Word of the Day: overall equipment effectiveness (OEE)

Word of the Day Daily updates on the latest technology terms | April 29, 2019 overall equipment effectiveness (OEE) Overall equipment effectiveness is a measure of manufacturing operations performance and productivity, expressed as a percentage. OEE indicates the degree to which a manufacturing process is truly productive and serves as a general and inclusive measurement of how well a company's manufacturing operations are performing. It's important to note that because OEE is a general measure, its value comes from being a big-picture indicator rather than a specific management tool. Overall equipment effectiveness is both inclusive and relatively clear-cut, which makes the metric both valuable and easy to understand. OEE enables simple overall performance comparisons between companies with very different situations and processes. Because OEE serves as a general measure of manufacturing operations performance, it can also be used as a key performance indicator (KPI) for measuring the success of improvement initiatives such as those related to quality improvement and lean manufacturing. How to calculate OEE In the simplest terms, OEE = availability x performance x quality. For example, a machine that has 90% availability, performs at 95%, and has a good-product quality rate of 98%, will have an OEE of 83.79%. Availability: The percentage of time that a machine or other physical asset is expected to be available for production. Performance: The percentage of the actual operational speed or the number of units produced in a certain timeframe, compared to the designated or standard speed. Quality: The percentage of defect-free parts or products produced. Importance of OEE What's notable about measuring overall equipment effectiveness is that it gives context among the three variables. For example, speeding up production at the expense of quality so that overall operational performance is compromised would not be considered truly productive. In addition, more than simple asset availability or production-line efficiency, overall equipment effectiveness takes into account the viability and quality of the products to be manufactured. OEE is used across manufacturing industries and spans manufacturing types, from process manufacturing to discrete manufacturing to hybrid manufacturing and so on. Quote of the Day "OEE provides a general measure of manufacturing operations performance to help track changes brought about by process improvements, quality improvements, lean manufacturing and other improvement initiatives." - Dave Turbide Trending Terms lean production operational performance management process manufacturing discrete manufacturing key performance indicators Learning Center Why should companies include OEE in their manufacturing KPIs? OEE is among the most important manufacturing KPIs, and a company's SAP ERP system can be critical in providing that information. Here's how. Why is OEE a popular manufacturing operations KPI? Overall equipment effectiveness is a helpful measurement that tells you how well plant processes and manufacturing operations are doing. Here's how it works. Industrial IoT application boosts machine utilization Read how a small metal parts manufacturer used a MachineMetrics industrial IoT application to boost overall equipment effectiveness by around 10% and improve the accountability of machinists. Three surprising benefits of asset utilization Asset utilization has become a top business IoT use case. Bsquare's Dave McCarthy offers three benefits beyond the usual suspects of asset utilization data. Enterprise manufacturing intelligence comes of age Advances in enterprise manufacturing intelligence let companies connect transactional and real-time operational data and deliver it to mobile devices for better decision making. Quiz Yourself Taiichi Ohno studied supermarket operation for _______ before developing Toyota's rules for lean production. a. awhile b. a while Answer Stay in Touch For feedback about any of our definitions or to suggest a new definition, please contact me at: mrouse@techtarget.com Visit the Word of the Day Archives and catch up on what you've missed! FOLLOW US About This E-Newsletter This e-newsletter is published by the TechTarget network. To unsubscribe from Whatis.com, click here. Please note, this will not affect any other subscriptions you have signed up for. TechTarget, Whatis, 275 Grove Street, Newton, MA 02466. Contact: webmaster@techtarget.com Copyright 2018 TechTarget. All rights reserved.