Covid Economics: 3 Ways OEMs Can Reduce Margin Erosion
by 
Megan R. Nichols
Overall equipment effectiveness is a concept you’ve likely run into before. How can you make the most of it? Here’s a quick guide to OEE-based quality assurance in the electronics manufacturing industry.
How to calculate overall equipment effectiveness
You need three data points to help you calculate the OEE score for a particular piece of equipment or a production line. They are:
- Availability (A): Calculated as run time (RT) divided by planned production time (PPT). PPT is total run time minus employee breaks, equipment downtime and other interruptions. Availability is calculated as a decimal that you can express as a percent.
- Performance (P): Calculate performance by taking the ideal cycle count time and multiplying it by the actual total count. Divide the result by the run time you used to calculate availability. You’re left with a decimal that you can express as a percentage.
- Quality (Q): To calculate your quality score, take the total number of units produced, and subtract the number of defective products. Take this “Good Count” and divide it by the total number of products manufactured. If you have 19,000 acceptable products during a production run of 20,000 units, your quality score is 95%.
Now you’re ready to calculate your OEE score. To do so, multiply Availability (A) by Performance (P) and then by Quality (Q).
Suppose you have an Availability (A) score of 88% (.88), a Performance (P) score of 86% (.86) and a Quality (Q) score of 97% (.97). Your OEE calculation will look like this:
OEE = .88 x .86 x .97 = .734
Your OEE score is 73.4%.
A “perfect” production process would yield an OEE score of 100%. The average OEE score among manufacturers is typically around 60%.
That means OEE can be a vital tool for implementing improvements. How can you use this score to do so?
Why is OEE useful in electronics manufacturing quality assurance?
1. Tracks roadblocks in real-time
First of all, keeping track of your OEE score can help you pinpoint which variables are having the greatest impact on quality and throughput in the short term. If you’re like most electronics manufacturers, the biggest flies in the ointment are:
- Small planned and unplanned stops impacting planned production time (PPT)
- Slow cycle count times resulting from inexperienced operators or worn-out equipment
- Defects affecting quality, traceable to individual machines or production lines
2. Demystifies the bigger picture
OEE also gives you the ability to drill down into specific daily variables impacting long-term yields and the company’s overall profitability and productivity. It lets you find and treat the root of a problem instead of dealing with the symptoms one at a time.
It’s also helpful to think of OEE as a communication tool. It provides an intuitive framework for operations managers, engineers, executives and production employees so that they can see how each process contributes to the whole and have fruitful conversations about what comes next.
3. Solves problems without new investments
In many cases, it’s tempting for electronics manufacturers to see smaller yields and higher numbers of product defects as an excuse to invest in new equipment. As we saw above, however, there are lots of variables that impact OEE — including slow processes, avoidable interruptions and under-trained or inexperienced employees.
Calculating OEE down to the individual production line uncovers some of this low-hanging fruit and may help you avoid making an expensive and unnecessary investment in new equipment. In other words, it helps maximize the ROI of the equipment you already own.
In other cases, it might pinpoint opportunities to revisit the equipment you’re using. If you want to improve yield and you’re trying to decide between buying a new machine and bulking up your staff, investing in double-sided processing equipment to enhance processing speed may end up being the wiser investment. However, you can’t know until you calculate your OEE.
OEE is a great tool for staff management, too. If one slow production line is driving your OEE score lower, it might mean there’s an opportunity to re-train or reassign the workers there. OEE can also prove useful if you want to compare the productivity or defect rates of two shifts throughout the day or week and make decisions about hiring new workers or shifting employees from one shift to another.
4. Helps set realistic goals
Electronics manufacturers have some of the most aggressive targets in terms of bringing products to market and producing hundreds of thousands of units to answer worldwide demand. Executives and operations managers can’t set realistic goals without a thorough understanding of the factors involved. Plus, broad directives to work faster generally aren’t helpful when there are so many variables in the mix.
OEE is one of the best tools for electronics companies when it comes to setting achievable and realistic production targets in real-time. With the implementation of Internet of Things-equipped machines on the factory floor, companies have all the data they need to calculate OEE in real-time and fine-tune their processes and personnel allocation. As a result, they can find a balance between aggressive and realistic when it comes to setting goals for throughput and product quality.
OEE: Understanding and improving company wide performance
Manufacturers in the electronics industry and beyond have been using OEE for long enough that it’s safe to say it’s stood the test of time. It’s not just essential for evaluating machines and production lines, but also for comparing the performance of multiple plants.
That makes it a company wide tool that can have a huge impact over time. Instead of wondering what’s eating into your profits, you can turn lost time and productivity into “found money” and a better product portfolio. Using time, labor and equipment investments more wisely all translate into a lower rate of errors, higher product quality across the board and a better reputation for your company.
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