Table Of ContentOverall Equipment Effectiveness
OVERALL
EauiPmen
t
Effectiveness
A Powerful
Production I Maintenance Tool
for Increased Profits
By
Robert C, Hansen
Industrial Press Inc.
Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Effectiveness
Library of Congress Cataloging-in-Publication Data
Hansen, Robert C.
Overall equipment effectiveness: a powerful productiodmaintenance tool for
increased profits I Robert C. Hansen.
p. cm.
Includes bibliographical references and index.
ISBN 0-831 1-3138-1
1. Total productive maintenance. 2. Industrial equipment. I. Title.
TS192 .H363 2001
658.2'02--d~21 2001051667
Industrial Press, Inc.
200 Madison Avenue
New York, NY 10016 -4078
First Edition. November 2001
Sponsoring Editor: John Carleo
Interior Text and Cover Design: Janet Romano
Developmental Editor: Robert Weinstein
Copyright 0 2002 by Industrial Press Inc., New York. Printed in the United States of
America. All right reserved. This book, or any parts thereof, may not be reproduced, stored in a
retrieval system, or transmitted in any form without the permission of the publisher.
Printed in the United States of America
10 9 8 7 6 5 4 3
Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Effectiveness
P R E F A C E
0
verall Equipment Effectiveness: A Powerful Production and
Maintenance Tool for Increased Profits brings together both the
social and technical aspects of successful manufacturing and pro-
cessing. I would have paid many times over to have such a book at the start of my man-
ufacturing 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, mate-
rials, 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 imple-
mented years earlier.
I hope that plant and corporate managers accountable for production opera-
tions not only learn the concepts and theories but also take the responsibility to per-
sonally 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 posi-
tion relative to its current performance. This potential is determined by taking the actu-
al 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 this book focus on collecting data, generating information, prioritiz-
ing, 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
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Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Effectiveness
powerful tool that should assist every engineer, foreman, department head, and man-
ager in selecting the right projects and then communicating the benefits in financial
terms.
A portion of this book provides tools and techniques for examining the inher-
ent 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 manage-
ment, 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 fac-
tory 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 provid-
ed 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 com-
pensating workers doing nonrepetitive 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 produc-
tive as they could be. Over the long term, plants can not downsize themselves to suc-
cess 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 con-
cepts in your work area.
Getting people to accept change and do things differently can be very impos-
ing 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 offaith to a single step. Climbing to high-
er levels on the mountain begins with a single step. Start Now!
Bob Hansen
PO Box 272427
Fort Collins, CO. 80527, USA
[email protected]
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Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Effectiveness
T A B L E O F
C O N T E N T S
Foreword 1.1 111
Preface V
Acknowledgements vii
1. Understanding the Power of Overall Equipment
Effectiveness (0E E) 1
1.1 Factories: Effective Producers of Good Goods 2
1.2 Factory Dynamics 3
1.3 Balancing the Business 4
Decide 11: A Simulation Experience 5
1.4 Leadership for Teams 8
1.5 Moving the Community to Improved Performance 10
A Case Study Using OEE Metrics 14
1.6 Total Effectiveness Equipment Performance (TEEP) 17
1.7 The Bottom Line: Good Goods at Lowest Cost-Now! 20
2. Learning the Basics of OEE Metrics 25
2.1 Definitions of OEE Categories 25
2.2 Data Collection Review 28
2.3 Practice Production Report 32
2.4 Summarization Example 33
2.5 OEE Formulas and Results 36
Method 1 OEE Using Nakajima Formulas 40
Method 2 OEE Using Event Time Records 41
Method 3 OEE Based On Good Units Transferred 41
2.6 Reconciliation and Loss Analysis 42
3. The Financial Aspects of OEE 47
3.1 Factory Example: Base Case 48
3.2 Case B: Same Output, Improved OEE 52
3.3 Case C: Full Factory, Improved OEE 54
3.4 Case D: OEE Impact on Return On Assets (ROA) 56
3.5 Case E: Higher OEE with the Same Sales, ROA 60
3.6 Case F: Higher OEE, Selling Everything Produced, ROA 62
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Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Efectiveness
4. The People Factor 67
4.1 The Most Important Resource: Actively Learning, 68
Motivated People
4.2 Group Centering Exercise 71
The Metronome Exercise
4.3 Skills, Interaction, Action 76
4.4 Observation and Education 79
4.5 Work Group Experiences 83
4.6 An Example of Expectations: Master Mechanics 88
4.7 An Example of Expectations: Technicians 91
4.8 Interviewing and Hiring 94
4.9 Ranking and Compensating 99
5. Priority and Decision Tools 105
5.1 The Value Fulcrum 105
5.2 Developing a Troubleshooting Guideline Decision Tree 109
6. Win-Win Maintenance/Equipment Shutdown Strategies 113
6.1 Steps to Improve TEEP: A Case Study 114
Identify 118
Exploit 120
Subordinate 126
Elevate 127
Go back 127
6.2 Shutdown Strategy Checklist 130
7. Reliability 101 137
7.1 Reliability101 Introduction 137
7.2 Reliability Nomenclature 143
7.3 Beginning Reliability with What You Have 156
7.4 Matching Maintenance Strategy to Equipment Function 160
7.5 Developing Best Practices 164
7.6 Building Reliability into Equipment Design 166
8. Reliability Availability MaintainabilitylSystem Performance
Analysis, (RAMISPA) 173
8.1 RAMISPA 174
8.2 Improving the ‘Horse’ you Already Have I Starting 175
Reliability
8.3 Quick Changeovers: Single-Minute Exchange of Dies 178
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Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Effectiveness
8.4 Theory Of Constraints 180
8.5 Data collection and Information sharing 183
8.6 Pareto Analysis 190
8.7 Project Management and Asset Life Cycle 192
8.8 Speed ups 198
8.9 Cycle time improvements 20 1
8.10 Benchmarking 204
9. A General Tool for Acceptance Testing 215
9.1 Reliability Quantification Testing 215
9.2 Implementation Stories 219
Case 1. Barrel Dumper Project 219
Case 2. Computer System Upgrade 220
Case 3. Material Handling Wheels 222
Case 4. Automatic Core Loading 222
10. Success or Failure 225
10.1 The Success Riddle 225
10.2 Why Factories Fail 230
Impending Failure Study 23 1
APPENDIX 237
1. Recommended Reading 231
2. RAPTOR 238
3. Redundancy Equations 240
4. Generic Failure Rates 244
5. Mechanical Failure Modes 253
6. Failure Mode Effects and Criticality Analysis 259
7. Constructing Pareto Charts 264
8. Preserving Failure Data 27 1
INDEX 275
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Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Effectiveness
C H A P T E R
UNDERSTANDING THE
POWER OF OVERALL
EQUIPMENT EFFECTIVENESS
T
his book is the culmination of the many years of experi-
ence I have inside a large Fortune 100 company. It is
offered as a “how to improve” guide for many of the issues
that exist in manufacturing work centers (factories or refineries) of all
sizes and types. We will look at the key parameters for the success of
manufacturing communities, then link those parameters to the financial
business metrics that are vital to your company’s success. We will also
look at the practical application of theories that are commonly spoken,
but seldom accepted on the factory shop floor.
Aspects of this book are appropriate for everyone involved in or
supporting a manufacturing process. The book provides all work centers
with techniques and measures for greater throughput that requires little or
no capital spending. Over the years, I have been successful in five differ-
ent types of manufacturing processes. Based on that experience, I offer
recommendations regarding what does and does not work to improve pro-
ductivity and reliability-maintainability in both the short term and the
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Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Effectiveness
CHAPTER 1
long term. I hope you will use this book proactively to drive improve-
ments in your area.
1.1 Factories: Effective Producers of Good Goods
Every factory* attempts to be an effective, low-cost producer.
This effort is required in today’s challenging environment when cus-
tomers demand quality product at the best value. Few factories attain and
maintain high level productivity and low costs. Many of these use a dis-
ciplined approach to identify the best improvements to make. They use
teams to eliminate the root problems that otherwise keep the factory from
driving toward continuously higher levels of effectiveness. In short, they
have found the power of OEE: Overall Equipment Effectiveness.’ By
recognizing the ‘hidden factory’ within, they have made improvements
that contribute directly to the bottom line.
World-class manufacturing areas share two common characteris-
tics. They are data driven and they are led by synergistic multi-hnction
leadership teams. Accurately measuring and driving key success parame-
ters contributes to higher productivity for both the area and the plant. A
method called Overall Equipment Effectiveness, or OEE, can help you
better understand how well a manufacturing area is performing, and iden-
tify what is limiting higher effectiveness.
Manufacturing systems are composed of equipment and machin-
ery that combine to transform materials and sub-assemblies into products
that are either parts 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 product can be made uniformly at a high rate
with minimal waste. The factory should effectively deliver the product at
less cost than would be needed to produce it individually. Every business
plan should include projections about the 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.
Continuous and discrete processes of transforming materials and
parts into products can be complex and unique; the system is often quite
technical and elaborate. In many instances, a standard product is manu-
factured in many different formats and variations. The system, therefore,
splinters into multiple processes, yet they use shared resources. Some of
the cases in this book come from the author’s personal experience in a set-
*The word yactory’ can be replaced by %e$nery’ throughout this book.
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Copyright 2005, Industrial Press Inc., New York, NY
Overall Equipment Effectiveness
CHAPTER 1
ting where over thirty process setups were used to produce variations of
seventy different products from four different product families. The cap-
ital investment was well over $100 million. Thus, the operating cost to
product was significant; the effectiveness of the operation had a major
influence on the company's bottom line.
Nearly every industry has multiple manufacturers, each compet-
ing 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 sur-
vivors, assuming that the need for the product is continuous. This "stay-
ing power" provides a significant advantage over time. For example, in
the paper clip industry, one of three U.S. manufacturers has equipment
over 50 years old, still producing high quality clips'. Sound investments
over half a century ago, and on-going maintenance, has provided a long-
term business advantage to the company.
In short, factories are at the core of any manufacturing company.
Staying in business requires building and maintaining effective factories.
1.2 Factory Dynamics
At any given factory, a vast number of events occur simultane-
ously every workday. The tasks of producing goods and maintaining
equipment usually hold the central focus. However, take a moment to
think about all the activities that 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 bearing is accidentally dropped on the floor today, and re-shelved for
later use, the piece of equipment that eventually uses it may have a short-
ened life. Approval or rejection 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 eventual-
ly affects all. Left on their own, all these elements can create a chaotic,
reactive environment full of surprises, a home for "Murphy," the demon
that brings bad luck. Actually, with all that can potentially go wrong in a
factory, it is amazing that factories do as well as they do.
And yet, what makes the difference between world-class manu-
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Copyright 2005, Industrial Press Inc., New York, NY
