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Just how efficient do you think your shop is?

Tonytn36

Diamond
Joined
Dec 23, 2007
Location
Southeastern US
The thread on automation tripped a couple of memory cells way back there somewhere and got me curious.

How efficient do you really think your shop is? Want to know how different reality is vs. perception? Really want to know where things are screwed up and where you need to start fixing it? Want to know why you aren't making as much money as you should? Has anyone here ever heard of OEE?

A bit of explanation: OEE stands for Overall Equipment Effectiveness. It is a set of hard numbers that will show you just how well you are doing as a manufacturer, and it applies to _any_ manufacturing, whether it be a one man shop or a 40,000 person corporation, and what you make has no influence.

OEE contains 3 factors, in basic terms:
1. Availability: How many minutes the equipment was available for production.
2. Performance: How well did you utilize the equipment availability.
3. Quality: How effective were you at using your equipment to produce a quality product.
OEE = 1 x 2 x 3, as a percentage.

To be classified as world-class manufacturer, in whatever segment you are, one man or not, the OEE should be 85% or better. Most companies will fall into the 50-70% range.

OEE will point you in the direction you need to focus your efforts because it points to where the problems lie.

Now, to see where you stand, go here:

http://www.oee.com/oee_quick_guide-request.html

Download the spreadsheet and guides, and fill in the information, it's pretty simple.
You can modify the spreadsheet to glean much more information, such as adding rows to explain why downtime occurred, and how many minutes per occurrence, scrap codes, etc. Don't mess with the actual calculations already in there, but this sheet can be expanded to help.
 
Well let's see, there are 168 hours in a week, and I manage to run a machine for 4 hours a day, 5 days a week, so that makes me 12% efficient on that one machine.
I've got 12 machines, so 11 of them aren't being used when I run the other one. So 1% efficient.

I think I deserve a gol durned medal for making a living at 1% efficiency. Can anyone else underdo me? :D
 
Wow, I thought 1% here, as a joking reaction, but now that you've done the math I guess I was right anyway!
Subtract time for being on PM and that puts it about .657% ....But wait....if the auto feed bandsaw or the barfed cnc lathe is running, I may be back up around that magic lone percentile. ;)
 
The thread on automation tripped a couple of memory cells way back there somewhere and got me curious.

How efficient do you really think your shop is? Want to know how different reality is vs. perception? Really want to know where things are screwed up and where you need to start fixing it? Want to know why you aren't making as much money as you should? Has anyone here ever heard of OEE?

Tonytn36 runs stuff that is balls to the wall 24/7. BTW Tony I can't get on your server since you changed it.
 
I like to think of efficiency as how far down the s***hole a company is.

If they've got 100% efficiency and are getting there by producing stock, the business is tying up capital in materials, machine time, and warehousing that could be spent elsewhere to grow and improve the business.

If they've got 100% efficiency and are getting there because they have work, they're missing deadlines. If your machines and guys are working ALL the time, that means they can't address hot jobs that come up, machine downtime (even for PM), or any number of inevitabilities that arise without missing deadlines.

So why do you want to shoot for this goal again? I'd love to own a business with about 20-25% efficiency as it is described here. Any higher, and I'd know I was in trouble.
 
Apparently, nobody read the information on the link. Shame....

Toastydeath, machine availability is based on "planned production minutes". If you plan to have the machine down for 1 hr per day for PM, then that isn't included in the calculations. If you have no work for the machine, that isn't planned production time either. What OEE does is look at how efficient you are when you _are_ running production, and if used, can make you a more profitable shop.
 
I threw in some numbers based on my 10 hour day and 4.5 hours of machine run time and some other variables and came up with 16.85%.

I like fuzzy math better, something like this: 100% - 16.85% = 83.15%. Based on my calculations and standards, I just missed the one man shop, world class efficiency!:D
 
Says Who ?

"...OEE should be 85% or better..."

Who says ?
It seems like kind of an arbitrary number.
I like to use the "sewer pipe" analogy:
Big hotel has a giant sewer pipe so that when everyone gets up in the morning and uses water the thing doesn't back up. The rest of the time it just sits there hardly used. The goal is not to get the most use out of a little pipe, the goal is to have it do the job when the system requires it.
In my shop the machines sit around alot, but when a job comes through I have enough of them to get the work through fast.
Sure it's good to keep machines working but that is not the goal.
I see it as a continuing process of eliminating BOTTLENECKS in the system whether they are machine related or processing , handling, billing, inspecting ..whatever.
May be thats a good analytical tool for a mega-factory but for me it's just way to much cypherin'..
SM
 
I did a similar exercise for several packaging plants a few years ago. We called it Ideal Efficiency (my employer probably used a different consultant). What I found is that despite the claims that the analysis was appropriate for a discrete parts environment, the analysis in a discrete parts less than 24/7 manufacturing environment required too many fudge factors to make it really useful. Where it did provide value was in a process environment, ideally one scheduled 24/7. As an example it was helpful on an extruder, especially one running multiple grades where we could look at reducing changeover times by better scheduling which grade followed a previous grade, but when we got into printing, especially where multiple jobs might run simultaneously on a machine the analysis quickly lost value.

In the printing plants, which from a scheduling and job costing perspective are very similar to a job shop, we got a lot more value from job cost analysis and building plant simulations. Most of our jobs required 3-6 operations and the simulations were especially helpful in situations with significant WIP. Managing WIP across multiple processes can become difficult in a hurry and WIP area constraints often forced us to run less than optimum order quantities.
 
i guess i am a bit "thick" between the ears :)

who cares how efficient a shop is?

an example

about 20 years ago i was doing business with a roof truss manufacture, they hired
some sort of consultant who with a group of observers put together some sort of standard unit analysis tool,,, yup the numbers looked great,, efficiency was great,,, cost was 50 grand and the owner was thrilled... until..

i followed the material that came into the yard through each process, tracked one sling of 2x4's, the worst of the boards were handled no less than 27 times,, each time requiring a man and a forklift.
all this for the worst board? a board that was finally destined to be cut into a vent block.

it took me 4 hours and a note pad to determine how to cut 3 forklifts, and reassign three men to something more profitable,, the result of this one change netted 185k the first year.
cost of my advise.. about 200 bucks.

now how did this affect efficiency? it didn't.. at least in how the system was designed to test for efficiency. they figured as long as the forklifts were running non stop for an 8 hour shift they were 100% efficient! as long as each of the forklift operators were driving 8 hours non stop they were 100% efficient!

efficiency is one thing,, profitability is quite another

efficiency is a tool to use to determine where changes can be, should be or must be made.

another shorter example

another company i worked for
the new owner after the first three years of losses was thrilled over finally making a whopping profit of 180k dollars the 4th year,,, i asked what the gross sales were?
he replied 25.5 million,,, hmmmm
i would not own a business that only managed 180k on 25.5 million in gross sales unless
there was a down economy or some valid reason to hang on,, it doesn't take much of a hickup to eat 180k and then where are you? break even? or worse?

business is not a hobby, it is an endevour to make money, and the more the better.

profit margin, bottom line % of sales holds more water to me than worrying about efficiency.

now in support of efficiency, i am all for efficiency if it works to help the employees get their job done as comfortably as possible, aid's in getting the job done quicker and at a higher profit, or provides the ability to tap into unused capacity.

but thats me :)

thick between the ears

bob g
 
Wow! Great web sight.

I used to have a factory with an automatic assembly line. This qualifies all those things you know are happening and gives you a way to prioritize solutions. I liked how they classify all the items. Setup, slow downs, setup rejects vs. production rejects. All you guys, above should go back and reread it. "Who cares about efficiency?" Anyone interested in owning and running a business. Number of good units going out the door in a day. If you are measuring the parts you make. Why not measure the business you run.


Wiz
 
some big contracts require you calculate this, and wont consider you if you cant proove you OEE greater than %85 or more.

really, you guys missed the PLANNED PRODUCTION TIME aspect.

if this OEE # is low it's because your crap is always breaking down on the job. means you maintenance program sucks, and your setup & changeover sucks.

it's perhaps no so applicable to "job shop" work as it is to high volume production
 
i guess i am a bit "thick" between the ears :)

who cares how efficient a shop is?

an example

about 20 years ago i was doing business with a roof truss manufacture, they hired
some sort of consultant who with a group of observers put together some sort of standard unit analysis tool,,, yup the numbers looked great,, efficiency was great,,, cost was 50 grand and the owner was thrilled... until..

i followed the material that came into the yard through each process, tracked one sling of 2x4's, the worst of the boards were handled no less than 27 times,, each time requiring a man and a forklift.
all this for the worst board? a board that was finally destined to be cut into a vent block.

it took me 4 hours and a note pad to determine how to cut 3 forklifts, and reassign three men to something more profitable,, the result of this one change netted 185k the first year.
cost of my advise.. about 200 bucks.

now how did this affect efficiency? it didn't.. at least in how the system was designed to test for efficiency. they figured as long as the forklifts were running non stop for an 8 hour shift they were 100% efficient! as long as each of the forklift operators were driving 8 hours non stop they were 100% efficient!

efficiency is one thing,, profitability is quite another

efficiency is a tool to use to determine where changes can be, should be or must be made.

another shorter example

another company i worked for
the new owner after the first three years of losses was thrilled over finally making a whopping profit of 180k dollars the 4th year,,, i asked what the gross sales were?
he replied 25.5 million,,, hmmmm
i would not own a business that only managed 180k on 25.5 million in gross sales unless
there was a down economy or some valid reason to hang on,, it doesn't take much of a hickup to eat 180k and then where are you? break even? or worse?

business is not a hobby, it is an endevour to make money, and the more the better.

profit margin, bottom line % of sales holds more water to me than worrying about efficiency.

now in support of efficiency, i am all for efficiency if it works to help the employees get their job done as comfortably as possible, aid's in getting the job done quicker and at a higher profit, or provides the ability to tap into unused capacity.

but thats me :)

thick between the ears

bob g


I maybe wrong, but I think most people care about efficiency. Your situation you describe sounds more like your boss paid for an efficiency assessment and plan to be come more efficient and didn't receive what he paid for. If you can become more efficient, it should translate into more profit.
 








 
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