Improving Plant Performance

Overall Equipment Effectiveness (OEE)
A White Paper

May 2005

Prepared by Frost & Sullivan’s
Industrial Automation Practice

Abstract: OEE - as a key measure of efficiency in production processes – has the
potential to improve plant performance, asset utilization and bring in significant and
virtually immediate ROI. The results are most evident in businesses that approach
production from a mindset of continuous improvement, since adoption of OEE systems
needs to be complemented by a determination to address the key issues impeding
optimal performance that are identified by the OEE approach

Improving Plant Performance 1

industrialautomation. metals. SCM and other process and manufacturing systems. pharmaceuticals and power distribution. PLCs. The report was completed in the first week of May 2005. USA. Its CitectHMI/SCADA. China and Africa. asset management. The Industrial Automation Practice of Frost & Sullivan monitors and tracks markets and technologies in MES. Improving Plant Performance 2 and About Citect Citect is a worldwide leader in industrial automation and next generation manufacturing execution systems (MES) and is the largest independent vendor in its field. Visit www. food and beverage. in the world. This White Paper was prepared for submission to Citect. visit http://www. has 15 offices in Australia. The white paper was written by analysts of the Industrial Automation Practice at Frost & Sullivan. Citect Plant2Business and suite of CitectIIM analysis modules are complemented by professional services. fieldbus and ethernet. Citect is headquartered in Sydney Australia. gas for further information. Frost & Sullivan is a global growth-consulting firm that helps global 1000 companies and emerging companies to meet and exceed their growth objectives. Frost & Sullivan takes no responsibility for any incorrect information supplied to us by Citect. customer support and training.Background This white paper was commissioned by Citect with the objective of introducing and elaborating a winning approach to improving plant performance. SCADA. including mining. All rights reserved. Europe. facilities monitoring. The company currently has 950 employees across 22 offices globally.frost. These solutions are enhanced by strong partner programs and are sold in numerous industries. n 1961. asset optimization. and its products are distributed in more than 50 countries worldwide. For further information on Industrial automation markets technologies. © 2005 Frost & Sullivan.

.................................................................. 4 What is OEE? ............... 7 What can OEE do for your business? ............................................................................................................................................ 6 How does a typical OEE solution help improve plant performance?... 4 How do you implement and use OEE? ..................................................................................................... 9 Recognizing and responding to the challenges....................................................................... 10 Improving Plant Performance 3 .................................................................................................................................. 2 Contents............................ 3 Introduction ........................................................................................Contents Background................

In recent times we have experienced a consolidation in the approach taken to performance improvement that is surprisingly common across a diverse range of industries. What is OEE? Overall Equipment Effectiveness (OEE) is a key measurement of efficiency in manufacturing processes (at machine. While not a new concept. So why is it so difficult? The inability to access reliable and timely plant information and ad hoc approaches and knowledge that only exist in people’s heads all contribute to making this difficult. Thanks to the work of Seiichi Nakajima of Nippon Denso. a major supplier to Toyota. it is only now being recognized in industries far removed from automotive or pure manufacturing where its roots have been. Your customers. This white paper explores the key steps needed to realize genuine performance improvement using wellknown methodologies combined with next generation MES applications. This means we now have a well-defined method of measuring plant performance that has universal meaning and acceptance. The concept had its roots in the Total Productive Maintenance (TPM) concept first conceived and used in the Japanese automotive industry in the 1960s and 70s. the cost of capital. and the clear majority of production facilities still have enormous potential for improvement when it comes to plant performance. the western world heard of and started to adopt this tool in the late 1980s. OEE at its simplest form is the cumulative impact of three factors – availability. The most common approach to performance measurement is the use of the KPI known as Overall Equipment Effectiveness (or OEE). performance and quality. Improving Plant Performance 4 . As any plant manager would attest this is easier said than done. manufacturing cell or assembly line levels). So what’s new about that? The financial pressure from company stakeholders is greater than ever before.Introduction It’s not uncommon today to find owners and operators of production facilities looking for ways to improve the performance of their assets and the quality of their products. To maintain a competitive business means getting more from the assets you already have. cost of labor and the shareholders are all driving businesses to increase production and reduce costs without resorting to major capital investment and without compromising product quality. your supply chain.

lack of quality materials and improper feeds. the best known run rate is taken as Ideal Run rate. Good Product refers to the quantity of product that meets quality standard or is to specification. operator inefficiencies. The key reasons why most operations do not achieve high OEE percentages are generally: ƒ ƒ ƒ ƒ ƒ ƒ Breakdowns Setup and Adjustments Small Stops Reduced Speed Startup Rejects Production Rejects The cumulative impact these can have on performance are shown in figure 2: Improving Plant Performance 5 . material shortage etc. or periods when no production is needed Current Run rate is the actual speed of operation of the equipment. This is invariably less than the planned production time due to unplanned downtime such as machine failure. scheduled maintenance. Total product refers to the total output of product from the equipment including rejects and those requiring rework. Planned Production time refers to the total planned operating time taking account of planned shutdowns for breaks. Ideal Run rate is the nameplate capacity (the equipment manufacturer’s stated ideal run rate for the equipment). changeovers.Figure 1: The OEE Calculation Availability = Actual Production time / Planned Production time Performance = Current Run rate / Ideal Run rate Quality = Good Product / Total Product OEE = Availability x Performance x Quality Actual Production time refers to the actual time that the equipment is in operation. This is invariably less than the recommended optimal run rate due to equipment age/wear. In situations where this is not available. lunch.

invariably those companies that seek to proactively improve business performance are the earliest and most enthusiastic adopters of OEE. for example. myopic approaches to what constitutes the health of the business (inordinate focus on current profits) weaken the motivation for continuous improvement. Improving Plant Performance 6 . Sectors where quality of output is critical and margins are low are driven to focus on the quality component and the performance component as well. Even those that do implement OEE. How do you implement and use OEE? The critical success factor in any OEE implementation is the need for the organization to start from the mindset of improvement. do so at various levels of uptake. Ultimately OEE provides data that enables improvement opportunities to be recognized – but the organization still has to act on the data for the OEE solution to be of value.Figure 2: Schematic representation of impact of losses on Plant performance Total Planned Plant Operating time Planned Shutdown Planned Production time Breakdowns Setup Adjustments Actual Production time Small stops Reduced Speed Net Production time Valuable Production time Startup & production Rejects 6 K E Y L O S S E S Since OEE provides data that enable production performance to be measured. In many cases. has traditionally focused most on the downtime component of the OEE equation. The mining and minerals sector.

But OEE solutions assist organizations to access the most important data.Another key requirement for OEE implementation is the presentation of relevant data in a clear format. Most of this time is devoted to planning rather than actual implementation. OEE solutions are supplied by MES software suppliers such as Citect. process engineers. shop floor. IT etc) in a variety of graphs and charts that can be personalized based on the stakeholder’s information and insight needs and preferences. What ‘causes’ impact production the most? What cause-based data points need to be measured? What definitions need input from the shop floor? What is the time-usage model adopted? What outputs does the business require at shop floor level. and presents it in an easy-to-use manner. Generally the package interfaces with existing SCADA/HMI. Huge amounts of data can potentially be obtained from a piece of equipment. QA. While modules can be specific to the key OEE parameters (Availability. and provides personalized information and insight to all relevant stakeholders (corporate level executives. at corporate level and by department? What KPIs need to be displayed? How does a typical OEE solution help improve plant performance? MES software suppliers such as Citect provide systems that give realtime access to and insights from OEE data. Improving Plant Performance 7 . other process control and automation systems and business systems. Typically the implementation of an OEE package takes between 1 to 3 months depending on the level and scale of adoption. The Planning process attempts to address the key needs and concerns of the business within the context of its actual operations. summarized outputs can also be generated to provide a holistic view to senior management for decision making that has an across-the-board impact on the organization. let alone an entire production line or plant. plant managers. Performance and Quality). This generally involves the implementation of an OEE solution in the form of software that draws and analyzes data from the production process. So how does an organization go about implementing and using OEE? Ultimately utilizing OEE requires timely access to relevant data to enable an organization to measure its OEE score by drawing and analyzing data in real-time (or close to real-time) from production equipment. and present it in a format that enables clear understanding of what the data is saying. and presenting the data to plant operators and manufacturing management in a format that enables the data to be understood. maintenance engineers.

utilization. real and virtual downtime etc. energy consumption per output unit.Figure 3: Typical output of top-level summarized OEE KPIs Availability-specific modules identify scheduled and unscheduled downtime events. cause and location. output per shift or crew. etc). Downtime events are segmented as per the company's time-usage model (availability. actuals Improving Plant Performance 8 . reliability. Figure 4: Sample output from an Availability-specific module Production-specific modules can provide real-time output of yield.

CitectIIM’s Downtime module implemented at BHP Billiton’s Cannington mine. Figure 5: Sample output from a Production-specific module What can OEE do for your business? The use of OEE solutions should be regarded as an investment. Impala Platinum’s Base Metal Refineries (BMR) near Johannesburg. the hidden potential in a machine or a cell that can deliver additional throughput to improve overall plant performance The quick identification of the actual causes that detrimentally impact production. Similarly. The OEE solution offers this economic benefit in a number of ways: • • • Identifying “lost production”. waste. Facilitation of more predictable production. South Africa achieved its 2006 throughput target of 2 million ounces of platinum well ahead of schedule. emissions. not as a cost. in Queensland. quicker decision making and execution and lower time to market for new products Improving Plant Performance 9 . Data is also provided on quality. energy. maintenance and throughput. Both systems achieved full payback in a matter of months. which allows for better planning. and percentage rejects. percentage rework. and product output. Australia delivered initial savings of A$1 million and continuous improvement in operations. using CitectIIM’s integrated suite of modules.versus targets etc on materials. bringing significant benefits to organizations through improved profitability. consumables. better asset utilization and virtually immediate ROI: For example. whether through human input (process/operator issues) or machine/material issues.

0% 99. the following OEE benchmarks are widely quoted as being “best practice” OEE scores for a continuous manufacturing process: Figure 6: “Best Practice” OEE Scores OEE Factor Availability Performance Quality OEE World-class Score 90. a simplistic comparison can be misleading if the sectorspecific variations (based on industry. level of customer demand etc) are not factored in. once the areas for improvement have been identified.9% 85. However. it can be used to help businesses benchmark their operations against world-class performance.0% 95. which are not ‘actioned’ into specific performance improvement measures. since the staff ultimately responsible for driving improvement do not fully understand the process that has identified the improvement opportunities Inaction. many organizations do not realize the full benefits that OEE solutions can deliver. they often succumb to common pitfalls such as: • • • • Using either too many or too few ‘cause’ codes. Businesses that hold OEE insights. This can lead to the calculation of OEE factor percentages greater than 100% Inadequate training of operators which weakens involvement and engagement with the plant performance improvement effort. giving either too aggregated or too fragmented data on production issues Inadequate understanding of the “nameplate” capacity of equipment. This is because. indicating that most organizations have significant scope for improvement to reach “best practice” levels. do not translate insights into improved plant performance Improving Plant Performance 10 . in implementing and using OEE. Recognizing and responding to the challenges Despite the many advantages. Overall. type of equipment. our experience has been that most production operations typically operate with OEE scores in the range of 6070%.0% However.• • • Improvements in product quality leading to lower product costs and higher customer satisfaction Cost savings through increased production consistency and reduced waste Moving from reactive repair and maintenance to a more proactive approach With OEE as an analysis tool.

Real and sustainable performance improvements need much more than just good measurement. b) a proven. Once we have a system that captures data in real-time.• Inadequate follow-through in terms of measuring and sustaining benefits. the power of analysis can be unleashed revealing real “cause based” issues that can be addressed through a variety of improvement initiatives. The key to improvement lies in the way in which data can be used to generate actionable improvement activities in the plant. Major variations in OEE scores can seriously impede your ability to streamline your supply/delivery chain making it very difficult to take advantage of just-in-time supply and delivery. It shouldn’t stop there either. END Improving Plant Performance 11 . This could slow down the momentum of long term plant performance improvements and weaken the internal mandate for more widespread use of OEE metrics in the future Having a reliable and easy to use set of measures on production performance is a great step forward. simple and proactive methodology and c) a flexible and easy-to-use application that supports your initiatives. A good OEE will improve the production of the operation but consistent application of OEE will reward the bottom line of the business. In reality what is needed is a plant performance improvement “solution” which requires the ingredients of a) dedicated people with the will to improve the business. and therefore the capability of the whole production process. Improvement gains need to be sustainable and consistent. There are ways to measure and analyze performance KPI’s that will allow you to determine the variation. but to focus entirely on the measurement of performance without proper regard to implementing solutions to improve performance is ultimately futile.