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Overall Equipment Effectiveness? Get the Measure of Your Production Operations!

Maintenance, repair and operations (MRO) is frequently seen as a back-room topic in many manufacturing firms. That’s why it’s often overlooked, while direct materials get the limelight. 

Getting the Basics under Control!

When SDI engages with a customer, our MRO professionals bring to bear the integrated supply chain management expertise, resources and systems to bring close to 100% of the customer’s MRO spending under management. And as this occurs, we see operational improvements such as reduced levels of inventory, fewer expedited shipments, and lower levels of inventory write-offs, to name a few.

Now free of the daily grind of managing MRO, the customer’s focus can change to more strategic questions, such as the overall operation of the plant and how “Overall Equipment Effectiveness” can be measured and improved.

What is Overall Equipment Effectiveness?

Overall Equipment Effectiveness (OEE) is a manufacturing best practice metric. It was developed in the 1960s to help evaluate how effectively the equipment in a manufacturing plant is being used. It’s a relative measure, so it is an extremely valuable tool to assess how and where to get performance improvements in the MRO supply chain and manufacturing processes.

Calculating OEE

The calculation of OEE takes into account the three manufacturing factors of equipment availability, equipment performance, and production quality:


OEE = Availability x Performance x Quality
 

An OEE score of 100% would mean that your production equipment is operating at:

  • 100% Quality: producing only acceptable pieces, with no rejects, with
  • 100% Performance: running as fast as possible, and at
  • 100% Availability: with no stoppage or down time.

Of course, we live in the real world, and each of these three measures is going to be impacted by what OEE practitioners call the “Six Big Losses.” These are things that will cause availability, performance, and quality to be less than 100%. These factors are as follows:

  • Availability
    • Planned Downtime
    • Breakdowns
  • Performance
    • Minor Stops
    • Speed Loss
  • Quality
    • Production Rejects
    • Rejects on Start up

Factoring in such losses, the OEE calculation will vary from period-to-period. For example, compare these two periods:

  Period 1 Period 2
Availability 89.0% 94.0%
Performance 94.0% 95.0%
Quality 99.0% 95.0%
OEE 82.8% 84.8%

On the surface, we’re doing better on Overall Equipment Effectiveness in the second period, but a closer look reveals that we’ve improved availability and performance at the expense of quality! Is that a trade-off that management wants to make?

The Value of OEE Experience

The above example points to the intricacies of OEE and to the need for experienced practitioners to help guide its implementation.

As SDI works with our customers, our reliability engineers are in an excellent position to help them determine which factors of their MRO supply chain are negatively impacting availability, performance, or quality.

Once the basic improvements are in place from bringing MRO under control, our engineers are able to pinpoint issues like chronic equipment failure, emergency work and facility management that detract from effectiveness. Likewise, they can identify the specific pain points in maintenance and repair history that result in production line breakdowns and/or loss in product quality.

Having identified the culprits, SDI can recommend—and help implement—tailored solutions to help reduce unplanned outages, keep quality rejects to a minimum, and maintain the highest levels of production machine performance.

Need Help with MRO and OEE?

How’s your plant running? Was this week better than last? How will next week be even better?

Overall Equipment Effectiveness is always the operations objective. Equipment is the lifeblood of your operation, so SDI excels at sourcing, pricing, buying and delivering the parts you need to keep your plant running as efficiently and cost-effectively as possible.

When production stops, your business stops. Profit stops. SDI can work with you to prevent that from happening.

Do you need advice on streamlining your MRO supply chain, or guidance on implementing OEE? Whether you need help every step of the way, or expertise in certain areas, SDI is here to help. Contact us to find out how we can help improve the effectiveness of your production operations!

Success Story

Our former solution provider was not independent; they were a supplier of parts. It's not the best thing to have a supplier be your MRO outsourcing provider. With SDI, we have a truly independent sourcing agent looking after our best interests.

SDI at Work

In the third post in this series on MRO As-a-Service by Spend Matters, Pierre Mitchell and Michael Lamoureux talk about how managing MRO as a process delivers benefits from efficiency to effectiveness and beyond to an evolutionary phase. The next generation of value, MRO-as-a-Service, helps organizations build intelligent, agile, scalable and integrated supply chains (direct and indirect).

The project team has worked its way through Define, Measure, Analyze, and Improve. It’s time to begin the Control phase. The key stakeholders gather to evaluate the solution as implemented and create a plan to sustain the improvements. The goal is to standardize the improved processes, establish an audit schedule and schedule periodic follow-up to identify additional opportunities for improvement.