Overall Equipment Effectiveness (OEE)

Properly maintained and optimized machines and equipment are vital for lean manufacturing. Lean depends on zero to minimal defects, speed losses, accidents, and unplanned downtime. Likewise, reliable, consistent, and variation-free throughput helps with overall supply chain uncertainty and variability.

To improve equipment availability, performance, and quality; Overall Equipment Effectiveness (OEE) must be measured, monitored and improved. Depending on an organization’s maturity level, there are one to three steps to achieve this. First, data acquisition from machines and equipment can be implemented to measure OEE. Second, OEE can be more accurately measured for truer reflection of current conditions. Finally, recommendations can be determined to improve OEE.

To improve OEE, seven losses are identified to determine where the greatest impact can be made. For availability, the losses are planned downtime, breakdowns, setup/adjustment downtime, and idling/minor stops (from uneven workflows and defect detection). For performance, the loss is from reduced speed or less output relative to standard rate. For quality, the losses are defects that are scrapped or reworked and reduced yield from equipment starts/stops.

To increase profits using OEE, machinery/equipment need to consistently produce high quality throughput on-time and without failure. Thus, the seven losses need to be addressed or minimized. Equipment condition monitoring, maintenance, and MTBF and MTTR improvements can reduce unplanned downtime. Machine/equipment performance can be enhanced by reducing Takt or cycle time. Quality parameter monitoring and error/mistake proofing can increase quality. Additional or different actions can also be taken to reduce inventory, waste, operating cost, lost sales, and customer rejects; relative to OEE.

Employee Empowerment via Total Productive Maintenance (TPM)

For numerous companies, OEE is effectively monitored and appropriate actions taken to improve availability, performance, and quality. However, at times, these actions are not positively impacting overall cost and revenue as expected. Likewise, several organizations are not meeting their profit projections.

When root cause analyses are performed, common issues appear. These include maintenance viewed by management solely as a cost. Routine maintenance intervals are skipped in favor of continuous production runs. Dirty machines, oilers, plant floors, and other unfavorable conditions exist that lead to machine issues. Operators are not motivated to clean machines, conduct simple maintenance, and perform basic inspections.

Finally, maintenance crews do not “root cause” issues, train or work with operators, and forget to deal with quality and machine speed issues (in favor of bigger issues). When challenges like these exist, OEE + employee empowerment are combined to help generate an increase in profit.

Employee empowerment is generated via actions similar to Total Productive Maintenance (TPM). TPM is a continuous improvement methodology with buy-in from all relevant employees from shop floor to top floor. These employees work together to increase machine/equipment availability, performance, and quality. They accomplish this by striving to achieve perfect production with zero unplanned downtime, defects, speed losses, and accidents. As business results improve, so do employees’ accountability, pride, and accomplishment under a TPM program.

For TPM, operators are trained to perform basic maintenance activities that do not require skilled crews. These activities can include cleaning equipment and ensuring fluid levels are at proper levels. Operators are empowered to maintain their equipment by completing a TPM checklist before or after their daily production runs. These activities coupled with poka-yoke help to reduce preventive and predictive maintenance and the corresponding cost. Common results include:

Up to 90% reduction in routine breakdowns. Up to 75% decline in customer complaints. Up to 80% reduction in defect rate.
Up to 50% increase in equipment availability. Up to 50% increase in production output. Up to 15%-30% reduction in maintenance cost.

How SMI Consulting Technologies Assists

SMI Consulting Technologies works with enterprises to acquire data in real-time to measure OEE, identify losses, and implement TPM and/or other improvement recommendations.

"We are able to create more capacity from within... to absorb more orders within the system without increasing any costs (capital and other expenditures)."


Vice President for Business Excellence
@ $4B+ pharmaceutical company


For instance, we helped this pharmaceutical company with real-time data acquisition for OEE measurement across multiple machines in multiple plants. Bottlenecks were identified and minimized. We also assisted the company with identifying the seven losses (especially equipment stoppages) and assigning the corresponding cost for use by the company's C-Suite.

The data acquired from the equipment/machine PLCs were also analyzed for Return on Capital Employed (ROCE) and Total Equipment Effectiveness Performance (TEEP); to help improve overall asset utilization. The company improved batch tracking and delivery (commit versus actual) performance. Finally, the company also increased revenue due to higher throughput from more capacity (at no additional cost) and reduced cost per unit.

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