OEE and 6 Big Losses

OEE or Overall Equipment Effectiveness is the most recognized measurement of manufacturing productivity. Developed about 100yrs ago by Harrington Emerson, OEE was originally designed as a single machine performance calculation with the goal of reducing waste. It is typically used in the context of Lean Manufacturing.

OEE is used to quantify efficiency with a basic calculation, composed of 3 factors: Availability, Performance, and Quality. The goal is to use this measure to locate the source of inefficiencies and quantify/measure them. "If you measure it you can improve it".

Six Big Losses

The 6 big losses are:

1. Breakdowns

2. Change overs and Setups

3. Machine Idling

4. Reduced Speed

5. Startup Scrap during machine warm

6. Scrap during normal production

These can be categorized into 3 buckets:

1. Availability losses - Breakdowns, Change Overs, and Setups

2. Speed Losses - Waiting around, i.e. machine idling or reduced speed.

3. Quality Losses - Scrap and Startup Scrap

With these pieces of information we can begin to calculate OEE with the 3 factors: Availability, Performance, and Quality

Each factor is represented as a ratio of the actual vs. ideal and expressed as a decimal rate. Finally you have to have a Planned Output. This is the ideal amount of production completed for the process being analyzed.

To simplify the OEE equation we'll define 3 new factors:

1. Gross Output = Planned Output - Availability Losses

2. Net Output = Gross Output - Speed Losses

3. Valuable Output = Net Output - Quality Losses

Finally we have our 3 main factors of OEE:

Availability = Gross Output / Planned Output

Performance = Net Output / Gross Output

Quality = Valuable Output / Net Output

OEE = Availability X Performance X Quality

When you multiply these together you get a ratio that is then used as a percentage to express the OEE. Continually measure and improve your OEE to increase efficiency.