oee financial benefits from component improvement
DESCRIPTION
OEE has long been used as a Lean measure for the effectiveness of production equipment. It is mainly used to determine where to focus improvement efforts, Availability, Performance, or Quality. This presentation provides an explanation of OEE and a case study of how improvements to each of the OEE factors can demonstrate financial resultsTRANSCRIPT
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Robert BairdLean Teams USA
+1 215 353 0696
OEE Financial Savings From Component Improvements
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OEE FactorsOEE = Availability x Performance x Quality
– Availability - Percentage of the actual amount of production time the machine is running to the production time the machine is available
– Performance - the speed at which the operation runs as a percentage of its designed speed
– Quality - the Good Units produced as a percentage of the Total Units Started. Referred to as First Pass Yield
Each Factor compared to a standard
𝑨𝒗𝒂𝒊𝒍𝒂𝒃𝒊𝒍𝒊𝒕𝒚=𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈𝑻𝒊𝒎𝒆÷𝑷𝒍𝒂𝒏𝒏𝒆𝒅𝑷𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒐𝒏𝑻𝒊𝒎𝒆
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LossesOEE Loss Category OEE Component Loss CategoryDowntime Losses Availability 1. Equipment Failure
2. Tooling damage3. Unplanned Maintenance4. Process warm up5. Machine changeover6. Material shortage
Speed Losses Performance 1. Product mis-feeds2. Component jams3. Product flow stoppage4. Level of Operator5. Equipment age6. Tooling wear
Quality Losses Quality 1. Assembled incorrectly2. Rejects3. Rework
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World Class OEEOEE Factor World Class
Availability 90%
Performance 95%
Quality 99.9%
OEE 85%
Which Process to Improve OEE
• Weighted Average Method• Value Added = Product Revenue – COGS
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Process OEEValue Add
Value %
OEE Value
1 85.0% $44,320 22.5% 19.2%
2 60.0% $51,005 25.9% 15.6%
3 77.0% $42,315 21.5% 16.6%
4 82.0% $48,900 24.9% 20.4%
5 55.0% $10,100 5.1% 2.8%
Total $196,640 100.0% 74.5%
Financial Performance of the Operation
CONSIDERING VALUE ADD WHICH PROCESS WOULD YOU IMPROVE OEE
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Cost Avoidance
OEE
$ CAPEX
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Case Study• 30% improvement in downtime, 10%
improvement in speed losses, and 2.6% quality improvement
OEE Factor Result BeforeAvailability 300 71.4%
Performance 21,300 71%
Quality 20,200 94.8%
OEE 48.1%
OEE Factor Result AfterAvailability 390 92.8%
Performance 30,459 78.1%
Quality 29,636 97.3%
OEE 70.5%
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Case Study Financials
• Before
• After𝑅𝑒𝑣𝑒𝑛𝑢𝑒=20,200∗$5.00=$101,000
𝑅𝑒𝑣𝑒𝑛𝑢𝑒=29,636∗$5.00=$148,180
46.7% Revenue Gain
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Case Study Financials• Before
• After
-25.2% COGS
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Case Study Financials• Before
• After
-34.5% Labor Efficiency 𝑫𝒊𝒓𝒆𝒄𝒕 𝑳𝒂𝒃𝒐𝒓 𝑬𝒇𝒇𝒊𝒄𝒊𝒆𝒏𝒄𝒚 𝑽𝒂𝒓𝒊𝒂𝒏𝒄𝒆=𝑺𝒕𝒂𝒏𝒅𝒂𝒓𝒅𝑹𝒂𝒕𝒆∗(𝑺𝒕𝒂𝒏𝒅𝒂𝒓𝒅 𝑯𝒐𝒖𝒓𝒔−𝑨𝒄𝒕𝒖𝒂𝒍 𝑯𝒐𝒖𝒓𝒔)
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ALWAYS VISUALLY MANAGE
PROGRESS
Guaranteed ROI From Lean Teams USAContact Us
• Lean Teams USA Lean Consulting
• View My Profile on LinkedIn
• Lean Teams USA +1 215 353 0696
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