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Complete Guide to Overall Equipment Effectiveness (OEE)

In this guide, we’ll provide a comprehensive overview of Overall Equipment Effectiveness (OEE) and Overall Process Effectiveness (OPE), and why every company should aim to measure both to get the full context of their production performance.

We’ll Cover:

  • Recap of OEE and its benefits

  • Understanding OPE

  • Power of OEE coupled with OPE

  • How you can start measuring OEE in your operations

  • How you can add greater operational context by measuring OPE

Chapter One: What is Overall Equipment Effectiveness?

Definition of Overall Equipment Effectiveness

Let’s do a quick recap of OEE and its equation.

Overall Equipment Effectiveness (OEE) measures the productivity of a machine. It takes the performance of a machine and multiplies it with its relative capacity and the quality of its output. The result is a score represented as a percentage for a specific scheduled run.

How to Calculate OEE

The formula for calculating the OEE of a machine is simple:

Formula for Overall Equipment Effectiveness

OEE = Availability * Quality * Performance

Availability is the measured amount of uptime of a machine during the scheduled manufacturing run.

Availability = Uptime / Scheduled Run Time

Quality is the number of units produced in a scheduled run time that meet the quality control levels and do not possess defects, divided by the total number of units that are produced in that scheduled run time.

Quality = Acceptable Units / Total Units

Performance is measured as a percentage of throughput of the machine, compared to its actual overall capacity.

Performance = Throughput / Ideal cycle time

Different Methods of Calculating OEE

The definition of OEE above is a widely used industry standard definition. However, OEE can be calculated in different ways, to fit the needs of specific operations in an organization. A common way OEE is changed involves simplifying the variables involved:

Simple OEE = (Ideal Cycle Time x Good Parts) / Planned Production

OEE = ([Uptime / Scheduled Run Time] - Training Time) x Performance x Quality

Changing the basic OEE calculation can add complexity, but may provide insight into specific data that your organization is interested in.

However, you chose to calculate your OEE, capturing it with a digital tool that allows ease-of-configuration is essential to effectively managing OEE.

Chapter Two: The Importance of Calculating OEE

Making informed, data-driven decisions is key to the success of any organization. Measuring OEE is a valuable metric to help you make and test hypotheses and make good decisions. OEE allows you to get ahead of maintenance or bottlenecks, and reduce the amount of non-value-added time in your process.

OEE is a Diagnostic Metric

OEE is ultimately a diagnostic metric. In other words, your OEE score alone doesn’t tell you much by itself. But because OEE provides you with an overview of the factors that make up operational efficiency, it tells you when to drill down deeper into the common causes of production problems.

Benefits of Tracking OEE

Monitoring OEE for each piece of equipment can give you the visibility you need to effectively make decisions that can result in:

Chapter Three: Overall Equipment Effectiveness vs Overall Process Effectiveness

OEE is one operations metric that has stood the test of time.

Recently, however, many manufacturers have begun to shift their attention from Overall Equipment Effectiveness (OEE) to Overall Process Effectiveness (OPE). If OEE is designed to present a picture of machine performance, OPE broadens the perspective to account for what’s happening around the machine.

Crucially, it accounts for one element that OEE misses: the human.

In other words, if you’re only measuring OEE, you might not be isolating — or even measuring — other factors contributing to low effectiveness.

Chapter Four: What is Overall Process Effectiveness (OPE)?

OPE includes a wider range of variables, including all steps of an operation, making it an end-to-end measurement of your entire process stream.

Most importantly, OPE includes the humans working around the machines for a holistic picture of machine performance.

Unlike OEE, there is no standard equation that accounts for overall process effectiveness. Whatever metric sheds light on the human-involved processes of the production is considered OPE. This is also why the focus on OPE is often overlooked. It can feel overwhelming to track everything.

How OPE Uncovers Deeper Insights into Production Process

Let’s look at an example of how OPE can add more context to the overall effectiveness of your machines and the processes around them.

Let’s say a furniture company makes kitchen tables across four stations like in the chart below.

Human Machine Value Chain
This value stream illustrates the human processes that OEE can’t always account for in a production operation.

Somehow during the process, throughput starts to decrease. An engineer notices buffers increasing before and after finish is applied to the assembled tabletops. Their first suspicion is that one of the machines isn’t performing optimally.

However, when they check the machine data, nothing has changed. OEE measurement has stayed the same during the production run.

The engineer suspects that the issue lies in the process and starts to ask questions to measure OPE:

  • Are parts moving between stations as quickly as possible?

  • Are changeovers being performed efficiently and correctly?

  • Are the right tools available when needed?

  • Are the humans in between machine processes working efficiently?

  • Is there non-value-added time slowing production?

These are just a few of the questions engineers can ask to understand why production has slowed. They reveal issues that can’t be reduced to machine availability, quality, or performance.

So to answer the above questions, engineers need to collect data at each step of the production. The best way to accurately balance lines and optimize the flow of work through the value stream is to understand what’s happening at every stage. True process visibility requires looking at both the human and machine factors in an operation.

Chapter Five: Automating Measurement with an OEE Calculator

Keeping track of OEE on paper or with a spreadsheet can be resource-intensive. It can result in subpar data.

By using an OEE calculator, you can quickly calculate OEE on the fly with an industry-standard definition, or a definition calibrated to your specific needs. With Tulip, you can build configurable OEE calculators that reflect the metrics most important to you.

Here’s an example of an OEE calculator application built in Tulip. It breaks down into four simple steps.

1) Load Machine to Track
Here you can select the machine(s) you'd like to track

Beginning your OEE calculation, the first step is to select the machine(s) (or process) that you would like to track. In the image above, you can see the machines available in a list. These machines are stored in a table and can be configured or linked with machine monitoring capabilities.

2) Select a Job
This section shows information related to your machine’s job

To add context to the OEE information you are tracking, the next step in the calculator app will be to select a job. This provides specifics about the operations and allows you to log work orders or other information. Adding a job will not impact the equation or OEE, but can help when triaging issues that arise.

3) Log Data
Here an operator can log data manually or automatically with machine monitoring

This step prompts operators to enter the information needed to calculate OEE. Setting the stage for the calculation is important, and there is room to prompt operators to enter any notes that are relevant to the state of the equipment, such as a downtime reason or other issues. With machine monitoring, the production data can populate automatically.

4) View and Submit Data
With all of the information input, you can calculate your OEE score and submit it

Here, engineers have two options by default: the ability to calculate and display OEE or calculate and submit OEE to be logged for a record. This allows engineers to check to see if their OEE calculations are in line with the information they input. Once the data is submitted, it can be analyzed in an OEE dashboard like the one below.

OEE dashboard example
An OEE dashboard example, visualizing metrics for machines on a shop floor

With a dashboard, you can choose a granular or holistic view - looking at a single machine’s performance, or the performance of a full machine shop.

Chapter Six: Adding Detailed Context to OEE with OPE Data

Because Overall Process Effectiveness covers a wide range of metrics related to human factors, there are endless types of data points that count as OPE.

Let’s take a look at example data points by answering the process-related questions we already asked in Chapter Two.

Documenting How Instructions Are Being Followed

Answer to: Are the humans in between machine processes working efficiently?

Not only is it important to train new operators, but it is also important to reinforce the standard of work expected for everyone on the shop floor.
Tulip’s simple dynamic work instructions app

Using an app like Simple Dynamic Work Instructions, engineers can ensure each step is documented and double-check its completion, product builds, maintenance, and quality check. By having operators sign off when they complete each action item in a standardized set of instructions, engineers can exactly pinpoint when, where, and how some of the human errors might have occurred.

Knowing the Status of Equipment and their Availability

Answer to: Are the right tools available when needed?
Tulip lets you log location and usage of all tools

Tulip automatically tracks data on tool usage, giving engineers and managers a granular view of its lifecycle and readiness. Information about tool conditions can be compared with other production data, allowing engineers to correlate tool usage with possible causes of damage. This data can also be used to determine the number of tools available and ready for a given production order.

Chapter Seven: The Final Takeaways

We first reviewed what OEE is and what OPE is. We learned that those two complement each other when trying to understand the efficiency of any operation.

If you don’t already track OEE, it can help you unlock vital performance information. If you do track OEE, embracing digital technology can reduce the workload around tracking OEE and other metrics.

OPE on the other hand can fill in the gaps where OEE can’t tell the full story. It is often overlooked, but always at the cost of having partial information or making the wrong causal analysis.

If you would like to get started with the OEE calculation tool and configurable apps for tracking OPE, Get in touch.

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