OEE and Key Performance Indicators

What are key performance indicators?

Key performance indicators are a type of performance measurement. OEE seeks to increase overall effectiveness and KPI’s help us measure it.

They are used to evaluate either a company’s overall performance or the performance of a certain aspect of their business. They are measure used in accordance with OEE (Overall Equipment Effectiveness).

In choosing KPI’s a business must have an extremely good understand of what is important to their particular organisation or industry. For example the Key performance indicator’s that are considered important to an IT support team will be entirely different to those of an accounts or Human Recourses team.

Assessment is essential

As with OEE constant re-assessment is an absolute must with any KPI’s and industries, standards and expectations change all the time. Business must take a pro-active approach to setting their Key Performance Indicator’s and involve as many staff members as possible. Those on the front line of organisations usually know what sells and what works better that anyone else.
Example KPI’s

- Amount of new customers acquired over a given period. If you set a benchmark as to what number of new customers indicated that you are doing well it will easy for you to measure your progress.

- Turnover. This is a fairly obvious one. Decide what amount of turnover in a given period will indicate that your business is performing well.

- Cycle time. How long should certain processes take? Decide what is optimal and then measure performance against it. If your cycle time KPI’s aren’t achieved then you can begin to ask yourself why and make necessary changes.

- Down time. Most companies would love to have absolutely no down time but this is completely unrealistic. Decide what your minimal amount of downtime that you can achieve is and set this as a KPI.

They must be quantifiable

OEE is more than just improving effectiveness; it is improving it to the benefit of everyone. Key performance indicators are exactly the same. They must never be to the detriment of a company’s employees, suppliers or customers. They must never be felt to be unobtainable. If they are then no one will bother trying to achieve something that they see as impossible.

Your key performance indicators must be quantifiable and realistic. Obviously as a company grows so will expectation and your KPI’s in turn. Reward you staff when you consistently meet your KPI’s so that they are seen as a good thing and not a bad.

For more information see OEE

The diversity of Lean Production

Lean Production originated in Japan. It is an approach to production management that focuses on cutting out waste and making systems efficient all whilst ensuring quality is not compromised. It is a methodology that has seen huge success in manufacturing, see below for Toyota as an example, and is now being used across the board.

Traditional Lean Production

As mentioned above Toyota is a great example for us here. They really developed the concept of Lean Production and moved it forward. Eiji Toyoda developed a system called the Socio-Technical System for his car manufacturing company which was of course Toyota.

He looked to people such as Henry Ford, who invented the assembly line and made a fortune with it, for inspiration. The system seeks to eliminate all waste within the manufacturing system. Waste such as operator errors, overproduction and motion issues. Toyota used this system to great success.

Basic principles of Lean Production

The long term philosophy is “Base your management decisions on long term philosophy, even at the expense of short term financial goals”. It is a hands on process and another popular mantra within it is “Go and see for yourself to thoroughly understand the situation” and “become a learning organisation through relentless reflection”.

- Use only reliable and tested technology that no only serves your purpose but your people too.

- Level out the workload. Work like the tortoise!

- Build a culture of stopping to fix problems so as to ensure excellent quality from the outset.

- Use visual control so that all problems are discovered and not hidden.

- Grow leaders who thoroughly understand their work and are able to implement and teach the philosophy.

- Respect all the people involved in your business from your staff to your suppliers and customers.

- Make decisions slowly by consensus. Consider every option.

Lean production is essential about problem solving. Many people get stuck in doing the same thing the same way with substandard results. You know what one definition of insanity is? To do the same thing over and over again and expect it to produce different results. Staff are encouraged to give feedback and suggestions as to how they think processes could be improved.

Widespread application

Hopefully you can see from this that Lean Production can be applied to many areas and industries. Call centres, the public sector and educational facilities are taking up these principles. If all business seek to listen to their staff, give them reasonable workloads and encourage their feedback it would be a very good thing.

For more information see Lean Production

What is OEE?

OEE stands for Overall Equipment Effectiveness. OEE reduces difficult and complex production issues in to readable, well-presented and usable information. Its measurement helps to improve your processes in a step by step way. It can be used to monitor best practises on machines, assembly lines and manufacturing cells. It is a simple and practical tool that helps you to gauge where you are and how you can move forward and make your production more efficient and effective. Let’s take a look at some of things that are considered as a part of the OEE process.

Planned production time: To help find your planned production time you will need to know this equation; Plant operating time – Planned shut down time = Planned production time. Planned shut down time is all the planned breaks such as lunch hours and maintenance time etc. These all need to be left out of the productivity analysis. OEE will carefully look at your planned production time and measure and record overall efficiency and losses with a view to your being able to eradicate these losses once they have been recognised.

Down time loss: Down time loss is considered to be anything that stops production for a period of time such as machine failure, shortages of required materials and changeovers. Changeover time can usually always be reduced in most instances.

Performance: The performance category covers any factors that may cause your machinery not to operate at its maximum speed or capacity when running. It should bring to light any operator ineffectiveness, machine wear and tear as well as use of poor quality materials.

Quality: OEE will also take any quality loss issues in to consideration. This means that it will identify when produce does not meet the required standard and has to be re-made or changed.
Once all these, plus lots of other contributing factors are taken in to consideration you will be left with a measurement of “Fully Productive Time”.

This is the time your machines are fully operational, working to their full efficiency and are producing the desired result. The main aim of OEE is to help you maximise and increase you fully productive time. There is usually always room for improvement in most manufacturing plants. Once you overall equipment effectiveness has been measured you can then see where you stand in the “World Class OEE”.

Studies indicate that the average manufacturing rate of most plants is around 60%. A world class overall equipment effectiveness measurement is considered to be anything above 85%. As previously mentioned many plants and production lines have a lot of room for improvement!