I’ve been asked this question many times: “I have been reading about the OEE measurement and I cannot find any particular agreement about the right number for OEE. Could you please give me any references?”
It is generally suggested that “below 65% should be considered unacceptable, since it represents a very low competitiveness and a great number of economic losses. A value between 65% and 75% is considered as regular, only acceptable if it is being improved. A value between 75% and 85% means an acceptable level with slight economic losses and which can be easily improved to World Class levels. A value between 85% and 95% is considered good and equals World Class values; it represents a high level of competitiveness. And finally, a value above 95% is considered as excellence; an excellent competitiveness and World Class Values.”
I do not agree with such a global approach, there are many angles to approach this question. Let me try to elaborate on it.
What number are we looking at?
First of all, there is no such thing as ‘an OEE number’ that could be referenced to, simply because it could be defined in a thousand different ways. Would you like to see an OEE of 85%? Well, I’ll get it for you tomorrow on your machine! It is just a matter of changing some of the definitions; lower the maximum speed, exclude some waiting-times like breaks and maintenance, stretch the specifications of good product etc. Sadly enough, there are consultants who earn money this way…
What is the criterion for ‘good’?
Let’s assume we are going to use the OEE Industry Standard for all machines. Now what is a ‘good OEE’ for a machine that continuously runs just one bulk product? And what OEE is ‘good’ for a machine that runs 60 different products a day?
Let’s take the first machine, running just one product all day, feeding a line. Is 95% OK? Not if the downstream equipment would only process the volume of 65%. Would 65% then be a good OEE? No, not necessarily! Why not? If the machine jumps forth and back between 45% and 95%, with an average of 65% OEE, it would still cause many problems. How about a stable OEE of 65%? Is that OK? No, not if it runs at a quality rate of 90% (or any other number that is not (near) 100%.
Let’s move on: is a stable 65% with a quality rate of 100% OK? What if we need to make huge and expensive efforts to get this done? Maybe your costs are so high now, that you are losing money with your beautiful machine!
It does not make sense to focus on the number itself. Instead, it should be understood what is really going on.
Some important questions with regard to the OEE number could be:
- Is there an OEE level where we can run the machine stable and reliable? I.e. can we run continuously between 40% and 44%? I would call that a hunch of ‘World Class’, since I have rarely seen such machine! It would be an indicator for a process that is – or can be – in control.
- Is there a range of OEE in which we can run a stable OEE at ANY level? I.e. could we run any desired OEE between 20% and 50% on demand for days? (Wow, ever seen that?)
- What OEE is desired to fulfill demand, and are we able to run such an OEE on this equipment?
- Are we able to run the machine without rejects?
- Are we able to run the machine without any unexpected interruptions?
- Are we able to swap between one product and the other, following demand flawlessly?
So, instead of focusing on the height of the number, start focusing on those components that may be indicators for a well understood and controlled process. As a result, the number will go up, costs will go down, etc.
How high are OEE numbers normally?
In my experience – measuring over 2000 machines in all kind of branches and continents – most machines will not exceed 35% to 45% of OEE (assuming OEE Industry Standard definitions are applied). In some branches (like pharma) the typical machine runs far less, while in others (like –some automotive) it can be higher. Some particular types of machines (like extrusion and injection molding-machines) tend to have higher OEE’s by the nature and the stage of development of the equipment.
After some years of TPM implementations and applying LEAN principles to prevent the loss of flow, equipment (again very generalized) may grow in the 60’s or even 70’s which (as a number…) is really good.
What about the economic losses?
Let’s take my statement about the average machine in the average factory running 35-45% OEE. Are they running economic losses? Most of them earn quite some money. Even worse: The conversion cost (if we may believe the controllers, which you should be very careful with) is mostly just a small part of the total cost. This explains why such low OEE’s are commonly accepted (otherwise they would not be there…).
The real economic loss is not in the height of the OEE, it is in the lack of flexibility and reliability of it. Think about it; What would it mean to the cost of the supply chain if every step would respond and follow the demand? Just imagine the economic consequences…
With the right OEE software you are able to follow many of the above mentioned effects and analyze what is going on behind the number it selves. I have designed the OEE Toolkit precisely to make such analyses. And when you are really keen on knowing the financial impact of your OEE let me do the math for you and teach you what does make sense and what doesn’t!