structured Downtime Reason Trees
Guidelines
 Categorized by product/operation/machine
The Technologies
Technologies  Drill Down Capability for Root Cause Analysis
 Basis for Process Improvement Charts
The Culture of OEE
 Automated Production Counts
 First Pass Yield Counts
 Rework Counts
April 24, 2009 20

21. OEE for Process
Improvement Automated Downtime
Process Improvement
Relying on Manually Collected Data
Why OEE?  Entry errors
 Significant effort to collect and analyze
The Science of OEE
Guidelines Making decisions based solely on Manually
The Technologies
Technologies
collected Downtime data
 Isnotoriously unreliable.
The Culture of OEE
 Are all hours of the day accounted for?
 Does it match up with actual product produced?
 Can it account for all the short stops occurring on a
typical line (most lines have 1,000 or more short stops /
week).
April 24, 2009 21

22. OEE for Process
Improvement OEE Without Automation?
Process Improvement
Why OEE?
Inaccurate
The Science of OEE
Availability Data
Guidelines
Inflates OEE
The Technologies
Technologies Incidents Total time
The Culture of OEE Manual Phantom
Average Manual Automated
Downtime (Before) (After)
Incidents 12 140
Duration
15 <2
(minutes)
*Theoretical based on
Total time 180 280 95% quality & 95%
OEE* 79% 73% performance

23. OEE for Process
Improvement Operator Input is Important
Process Improvement
Selectively involve the operator….
Why OEE?  Automate collection of OEE and the supporting downtime data
so that good decisions can be made regarding actions that will
The Science of OEE
improve OEE.
 Time and again, clipboard data collection for OEE and Downtime info
Guidelines
has proven to be of little value
The Technologies
Technologies  Operators don’t time themselves
 Operators can’t perceive the effect of repetitive problems
The Culture of OEE  Changeover vs. shift change example
 But, do not limit yourselves to the automation layer
 Can not always provide root cause
 Downtime reason selection by Operator IS powerful
April 24, 2009 23

24. OEE for Process
Improvement Structured Downtime Reasons
Process Improvement
Why OEE?
The Science of OEE
Guidelines
The Technologies
Technologies
The Culture of OEE

25. OEE for Process
Improvement Downtime Reasons and Drilldown
Process Improvement Monthly to Current
Downtime
Why OEE?
25
The Science of OEE 20
15
10
Guidelines 5
0 Line Stop Incidents
Equip Planned Line Stop Rejects
The Technologies
Technologies Down Maint
10
8
Shift 1 Shift 2 Shift 3
The Culture of OEE 6
4
Transfer Errors 2
0
Raw Transfer Quality
Material Error Hold
20 Shortage
15
10
5
0

26. OEE for Process
Improvement Automate Production Counts
Process Improvement
Collecting production counts is simple, effective
Why OEE? means to determine First Pass Yields
The Science of OEE
Counting Rework cycles for an item more difficult, but
Guidelines can make dramatic improvements in Quality
The Technologies
Technologies
The Culture of OEE
April 24, 2009 26

27. OEE for Process
Improvement Eight Key Elements of Process Improvement
Process Improvement
 Management involvement to set the Business
Why OEE?
Objectives and maintain program focus.
The Science of OEE  Ability to accurately measure productivity in Real-time.
 Ability to accurately capture detailed reasons for
Guidelines
efficiency losses, for corrective actions.
The Technologies
 Assign Responsibility to Issue Champion
Culture of OEE
The Culture of OEE  Empower Issue Champions to Solve Problems
 Ability to selectively involve the Operators.
 Web Reporting for easy distribution of current
performance to all parties.
 Maintain Issue and Resolution Histories
April 24, 2009 27

28. OEE for Process
Improvement There’s No “I” in OEE
Process Improvement Achieving RESULTS requires participation of the entire
Why OEE? team.
 Get Operations, Production, Maintenance, Engineering, and Quality
The Science of OEE on board right from the beginning.
Guidelines
The Technologies
Culture of OEE
The Culture of OEE
April 24, 2009 28

29. OEE for Process
Improvement Conclusion!
Process Improvement
Improved Productivity and Asset Utilization…
Why OEE?  Always result in savings that drop right to the Bottom Line
(earnings)
The Science of OEE
 Always result in Reduced Capital Expenditures
Guidelines  In Good Times, unleashes unused capacity, so volume can
ramp up without requiring major investment in more
The Technologies plants, equipment, and employees.
Culture of OEE
 In Bad Times allows plants to:
The Culture of OEE
 Cut back to only those shifts that are necessary
 Reduce overtime expenditures
 Reduce waste
 Identify and sell under performing assets, reducing
depreciation and maintenance costs.
April 24, 2009 29

30. OEE for Process
Improvement Conclusion!
Process Improvement
Improved Productivity and Asset Utilization…
Why OEE?
 Provides Data to make Suppliers more Accountable
The Science of OEE  EquipmentSuppliers
 Consumables / Raw Materials Suppliers
Guidelines
The Technologies
 Gather Hard Data related to equipment performance.
Culture of OEE
The Culture of OEE  Identify equipment problems.
 Justify Capital Improvements or Asset Reductions.
 Motivate Operators and Maintenance Team
 Drive Uniformity in Plant Scorecard calculations.
April 24, 2009 30

31. Questions?
Web Site: www.AvidSolutionsInc.com
Contact Information:
Ed Brown – 919.468.4334 x221
Eric Mayer – 919.468.4334 x202
April 24, 2009 31