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11. 7 Situations where 85 percent OEE is not OK

Q: Usually, 85% OEE is considered to be ‘World Class’. You say it isn’t. How come?

7 Situations where 85 percent OEE is not World Class

Arno Koch •    I’ll give you several reasons or situations when 85% OEE is FAR from World Class:

Situation 1. Not all losses are included in the definition of the OEE

It is possible to run any machine at 85% OEE from today, simply by adapting the OEE definition… Just take out breaks, maintenance, setups, all kind of waiting, or calculate OEE with a maximum speed that is lower than theoretically possible (the so called ‘realistic speed’) and hoopla: there is your 85%. Don’t laugh! This is not exceptional! Most definitions I saw where ‘manipulating’ OEE by hiding all kind of losses, resulting in a too high OEE.

Situation 2: Quality rate is low

  • As long as quality rate is not extreme high, the process obviously somehow can become unstable. The quality problems are probably only the tip of the iceberg. After all, if the ‘system’ could handle this, there would not be any quality problems.
  • The costs of the scrap products are high, even for a ‘cheap’ product such as egg cartons, for example (no disrespect intended for this fine product!) Just take a moment to calculate how quickly your profit margin erodes when you produce more scrap! Once you have passed that tipping point, yes, you are making more products, but in fact you are quickly incurring loss! You are throwing money away! This can absolutely occur at a ‘beautiful OEE of 85%’, in which case you are throwing away your money almost continuously and at high speed…

Situation 3: OEE fluctuates, process is not in control

An average OEE of 85% does not mean the machine runs at 85% all the time. If the OEE fluctuates between 30% and 100% OEE, in the end still 85% might remain on average…. This will be a very expensive process (meaning low efficiency).

Situation 4. Stock increases

Running large batches usually enhances the OEE; less setups, ‘keep running once it runs’….

But (if) this is not what the customer demands; we will increase stock, thus causing tons of negative side effects. In this situation 85% OEE can never be called world class, in the contrary!

Situation 5: High effectiveness is achieved at low efficiency

If the 85% OEE is achieved by investing heavily or by increasing the used resources, the costs will go up. Whether this is a good idea -in economic terms- needs to be calculated. From a point of view of improving by loss reduction, this is the wrong way to go.

Situation 6: High effectiveness is achieved without binding the workforce

Although I would not directly see how to do so, it might be possible to get the equipment to run at 85% OEE without involving the workforce around it. If well standardized, this might even be sustainable. However since the workforce was not involved the question will be:

  • Will they have enough understanding of the process to correct i.e. abnormal situations (resulting in a crash when this occurs)?
  • Will they be able to give input to an improvement process? In other words: probably the process will not be able to grow, based on workforces’ knowledge.

Since we all know how difficult it is to create standardized- and sustainable processes, it will be most plausible that this situation leads to another effect:

Situation 7: 85% achieved, but it is not sustainable

We know that when ‘the shit hits the fan’, all is possible. If 85% OEE is achieved by pushing and tricking, it will be highly questionable whether this will be sustainable and ‘in control’. This type of situations is potentially dangerous. It seems everything is OK, but actually it is a ticking time bomb. Machine crashes, accidents, or sudden loss of capacity or quality will be waiting to occur because there is a situation that is under stress and just waiting to become out of control.

Resuming: This all means, there are situations where running 38% OEE might be far more world Class than running 85%…

Again: The OEE number it selves, seen without its context, is a non-number, it has no value as such.

More info:

Evaluating performance of machines

How high should OEE be?

Compare OEE when defined according the OEE Industry Standard

Use and abuse of OEE

World Class OEE

Comparing OEE’s to benchmark machines

OEE Definitions

OEE Questions

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