OEE – Not Just for Machines Any More

OEE – Overall Equipment Effectiveness – is like SMED – Single Minute Exchange of Dies- suffers from being narrowly named by its originators. Just as SMED is a set of techniques and thought processes for changing production over from one product to another that applies to just about everything – not just exchanging dies – OEE applies to a lot more than equipment. It applies to any and all work being done at a constraint.

Another problem with the perception of OEE is that many of it proponents see it as a universal cure, when it is enormously powerful at the constraints; not so much anywhere else.

OEE is basically the summary of three metrics: Utilization – of the planned time the operation is supposed to be producing, how much time was it really producing?; Rate – when it was producing, how well did it produce compared the ‘standards’?; and Yield – how much of the stuff produced was any good?

That idea – that those three factors best measure throughout at the constraint – is irrefutable, yet far too many companies don’t apply it to people driven operations if they use it at all. What is particularly interesting is how it plays right into the perceived problem of many companies that think they suffer from a shortage of skilled workers.

Case in point: A company in New Zealand that correctly saw its constraint as an operation in which highly skilled welders did their thing. Turned out that they did not have a shortage of highly skilled welders so much as they had their highly skilled welders spending a lot of time doing things other than high skill welding. They spent a lot of time getting material, setting up jobs, doing welding that entry level welders could do, etc… They didn’t need to hire more skilled welders – they just needed a helper or two in the cell to do that other work and increase the highly skilled welder utilization – the amount of time they did actual constraint work.

Similarly – on more than one occasion I have come across companies whose constraint was in engineering. By applying OEE logic to that constraint, and looking at how much time the engineers were actually doing work that took a degreed engineer it was obvious that more engineers weren’t needed. They just needed to reduce the huge amounts of time their engineers were spending in meetings, doing basic drafting work, and a lot of other things you don’t need to go to Purdue to learn how to do.

Of course, in both of the above instances the problem was utilization, rather than rate, and perhaps the bigger problem whether the constraint operation is machine or labor driven is a collective tunnel vision on rate. Constraint problems are too often viewed as (first) a matter of getting people to work harder; then (second) solved only by adding more resources to the constraint – buying another machine or hiring more people.


A classic, but simple, example of addressing utilization instead of beating up people or spending ore money is the company that simply juggled around break times to keep a constraint machine running eight hours a day rather than shutting it down for an hour a day for employee breaks; then going a step further by staggering employee daily start and stop times to expand it to ten hours a day. From seven hours of utilization a day to ten – without spending an additional dime. That simple, radical improvement is only possible when people use OEE thinking, and realize that utilization is the big opportunity – not the rate at which parts pop out while the operation is running.


What prevents this kind of thinking and improvement more often than not are senseless but firm HR policies that everyone has to take breaks at the same time, and everyone on first shift has to start and stop at the same time.


There’s the tip of the week: Identify the constraint, apply OEE logic, take a hard look at rate, and do a little bit of creative thinking, then sit back and watch in amazement at the overall improvement.

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