Download - OEE Financial Benefits From Component Improvement

Apr 12, 2023 www.leanteamsusa.com 1

Robert BairdLean Teams USA

+1 215 353 0696

OEE Financial Savings From Component Improvements


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


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


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


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


Cost Avoidance

OEE

$ CAPEX


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%


Case Study Financials

• Before

• After𝑅𝑒𝑣𝑒𝑛𝑢𝑒=20,200∗$5.00=$101,000

𝑅𝑒𝑣𝑒𝑛𝑢𝑒=29,636∗$5.00=$148,180

46.7% Revenue Gain


Case Study Financials• Before

• After

-25.2% COGS


Case Study Financials• Before

• After

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


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