OEE and Maintenance Performance Evaluation

With the increasing awareness that maintenance not only ensures safety and track performance, but also creates additional value in the business process, the Swedish Rail Administration (Banverket, 2007) is treating maintenance as an integral part of the business process, i.e. applying a holistic view of the infrastructure maintenance process in order to fulfil customer requirements (Karlsson, 2005). Maintenance is an activity that has a significant contribution in operation costs; approximately 30% of operation costs, if the company is implementing an automated production system (Garg & Deshmukh, 2006). Therefore, measurement of maintenance performance has become an essential element of the strategic thinking of assets owners and managers. Without any formal measures of performance, it is difficult to plan, control, and improve the maintenance process (Liyanage & Kumar, 2000).

Every factory attempts to be an effective, low cost producer. This effort is required in today’s challenging environment when customers demand quality product at the best value. Few factories attain and maintain high level productivity and low costs. Many of these use a disciplined approach to identify the best improvements to make. They use teams to eliminate the root problems that otherwise keep the factory from driving towards continuously higher levels of effectiveness. In short, they have found the power of OEE. World-Class manufacturing areas share two common characteristics. They are data driven, and are led by synergistic multi-function leadership teams. Accurately measuring and driving key success parameters that contribute to higher productivity for

92

both the area and the planet; OEE can help you better understand how well a manufacturing area is performing, and identify what is limiting higher effectiveness.

Manufacturing systems are composed of equipment and machinery that combine to transform materials and sub-assemblies into products that are either part for the next step of manufacturing or finished goods. A significant amount of capital is often invested to design, build, and implement a system so that products can be made uniformly at a higher rate with minimal waste. Every business plan should include projections about effectiveness of the proposed system and how well it will contribute to the bottom line. The company should also be aware of the degree to which it is at risk if the expected effectiveness is not attained and sustained.

Nearly every industry has multiple manufacturers, each competing for its share of the market. Even a company with the best product may not stay in business if its expense for getting the product to the customer is excessive, fierce competition usually exists.

Companies with the most effective factories will have the staying power to be the long-term survivors. In short, factories are at the core of any manufacturing organization.

Staying in business requires building and maintaining effective factories.

At any given factory, a vast number of events occur simultaneously every workday. The task of producing goods and maintaining equipment usually hold the central focus.

However, take a moment to think about all the activities which go on and how and when they impact the manufacturing process. Decisions made in purchasing today set in motion a timeline for each item ordered and used. How well a piece of equipment is repaired today will influence some future runtime. In the spare parts warehouse, if a

93

bearing is accidently dropped on the floor today, and re-shelved for later use, the piece of equipment that eventually uses it may have a shortened life. Approval or rejections of various projects can affect overall operations for years to come. Hiring and training decisions by human resources set the stage for subsequent events. In short, all the pieces of a factory interlock; one event eventually affects all. Left on their own, all these elements can create a chaotic, reactive environment full of surprises.

What makes the difference between world class manufacturers and the rest of the pack?

World-Class organizations have evolved from a factory of individuals to a factory of coordinated teams working together with a common purpose. All areas have win-win relationships with their interdependent areas, a relationship of interconnection. They make certain that decisions are made correctly the first time. They balance production and production compatibility appropriately. They are in control of the ‘big picture’; they have engaged every one’s support in working toward a high level of excellence and sustaining that position. The bottom line; they know where they are and where they are going.

Having an effective factory is not the only requirement of a successful business. Many other factors are also important. Which way is the economy going to move? Will the competition cut prices? Is the product in demand? Will the product evolve into another?

What are the distribution channels for the product? Should the source of supply be in one place or several? World-Class companies continually address these and other questions as they shape and modify their business plans. World-Class companies are known for another attribute. They are built around the concept that an affective factory producing ‘good goods’ as needed to meet market demands is a valuable asset for any

94

company to have. This attribute is maintained both, short and long term. One of the main metrics used to identify World-Class companies addresses how effectively factories run their processes when scheduled to run. OEE is designed to provide this number; yet most factories do not compute OEE or use it to set and maintain their priorities (Hansen, 2001).

OEE is an index frequently used in the manufacturing industry to calculate the overall equipment effectiveness of a production system or parts of it. The index itself was presented as an overall metric in the TPM concept (Nakajima, 1988). OEE is an aggregated productivity measure that takes into consideration the six big losses that affect the productivity of equipment in production systems (Venkatesh, 2006).

Equipment failure, setup, and adjustments are related to the downtime and expressed in terms of availability. Idling and minor stoppages, together with reduced speed, are related to speed losses and expressed in terms of the performance rate. Finally, process defects and reduced yield are related to defects and expressed in terms of the quality rate. OEE itself multiplies the equipment's availability, performance rate, and quality rate. The three factors involved in this calculation are independent of each other; i.e.

variations in one of the three factors will not affect the other two. Normally, OEE figures can be found from 30-95% (Ljungberg, 1998; Ahlmann, 1995).

The definition varies among applications by different industries, and therefore it is difficult to identify the ideal OEE figures as well as compare the OEE figures among different companies (Jonsson & Lesshammar, 1999). Generally, availability is defined as the ratio of the actual uptime and the intended uptime, the performance rate as the

95

ratio of the actual production time and the intended production time, and finally the quality rate as the ratio of the good items produced and the total amount of produced items. The availability and performance rate normally refer to the loading and operating time (Nakajima, 1988) or the planned time and amount of production (De Groote, 1995).

Various aspects of OEE can be found in the literature. The availability metric is targeted in these discussions. Some authors claim that the availability metric is influenced by factors beyond the equipment itself, such as operators, facilities, the availability of input materials, scheduling requirements and many more; i.e. the OEE metric reflects the integrated equipment system and not the equipment itself (De Ron & Rooda, 2005, 2006). Others argue that the OEE metric does not take into consideration all the factors that reduce the availability, such as the planned downtime and the lack of material and labor (Ljungberg, 1998; Sheu, 2006). It is likely that the figure might be overstated and the mill’s OEE would be higher than it genuinely is. Operators could also be tempted to record ‘target’ figures. This means that if the operator is allowed to take 60 minutes to set-up the mill equipment he or she may always take 60 minutes, or record 60 minutes, even if it is less. It matters, if the mills do not find out the actual performance level of their equipment, they may not utilize their equipment to its full potential and miss the chance to improve OEE and performance of their investment.

2.11 Malaysian Palm Oil Industry: Scope, Importance & Challenges