Lean Execution > Advanced Lean Manufacturing > 6 things OEE is NOT!

6 things OEE is NOT!

While OEE has been receiving much deserved attention as manufacturers look for ways to improve their bottom line, it is not the cure for all that ails manufacturing.  Many in the manufacturing community seem to be getting caught up in the buzz and hype of OEE and its profound ability to improve the bottom line.

1.  OEE is NOT magic

As we were researching for our problem solving series, we couldn’t help but notice the numerous attributes that were being given to OEE and how it seems to be solving all the woes of manufacturing.  A thermometer won’t change the weather and OEE alone won’t change your operation.

OEE:  The Lens of Opportunity

We prefer to think that using OEE is like putting on a pair of much needed glasses.  What you are looking at hasn’t changed, your eyes haven’t changed, but the way you see it has.  Similarly, OEE is a very effective metric that serves as a lens to help you see and identify where losses are being incurred.

OEE will help to identify the problem or at least the symptoms.  The real opportunity is to determine root causes for the losses and implement effective corrective actions to eliminate them.  OEE can also be used to verify or validate the actions taken.  Remember,

2.  OEE is not a root cause analysis tool

3.  OEE is not problem solver

4.  OEE is not a solution provider

We recently reviewed an article suggesting that OEE is an indicator of a company’s profitability.  We would argue that OEE is a measure of loss or, to be more positive, profit potential.  Just because we’re effective, doesn’t mean we’re profitable.  Today’s economy and the current state of manufacturing clearly demonstrates this.

5.  OEE is not an indicator of profitability

Another misnomer is mistaking OEE as a measure of operational efficiency.  OEE measures how effectively we used the time for a given asset to make a quality part.  OEE isn’t concerned with the amount of labour or materials required to achieve the desired “rate”.  For example, using two people to achieve the rate of one is not efficient.  As another example, using a higher grade of material to achieve a quality part due to unresolved process issues is not efficient.

6.  OEE is NOT a measure of  Efficiency

Again, OEE measures how  effectively assets are being utilized to make a quality part.  For a complete discussion on measuring OEE, refer to our discussions on Calculating OEE (see the categories side bar).

What is the Answer?

OEE is the single metric that can be used to identify where significant losses are being incurred, the real opportunity to improving the process is to identify the root causes and finding the solutions to the problems that have been identified.

OEE is an excellent diagnostic metric that can help to focus your improvement efforts.  The data acquisition systems available on the market today provide real time intelligence and valuable insight into your processes.  These tools in collaboration with an effective problem solving strategy ultimately become the reason for your improved performance.

Statistics don’t improve quality, thermometers don’t change temperatures, clocks don’t prevent breakdowns.  Don’t confuse the measurement system with the solution – it’s one of the tools.

Effective analysis, problem solving, and timely and efficient execution of corrective actions to address the concerns and eliminate the real root causes – that’s the answer.

OEE is simply one method to grade your efforts.

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Until Next Time – STAY lean!

Posted in Advanced Lean Manufacturing, Cost Control, Lean Metrics, Problem Solving, Process Control and OEE Tagged with: , , , , , , , ,
One comment on “6 things OEE is NOT!
  1. jaydixit says:

    I agree with you, lot of organizations get caught up in buzz words without really understanding what it really is. OEE is being used more and more and KPI by Senior Management who do not understand what it is. Recently met a Senior Executive who told me that they have implemented OEE as KPI recently when I asked him what sorts of results they were getting he told me OEE was 96% (This is on an equipment used for batch production, change over times (set up times) of 1-3 hours and products get changed more than once sometimes on daily basis. When I asked him if he was sure that OEE was 96% he said “Yes”. Obviously OEE measure was thrust upon his sub-ordinates who are obviously not reporting the correct figures and is not being used as a diagnostic tool but something to which performance pays are linked.

    Oee is an excellent tool for diagonstic purposes and improvement provided it is understood and used correctly especially by senior management.

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