Overall Equipment Effectiveness (OEE). Approaches for Improvement (PDF)

Scientific Essay from the year 2015 in the subject Business economics - Operations Research, Comenius University in Bratislava (Faculty of Management), language: English, abstract: Overall Equipment Effectiveness (OEE) is a ratio of the actual output over the figure it could be theoretically, and is calculated by a multiple of three components, all of which relate to actual versus theoretical values; availability, performance and quality (Lannone and Nenni, 2013). Another relevant interpretation of the acronym OEE was devised by Vijayakumar and Gajendran (2014, p. 47), providing three principles for maximising the OEE value, where O represents its objective of accomplishing organisational goal(s), E is the efficiency resulting from doing things right, and E for effectiveness which is a consequence of doing the right thing.

The major purpose of OEE is used to improve overall manufacturing production performance. The measurement demonstrates how well the production process matches the planned process, its value is reliant on the multiple of the three components, availability, performance and quality but industry average values are well below the 100% figure. In reality world class performance is regarded as and OEE value equivalent to 85%, however, in most cases the actual figure is much lower, between 60% and 70% (Lannone and Nenni, 2013). Automotive manufacturers who are able to reduce the length of manufacturing processes by as little as a few seconds can leverage productivity by one or two extra vehicles a day, generating additional revenue in the long term (Montpass, 2014).

Hence in this presentation the reasons for the gap are appraised, particularly in relation to automotive manufacturing. Initially an overview of each of the components and the factors that most negatively impact on the OEE value are provided, followed by the most up to date interventions that are being employed to improve OEE. In an industry in which consumption is declining (Marketline, 2015) and competition for sales increasingly fierce, the OEE value is vital to productivity and competitive advantage.