If you want to succeed as a manufacturer in the age of Industry 4.0, the technological revolution, there are several critical manufacturing KPIs that you need to monitor throughout the life of your business. One of the most important manufacturing metrics is Overall Equipment Effectiveness (OEE).
OEE is a powerful tool for measuring and improving the performance of your manufacturing processes. In this article, we’ll delve into what OEE is, how to calculate OEE, the benefits of OEE, and how IoT platforms can take the menial work and excessive time out of measuring and tracking OEE.
What Is Overall Equipment Effectiveness (OEE) in Manufacturing?
Overall Equipment Effectiveness (OEE) is a standard metric for measuring manufacturing productivity. It identifies the percentage of manufacturing time that is truly productive. A perfect score of 100% means you are manufacturing only good parts, as fast as possible, with no stop time.
OEE is composed of three main factors:
- Availability: This measures the percentage of scheduled time that the equipment is available to operate. It accounts for downtime events such as equipment failures or adjustments.
- Performance: This assesses the speed at which the equipment operates as a percentage of its designed speed. Performance losses include factors like slow cycles and small stops.
- Quality: This evaluates the quality of the products produced as a percentage of total products started. It considers defects and rework.
By multiplying these three factors (Availability x Performance x Quality), you get the OEE score. For example, if Availability is 90%, Performance is 95%, and Quality is 98%, the OEE score would be 83.7%.
How to Calculate Overall Equipment Effectiveness (OEE)
To calculate OEE, you first need to calculate Availability, Performance, and Quality.
Calculating Availability
Let’s start by calculating Availability. The formula for Availability is:
- Availability = Operating Time / Planned Production Time
Planned Production Time is the total amount of time the production is expected to run. Exclude planned breaks like scheduled maintenance from your calculation.
Operating Time is the actual amount of time the equipment is running and producing products. This can be measured manually by recording the time the equipment was turned on and turned off, or using IoT software to track this automatically.
Simply divide Operating Time by Planned Production Time to find Availability. Then, multiply this figure by 100 to get a percentage.
Calculating Performance
The formula for Performance is:
- Performance = Net Run Time / Operating Time
Net Run Time is the actual time the equipment produces at its ideal cycle time, or the shortest possible amount of time it takes for the equipment to produce one unit.
To reach Performance, calculate Net Run Time by multiplying the number of produced units by the ideal cycle time, then divide that number by the Operating Time you found in the previous step, and multiply by 100 to get a percentage.
Calculating Quality
The formula for Quality is:
- Quality = Good Units / Total Units Produced
Good Units means exactly what it sounds like: the number of units that meet your industry and company’s quality standards.
Total Units Produced includes both good and defective units.
To calculate Quality, count all the units produced, then count only the good units produced, and divide the good units by the total units. Multiply by 100 to get a percentage.
Calculating OEE
The formula for OEE is:
- OEE = Availability x Performance x Quality
In other words, take all the percentages from the first three steps and multiply them to find your OEE score.
Example OEE Calculation
Let’s break it down with an example. Let’s say your business produces industrial fans. You want to find the OEE to understand what percentage of your manufacturing time is truly productive. Here are the steps you would take:
- Availability
- Planned Production Time: 480 minutes (an 8 hour shift) – 60 minutes (planned breaks) = 420 minutes
- Operating Time: 390 minutes
- 390 / 420 x 100 = 92.86%
- Performance
- Ideal Cycle Time: 1 minute per industrial fan
- Total Units Produced: 400 fans
- Net Run Time: 400 fans x 1 minute = 400 minutes
- Performance: 400 / 390 x 100 = 102.56%
- Quality
- Total Units Produced: 400 fans
- Good Units: 380 fans
- Quality: 380 / 400 x 100 = 95%
- OEE
- 92.86% x 100% x 95% = 88.22% OEE
How to Use OEE to Improve Your Business
So, what does OEE really tell you about your business and how can understanding OEE help your business improve? Here are some ways you can use OEE to improve manufacturing processes, productivity, and find new ways to save costs.
1. Identify Areas for Improvement
By measuring OEE, manufacturers can pinpoint areas where productivity is being lost. Whether it’s frequent equipment breakdowns (Availability), slow cycle times (Performance), or high defect rates (Quality), understanding these losses allows for targeted improvements.
2. Set Realistic Goals
Use your OEE score to set achievable improvement goals. For example, if your current OEE is 60%, aim to reach 70% over the next six months by addressing the most significant losses.
3. Implement Lean Manufacturing Practices
OEE complements lean manufacturing techniques. Practices like Total Productive Maintenance (TPM), Six Sigma, and Kaizen can help address the root causes of losses identified through OEE.
4. Monitor and Sustain Improvements
Regularly monitoring OEE helps make sure that improvements are sustained over time. It also allows for the continuous identification of new improvement opportunities as production conditions change.
5. Benchmark Against Industry Standards
Comparing your OEE score against industry benchmarks can provide insights into how your operations stack up against competitors and highlight areas for further improvement.
How IoT Platforms Can Help You Measure and Improve OEE
IoT (Internet of Things) platforms are revolutionizing the way manufacturers measure and improve OEE. Here’s how IoT can enhance OEE measurement and optimization:
Real-Time Data Collection
IoT devices can collect real-time data from equipment, providing accurate and up-to-date information on Availability, Performance, and Quality. This allows for immediate identification of issues and quicker response times.
Predictive Maintenance
Predictive maintenance uses IoT devices to monitor machine performance and provide insights into how well they are operating. IoT sensors can predict equipment failures before they occur, reducing downtime and improving Availability. By monitoring equipment conditions such as temperature, vibration, and pressure, IoT platforms can forecast maintenance needs and prevent unexpected breakdowns.
Enhanced Performance Tracking
IoT platforms provide detailed insights into machine performance, enabling better analysis of cycle times and identification of performance bottlenecks. This data-driven approach helps optimize machine speeds and reduce minor stoppages.
Quality Control
IoT-enabled product quality control systems can detect defects in real time, reducing the production of faulty products. Vision systems, for instance, can inspect products during production and immediately alert operators to quality issues.
Data-Driven Decision Making
IoT platforms aggregate and analyze data from various sources, providing comprehensive dashboards and reports. This holistic view empowers managers to make informed decisions based on accurate and detailed insights into production processes.
Scalability
IoT solutions can scale with your business. Whether you’re a small manufacturer or a large enterprise, IoT platforms can be tailored to fit your needs, ensuring that OEE measurement and improvement efforts grow alongside your operations.
Learn More About IoT Solutions in Manufacturing
Overall Equipment Effectiveness (OEE) is an essential metric for manufacturers aiming to maximize productivity and efficiency. IoT platforms play a crucial role in enhancing OEE measurement and optimization by providing real-time data, predictive maintenance, and advanced performance tracking.
If you’re unsure whether automated solutions like IoT are right for your manufacturing business, schedule a consultation with the experts at ProphecyIoT today. We’d love to conduct an in-depth assessment that helps you identify the right IoT solution for you.
