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Maximizing Equipment Effectiveness: Unveiling OEE Ambiguities

Manufacturing engineers, production managers, and individuals involved in machine utilization and optimization in industrial settings can benefit from gaining insights into historical practices and understanding the importance of efficient production.  

Today we explore the evolution of equipment effectiveness, challenge the traditional approach to measuring machine performance, and provide strategies for production optimization.   

Evolution of Machine 

Utilization Targets In the 1980s, as a Senior Chief level manager at Bosche and other top manufacturing companies in India, I witnessed the importance of tracking machine utilization.  

Managing a billion Deutsche Mark CAPEX budget, I strived to achieve a utilization target that increased from 75% to 85%. The simple formula was Planned Cycle Time x Good Quantity Produced / 24 hours. 

The Limitations of Overall Equipment Effectiveness (OEE) 

While OEE is a commonly used metric, its calculation can be ambiguous.  

Excluding planned losses leads to situations where OEE can exceed 100%. I encourage my clients to consider planned losses and the impact of non-value-adding stoppages.  

We can maximize equipment effectiveness by questioning that 85% OEE is the best target.

Rethinking Machine Performance Measurement 

To optimize production, it is crucial to reduce cycle time continually.  

Through Kaizen on Fixtures and Tools, we can achieve preventive quality assurance and cost reduction.  

Hourly output monitoring enables accurate shift output prediction, facilitating fact-based decision-making.

Embracing a planning mindset helps us achieve 100% utilization every hour. 

Strategies for Production Optimization 

Maximizing machine utilization drives industrial productivity and manufacturing efficiency.  

We ensure a deep-rooted planning mindset by implementing strategies like “Go and See” or ” Genchi Genbutsu” culture. These efforts result in the globally lowest cost per piece, even in high labour-cost locations. 

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Q.1 What is equipment effectiveness, and why is it important in manufacturing?

Equipment effectiveness refers to the optimal utilization of machines in manufacturing processes.

It is crucial because it directly impacts productivity, quality, and cost efficiency. Maximizing equipment effectiveness leads to improved profitability and overall business growth. 

Q.2 How has the target for machine utilization evolved over the years?

In the 1980s, the machine utilization target was around 75%. However, with increasing focus on efficiency and productivity, the target has risen to 85% in recent years. This upward trend reflects the continuous drive to maximize available resources and effectively meet customer demands. 

Q.3 What is Overall Equipment Effectiveness (OEE), and how is it calculated?  

Overall Equipment Effectiveness (OEE) is a metric used to measure machine performance. It is calculated by multiplying a machine’s availability, performance, and quality rates, resulting in a percentage value that represents the overall effectiveness of the equipment. 

Q.4 Why should planned losses be considered in OEE calculation?  

Planned losses, such as necessary but non-value-adding stoppages, should be regarded as in OEE calculation to reflect machine performance accurately. By accounting for these losses, businesses can identify improvement opportunities and optimize their equipment utilization. 

Q.5 Is 85% OEE the best possible target for machine performance?

Challenging the conventional belief, 85% OEE may not be the best possible target for machine performance. By considering planned losses and continuously striving for improvement, businesses can achieve even higher levels of equipment effectiveness and unlock additional productivity gains. 

Q.6 How can maximizing machine utilization contribute to cost reduction and improved productivity? 

Maximizing machine utilization ensures that production resources are used optimally, reducing costs and improving productivity.

Efficient utilization minimizes downtime, eliminates bottlenecks, and enables businesses to produce more output within the same time frame, resulting in increased profitability.

Q.7 What are some challenges in achieving high machine utilization?

Achieving high machine utilization requires careful planning, proactive maintenance, and effective coordination. Some challenges include equipment breakdowns, unexpected stoppages, skill shortages, and inefficient production scheduling. By addressing these challenges systematically, businesses can enhance machine utilization.

Are you ready to maximize your equipment effectiveness and achieve exponential growth? Sign up for a free 30-minute online consultation and gain valuable insights tailored to your manufacturing operations. Let’s optimize your production and drive exceptional results together. 

Remember, efficient production is the key to sustained success in today’s competitive manufacturing landscape. 


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