Overall Equipment Effectiveness (OEE). Approaches for Improvement

Scientific Essay 2015 8 Pages

Business economics - Operations Research




The Reasons for Low OEE Values

Interventions to Improve OEE
Industrial Internet
Cloud and SaaS Solutions




Overall Equipment Effectiveness (OEE) is a ratio of the actual output over the figure it could be theoretically, and is calculated by a multiple of three components, all of which relate to actual versus theoretical values; availability, performance and quality (Lannone and Nenni, 2013). Another relevant interpretation of the acronym OEE was devised by Vijayakumar and Gajendran (2014, p. 47), providing three principles for maximising the OEE value, where O represents its objective of accomplishing organisational goal(s), E is the efficiency resulting from doing things right, and E for effectiveness which is a consequence of doing the right thing.

The major purpose of OEE is used to improve overall manufacturing production performance. The measurement demonstrates how well the production process matches the planned process, its value is reliant on the multiple of the three components, availability, performance and quality but industry average values are well below the 100% figure. In reality world class performance is regarded as and OEE value equivalent to 85%, however, in most cases the actual figure is much lower, between 60% and 70% (Lannone and Nenni, 2013). Automotive manufacturers who are able to reduce the length of manufacturing processes by as little as a few seconds can leverage productivity by one or two extra vehicles a day, generating additional revenue in the long term (Montpass, 2014).

Hence in this presentation the reasons for the gap are appraised, particularly in relation to automotive manufacturing. Initially an overview of each of the components and the factors that most negatively impact on the OEE value are provided, followed by the most up to date interventions that are being employed to improve OEE. In an industry in which consumption is declining (Marketline, 2015) and competition for sales increasingly fierce, the OEE value is vital to productivity and competitive advantage.

The Reasons for Low OEE Values

Manufacturing performance is inhibited by six factors that reduce its value from 100%. The six main factors that generate losses are downtime, production and quality issues. Downtime losses are a consequence of breakdowns and failures, poor set up requiring subsequent adjustments, and production is hindered by stopping the machine for small periods to resolve blockages or machine jamming, as well as machine wear less than optimum machine running speed, whereas quality losses primarily result from rejects at start up and during the production run (Vijayakumar and Gajendran, 2014: Lannone and Nenni, 2013). The world class figure of 85% is most impacted by availability, which refers to actual time consumed over planned schedule time and averages at 90% but performance, which is dependent on actual versus theoretical output. In contrast; quality can be close to 100%

Interventions to Improve OEE

OEE measurements have tended to be focused on single machines whereas in the case of multiple machines the whole production line should be the focus according to Braglia. Frosolini and Zammori (2009), who proposed a new metric Overall Equipment Effectiveness of a Manufacturing Line (OEEML). The major advantages were shown to be the capacity to find the root cause of inefficiencies and to detect where they were occurring even when dynamic or static buffers divided the production line into sections.

The limitations of OEE were also highlighted by Greefe and van de Merwe (2013), who specified that it measured the performance over a series of continuous units and did not therefore pinpoint the underlying issues. Sometimes failure of a critical production line unit was automatically resolved by the presence of a back-up but the basic issues increasing OEE values remained

Industrial Internet

The use of the industrial internet is promoted as a solution to the issues related to OEE for production lines cited earlier. Industrial internet is a concept that combines the manufacturing the information ages, in other words merging the machines and transport of the industrial revolution with those of the internet revolution, comprising computing, information and communication, figure 1. The fusion of technologies is exploited to provide intelligent machines, powerful analytics that can be monitored and analysed to drive up understanding of issues or reveal trends and people who are involved in both the design, and optimisation of characteristics of the first two elements (Evans and Annuziata, 2012).

Figure 1: Components of the Industrial Internet

illustration not visible in this excerpt

Source: Evans and Annunziata (2012)



ISBN (eBook)
ISBN (Book)
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470 KB
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Institution / College
Comenius University in Bratislava – Faculty of Management
OEE Overall Equipment Effectiveness




Title: Overall Equipment Effectiveness (OEE). Approaches for Improvement