Continuous Improvement in Industry Blog

Improving OEE - Chapter 4

20181109 Improving OEE Blog
by Ross Kennedy, 9 November 2018

Review of “Understanding, Measuring, and Improving Overall Equipment Effectiveness” published by CRC Press Taylor & Francis Group – a Productivity Press book.

The fourth chapter titled Improving OEE, outlines a structured and disciplined team based approach required to fully understand all the issues that can impact on Overall Equipment Effectiveness or OEE performance.

There are 3 types of issues that can impact on OEE Losses:

  1. Technical;
  2. People Development; and
  3. Management.

Too often the focus is on the Technical issues, such as equipment reliability reflected in Unplanned Recorded Downtime (Breakdowns), however our research highlights that these often make up less than 25% of total losses.

Decisions by Management relating to structures, manning, rosters, planned downtime allowances such as clean-up time, breaks etc, as well as poor production and maintenance People Development resulting in poor set-up or changeover practices, poor equipment care (looseness, contamination and no lubrication) or the lack of ability to identify small problems at the earliest possible time by far contributes to the majority of losses.

In order to identify these issues correctly, there are 3 ways of capturing OEE Losses that should be used in concert to ensure a holistic understanding of losses is achieved. They are:

  1. High Level Measurement;
  2. Continuous Recording; and
  3. Sampling through Observation.

When using these techniques to capture OEE Losses, an OEE Loss & Improvement Analysis should be used to breakdown those losses even further. An OEE Loss & Improvement Analysis is best done with a properly structured Cross-functional Team as the self learning, especially through observations, will challenge current beliefs and build relationships. As such the make-up of the team is very important recognising the 1st Level Staff person should lead the team as they are responsible for the performance of the targeted equipment or production line.

It is important that prior to establishing a Cross-functional Team, the Improvement Manager / Co-ordinator / Specialist should conduct a Preparation Analysis (typically 16 tasks) that is overseen by the CI or Site Leadership Team. This is critical for the success of the team, otherwise it may get bogged down with collecting basic information rather than identifying the critical People Development issues through surveys, diagnostics and observations.

Developing your Planned Downtime Model and establishing the OEE Baseline should also be completed before kicking off.

If you would like to learn more about CTPM’s approach to OEE, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au. My book is available for purchase through Amazon using this link.

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Calculating OEE - Chapter 3

20181029 Calculating OEE Blog
by Ross Kennedy, 29 October 2018

Review of “Understanding, Measuring, and Improving Overall Equipment Effectiveness” published by CRC Press Taylor & Francis Group – a Productivity Press book.

The third chapter titled Calculating OEE, raises some interesting insights into why Overall Equipment Effectiveness or OEE is poorly calculated by many people.

The 2 most common methods of calculating OEE is by either using Equations which involves multiplying Availability, Performance Rate and Quality; or by using the Time Loss model where you start with Available Time then remove all the time associated with downtime, rate and quality losses.

Both methods, if done correctly, will give the same OEE result, however we have found the Time Loss model will provide much more detail regarding where the loss opportunities are.

Another measurement tool for calculating OEE is the High Level OEE (HLOEE) equation which is based on a simplified version of the Equation method.

20181029 HLOEE Calculation

It is a very simple and accurate way to calculate OEE, however it does not outline where the losses are coming from.

When capturing raw data to calculate OEE for either of the methods above, there are three issues you need to consider:

  1. If recording is captured manually, it may not be very accurate especially when it comes to minor or short duration stops;
  2. If recording is captured automatically, often the reason or reasons for the minor or short duration stops are poorly recorded resulting in a high level of ‘other’ losses; and
  3. If poor definitions are in place for key losses such as Ideal Speed, Available Time and some of the Quality losses, OEE calculations can be distorted.

Once you have selected your OEE Calculation method and considered all the issues, it is important to remember that the whole reason for collecting Loss information is to make improvement decisions. One of the most common tools used for this is the Pareto Chart.

The Pareto Analysis should initially start with the 7 Main Losses (1st Level Pareto) then a 2nd Level Pareto should be created for each of the 7 Main Losses starting with the biggest loss. In some cases you may even create a 3rd Level Pareto of the reasons for the largest 2nd Level Pareto issues.

Being able to accurately display Loss information correctly becomes a very helpful tool to identify OEE improvements, and help lead your Continuous Improvement journey to achieve Operational Excellence.

If you would like to learn more about CTPM’s approach to OEE, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au. My book is available for purchase through Amazon using this link.

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Measuring OEE - Chapter 2

Measuring OEE Blog
by Ross Kennedy, 22 October 2018

Review of “Understanding, Measuring, and Improving Overall Equipment Effectiveness” published by CRC Press Taylor & Francis Group – a Productivity Press book.

The second chapter titled Measuring OEE, raises some interesting insights into why the concept of Overall Equipment Effectiveness or OEE is poorly measured by many people.

Before measuring OEE you should develop a set of definitions for the timeframes and various losses involved, recognising there are three operational situations where OEE can be measured and each will require a different approach.

The operational situations involve fixed or variable Available Time, Inputs, and Good Output.

The most common situation is fixed available time where you run and measure OEE for the entire shift with variable inputs and variable good output depending on the performance or OEE of the line or equipment.

The other two operational situations are where available time varies due to either the need to process a fixed input or batch, or where there is a requirement for a fixed good output and you run until that is achieved as in making fresh daily bread or a daily newspaper.

Once you determine your operational situation you can create your Loss Model and document your definitions so that there is agreement by all, recognising ‘measures dictate behaviour’.

The key to measuring OEE is to include all the losses that you wish to improve. This is why I recommend the 7 Losses Model which includes Planned Downtime, and Speed Loss that is based on Ideal Speed rather than average or standard speed used for production planning.

If you would like to learn more about CTPM’s approach to OEE, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au. My book is available for purchase through Amazon using this link.

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Understanding OEE - Chapter 1

15 October 2018 Lean in Industry Blog
by Ross Kennedy, 15 October 2018

Review of “Understanding, Measuring, and Improving Overall Equipment Effectiveness” published by CRC Press Taylor & Francis Group – a Productivity Press book.

The first chapter titled Understanding OEE, raises some interesting insights into why the concept of Overall Equipment Effectiveness or OEE is sadly misunderstood by many people.

OEE is based on the premise that equipment is only effective when it is available as required, running at the ideal speed, and producing perfect or within-specification output.

OEE can be a powerful improvement tool if used correctly, however it should not be used as a comparative performance measure matching one machine or line to another.

Too often misguided managers go looking for the simple measure that they can focus-on to compare performance, however, in reality there is no one measure that tells the full story.

A suite of performance measures which are aligned to your site’s Key Success Factors of Operations are required to capture all opportunities for improvement in an operation.

To support the improvement of your performance measures we have found OEE (plant & equipment focused), Lead Time Reduction (process focused) and Time Lost (people focused) are the drivers to improve, not measures to be compared.

Production must be accountable for OEE performance with all other departments assisting them to achieve agreed targets of closing the gap to the OEE Ideal Vision based on agreed assumptions for the 7 Losses: Planned Downtime, Set-up or Changeover Downtime, Unplanned Recorded Downtime, Minor Unrecorded Stoppages, Reduced Speed, Rejects & Rework, and Start-up & Yield Loss.

This chapter reinforces the importance of establishing an understanding of OEE throughout the entire workforce so that OEE does not become ‘the most misused and abused indicator of equipment performance’ at your site.

If you would like to learn more about CTPM’s approach to OEE, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au. My book is available for purchase through Amazon using this link.

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Expose the Hidden Factory in your Plant with OEE

16 February 2018 Lean in Industry Blog
by Ross Kennedy, 16 February 2018

OEE or Overall Equipment Effectiveness was created during the development of the Toyota Production System to help understand all the losses that could affect equipment performance so as to reduce lead times and improve quality, rather than relying on the traditional approach of measuring just equipment downtime.

I first came across the concept in 1989 in a Productivity Press book titled TPM Development Program. It outlined that equipment could only be effective if it was Available when required, running at the ideal or theoretical speed or Rate (very best in ideal situation), and producing good Quality output first time.

Hence OEE = Availability% x Rate% x Quality%.

Originally OEE involved the Six Big Losses (equipment failure, set-ups and adjustments, idling and minor stops, reduced speed, process defects, reduced yield), however in more recent times this has been expanded to seven losses with the inclusion of planned downtime when the operating crew are at work.

OEE is often referred to as the measure that allows you to expose and capture the "hidden factory" within your plant. Often sites will identify opportunities worth 20% to 50% more capacity from their production lines or processes with little or no capital expenditure simply by fully understanding and doing something about all the losses that stop their equipment from being effective. I have certainly witnessed this in manufacturing, mining, and process industries during the past 20 years of applying this learning in a structured discipline way.

I have found when studied in detail, OEE losses can be attributed to three key areas:

  • Technical issues such as design weaknesses or poor maintenance practices;
  • People Development issues such as poorly trained operators or maintainers who lack an understanding of prevention at source for equipment; and
  • Management issues such as inappropriate organisation structures, rostering, recruitment, daily management policies, planned maintenance and planned break times.

Once identified and actioned, the improvement results can be very significant.

One mine site in Indonesia reported at an international conference in Asia how over two years they saved over US$135million by focusing OEE improvement on their run-of-mine. At Australia’s largest privately owned brewery, OEE was used to increase the capacity of their main production line by more than 15% each year to defer the need to increase to a two-shift operation for three years while still meeting the growth of their business which was reported in the local media as 17.5% average yearly growth from 1993 to 2012.

Unfortunately at many sites, OEE has become the most misused and abused indicator of equipment performance with some sites changing the definitions to make it appear better as they are required to submit it to corporate for comparison between other sites.

At one large multi-national food manufacturing site I visited they were boasting about their high OEE performance, however when I delved into the way they were measuring OEE, I realised that they had removed Planned Downtime and Set-up or Changeover Downtime and had an Ideal Speed set at the standard average speed used for setting budgets and doing costing (typically 20% lower than true ideal or theoretical speed).

In effect, they were hiding many opportunities for improvement so that they could report a good performance figure to corporate management. In other words, they had a culture of always trying to look good rather than seeking out opportunities for continuous improvement.

OEE should be seen and used as a "driver" for improvement, not as a performance measure to be compared or benchmarked between equipment and sites. As a "driver" for improvement, the definition for OEE should have a 100% correlation to the good output produced from your line or plant. In other words, if OEE increases by 10% then you should be making 10% more good output or making the same amount of good output within 10% less time, hence the need for the OEE definition to include all the seven losses.

If you would like to learn more about CTPM’s approach to OEE, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au. My book is available for purchase through Amazon using this link.

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Should we be using Proverbial Wisdom to guide Lean Transformations?

23 January 2018 Lean in Industry Blog
by Ross Kennedy, 23 January 2018

The following piece of proverbial wisdom is remarkably astute: Give a person a fish, and you feed them for a day. Teach a person to fish, and you feed them for a lifetime.

So how does this apply to a Lean Transformation?

Our observation is that many companies are setting up their Lean or Operational Excellence departments with Lean specialists whose role is to identify improvement opportunities then execute Lean projects or events to achieve the targeted gains for the company. They get the people in the area being targeted involved, however the time allocated is normally as short as possible so as not to disrupt operations. Typically it is just enough time to get the Lean specialist’s well thought out change implemented before the focus is 100% back on the job at hand.

Sadly what we find is that often many of these Lean projects are not sustainable, or do not achieve their full expected benefits in the long term because the Lean specialist moves onto another project in another area, and the people in the original area drift back to their old ways.

In other words the Lean specialist, often directed by his boss for quick wins, is more focused on getting the Lean project outcomes (the fish) rather than teaching everyone involved about how to identify losses and wastes at the earliest possible time and be able to address them promptly.

Professor Jeffrey K. Liker from the Industrial & Operations faculty at the University of Michigan USA in one of his books published in 2007 titled Toyota Talent: Developing your people the Toyota Way touches on this very important and often forgotten part of Lean when in chapter 2: Toyota Works Hard to Develop Exceptional People, he explains how the Toyota Production System’s chief architect Taiichi Ohno, as he implemented single-piece flow, soon learnt it would not work by relying on the traditional model of Industrial Engineers telling the workforce what to do.

“A select few front-office experts could not possibly deal with all the situations that would surely arise. He needed capable masses. The development of capable masses requires a clear plan. It requires time and patience. Above all it takes persistence and the willingness to stick with it and to deal with the individual peculiarities and challenges of each person.”

It is worth reflecting on your approach to your Lean Transformation. Are you feeding your people fish, or are you teaching all of them how to fish for losses and waste?

CTPM’s approach to Lean Transformations is very much based on progressively teaching all your people how to fish for losses and waste with a few fish (early wins) thrown in to keep senior management happy. This is why our motto is: Think People before Tools

If you would like to know more about CTPM’s approach to Lean Transformations, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au.

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Identify the Problem – the key to Root Cause Analysis

18 August 2017 Lean in Industry Blog
by Ross Kennedy, 18 August 2017

Recently I ran a very successful public workshop on Frontline Problem Solving Root Cause Analysis. This approach is designed to assist all levels in a company from Manager to Shopfloor, to develop effective Root Cause Analysis skills – a critical foundation for Operational Excellence.

During the workshop we have the delegates form teams and work on a problem or incident they have brought along from their workplace.

One team’s problem was presented as a recent incident at their site involving a quality loss from filling the incorrect amount of product into the container on their high speed capsule bottling line. It was reported that some packs or bundles when checked at their weigh scales, failed indicating that some containers had less than the required 50 capsules. As they investigated the problem they found a crack in the glass of their visual sensing system on the filler. This was replaced, and the problem resolved. Hence they wanted to work on the problem of ‘Filled Bottles – incorrect bundle weights’.

As they progressed through the first four steps of the 7 Step process: Define ProblemContain ProblemAnalyse Problem and Develop Root Cause Solutions, they realised that the problem they should be working on is ‘Sensor Glass – cracked’, because in the workplace under the pressure of getting production out, they had assumed replacing the cracked glass would solve the problem. When in fact, as they started asking ‘Why’ a few times over, there were a lot of possible issues that should have been followed up on so that the glass never cracks again.

This is a great example, and not an uncommon example, we come across as we get people out of the workplace to start to appreciate what Root Cause Analysis is all about. It is not about learning how to fix a problem quicker in the workplace – they already had done that by being able to immediately stop the line, inspect the equipment, find the cracked glass and get it quickly replace. It is about how to stop the problem from happening again.

If you would like to know more about Frontline Problem Solving Root Cause Analysis, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au.

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Chasing Production Records isn’t very Smart

5 May 2017 Lean in Industry Blog
by Ross Kennedy, 5 May 2017

Too often we find sites obsessed with trying to achieve new production records in an attempt to increase their overall output. The sad reality is that trying to achieve new production records rather than focusing on why the average or target performance was not achieved will nearly always lead to less total output over the longer term.

Of course chasing new production records may sound very heroic and may create great motivation within the workforce, especially if linked to attractive rewards or bonuses. However when compared to the long term average performance that can be achieved through Reactive Improvement, the shortfall can be quite significant.

Chasing production records will often widen the distribution curve (see visual below), as there is often very poor performance after a record has been achieved because the plant has been pushed too hard resulting in unforeseen failures or disruptions.

Figure 1 Chasing Production Records isnt very Smart

By reviewing performance daily through rapidly identifying and addressing the root causes, and putting the effort into why the desired (average or target) performance was not achieved, you will progressively reduce the variation and increase the average in performance. Therefore resulting in a greater output over the long term.

Reactive Improvement is about developing an effective Daily Management Process covering all levels, so that you have the ability to rapidly recover from an event or incident that stops you from achieving your budgeted or expected performance, and most importantly initiating corrective actions at the earliest possible time so that the event or incident will not re-occur anywhere across the organisation.

Most organisations have Daily Review Meetings as part of their Daily Management Process however far too often they are not effective. They often start late or drag on for too long, they accept poor performance standards, they skip over below target performance by accepting ‘work-a-round’ corrective actions, and the list goes on. How do your Daily Review Meetings compare?

If you would like to know more about CTPM’s approach to Reactive ImprovementDaily Review Meetings or Frontline Problem Solving, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au.

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Daily Management 101…

17 February 2017 Lean in Industry Blog
by Ross Kennedy, 17 February 2017

It might sound overly simple, but are your daily review meetings simply about complying with company policy?

Or are they really focused on safely achieving your production plan at the required standards?

If you cannot answer this basic question positively, chances are you have not developed effective Daily Management practices and Frontline Problem Solving skills of your workforce and if an incident does arise they will probably work around it rather than stopping it ever happening again.

There are three key parts to any Continuous Improvement Strategy:

  1. Reactive Improvement to ensure effective Daily Management
  2. Stable Production Plan to stop Fire-Fighting
  3. Pro-active Improvement to take you to your Improvement Vision

Many organisations tend to focus on Pro-active Improvement (3) with Lean, Six Sigma or TPM initiatives and lose sight of the importance of the foundations of Reactive Improvement (1) and a Stable Production Plan (2).

It should be noted a  Pro-active Improvement journey can take many years to achieve Operational Excellence which means there is a strong argument for getting effective Daily Management and Frontline Problem Solving through Reactive Improvement in place sooner rather than later, to free up everyone’s time for Pro-active Improvement.

In fact Reactive Improvement and having a Stable Production Plan are critical foundations to free up everyone’s time so they can work towards achieving Operational Excellence and Perfect Equipment Performance.

To find out more about getting your Daily Management and Frontline Problem Solving efforts up to speed and whether  government funding is available, contact myself, Ross Kennedy at CTPM Head Office on + 61 (0)2  4226  6184, via Mobile + 61 (0)418 206 108 or email ross.kennedy@ctpm.org.au.

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