Going beyond OEE: real-time visibility of manufacturing performance to gain competitive advantage

Posted in Blog on October 19th, 2020

This is the third blog in a 4-part series exploring the common business challenges facing the manufacturing industry.

Manufacturers have used OEE as a reliable metric for understanding and improving machine performance for many years now. A simple performance indicator, OEE shows a machine’s actual performance, compared to its theoretical maximum. Having a good OEE score is a must, but is it enough in providing a holistic view of your overall factory performance? Should manufacturers go further than OEE by exploring other metrics, tools and systems to ensure they are running as efficiently and effectively as possible?

Utilising real-time data for actionable improvement

Although very useful in benchmarking machine performance, OEE has its limitations. Its equipment-centric approach does not account for all factors that affect productivity such as procedures and processes, which are the general cause of equipment inefficiency. Not all OEE tools make critical production information available in real-time, which is important because this data is needed to make actionable improvements. The data presented in an OEE system must be acted upon quickly, otherwise, production managers will find it difficult to uncover the root cause of problems. Short interval control (SIC) is a popular shop-floor process for driving production improvements during a shift, and ultimately improving OEE. Data from an OEE system is used by the shop-floor team to identify and implement improvement actions. SIC helps create a culture of continuous improvement, as operators become actively engaged with the system and see the value gained from it.

OEE calculations are great at establishing whether a machine is working at maximum capacity, by means of establishing availability (unproductive machine times), performance (cycle times) and quality (waste) losses. Its downfall is not providing information on how a machine can produce more for example, and importantly the reasons behind process inefficiencies to drive improvement! OEE is a great building block for Digital Lean initiatives, however, manufacturers should consider going beyond OEE to gain further business value.

How to address wider manufacturing challenges

Increasing OEE scores to world-class levels of productivity typically require additional KPIs and tools to drive continuous improvements throughout the entire manufacturing process. OEE systems often fail to deliver expected improvements because they simply do not factor all areas that affect productivity. Listed below are common challenges experienced by manufacturers, which should not be viewed in isolation, especially when building a business case for an OEE system:

  • Identify bottlenecks

Availability losses such as planned or unplanned downtime, machine setup time, inventory turns, and changeover times all impact OEE figures negatively. Crucial information such as the effect of non-productive tasks (e.g. sanitising and labour changeover), when a machine went down and the impact it had on the rest of production is however less accessible. Manufacturers must go beyond OEE to identify inefficiencies throughout the production process, to provide the real-time information needed to take corrective action.

  • Reduce costly product recalls

Quality issues such as product recalls can be time-consuming and costly, not forgetting the damaging effects on brand reputation. OEE systems provide useful quality loss information, such as waste levels, however, an integrated quality management system can provide real-time visibility and historical data (e.g. quality checks, weight recordings and SOPs) required to meet regulatory compliance. Manufacturers should therefore consider capturing and managing critical quality-related events in real-time to help improve product quality and reduce the impact of costly product recalls.

  • Optimise maintenance activities

Unscheduled maintenance results in lost production, higher part costs, and lost time for fixing problems; costing significantly more than planned maintenance.  Adopting a more proactive, preventive maintenance approach to coincide with planned production downtime significantly reduces costs. Preventive maintenance needs to be controlled and managed effectively to keep equipment producing consistently high-quality product. A CMMS (comprehensive maintenance management system) can have a positive impact on equipment availability and performance rates, reducing unplanned downtime to optimise maintenance activities and gain maximum value from assets. OEE is a valuable tool for driving maintenance performance improvements, and so manufacturers should explore the benefits of an integrated maintenance system to complement OEE.

  • Reduce rising labour costs

Having the right amount of people and balance of skills on the shop floor is a huge juggling act! Too few will cause bottlenecks and result in missed production deadlines, too many will create unnecessary labour costs impacting profits. Detailed labour information such as how many staff are needed on lines, required skill sets, and how long it took to complete a job are not usually accessible through a standalone OEE system. Likewise, understanding how efficiently the workforce is performing against output, how profitably jobs are running and realising the true cost of labour are factors beyond the scope of OEE. Manufacturers should consider measuring OEE and labour efficiency KPIs together to optimise workforce performance and ensure maximum productivity.

  • Reduce product overfill & meet regulatory compliance

Quality and regulatory challenges include the need to reduce giveaway on fixed weight products, improve yield and achieve better scheduling. Often Food & Beverage and CPG manufacturers adopt overfill methods to comply with the average weight legislation but are unaware of the impact on production costs and profitability. Going beyond OEE, such as utilising Statistical Process Control (SPC) within a quality management system can help management and operators reduce process variation, so to comply with legislation and significantly reduce the cost of over production.

Flexible supply chains for a competitive edge  

Flexible supply chains allow manufacturers to adapt quickly to changing consumer demands and shorter lead times. Where there are similar products produced on the same production line, mass customisation can be achieved. Manufacturers need to produce a variety of products quickly and efficiently, at competitive prices to stay competitive! Managing costs effectively within this type of supply chain will certainly create a heightened need for digital solutions that integrate with other business systems such as ERP. Modern manufacturers looking to gain extra market share and become world-class producers in their sector should consider their current and future business demands and align them with the most appropriate technology solution.

Don’t stop at OEE – look at the bigger picture

The flexibility of a fully integrated MES system will support and enhance OEE, by providing the extra context needed to address inefficiencies for tangible business value. After all, if manufacturers want to reduce costs and increase profits to gain a competitive advantage in their sector, they must go beyond OEE to enable them to answer questions such as:

  • How are we performing right now?
  • What are the real issues?
  • What should we focus our efforts on?
  • What will make the biggest impact?
  • What should we measure next?

Why do OEE systems fail to deliver improvements?

Conversations with clients used to be centred around features, functionality, and performance of OEE systems with very little focus on business benefits. There are still many systems integrators simply implementing the software and leaving the client to it. Businesses do not know how to use the data to make improvements to gain maximum business value – which is why many OEE projects fail. Good communication between all stakeholders, staff training and buy-in is crucial to ensure the system is used for its intended purpose and value is subsequently gained from it.

Helping our clients build a solid business case  

Cimlogic works with their clients to understand current business needs and challenges, whilst helping to recognise the problems being experienced. By understanding our clients’ core business needs and challenges, we analyse the cost of the problem to the business and develop a solid return on investment. If the cost of the problem is unknown, we can provide the skill set needed to develop a solid business case and justification to help identify the best solution; whether an OEE system or a fully integrated MES solution with multiple functionalities such as OEE, labour, quality and maintenance.

Has your OEE improvement journey become stagnant, and not sure what to do next? Are you embarking on a digital journey to address multiple challenges and unsure where to focus your efforts? Contact Cimlogic today for a discussion on your manufacturing challenges and how we might support you on your digital manufacturing journey.

To find out more please visit the Manage Labour page on our website or email [email protected]

Would you like to understand what impact your workforce has on production costs and profitability? Register here to our upcoming webinar on Fri 6th Nov 2020 at 11am – Labour Variance in Manufacturing.