Q 600. Availability is one of the three parameters in the calculation of OEE. How is it sometimes mis-calculated to artificially inflate the OEE numbers? How can this be avoided and what is the right method to calculate Availability? Provide relevant examples.

 

Note for website visitors -

• This platform hosts two weekly questions, one on Tuesday and the other on Friday. 
• All previous questions can be found here: https://www.benchmarksixsigma.com/forum/lean-six-sigma-business-excellence-questions/. 
• To participate in the current question, please visit the forum homepage at https://www.benchmarksixsigma.com/forum/.
• The question will be open until Tuesday or Friday at 5 PM Indian Standard Time, depending on the launch day. 
• Responses will not be visible until they are reviewed, and only non-plagiarised answers with less than 5-10% plagiarism will be approved. 
• If you are unsure about plagiarism, please check your answer using a plagiarism checker tool such as https://smallseotools.com/plagiarism-checker/ before submitting. 
• All correct answers shall be published, and the top-rated answer will be displayed first. The author will receive an honorable mention in our Business Excellence dictionary at https://www.benchmarksixsigma.com/forum/business-excellence-dictionary-glossary/ along with the related term.

• Some people seem to be using AI platforms to find forum answers. This is a risky approach as AI responses are error prone as our questions are application-oriented (they are never straightforward). Have a look at this funny example - https://www.benchmarksixsigma.com/forum/topic/39458-using-ai-to-respond-to-forum-questions/

• We also use an AI content detector at https://crossplag.com/ai-content-detector/. Only answers with less than 15-20% AI-generated content will be approved.

OEE stands for Overall Equipment Effectiveness and is a metric allowing measure equipment performance. It contributes monitoring production productivity.

To calculate OEE, we need three factors:

- Availability

- Performance 

- Quality

OEE will be in percentage, 100% being the best result ever. in fact OEE equals Availability multiply by Performance Multiply by Quality.

OEE = A x P x Q

 

For Availability, it is important to understand that stoppage during planned production time are considered.

Performance is about Equipment speed.

Quality is about defects.

if OEE numbers are artificially inflated, the results would not give the right picture and then no corrective action would be driven if ever needed. the best way to have trusted numbers is to consider the data collection as serious activity by either puting in place a manual log book at each Equipment or to digitalize the stoppage recording when availability is concerned. 

If the short stoppages are not recorded, it is not possible to have good data quality.

Availability is one of the 3 parameters along with Performance and Quality in OEE (Overall Equipment Effectiveness) calculation.

Availability is calculated as : Actual Time / Planned Time.

Availability can be miscalculated by not considering Forecasting time accurately. Not considering planned outages/downtime in the forecasting. Ignoring known factors that may cause unplanned outages and downtime.

To avoid this, include all the factors that impacts planned or unplanned outages. Also ensure to consider historical data for similar sequence which will help in forecasting.

E.g.: Suppose a contact center operates for 70 hours a week. But in a given week it has 5 hours of planned outages due to some system upgrade. And it also 1 hour of unplanned outage due to some breakdown in systems. So Availability should be calculated as Availability = (70- 5-1) / 70 = 64/70 = 0.9142 = 91% . So actual availability is 9% less than planned one.

Overall Equipment Effectiveness (OEE) is a metric that measures the performance of a plant and depends on 3 factors that tells how efficient a plant is during the manufacturing process.

 

Overall Equipment Effectiveness (OEE) is measured as the product of availability, performance rate, and quality rate

where,

Availability is the parameter used to measure production or running hours out of total available hours.

 

Performance Rate is the parameter used to measure actual throughput out of designed throughput.

 

Quality Rate is the rate that measures good product output out of total product output.

 

An OEE of 85% is taken as benchmark in Manufacturing sector and try to improve the process to world class results

 

OEE calculations has been illustrated using right calculation methodology and also 4 scenarios has been illustrated where there are miscalculations in availability to inflate OEE for a manufacturing process that produces finished products as per required throughput.

 

Generally, availability is being mis-calculated to inflate OEE for the process and below are the following scenarios:

 

Scenario 1: Unplanned stoppage for raw material shortage not considered - Unplanned stoppage includes stoppages due to machine breakdown or other unplanned stoppages due to raw material stoppage or physical inventory audits, etc which are not considered in unplanned stoppages

 

Scenario 2: Planned maintenance not considered - Sometimes plant shutdowns due to maintenance are not included in availability calculations to inflate OEE no.s

 

Scenario 3: Break hours not considered - Sometimes operators take breaks in shifts due to which production is stopped and these break hours are not considered in availability calculations to inflate OEE no.s

 

Scenario 4: Planned maintenance and break hours are not considered to inflate OEE

 

 

 

 

 

 

Availability is one of the three parameters in OEE calculation, Performance and Quality are the other two parameters used in OEE Calculation.

Before to understand, How the factors being mis calculated. We need to understand the Calculation of OEE.

 

 In General, OEE Calculated as follows:

OEE (Overall Equipment effectiveness) = Availability x Performance x Quality

Where, Availability = Run time / Planned Production time

-        Run time is the difference of Planned production time to Stoppage time

-        Performance is the ratio of (Ideal cycle time x Total count) to Run time

-        Quality is ratio of Good count to Total count

Availability:

Availability loss includes all events that stopped planned production needs to be accounted.

Such as

-      Unplanned machine stoppage’s due to Equipment failure

-      Material shortage and

-      Planned Stoppage such as changeover time.

Performance:

Performance Loss considers all factors that causes the Machine to operate at less than the required possible speed when running (includes Slow speed and Small Stops), Performance is calculated as the ratio of Net Run Time to Run Time.

Practically, calculation of Performance is as follows,

Performance = Ideal cycle time * Total count / Run time

Where, Ideal Cycle Time is the theoretical fastest possible time to manufacture one piece.

When it is multiplied by Total Count the result is Net Run Time – the theoretical fastest possible time to manufacture the total quantity of pieces.

 

Example:

Ideal cycle time – 1 minute

Total count – 300 Pieces

Run time – 420 minutes

Performance     = Ideal cycle time x Total count / Run time

                        = 1* 300 / 420

                        = 71.4%

 

Quality Calculation:

Quality Loss considers the manufactured pieces that do not meet quality standards.

Which includes the pieces that are reworked.

In practice, Quality is calculated as ratio to Good count to Total count.

 

Calculation of OEE:

OEE considers all 16 losses like Stop Time Loss, Speed Loss, and Quality Loss resulting in a measure of actual productive time.

OEE = Fully Productive Time / Planned Production Time

Practically, OEE is calculated as:

OEE = Availability * Performance * Quality

If the equations for Availability, Performance, and Quality are substituted in the above equation and then reduced to their simplest terms the result is:

OEE = Good count x Ideal cycle time / Planned production time

We have seen how the OEE is calculated, now we can review each type of loss and its relationship to

Major goals to improve OEE is to reduce the 16 Major losses, 16 Major losses are given below for reference,

Capturing the Losses precisely will provide insights to act appropriately to improve the OEE. Similarly, Inaccurate capturing or not capturing of losses correctly leads to inflated value of OEE.

Example: In Manufacturing process, Equipment loss is availability loss.

Equipment failure may be due to following reasons like,

-      Tooling failure

-      Breakdowns, and

-      Unplanned maintenance.

But in-correct capturing or tracking of above details may give more or inflated value in Availability time.

In-correct capturing or recording happens due to following reasons.

o   Improper training or No Training

o   No clarity in recording of data. (Like Machine stoppage and Measurement and Adjustment losses recorded in Machine stoppage)

o   No proper SOP

o   No Real time capturing of machine running and stoppage details.

o   Complex way or No way of capturing and recording of details.

Solution:

1.    Policy can be set in SOP.

Like any downtime longer than two minutes should have a reason associated with it shall be considered Equipment Failure.

2.    Real time capturing of Machine stoppage and running time, etc.,

Real time capturing will give accurate details to capture availability. – Appropriate mechanisms or software’s can be fixed in machines to capture these data.

3.    Training of Operator’s, Supervisors and concerned personal’s on Procedure’s

Ø  How to record the data?

Ø  What to record?

Ø  Which type of losses?

Ø  Friendly Data sheet used to capture the losses? Etc.,

4.    Visual Work instruction/SOP in workstation.

5.    Wherever possible, Optimum conditions needs to be set.

Eg: Machine Speed, changing of tools using SMED, etc.,

Thus, by recording and capturing the details accurately leads to Perfect calculation of Availability and provides correct OEE calculation.

 

Overall Equipment Effectiveness is an industry best practice metric which calculates the percentage of planned production time that is actually productive. An OEE score of 100% indicates Perfect Production, that is, producing only OK units , as quickly as possible, with zero downtime.

OEE = ((Good Count * Ideal Cycle Time) / Planned Production Time

where (a) Good Count = units that are produced without defect

(b) Ideal Cycle Time = the ideal minimum possible time required to produce one unit

(c  ) Planned Production Time =  the cumulative time that the production asset is scheduled for production

(d) Fully Productive Time = the cumulative time that an assembly line or machine spends producing only good parts, as fast as possible, with zero stop time.

OEE explains wastes in a manufacturing process very efficiently by breaking it down into three components : (1) Availability Loss (2) Performance Loss and (3) Quality Loss

Availability Loss considers all those events that stop planned production for an appreciable period of time ( usually, spanning from a few minutes or longer ) . It includes Unplanned Stops ( for example, Equipment Failure and Material Shortage ) and planned stops (for example, Changeover Time ).

Availability is calculated as the ratio of Run Time to Planned Production Time , where Run Time is simply Planned Production Time minus Stop Time.

Availability = Run Time / Planned Production Time

Where Run Time = Planned Production Time – Stop Time

Machinery age, maintenance practice (planned shutdowns) and holidays impact availability. A production process can be more automated at one facility than another.

Organizations must comprehend where the maximum value of a metric is : measuring performance at a unit level or site level.

Some companies have rules which stipulate prolonged downtime to be classified as ‘planned ‘, which means that ‘unplanned downtime’ can get masked so that the OEE is not impacted.

OEE represents the average performance but does not necessarily tell the whole story.

If the OEE goes up by X % in a quarter, then it can be a result of new system implementation or a different method of measuring data. An organization needs to observe what happens in 6 months.  

 

OEE is given by the formula:

OEE = %Availability x %Performance x %Quality - Where each Availability, performance and Quality can take up values from 0 to 100%.

Availability in this case is expressed as

Availability = Run Time / Planned Production time.

Where Run time = Planned Production Time Minus breakdowns, changeover times, etc

 

Many businesses DO NOT view most of the downtimes as downtimes, but rather as a part of the process. For instance, small stops, part loading and unloading, inspection, machine setup time, changeover times is not considered as a downtime. This defeats the entire purpose of calculating OEEs and would often end up producing OEE numbers that are not correct.

 

OEE inflation can be avoided by factoring in all the time spent in addressing any and all time-traps, bottlenecks, changeover times, set-up times, etc during the planned production time.

 

Examples of Downtimes which are often not considered while calculating Availability:

1)  Frequent inspections in between the process steps which despite being a part of the process eats up a considerable amount of planned production time. 

2)  Changeover times in between the processes if production levelling is done by product type.

3).  Frequent part changes in between. 

 

Conclusion:  Inflated OEE results in so many hidden wastes and deprives us of the opportunity to continuously improve our processes.  A magic OEE number is yet to discovered.  While 85% OEE is considered an ideal and desirable (95%A x 95%T x 95%Q), what matters more than just the OEE figure is attaining a gradual improvement in OEE overtime as a result of continuous improvements thereby increasing the overall equipment effectiveness.  More than chasing the OEE benchmarks, an accurate self-assessment of your performance should be the first step in determining what is feasible and where you might look for further improvements.

Great answers to this question. B Ravi Sankar has provided the best answer to this question. He has provided a detailed example of how Availability is miscalculated in OEE. Well done.

Answer from D. Nandakumar is also a must read to understand the various reasons for availability losses as these losses are the opportunity where the calculations go wrong.