OEE as a business KPI

How to evaluate total productivity of an industrial plant and encourage executives to use OEE as a business measure that reveals opportunities and drives real improvements

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OEE software
by Marc Leroux

A customer, I’ll call him Fred, mentioned to me that executive management often discounts OEE because it is a manufacturing metric, not a business metric. Let’s take this point.

In addition to the three main components of OEE - Availability, Performance and Quality - described in "OEE as a performance KPI", there is also the concept of a OEE as a business KPI. "Business OEE" multiplies OEE by the Planning Factor (Pf) which describes the extent that available time has been utilized for production purposes.

Getting ready for OEE discussion on executive level

Our discussion then moved to the pragmatic issues that Fred was facing in his organization.

“At first our line managers hated the concept because the numbers were so low. When we first started recording OEE, the numbers were in the 60’s and a lot of people on the project felt that was way too low.

Our Maintenance Manager got pretty excited because he knew he was keeping uptime around 99%. We ended up eliminating losses, and changing the definitions of what running time was going to be.

If we are used to judging performance in the range of 99%, we'll never get there with OEE. Therefore many people still don't like using this KPI because the OEE number is too low or try to change the definitions.

The trap of an artificial OEE increase

"When we got our OEE up to the mid 90’s we felt that it was time to show it to our executive level.”

I asked him how that went and he just smiled.

“It turns out that our VP of manufacturing had used OEE in a company he used to work for. As soon as we said that our OEE was 96% he blew his stack. He made it clear that there was no way an operation like ours could hit 70% and then made us go through all the calculations with him. It was pretty embarrassing.”

Fred went on to say that they ended up reversing all the decisions that had been made to artificially improve the numbers.
"We embarked on a major exercise to educate people on what OEE is, what it was highlighting from our operations and what the opportunity for improvement was"
"We ended up reversing all the decisions that had been made to artificially improve the numbers"

Learning to see opportunities behind the numbers

“It was pretty amazing. Once people started to see the data behind the numbers we started to see a huge change in attitude. Most of the guys are taking this as a personal challenge, and we’re seeing big improvements in productivity.”

I asked him if that was one of the objectives they had when they started the OEE exercise. That got another big smile. “That was THE reason we started the exercise”.
Out-of-the-box OEE software to help you uncover hidden potential and motivate production teams to maximize equipment utilization, uptime and quality

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