OEE (Overall Equipment Effectiveness)

…A Key success indicator!

Know the effectiveness of resource usage in the
Manufacturing Process…!!!

In the current competitive business environment where there is no scope

of any kind of wastages, the operations need to be run in the most
efficient and effective way. Every thing right from Man, machine to
material need to work perfectly and in unison. Though Productivity and
Quality are important indicators to monitor the performance but unable to
show the true picture, hence partial in applications. OEE (Overall
Equipment Effectiveness) is a LEAN tool which helps in monitoring
and improving the processes with a holistic approach covering
availability, performance and quality. Manoj Tiwari, Asst. Professor,
NIFT, Gandhinagar discusses the key features of OEE, a possible
methodology to measure it, its benefits in context of apparel
manufacturing.

Introduction- OEE (Overall Equipment Effectiveness) is one of the

LEAN Manufacturing tool and has been widely practiced in manufacturing set-ups
across the world and considered as a key performance measure in TPM (Total
Productive Maintenance). However significant applications of OEE have not been
seen in the Apparel manufacturing yet. Lack of awareness of productivity and quality
issues (Cost of poor quality) and little/no emphasis on machine maintenance issues,
difficulty faced in calculations and ability to correlate the results to benefits in value
terms may be considered as the key reasons for such scenario. And as a result OEE is
still an unexplored tool, if used properly it may open new doors of opportunities. OEE
benchmarking for apparel industry is need of the hour which should be addressed by
the experts of academia and industry. This article is an effort to introduce readers
about basics of OEE, its benefits and functioning in the apparel manufacturing.
The below mentioned scenes can be easily noticed in the garment manufacturing set
ups-
1. Some particular machines not functioning properly and all the available
mechanics of the factory are struggling to make it OK.
2. Hours spent in settings and fixing & adjustments of folders.
3. Wastage of fabric and garment rejections in the set up.
4. Production losses (Start up losses) on a newly set machine.
5. Frequent break downs in machines and loss of productivity.
6. Production delays and quality issues due to problems from a particular key
machine and not meeting the daily targets.
7. Shipment failures due to quality issues as a result of malfunctioning of a
particular machine.
The above mentioned scenes are only few the working professional can easily count
number of such incidents they have faced in the past. Most of the times the cost of the
losses is multiple times of the cost of the machine or equipment. All the expected
profit margins vanish and the organisation faces losses in terms of penalties and sales
losses in case of shipment failures.

However productivity and quality are taken seriously and seen as one of the indicators
of health of the organisation. But most of the time these are analysed and calculated
separately, which doesn’t give the clear picture. It is unable to identify the real
problems/ issues of the process. We never know, how much utilisation is there of the
machinery in a manufacturing set-up. On a fine day, there are chances that
productivity is good and quality of produced garments is also fairly good (separately),
but machine is available only for few hours out of 8.0 hours of the shift. Here both
productivity and quality are good and there is no problem seen but we may face some
serious losses as we don’t know the machine/equipment utilisation.

Here the need is to observe availability, Productivity and quality in a holistic way not
separately. This will give clear and precise idea about how well the machine is being
used. OEE (Overall Equipment Effectiveness) is the tool which helps in this regard.
Once OEE is calculated, it guides us for systematic steps for overall improvements.
While calculating OEE, three parameters are taken in to consideration. These are-
1. Availability
2. Performance
3. Quality
Availability- In simple word this means, how much time the machine has been
actually used against the total time available to work on the machine for the services
or products.

Availability Calculation- Availability can be easily calculated from the total

working/functioning time of the organisation, for example, say 8.0 Hours or 480
minutes in a day. But this is not the production time, as there will be some planned
breaks (Tea and lunch) and there may be some planned machinery break downs for
scheduled maintenances. Here we need to subtract the break times and
planned/schedule machine break down times from the total shift time, as the operators
and machines are not supposed to work in these breaks. The resultant is called “total
planned production time”

Total Planned Production Time = Total Operating Time – (Time allotted for
planned breaks and machine breakdowns for scheduled maintenance)

Total Production time is the time for which one is supposed to work and ideally
should get it fully for producing services or producing goods. But while working,
there are some break downs (Sudden break downs, time consumed in machine
settings, folder/work aid adjustments, start up losses, unavailability of materials etc.).
Due to these losses operator is unable to utilise the total production time, however he
was willing to work for that time. Hence it can be said that, Total Available
(operating) time is again a fraction of total production time.

Total Available (operating) Time = Total Planned Production Time- (Time

consumed/wasted in unplanned/sudden breakdowns and start up losses)

Availability is the ratio of total available (operating) time to the total planned
production time.

Availability = Total Available (Operating) Time /

Total Planned Production Time
Performance - This is the second parameter used in calculating OEE. There are
chances that from the actual available time also, operator is unable to utilise it
completely. It may be due to operator’s inefficiency, machine speed loss (machine not
functioning at predefined/theoretical speed), small interruptions like thread breakage,
needle break and changes, wrong method used while stitching, unnecessary extra
movements, wrong work place lay out etc.). In this situation the actual out put is not
as the calculated/planned or theoretical out put. This again should be calculated in
terms of time, like time consumed in actual output (Total time produced) and the total
available (operating) time.

Performance = Total Time Produced/ Total

Available (Operating) Time

Quality- This the third factor used in OEE calculation. In simple words, this is the
indicator of conformance to the specifications in the finished product. It is the ratio of
OK quality products to the total number of products actually produced in the actual
production time.
Here it is important to note that in context of garment manufacturing, the time
consumed in rework should be considered as time loss due to poor quality. So like the
performance factor, the quality factor should be calculated in time terms instead of
number of pieces. It can be calculated as the ratio of time consumed in OK quality
products to the actual production time.
Quality rejects in the start up, rework, quality loss due to machine malfunctioning and
material should be calculated in time terms and considered as Quality loss while
calculating OEE.

Quality = Time consumed in producing OK quality

goods / Time consumed in producing total goods

The OEE can be calculated by multiplying the all three factors (Availability, Capacity
and Quality) as below-

OEE= Availability X Performance X Quality

The OEE calculation for a garment manufacturing machine can be understood by
using below example-

Total working hours per day 8 Hours or 480 minutes

Lunch break 1 break for 30 minutes
Tea Break 2 break for 10 minute each
Machine Break Down 40 minutes
SAM value for the operation 0.5 minute
Units produced in shift from that machine 600 Units
Time consumed in Rework 30 minutes
Rejects 40 Units

Total Planned Available Time = Total working Hours per day – (Time for Lunch
Break + Time for Tea Breaks)
= 480 – (30 + 10 X 2)
Total Planned Available Time = 480 – 50 = 430 Minutes

Actual available (Production) time = Total Planned Production time – Time

wasted in Break down
= 430 – 40 = 390 Minutes

Availability = Actual available (Production) time / Total Planned Available

Time
= 390 / 430 = 0.9069 or 90.69%

Performance- Total minutes produced / Total minutes available

Total minutes produces = Number of goods produced X SAM value for one operation
= 600 X 0.5 = 300 minutes

Performance = 300 / 390 = 0.7692 or 76.92%

Quality – Time taken to produce OK quality products / Total minutes
produced

Time taken to produce OK quality products = Total minutes produced – (Time

consumed in Rework + Time wasted in producing rejects)
= 300 – (30 + 40 X 0.5)
= 300- (30 + 20)
= 250 minutes

Quality = 250 / 300 = 0.8333 or 83.33%

OEE = Availability X Performance X Quality

= [390/430] X [300/ 390] X [250/ 300]

= 250/430 = 0.5813 or 58.13%

If we observe carefully, it can be noticed that availability, performance and quality

factors are 90.69 %, 76.92 % and 83.33 % respectively. And separately it looks fairly
good. But this may not be the true picture; the data may be misleading, as it doesn’t
give the idea of overall usage of the resources. Here OEE comes in picture and gives
us a holistic view after measuring the all three factors simultaneously. As the OEE is
58.13% in above discussed example. It’s an indicator that even after good figures of
availability, performance and quality, we are able to utilise only 58.13 % of that
equipment, which is definitely can’t be said satisfactory and there is huge scope for
further improvement. Here OEE can be clearly said as the ratio of the Fully
Productive Time to the Planned Production Time.
Benefits of OEE- OEE may be very useful for apparel manufacturing if practiced
religiously. The current status of OEE is able to give us the clear cut idea where we
are at present and which is the most crucial factor affecting the OEE. Accordingly a
priority list can be worked out so that action plan can be developed targeting
improvements in the respective area. Time to time OEE can be calculated for a
comparative analysis, observe the progress/improvements and to set the future course
of action.
Effectiveness monitoring using OEE may be helpful in finding out the key
problematic areas or bottlenecks which are affecting the final O/P and may guide in
solving them as per requirement. In other words it can be said; OEE monitoring
guides us in differentiating between urgent and important. The key benefits may be-
1. Monitoring and Controlling of sudden machine break downs.
2. Analysis and improvement in set-up time for machines/equipments.
3. Machine/equipment idleness due to unavailability of material as a result of
poor line balancing or wrong planning.
4. Highlighting poor machine conditions ( those machines which have regular
interruptions and speed losses)
5. Highlighting operators’ inefficiencies with the key problems, further
training/skill development can be planned accordingly.
6. Improved work place design by highlighting issues with Man-Machine and
Material placement.
7. Highlighting quality related issues from particular machine/equipment or
process.

At the same time, here it’s imperative to say that OEE is merely an indicator of
equipment effectiveness, it’s not the panacea of problems, but definitely it’s
capable to provide the real picture with complete coverage.
The chart drawn gives the pictorial representation of OEE calculation in an easy way.
 Total Operating Time

Total Planned Production (A) Planned Breaks and Scheduled

Maintenance

Total Planned Production (A)

Actual Available (Op.) Time (B) Machine Break Downs

Availability(x) = Actual Available (Op.)Time (B) / Total

Planned Production Time (A)

Actual Available(Op.) Time(B)

Operator’s inefficiency, Speed

Actual O/P Time (C) Loss, Short break downs

Performance (y) = Actual O/P Time (C) /Actual Available (Op.)

Time (B)

Actual O/P Time(C)

OK Quality O/P Rework and Quality Rejects

Time (D)

Quality (z)= OK Quality O/P (D)/ Actual O/P (C)

OEE = Availability (x) X Performance (y) X Quality (z)