Lean Execution > Advanced Lean Manufacturing > OEE and Capacity Management

OEE and Capacity Management

Capacity – Available or Required?

From a scheduling perspective it is very easy to determine how much capacity (or time) will be required to manufacture a minimum quantity of parts.  However, it is not just a matter of multiplying the Standard Cycle Time by the Quantity of Parts and dividing by the part or process OEE %.

As you may recall, the availability component of OEE also accounts for set up or change over time.  Unfortunately, change over time is not typically dependent on the quantity of parts to be produced.  As such, set up or change over time must be tracked / measured  for each individual process and treated separately.

For example, in the metal stamping industry, a die change may take 20 minutes from the last good part to the first “next” good part out.  The quantity produced is variable depending on the yield of the coil (material thickness versus weight), and the number of coils run.

The duration of the run is subject to the set up time and coil / material change over times.  For this reason, unlike Performance and Quality, Availability is not a constant.  From a scheduling perspective, we can calculate the minimum run time using factor based on (Performance X Quality) and then account for availability by adding the set up and material change over times.

If the scheduled quantity is FIXED,  then  we can likely use the simple equation as originally stated.  For example if a process is scheduled to produce 500 pieces of product A on a machine having a cycle time of 30 seconds and the OEE for the process is 85%, then the time to produce the parts would be calculated as follows:

  • (500 Parts X 30 Seconds) / 85% = 17647.1 seconds

In this example 4.2 hours at standard versus 4.9 hours based on the OEE index.  As we noted above, however, because the quantity of parts is FIXED, the set up time and / or change over time is less concerning.

Repeating this process for all the parts that run through a given machine, it is possible to determine the total capacity required to run production. 

Capacity Available

If you are considering new work for a piece of equipment or machinery, knowing how much capacity is available to run the work will eventually become part of the overall process.  Typically, an annual forecast is used to determine how many hours per year are required.  It is also possible that seasonal influences exist within your machine requirements, so perhaps a quarterly or even monthly capacity report is required.

To calculate the total capacity available, we can use the formula from our earlier example and simply adjust or change the volume accordingly based on the period being considered.  The available capacity is difference between the required capacity and planned operating capacity.

Capacity Considerations and OEE

As we have mentioned in previous posts, be cognizant of the variation that may be present in the data.  A company that has been running and collecting OEE data for several months or even years will certainly be able to scrutinize the integrity of the OEE index and determine it’s statistical relevance.

A PPI (process performance index) that considers both OEE and Throughput Variance will present a more statistically relevant method of approximating capacity utilization.

VARIATION is the top form of WASTE in any business.  Although understanding variance is important, of greater concern is eliminating the source(s) of variance.

Until next time – STAY lean!

Vergence Analytics
Posted in Advanced Lean Manufacturing, Capacity, Lean Metrics, OEE: Overall Equipment Efficiency Tagged with: , , , , , , , , , , , , ,
One comment on “OEE and Capacity Management
  1. My Complements To You says:

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