I have a lot of respect for Industry Week. That said, I am not sure I agree with author Louis Columbus on some of his lessons learned in this month’s article, “Finding Manufacturing Performance Gaps with OEE.” In this series, I will discuss our experience using Overall Equipment Effectiveness (OEE) as a metric. We have helped dozens of leading manufacturers build effective operational improvement programs incorporating this metric. We agree that its use should be thoughtfully considered and carefully implemented. In our experience however, the issues Mr. Columbus raises can be addressed and mitigated.
Finding Performance Gaps with OEE
First of all, Columbus references that “70% of manufacturers have adopted OEE and are using it to measure, analyze, and report data from the shop floor to the top floor.” Really? I cannot dispute Mr. Columbus on the percent of responses he received. I do question the sample size or the definition of use behind this statistic. I would agree that 70% of manufacturers are considering adopting OEE as a critical metric for their organization, or even that 70% are working with it in some limited, piecemeal way. However, my company’s discussions with hundreds of manufacturers strongly suggests that comprehensive, enterprise-wide adoption of the metric is actually much, much lower than this finding would suggest.
Perhaps that is why Columbus also cites that only 15% of “companies scale their use of the metric across production centers or plants in less than a year.” We would concur with the finding if it had not been qualified. Adopt rate depends on what standard you apply to define effective and widespread adoption of the OEE metric in an organization. We would estimate real, sustained, and effective use of the metric at no more than 25% of manufacturers today.
Why OEE is Important
“For the majority of manufacturers who are comparing relative levels of OEE by machine on the same production floor, it’s startling how wide variations are between OEE measurements.” Why is that startling? The observation really just points to why OEE is so important -- if measured accurately. To drive real operational improvement, the KPI needs to be aided by tools that support root cause analysis effectively. It also should be enabled by a robust IIoT data analytics platform. That platform can scale to hold large quantities of historical data. It provides a foundation to analyze and report easily on trends and anomalies. And it provides those findings directly to front line manufacturing personnel to act quickly.
Perhaps it’s just startling because so many manufacturers intuitively know that this is the reality of their plant floor performance today but are reluctant to face the significant costs and negative impact this is having on their business performance every day. If so, we wholeheartedly agree. We see daily with our customers that “there is a benefit to tracking how OEE fluctuates with the volume and velocity of work through the adoption of real-time monitoring.” And that “there is a growing potential for Industrial Internet of Things technology to provide trusted, up-to-the-moment OEE data, enabling additional insights into performance fluctuations based on equipment effectiveness and efficiency.” Mariner has just such a solution!
Net: thought provoking and worthy of a careful read
Most of these differences in perspective are understandable. There is a lot of hype, intensity, and urgency surrounding OEE. Mr. Columbus level-sets expectations of what this metric can and cannot do. I strongly agree with his main assertions. OEE can be a powerful metric to drive operational improvement and excellence in manufacturing. The “devil IS in the detail” of how OEE as a metric is deployed and used to drive improvement. As a manufacturer, you need to be careful and not satisfied with superficial aggregate measurements that don’t really answer the questions of “why” or “how”. An OEE-based performance measurement program can hinder an organization from achieving its true operational excellence potential if not carefully designed and deployed properly.
Overall, I want to thank Mr. Columbus for his contribution to the conversation. He raises lots of very relevant points and concerns. Manufacturing leaders should consider these as they adopt or improve their performance management systems. Definitely read, share, and discuss this article. OEE is a powerful metric when deployed properly. It is an effective benchmark. OEE can highlight success regardless of the starting point. It can foster healthy competition and challenge complacency. As a single measure, it drives focus. Though powerful and nuanced, it is easy to explain and grasp. And its proven -- many organizations HAVE used it successfully. In my next post, I’ll challenge some of the specific “lessons learned” called out in the piece.
This post was authored by Mark Adelhelm