Why Manufacturers Use OEE Software to Improve Efficiency

Manufacturers constantly strive to build or maintain a competitive advantage. They seek improvements in the areas of people, performance and process to achieve this objective. Efficiency KPIs help support this initiative by tracking progress towards underlying operational goals, such as reducing downtime or optimizing throughput. OEE software makes managing and viewing these metrics easier.

Another commonly used metric is overall equipment effectiveness (OEE). It considers the quality of goods produced, how effective workers are and how well machines are performing. Measuring and improving these factors help boost your plant efficiency.

However, if you are using manual processes with paper and spreadsheets, it can be difficult to compute this number consistently. This challenge can create distrust in the metric because there isn’t a single version of the truth. OEE software resolves this issue by automating the calculation in real-time whether your factories use process or discrete manufacturing (or both).

Why Is Measuring OEE Important?

Overall equipment effectiveness represents a lean manufacturing metric developed to determine how much of the time allotted to production is genuinely productive. It is a benchmark to compare performance for:

  • How a production asset measures up to industry standards
  • How a production asset measures up to other in-house assets
  • How results produced during different working shifts compare using the same assets

You can measure OEE as a baseline when tracking progress on eliminating all potential waste from production assets. Below are some of the typically seen percentages and what they indicate.

  • 100% — You’ve achieved perfect production by manufacturing good parts quickly with no stop time
  • 85% — For discrete manufacturing, this represents a world-class score and an ideal long-term goal for other industries
  • 60% — If you’re hitting this score, that means your company falls into the median for manufacturing
  • 40% — A score in this range is typical for new businesses and manufacturers investing in technology for the first time


Calculating Your Manufacturing Metric

You can calculate OEE in two ways. The first method is simply:

OEE = (Good Count x Ideal Cycle Time) / Planned Production Time

What does all that mean? Here’s a breakdown of each term.

  • Good count: Represents parts produced within a plant that meet set quality standards without requiring rework
  • Ideal cycle time: The least amount of time required to produce a part
  • Planned production time: Time allotted to your equipment to produce parts

Calculating OEE using this formula gives you a ratio of your production of good parts against your planned production time. The drawback to the calculation is that you don’t get insight into critical loss-related factors.

The second method adds these factors to the equation. Let’s review what goes into it.

Additional metrics

  • Stop time: A period during which processes did not run as scheduled, either for planned or unplanned stops
  • Run time: Planned production time minus stop time
  • Ideal cycle time: The fastest your process runs under ideal circumstances
  • Total count: A total count of parts produced during run time, including those below quality standards


Loss-Related Factors

  • Availability: Measures the amount of time lost when events bring production to a halt. You calculate availability as a ratio of run time to planned production time
    • Equation: Availability = Run Time / Planned Production Time
  • Performance: Measures any factors responsible for processes operating at less than their maximum when running
    • Equation: Performance = (Ideal Cycle Time x Total Count) / Run Time
    • Alternative Equation: Performance = (Total Count / Run Time) / Ideal Run Rate
  • Quality: Accounts for parts not up established quality standards
    • Equation: Quality = Good Count / Total Count

Once losses during production are added, you get a measurement that provides an accurate picture of your productive manufacturing time.

OEE = Availability x Performance x Quality

Tracking your company’s overall equipment effectiveness tells you how well you’re doing in optimizing the efficiency of your processes. Improving this KPI should lead to higher productivity while still maintaining quality. If the score indicates a gap, it’s often more cost-effective to work on the factors that affect OEE versus more expensive alternatives, including:

  • New equipment purchases
  • Paying for more overtime
  • Adding shifts
  • Outsourcing production


What Is OEE Software?

Instead of trying to keep up with a complex array of spreadsheets and other documents stored in siloed systems, OEE software provides the information through one centralized platform. Most solutions integrate data sources between your shop floor, such as an MES, and business suite, such as an ERP. These solutions also eliminate a lot of the complexity of tracking OEE and other important metrics by automating the calculations based on real-time data. There are many options on the market. A few to highlight are the SAP OEE application for SAP MII, Movilitas Real-Time Production Management (RPM) and SAP Digital Manufacturing Cloud (DMC) for Insights.

This connection enables a holistic view of operations from customer order through product delivery. OEE software also enables access to real-time metrics via dashboards and scorecards that can be conveniently placed throughout your operations. This visibility enables a trusted, single version of the truth across your organization that drives the improvement needed to keep your competitive advantage.

Learn more about deploying OEE software for improving your manufacturing KPIs with our guide, A Simple Solution for Improving Your Manufacturing OEE. Movilitas RPM is an MES solution developed for SAP environments. For more information on how our manufacturing accelerator can be used, please access our case study, How a CPG Giant Improved Its Production KPIs.

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