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Robert BairdLean Teams USA

+1 215 353 0696

OEE Financial Savings From Component Improvements

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OEE FactorsOEE = Availability x Performance x Quality

– Availability - Percentage of the actual amount of production time the machine is running to the production time the machine is available

– Performance - the speed at which the operation runs as a percentage of its designed speed

– Quality - the Good Units produced as a percentage of the Total Units Started. Referred to as First Pass Yield

Each Factor compared to a standard

𝑨𝒗𝒂𝒊𝒍𝒂𝒃𝒊𝒍𝒊𝒕𝒚=𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈𝑻𝒊𝒎𝒆÷𝑷𝒍𝒂𝒏𝒏𝒆𝒅𝑷𝒓𝒐𝒅𝒖𝒄𝒕𝒊𝒐𝒏𝑻𝒊𝒎𝒆

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LossesOEE Loss Category OEE Component Loss CategoryDowntime Losses Availability 1. Equipment Failure

2. Tooling damage3. Unplanned Maintenance4. Process warm up5. Machine changeover6. Material shortage

Speed Losses Performance 1. Product mis-feeds2. Component jams3. Product flow stoppage4. Level of Operator5. Equipment age6. Tooling wear

Quality Losses Quality 1. Assembled incorrectly2. Rejects3. Rework

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World Class OEEOEE Factor World Class

Availability 90%

Performance 95%

Quality 99.9%

OEE 85%

Which Process to Improve OEE

• Weighted Average Method• Value Added = Product Revenue – COGS

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Process OEEValue Add

Value %

OEE Value

1 85.0% $44,320 22.5% 19.2%

2 60.0% $51,005 25.9% 15.6%

3 77.0% $42,315 21.5% 16.6%

4 82.0% $48,900 24.9% 20.4%

5 55.0% $10,100 5.1% 2.8%

Total $196,640 100.0% 74.5%

Financial Performance of the Operation

CONSIDERING VALUE ADD WHICH PROCESS WOULD YOU IMPROVE OEE

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Cost Avoidance

OEE

$ CAPEX

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Case Study• 30% improvement in downtime, 10%

improvement in speed losses, and 2.6% quality improvement

OEE Factor Result BeforeAvailability 300 71.4%

Performance 21,300 71%

Quality 20,200 94.8%

OEE 48.1%

OEE Factor Result AfterAvailability 390 92.8%

Performance 30,459 78.1%

Quality 29,636 97.3%

OEE 70.5%

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Case Study Financials

• Before

• After𝑅𝑒𝑣𝑒𝑛𝑢𝑒=20,200∗$5.00=$101,000

𝑅𝑒𝑣𝑒𝑛𝑢𝑒=29,636∗$5.00=$148,180

46.7% Revenue Gain

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Case Study Financials• Before

• After

-25.2% COGS

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Case Study Financials• Before

• After

-34.5% Labor Efficiency 𝑫𝒊𝒓𝒆𝒄𝒕 𝑳𝒂𝒃𝒐𝒓 𝑬𝒇𝒇𝒊𝒄𝒊𝒆𝒏𝒄𝒚 𝑽𝒂𝒓𝒊𝒂𝒏𝒄𝒆=𝑺𝒕𝒂𝒏𝒅𝒂𝒓𝒅𝑹𝒂𝒕𝒆∗(𝑺𝒕𝒂𝒏𝒅𝒂𝒓𝒅 𝑯𝒐𝒖𝒓𝒔−𝑨𝒄𝒕𝒖𝒂𝒍 𝑯𝒐𝒖𝒓𝒔)

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ALWAYS VISUALLY MANAGE

PROGRESS

Guaranteed ROI From Lean Teams USAContact Us

• Lean Teams USA Lean Consulting

• View My Profile on LinkedIn

• Lean Teams USA +1 215 353 0696

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