WHY OEE is a Key Production Performance Indicator?

Although OEE (Overall Equipment Effectiveness) has been around for a long time it is still in my mind one of the least understood key performance metrics.  In some Production environments where it is deployed it is not properly deployed because it's true value is not fully understood. 

The main reason for being least understood probably stems from the word "Equipment" which is misleading as immediately it is thought of as an Engineering/Maintenance type metric designed to report Reliability. It is much more than Reliability!

Many poorly deployed OEE projects are also because they stem from the same assumption and the OEE information provided by Control and SCADA type systems while it may be reporting an accurate OEE figure does not give sufficient information to drive significant OEE improvement. 

If OEE was called Overall Production Performance Effectiveness then it's value would be much better understood because we've moved away immediately from just Reliability. OEE itself measures time actual good output actually took vs time it should have taken to produce the same output. There are a couple of ways to Calculate OEE  (OEE Calculation from OEEsystems International). 

The OEE Losses is where the message gets lost. OEE Losses include Reliability Issues but much more significantly they also Losses related to Operations and Process related issues which is where you most often get the quickest wins when you are driving OEE Improvements.

On the OEEsystems International Website they Have a page talking about the OEE Definition and go beyond definition by talking about WHY you should use OEE, they explain HOW OEE delivers the WHY and very importantly they talk about WHO in the Production arena should be involved in operation and selection of OEE (the OEE drivers).

The WHY is interesting because it links OEE (or Overall Production Performance Effectiveness) to the Business Goals.

They talk about Production Companies that truly understand OEE adopt it into their production process do so for some of the following business reasons:

#1 Using their existing resources (People, Machines etc..) to make more

#2 Make the same but tackle the cost of Production

#3 Increase flexibility in Production to meet customers changing demands (e.g. smaller lots)

#4 Good manufacturing environment to work in (culture)