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Consider the Downside of OEE

There's a great deal wrong with OEE OEE Overall Equipment Effectiveness
OEE Office of Energy Efficiency (Canada)
OEE Overall Equipment Efficiency
OEE Office de l'Efficacité Énergétique (Office of Energy Efficiency - Canada) 
 (overall equipment effectiveness The introduction to this article provides insufficient context for those unfamiliar with the subject matter.
Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page.
). OEE comes up short as an equipment management device, and is poorly cast as a centerpiece of total productive maintenance (TPM (1) See TP monitor.

(2) (Transactions Per Minute) The number of transactions processed within one minute. See TPS.

(3) (Trusted Platform M
). Moreover, linking OEE to lean is perverse.

The OEE calculation, by now well known, is: availability rate times production (or efficiency) rate times quality rate. The first two elements, availability rate and production rate, are in conflict with lean's essence: Produce/deliver just what the next process requires.

In most industries, the next process wants variety, which lean provides primarily through quick changeover. Managers know just what to do to achieve high availability Also called "RAS" (reliability, availability, serviceability) or "fault resilient," it refers to a multiprocessing system that can quickly recover from a failure. There may be a minute or two of downtime while one system switches over to another, but processing will continue.  and OEE scores: Go for fewer time-consuming changeovers. That means longer production runs and more units than needed at next processes, requiring storage of the excess. Lean loses.

Lean expert Michael Baudin points to another demerit de·mer·it  
n.
1.
a. A quality or characteristic deserving of blame or censure; a fault.

b. Absence of merit.

2. A mark made against one's record for a fault or for misconduct.
 of availability. He notes that a machine's primary role may be "event response," which it cannot fulfill "if it is busy with routine production 100% of the time." Then, he says, "100% utilization translates to 0% availability," ensuring that prototyping, product development, tool and die work, and so on cannot find machine time. More generally, if a producer's niche is quick customer response, it cannot tolerate high machine utilization/availability rates.

Much of the leadership in the lean community, including lean accounting Lean accounting is accounting for the lean enterprise. It seeks to move from traditional cost accounting to a system that measures and motivates good business practices in the lean enterprise. Applying lean principles to accounting can be part of this system. , has long argued that the machine-utilization metric is anti-lean and should be scuttled. Few, however, have gotten around to saying the same thing about the availability metric. That is unlikely to last since, as Baudin shows us, what's wrong with utilization is also wrong for availability, and OEE.

Lean's mandate, to make/deliver what the next process wants, is compromised by the productivity component of OEE. If the machine's capacity is 200 units/hr but customers' needs add up to just 100, the machine must make just 100- and stop. That yield's a miserable 50% productivity rate. But that is good (lean), not bad (fat).

Total productive maintenance is often held up as an adjunct to lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. . As such, for reasons already given, TPM is ill-served by OE E- at least as an ongoing performance metric. OEE does, however, have a positive attribute: shock value. A producer's initial calculation of OEE may be compared with OEEs for similar companies. The (likely) large gap says to the CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , president, or general manager: Our competitiveness is badly compromised by the sad state of our equipment and facilities. Help!

It's time It's Time was a successful political campaign run by the Australian Labor Party (ALP) under Gough Whitlam at the 1972 election in Australia. Campaigning on the perceived need for change after 23 years of conservative (Liberal Party of Australia) government, Labor put forward a  to turn off OEE.

History provides a like example. In the early 1980s, Western manufacturers were getting hammered by leading Japanese producers, largely for quality reasons. Quality beacons Philip Crosby and Armand Feigenbaum provided the prod our financially driven leaders needed. They advised companies to calculate their cost of (bad) quality- the sum of the costs of internal failure, external failure, quality appraisal, and prevention. Commonly, cost of bad quality turned out to be a double-digit percentage of total sales revenue.

Overall equipment effectiveness has strong word appeal, as do its three components: availability, productivity, and quality.

Every company would like its equipment to be highly available to serve customers. But expressing availability as a rate creates a dilemma. There is no right rate. Too low means equipment is down excessively- a costly waste. Too high, and demands become backorders; customers defect, and earnings are lost. By-the-numbers management cannot work when there is no correct number.

With productivity rate, it seems that high is good, higher better. The problem is that, in application, productivity always invites gamesmanship games·man·ship  
n.
1. The art or practice of using tactical maneuvers to further one's aims or better one's position:
 and, as an element of OEE, conflict. What do supervisors do when pressed for higher productivity? They crack the whip, extend production runs, forego training, and never mind the growth of unneeded inventory. And they put off preventive maintenance-the ultimate offense, given prevention's central role in OEE, TPM, and lean.

With quality rate, the unimpeachable un·im·peach·a·ble  
adj.
1. Difficult or impossible to impeach: an unimpeachable witness.

2. Beyond reproach; blameless: unimpeachable behavior.

3.
 ideal is 100% good, zero defective. But quality rate is composed of many quality variables. Combining them into a single number shifts attention away from multiple root causes in need of correction and toward an abstract number.

As mentioned earlier, once quality management has been established in the trenches, trying to manage it at a distance with high-order numbers becomes a redundant distraction.

For companies new to lean and TPM, OEE may be able to serve the useful role of awakening management. Aside from that, it's time to turn off OEE, since its numbers are wobbly, application redundant, and effects perverse.

© 2008 Society of Manufacturing Engineers The Society of Manufacturing Engineers [1] (SME) is dedicated to bringing people and information together to advance manufacturing knowledge. SME is internationally recognized by manufacturing practitioners, companies and other organizations as a source for information,  Provided by ProQuest LLC (Logical Link Control) See "LANs" under data link protocol.

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Vergence
Redge (Member): Consider the downside of OEE 6/2/2009 5:51 PM
As a lean consultant, I fully support the use of OEE as a vantage point metric. No one ever assumed OEE would be used as a single independent metric. I for one, consitently emphasize that OEE is not a stand alone metric. I would also agree with the content article in that conflicts may arise if management are blindly looking at OEE only.

OEE should not be confused with TEEP. The idea behind OEE is to ensure that the machine is available to run a quality part at rate when required to do so. I'm not sure where the authors of this article received their OEE training, but it seems to me they were either mislead or don't understand it.

This one misses the boat - completely. I have read that sometimes the best way to encourage comments is to write something contradictory. In light of this, well done.

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Article Details
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Author:Richard J Schonberger
Publication:Manufacturing Engineering
Date:Dec 1, 2008
Words:753
Previous Article:History of Trust; Tradition of Innovation


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