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Strategies for improving overall equipment effectiveness, part two

This roadmap for improving OEE illustrates how all steps must lead to business outcomes and deliver a solid return on investment.

Overall equipment effectiveness (OEE) has the potential to revolutionize manufacturing from the shop floor to the top floor. The most successful OEE strategies begin based on organizational goals that impact every aspect of a manufacturer’s business. OEE is most often contributing to the strategic goals of improving quality, decreasing costs, improving productivity and increasing capacity. 

Every manufacturer’s roadmap to increasing OEE performance is going to vary based on the unique supply chains, production processes, product lifecycles and extent of manufacturing data to the machine level. The roadmap of how to improve OEE is a framework that all manufacturers can use to extract the most value. 

In using the roadmap below, it’s important to keep in mind the following points regarding how improving OEE performance boosts production quality and efficiency and contributes to increasing revenues and profits. 

  • OEE is one of the best manufacturing metrics for stabilizing the production levels of a given machine or asset. Consider scaling OEE across an entire production line after pilot tests with specific machines are complete. Comparing lines using OEE provides an accurate baseline of machines and their capacity to improve. 
  • Include OEE measurements by machine in quality management dashboards and reports to gain insights into how machine yields, scrap rates and reject rates are impacting cost of quality (CoQ) and acceptance rates. OEE’s first contributions will be to stabilize production levels by machine or asset across the shop and plant floors. By combining OEE with other metrics, it’s possible to quantify manufacturing reliability. Using the roadmap below manufacturers can transition from using OEE as a metric to stabilize manufacturing machinery to quantifying plant-level manufacturing reliability. 
  • The most effective OEE strategies are intentionally created to support long-term organizational or strategic goals, focused on improving line performance and process quality. OEE is a great stabilizing metric in manufacturing in the short term. Long-term goals need to measure the reliability of the entire manufacturing process, tying performance back to business outcomes and return on OEE investments. World-class manufacturers are using real-time monitoring to track OEE to the machine level while gaining new insights into manufacturing’s contribution to cost reductions, improved productivity and quality, and increased capacity. 
  • Scaling OEE to improve production-line performance forces process quality also to improve. When a production operation transitions from using OEE as a manufacturing stability metric to predicting manufacturing performance, plant floor processes improve. This is driven by the greater insights gained into how each machine’s performance on a production line can be improved with less complex, more scalable processes across the production floor.
  • Tying line performance and process quality gains to business outcomes fuels OEE performance gains. The key to accelerating OEE performance is to tie back improvements to business gains and outcomes. When a solid connection is made between improving OEE performance and seeing improved business outcomes, cost and revenue goals are achieved quickly. The key to improving OEE performance payoff is knowing how each incremental gain by machine, line and plant improves revenues and reduces costs. 

The following graphic provides an overview of the IQMS roadmap for improving OEE, illustrating how all steps must lead to business outcomes and deliver a solid return on investment.

Roadmap: How to improve overall equipment effectiveness.

Click here to view a PDF of the roadmap:  OEE-roadmap-1400.pdf

Part three of this series lists lessons learned by manufacturers who have successfully integrated overall equipment effectiveness into their daily operations.

Read part one of this series.

About the author

Louis Columbus is currently serving as Principal at manufacturing software company IQMS. Previous positions include Director Product Management at Ingram Cloud; Vice President Marketing at iBASEt, Plex Systems; Senior Analyst at AMR Research (now Gartner); and marketing and business development at SaaS start-ups. Columbus holds an MBA from Pepperdine University and the Strategic Marketing Management and Digital Marketing Programs at Stanford University Graduate School of Business. He also teaches MBA courses in international business, global competitive strategies, international market research, strategic planning and market research. Columbus currently is a member of the faculty at Webster University and has taught at California State University, Fullerton; University of California, Irvine; and Marymount University.

About IQMS

IQMS (Paso Robles, CA) is a manufacturing software provider that uniquely combines ERP and MES functionality to give manufacturers a comprehensive end-to-end suite for running the business, backed by the real-time performance and scalability that companies demand. Developed specifically for mid-market repetitive, discrete and batch process manufacturers, IQMS provides robust capabilities for addressing strict customer and regulatory certification and compliance. IQMS achieves this by delivering traditional ERP functionality for accounting, sales orders, material requirements, inventory and purchasing, plus extended native features for CRM, human resources, production scheduling, shop floor control, warehouse and quality modules. With offices across North America, Europe and Asia, IQMS serves manufacturers around the world.

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