OEE – The Catalyst that Drives Significant Improvement and ROI

As the economic climate continues to remain firmly in the doldrums, manufacturers are being forced to re-evaluate their cost bases. The object of the exercise is to minimise operating costs in order to try to drive margins higher, or at least to stop them diminishing.

With the supply of new cash being as tight as it is, and most businesses being unwilling to invest too far ahead, more and more pressure is being exerted on finding ways to utilise existing assets and plant to maximum benefit. This is where OEE (Overall Equipment Effectiveness) comes into its own right.

Inefficient machinery, sloppy procedures, and high reject rates all combine to increase costs, lowering both ROI and profitability. But with an effective OEE system in place, this can all be changed without necessitating any serious new investment.

Many businesses operate their own spreadsheet systems to monitor costs. The only problem with spreadsheets however, is that they take a lot of time to update, time that should be spent working with real-time information from a powerful OEE system to make real plant improvements.OEE software is specifically designed to evaluate all phases of the manufacturing process. The program is generic in nature and can therefore be applied to a wide variety of different business models. Each program can however be adapted to suit a different permutation of operational processes and procedures, turning it into a customised, tailor-made fit.

An OEE system looks at various aspects of the manufacturing cycle. These include (but are not limited to):

  • Plant performace (P)
  • Work loading
  • Production line availability (A)
  • Machine downtime
  • Stoppages due to shortage of materials
  • Stoppages due to plant maintenance issues
  • Quality (Q) and the reject rate
  • Availability of labour.

Where P, A and Q are the three underlying elements of OEE.

The best use of an OEE system is when it is deployed as a catalyst. In other words it is used as a driver of change. Utilising the “drill down” features that an OEE software package provides, it enables in-depth study of many of the components of any process. This allows and facilitates the query in progress to burrow down to the underlying data to analyse what exactly is causing the problem.

Sophisticated OEE software programs, such as the Idhammar OEE system, have enormous analytical power. However, through clever design and the need for simple functionality, the control panel allows almost anyone in the working environment to be able to harness that power. This helps to promote ownership and responsibility, which is a key step forward when problem solving.

The fact of the matter is that even small improvements in OEE percentages can result in significant changes of production efficiency, productivity, and profit. These changes will realise a real improvement on the ROI. For example, it is quite usual for a 10% increase in overall OEE, to drive a 50% increase in the return on assets, or ROA.  This sort of improvement is also much more cost effective than it otherwise would be following the procurement of additional plant.

The introduction of an effective OEE system is the first major step any organisation can take in the process of improving its ROI. However, for the potential of the OEE program to be fully realised, the culture of the organisation must be also changed to use it to its fullest extent, in order to reap the maximum benefit.

Get in touch, and let Idhammar help you uncover the potential of your operations.