A Short Story about OEE and how it can Impact your Business

September 9, 2016 - 4 minutes read
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OEE (Overall Equipment Effectiveness) is an industry standard at some of the world’s leading manufacturers, but is still relatively misunderstood by many at small and mid-sized manufacturers.

Let me share with you a little story…

Our client, a worldwide silicon wafer production leader, partnered with many of the world’s foremost chip manufacturers. The company operates manufacturing facilities throughout Europe, Asia, and the United States.

Our client was experiencing capacity constraints at three of their key plants located in the United States, Japan, and Singapore. With increased customer demand and the bottom line not supporting any capital investment, the company needed to increase output from the sites with their existing infrastructure. The company partnered with Tefen to benchmark the production lines and design a solution that would meet client demands without relying on new equipment or technology. The overall goal of the project was to increase Overall Equipment Effectiveness (OEE) at each of the designated sites.

What is OEE?

OEE is a hierarchy of metrics used to evaluate how effectively a manufacturing operation is utilized. It is a methodology employed to drive equipment performance improvement, detail efficiency losses, and is generally applied to the bottleneck of the system.

OEE calculations have 3 components:

  1. Availability (Uptime)
  2. Performance (Speed)
  3. Quality

OEE Graphic

OEE Components

How Tefen Helped

Tefen began its engagement with an analysis of the lines at each of the production facilities, scoping each of the three sites to increase output without purchasing additional equipment.

This process quickly unveiled a systemic problem: scrap and rework were deemed to be the largest inhibitor of increasing capacity.

During the analysis, line experiments were conducted to ensure the proposed solutions would yield the expected results.

The test proved the solutions feasible and we developed action plans and to achieve future state goals.

Through the project team’s analysis, Tefen further identified a number of additional action plans to address the OEE losses associated with the findings including reducing setup/changeover times, increasing machine speed, and reducing quality errors that produce scrap and waste.

At the end of the engagement, each of these segments stood as prime opportunities for the company to achieve their goals of increased production and meeting the demands of their customers.

After addressing all constraints and inefficiencies, our client anticipated approximately $36M worth of savings in the first year alone, whilst deferring any capital investments through the end of the period.

Project Impact

With OEE improvements, the site significantly increased production volume and capacity, which in turn tremendously impacted the bottom line positon of the company. At the end of the engagement, the client was able to impact “top line” savings by $3.1M – $3.6M per month and $2.1M – $2.8M per month in consecutive fiscal years.

The moral of this story is that OEE losses are a great place to start when designing improvement opportunities for your production lines. A robust OEE program is not only for large manufacturers. It can be adopted and rigorously employed at smaller manufacturers to improve the overall effectiveness of your equipment, no pun intended.

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