Overall Equipment Effectiveness
By Robert C. Hansen
Considered to be the seminal book of the principles of Overall Equipment Effectiveness (OEE), Bob Hansen explains how a 10% improvement in OEE can generate a 21% – 62% improvement to EBITDA.
The base business case, operating at 60% OEE, is compared to the same company operating at 66% OEE. In the first business case, Mr. Hansen explains how a 10% improvement in OEE impacts direct costs and generates a 21% improvement to EBITDA. In the second business case, Mr. Hansen explains how a 10% improvement in OEE impacts EBITDA if the “hidden factory” is leveraged to the full benefit of the company.
“Understanding this book will reduce the leap of faith to a single step,” said David McPhail, President. “We enable our customers to measure and monetize OEE in real time at the machine tool, factory and enterprise level,” he said.
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Overall Equipment Effectiveness: A Powerful Production and Maintenance Tool for Increased Profits brings together both the social and technical aspects of successful manufacturing and processing. I would have paid many times over to have such a book at the start of my manufacturing career. The book is a practitioner’s primer; it demonstrates how to apply and improve overall equipment effectiveness at your factory or processing plant.
Picture yourself facing a majestic mountain that represents performance excellence at its peak. Every factory or processing plant represents a mountain and no two are exactly the same. In fact, each changes whenever its products, processes, materials, or people change. Achieving excellence is a continuous climb.
You have many decisions: where to start climbing the mountain, what to take with you, how to use your resources, and which tools to use to measure your progress. A wise person would first engage those who have made the climb before and learn from them what worked and what didn’t work. This book lays out guidelines and strategies for a successful climb. It is not the only way to success; however, it can reveal new trails that help shorten the journey.
Every department and area where I have worked has demonstrated some level of progress over its years of operation. When significant jumps in productivity were made, I thought about the vast amount of income that could have been realized had the practices and procedures that identify and leverage the “hidden factory” been implemented years earlier.
I hope that plant and corporate managers accountable for production operations not only learn the concepts and theories but also take the responsibility to personally champion OEE. If you are not supporting reliability, then you are supporting failures.
The concept of true OEE is the most important aspect of this book. This book is worth its weight in platinum if all it does is help you discover your plant’s true position relative to its current performance. This potential is determined by taking the actual quantity of good product transferred out and dividing it by the total amount that could be made in all the hours of scheduled production. This amount is what could be made without any losses due to quality, speed rate, equipment downtime, changeovers, start-ups, shutdowns, or lack of materials and supplies. If your plant is in the envious position of selling everything it can make, then your hidden factory is the difference between what good product was transferred out in the past twelve months and what could be made in 8760 hours of perfect production.
Parts of the book focus on collecting data, generating information, prioritizing, and selecting ways to significantly improve the bottom line. A major goal is to show how to identify the improvements a project should yield in financial terms, then to actually generate those results.
I have outlined a methodology that links OEE and equipment reliability improvements to bottom line increased income for operations. This methodology is a powerful tool that should assist every engineer, foreman, department head, and manager in selecting the right projects, and then communicating the benefits in financial terms.
A portion of the book provides tools and techniques for examining the inherent reliability of existing or proposed equipment systems and design for reliability methodology. These include reliability block diagrams and computer simulations of modeled systems. The book refers to software that can be freely downloaded from the Internet. The examples demonstrate practical applications that investigate possible improvements. The software program can perform the vast majority of that provided by highly-priced commercial simulation software.
Another useful tool is Reliability Quantification Testing (RQT). This general tool for existing and new equipment fabrications helps quantify the actual reliability performance. It should become a mandatory tool used for accepting or commissioning equipment systems critical to your manufacturing processes. To build in reliability of proposed designs, reliability specifications and the level of testing before acceptance must become a part of the original purchase order. RQT establishes the test hours and failure frequency parameters, then generates a point estimate of actual Mean Time Between Failures for the tested system.
In addition to OEE, this book champions the theory of constraints management, quick changeovers, production–production capability balance, conditioned-based maintenance, and a maintenance strategy of short frequent linestops. Any one of these tools or techniques might leverage additional productivity out of the hidden factory at many plants worldwide and could be financially important to your company’s overall business.
Several aspects of the human side of manufacturing are addressed in this book. Years of observing maintenance people doing extensive shutdown work provided insights about human energy levels and attention to details. These observations form the basis for shutdown planning guidelines. In addition, a system of ranking and compensating workers doing non-repetitive work is provided as well as recommendations about the hiring process. One of the most important purposes of this book is to help plants avoid the pain of unplanned downsizing that results from not being as productive as they could be. Over the long term, plants can not downsize themselves to success without fundamental changes in current methodologies.
At the very least, this book is intended to motivate readers to start now on their journey up the mountain toward performance excellence. I would be delighted to receive comments and stories about the active use and application of this book’s concepts in your work area.
Getting people to accept change and do things differently can be very imposing even if you know it is the right direction to go. Change often requires a leap of faith. Understanding this book will reduce the leap of faith to a single step. Climbing to higher levels on the mountain begins with a single step.