Having visited both PPMA in Birmingham and Pack Expo in Chicago recently, I was bemused to see so many more companies offering OEE or Performance Improvement Systems, which promise a future Utopia. If my many decades within the performance improvement business has taught me one thing, it is that the Utopian ideology of Performance Optimisation is far more complex than many seem to realise.
So why the significant focus on OEE? We believe the thinking behind its original development was that it brings together so many different departments within a single combined metric. Hitherto, departments such as Planning, Production, Technical, Quality and Engineering, often worked as separate entities with their own information silos or, in some cases, no useful historical information at all. At least OEE has helped enormously to encourage interdepartmental working and information exchange.
This is not to criticise any particular OEE supplier or user, but simply to re-emphasize the point that no system can hope to deliver the Utopian production ideology if it is only generating one or two metrics.
But OEE is so easy to manipulate and, even when applied ‘by the book’, still only gets companies so far!
One user recently told us that, since the installation of their XYZ system, their OEE had increased to 85% but, they went on to say, ‘we left out Quality and we allow 20 minutes morning startup time and 20 minutes close down time at the end of each shift. We also leave out; product changeover times, planned maintenance, tea breaks, lunch breaks and time allowed for team meetings.’
It can be difficult to convince such users that, whilst their measures are probably very useful to them and have helped to make significant gains, such measures fall a long way short of true OEE.
But let’s not get too prescriptive. Even true OEE is by no means a panacea. For example, when OEE is measured strictly by the book, it takes no account of manning levels. In a typical production run, a production manager may need to increase the crew size due to product quality issues or troublesome performance from say a labeller, so additional metrics such as ‘units per man hour produced’ can also be very revealing and drive improvement actions.
Another weakness with so many of the ‘me too’ OEE systems, is that they lack both the high level ‘top losses’ management analysis and the granularity (drill down), essential for rapid root cause analysis so necessary to drive lasting performance improvement.
Another limitation of many OEE systems is that, even when they include true Availability, Performance and Quality percentages, these are usually based upon a ‘Rolled Throughput Yield’ which, though it can account for defects produced during the run, the average OEE system provides little or no opportunity for OEE correction through the entry of post-production quality rejects or even a whole batch quarantine.
Compliance is another big issue, or can be. This is often confused with individual product quality or packaging integrity, but could more accurately fall under say ‘Coding and Labelling Verification’; where the product quality is good, the pack seal integrity is good and so on, but someone set up the date coder incorrectly, meaning that the whole batch could be quarantined or rejected through non-compliance.
More batch rejections are caused by incorrect packaging and/or coding than anything else, often leading to batch rejection by a supermarket chain, even though the quality of the product falls well within the product specific quality requirement.
How many companies truly calculate the cost of batch rejections, rework, scrap, etc., and either use this data to retrospectively correct previous OEE figures or keep a running total of such costly events under say a ‘Cost of Quality’ or ‘Cost of Non-Compliance’ analysis?
In our experience, not enough. More often than not, such batch rejections or RTMs (return to manufacturer) and the consequential costs through rework, scrap, damaged customer relationships, etc., are simply treated ‘as par for the course’. One company recently told us that it was cheaper to risk a few supermarket fines than to invest in a system to eliminate the risk! With so much competition for supermarket shelf space and between the supermarkets themselves, we believe that anything short of Total Compliance is a dangerous and risky strategy. The companies no longer with us, because they took such risks, are far too numerous to list here.
We believe there is no substitute for a holistic approach where all risks, variables and efficiency constraints are taken into account, in order to give the most accurate picture of overall compliance, quality and efficiency, in real time.
In effect, creating right first time products, every time, at lowest manufactured cost, that go out and stay out and thereby consistently achieve total customer satisfaction, where only the customer comes back, but never the product.
The good news is that there are some very encouraging signs that a growing number of both large and small users are demanding a much more holistic approach, to make true overall performance instantly visible, pushing companies like ourselves to deliver even more comprehensive, real-time solutions, and to ensure that tomorrow’s interpretation of holistic will take us even further than today’s. In essence, today’s ‘Good’ is unlikely to be ‘Good Enough’ tomorrow.
Roy Green, Harford Control