How To Measure OEE; You’re Doing It Wrong

Manufacturing Dashboard KPI

Can you really measure OEE?

I’ve talked about OEE at length before. Why it’s important, how to measure OEE, and why it is considered by some to be a magic number. But, to a certain extent, we need to pump the brakes on this question of measuring OEE. Why?

A large number of manufacturers I talk to are concerned about their OEE number and not if it is being collected in an accurate or consistent way that can truly be tracked over time. Don’t get me wrong, they are carefully thinking about OEE but they are more concerned with reaching a certain benchmark than they are about measuring it in a way that will allow them to see incremental progress over time; which is what I would argue is by far the most important thing to consider. Let me explain how you should think about and measure OEE…

Why it’s the percentage change, not the number, that matters

Let’s say your OEE is theoretically very high, but month to month, it averages out to little to no real change. The most important thing to observe with shop floor operations is data consistency and improvement. You want to identify outliers that are causing wild swings in OEE one way or the other. Monitoring OEE numbers but not overall percentage changes can hide these important observations. They also open the door to subjective interpretations of OEE vs. objective data-driven changes.

How we should change our thinking about OEE

Let’s pretend that most manufacturers think they need to be at a certain OEE %. Maybe they think they should be at 80%. Staff and stakeholders will often manipulate the calculations to arrive at those target numbers by arguing over what should be counted as downtime. It does not give a true picture of how efficient the shop floor really is. It only gives a picture of how the data is calculated, collected and skewed.

Should you include lunches and smoke breaks? Should you classify lack of orders or lack of raw material as planned down time? These things affect those numbers. If your goal is to get to 80%, these things can be included or not to arrive at the target. If you focus on percentage improvements, you will be able to measure true improvements vs. goal setting achievements.

The key to doing this is collecting consistent data and looking at percentage changes. What the actual OEE number absolutely does not matter.

Don’t fight about the number, just collect consistent OEE data

Many organizational staff members will get into fights about how to classify this stuff and it skews the real results. It actually doesn’t matter what the OEE number is, or what you choose to collect and include and what you don’t. What fundamentally matters the most is the percentage changes over time.

What has to be done to achieve this is to collect the data the same way and ensure you have the same measurements in place over the long term.

Few organizations can actually do this today. This requires the ability to look at things in real-time and to see what actually occurs on the shop floor (not someone’s subjective data). This means you need analytics that you can count on. This is where most manufacturers should start.

If you want to understand how to calculate OEE take look at our OEE Calculator and Formulas page.

If you have any questions feel free to email me directly at bsapot@SensrTrx.com.

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