OEE Modeling with Brad McCully
We’re delighted to have Brad McCully joining us. He’s a business development executive at Advanced Technology Services and has been a part of the company since its founding in 1985. But, he got involved in the manufacturing field much earlier in his career, working at various levels for Caterpillar.
Brad will help us get a look at:
- What asset performance is
- What OEE is and how it relates to asset performance
- The importance of OEE in organizations
- What OEE modeling is and how organizations use it
- How to get started and the possible risks
What is asset performance?
A production asset produces a product. So excellent asset performance is providing a quality product at the rate the asset was designed to deliver it. Therefore, the two critical elements to the process are whether:
- It produces a quality product
- It produces at the intended rate
What is OEE?
There’s a mathematical formula bringing together machine availability, productivity, and quality, to give you a percentage. That percentage is a reflection of the output for that asset during a specific period. The key to OEE is understanding where your losses are in availability, productivity, and quality. From there, you should be able to drive continuous improvement.
For OEE to occur:
- Availability – The asset has to be available to run.
- Productivity – When it runs, does it do so at the rate it’s supposed to?
- When it produces products, how many are quality, and how many are not?
Why should organizations use OEE?
Most organizations don’t use it. But, from the data collected, it makes it easy to know where your losses are. That helps you be able to put together a plan to drive improvement in that area. You’ll improve the performance of your plant from a productivity and customer service point, as well as financially. Cut those losses.
You can do a lot of research to find out what the industry standard for OEE is. But the key thing is consistency. Once you start measuring, keep things consistent. That will get you reliable results on your performance. It’ll also help you know where to drive continuous improvement.
What is OEE modeling?
OEE modeling creates a baseline of factory performance to forecast what improvements work. It’s for people who don’t have OEE data but still need to track where they’re making their investments, and what their ROI should be. So you’ll look at availability, productivity, and quality through the data they have and other extra investigations. That creates a baseline OEE percentage. Then you correlate that to the financial performance to have a forecast.
When you create an OEE metric to show the improvement, it isn’t so important that the baseline is perfect. What is measured is the value of the change. There’s some difference in the return. But if you improve from 60%-65% or 65%-70%, the two metrics are still similar.
How would organizations use OEE modeling?
It’s a great tool when you’re thinking about making investments on your projects. You need a return on investment calculation. So when there’s no reliable data from the factory floor to help do that calculation, OEE modeling will show you where that change is. You’ll then have the ability to weigh out your projects and make the right choices for your investments.
Organizations will also have a dollar standpoint for the percentages they’ve generated. That’s by dividing the rate and yearly returns to get the value of each percentage. On average, 60% OEE is fine, but there’s still room for upward improvement.
Which best-in-class number are most organizations aiming?
Online research shows you that the World-class OEE level is 85%. But that depends on how you calculate it. Most organizations have targets they would like to reach. They’re also aware of asset performance issues within their plant. By looking at direct labor hours and production hours, you can forecast improvement. You’ll base it on the client’s business conditions rather than a random number.
To get started with OEE modeling, you can create a spreadsheet for it within the factory. You can also get an expert to create an OEE model for you and guide you on using it.
What are the risks to OEE modeling?
The risks come in determining whether you know where your losses are. Once the OEE model gets created, you have to make sure you pick the right projects and assets to drive results. If you start working on the wrong asset, you may not get the performance you forecasted. For success with such a project, you need to know where your losses are on the factory floor.
Are there any sensitivity models within the process?
Not at all. You can add that, but a talk with the client works best. Keep in mind that the decision rests with the client. They have to agree that there’s an ROI. Your role would be to shine the light on the potential the model holds. The controllers and plant workers have to agree that the move makes sense. They have to believe in its value and own it.
What makes OEE modeling a success?
The data source plays a significant role in OEE modeling. The more accurate the data on how things are performing on the shop floor, the better. So if you have an excellent CMMS and you’re diligent about it, you’ll know where the problems are. From there, you’ll know where to drive improvement.
You can also interview operations and maintenance people, or walk the floor to look at things. If talking to several people on the plant floor leads you in the same direction as far as problems and losses, you can also take that as a useful fact.
In summary
For the success of your OEE model, always have the right data. Also, ensure customer buy-in. Everyone needs to be on board with the changes you’d like to make. It creates a powerful team to get things done.
OEE modeling makes the possibilities known. If you’re struggling with making asset performance investments or making changes because you’re unaware of the ROI, or you’ve got competing projects, there is a solution. The model helps you look at your assets and performance, and quantify them in dollars and cents. That will help you make better business decisions moving forward.
Ways to apply the model include looking at the topline performance to get more revenue. But, there are manufacturing plants that don’t need more income. There are ways to quantify and talk about taking out costs, reducing overtime, and labor cost with an OEE model.
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