Definition(s) of EFFECTIVENESS

Effectiveness - Efficiency - Productivity

Efficiency – Effectiveness – Productivity

What is the relationship between efficiency, effectiveness and productivity?

What is the path that can be followed to bring  ‘improvement’

What are the definitions within OEE?

Perspective

Effectiveness Definitions: From what side to look?

This definition takes the VALUE ADDING PROCESS as th central refference point. This can be a machine, a line or a process.

Every process has INPUT and OUTPUT.

When looking at the input side we look at EFFICIENCY. When looing at the OUTPUT of the process, we look at its EFFECTIVENESS. When we look at the result of efficiency and effectiveness, we look at the PRODUCTIVITY:

Diagram to explain efficiency, effectiveness definition and productivity

Efficiency

Efficiency looks at the INPUT side of the process

Efficiency is determined by the amount of time, money, and energy – i.e. resources – that are necessary to obtain certain results.

In order to meet our daily production quota, we plan a machine that uses up energy and raw materials, and needs operators and maintenance personnel.

This means, if we are able to meet our daily production with less energy and fewer operators, we have operated more efficiently: Assuming that the output remains the SAME. 

Effectiveness

Effectiveness looks at the OUTPUT side of the process

Effectiveness is determined by comparing what a process or installation CAN produce with what they ACTUALLY produce.

Therefore, effectiveness does not tell anything about the efficiency – the amount of resources that have to be committed to obtain that output. If we are successful in manufacturing more good product in the same time period, effectiveness will increase: assuming we did not add more people, surface, or other cost (that would lower the efficiency).

Productivity

Productivity is the result of Efficiency and Effectiveness

Productivity is determined by looking at the production obtained (effectiveness) versus the invested effort in order to achieve the result (efficiency); in other words, if we can achieve more with less effort, productivity increases.

Goldrath (TOC)

Productivity according to E. Goldrath ('The Goal')

Goldrath defines productivity as:

The extent in which a company generates money.

The goal of a production company is therefore not to reduce expenses but to generate as much money as possible!

Effectiveness KPI’s

Overview

Why different KPI’s

Several parties, such as production teams, line managers and top management may have a different scope when looking at ‘effectiveness’.
Being aware of those differences, it is possible to calculate different indices representing those different scopes; all based upon the same data. In the literature we find several attempts to do so, unfortunately they are not always consistent.

Although these definitions go beyond the scope of OEE, it is necessary to have a clear picture on this issue since it determines how to define certain categories within the OEE.
oee ooe teep diagram

Different calculations of Availability

The main difference in the calculation of the effectiveness KPIs is in the way ‘Availability’ is being approached. The overview below will be discussed in detail per KPI.

overview different availability definitions

OEE

Overall Equipment Effectiveness

OEE is the default scope for a production team. It shows the ratio between the theoretical maximum good output during the loading time vs. the actual good output. The loading time (the available time for the production team) can be less than the operations time since the equipment can be unscheduled during the scheduled time, thus reducing the loading time. Loading time therefore is the time the equipment potentially could have been running.

Caution: Setups, Breaks, Maintenance are all potential losses to be reduced; the machine is waiting for something thus this time is WAITING time and nót unscheduled. The main reason to un-schedule a machine is a lack of demand.

In cases where multiple different products have been produced, (either sequential or parallel) the Performance part of the OEE is calculated as a weighted average between the several expected output ranges.

Definition of ‘Availability’ in OEE

In the definition of OEE, the ‘availability rate’ indicates the relationship between the time that the machine could theoretically have been in operation (there was ‘demand’) and the time that there was actual output.

definition of availability in oee

OEE Top

OEE Top is equal to OEE, except for the way the performance rate is calculated.

In OEE Top the performance rate is calculated based upon the Name Plate Capacity of the equipment; thus ignoring restraints due to the product-machine combination. It is used to detect effectiveness losses due to the allocation of products; the chosen product mix.

OEE Top is used in systems where the physical maximum of the equipment and the physical maximum of certain products are far apart. If for example an extruder has enough heating and extrusion power to produce a 125mm PVC pipe and you would now produce a 15mm pipe, then its maximum speed in kg of product would be significantly lower than for this 15 mm pipe, although it is physically driven to its limit.

In other words: it would be better to produce this smaller pipe on a smaller extruder. So if the OEE is significantly higher than the OEE Top, then could ask yourselves whether you may have used an oversized system for the current product mix.

OEE Solitair

OEE Solitaire is applicable in situations where the monitored equipment has a (technical) link to other equipment/processes. Thus the equipment is an integrated part of a line.
The effectiveness of such equipment is partially depending on factors like line balance and effectiveness of other equipment.
OEE Solitair is is meant to detect the influence of line dynamics to the equipment.

‘No Input’ (input buffer empty) and ‘No Output’ (Output buffer full) are the exponents of such influences.

In certain cases i.e. with huge installations in process industry, or lines with V-shape characteristics, parties may want to know the effectiveness of some of the equipment independently from the rest of the process.
The resulting effectiveness losses are so to say collateral damage from issues outside the monitored equipment.
In other words; What would the effectiveness of the equipment be, when it was running solitaire, with no restraints from the rest of the line?

Definition of Availability in OEE Solitair

For this purpose, an OEE can be calculated excluding ‘No Input’ and ‘No Output’ thus showing the effectiveness purely focussed on the equipment independent from the line.
Calculating the OEE Solitaire takes Line restraint time (normally considered to be (I) Idle time) out of the loading time (so it is considered as Unscheduled time (-) ).

availability in OEE Solitair

Caution: ‘No Input’/’No Output’ should not be confused with for example ‘no raw material’ or ‘no packaging’ since these have another cause; in the strict approach of Line Restraints, they are not Line Restraints. However the may be visualized as (L)ogistic restaints!

OOE

Overall Operations Effectiveness

Operations effectiveness goes beyond the scope of the production team (Maintenance – Operator – Engineer). It includes the operations time the equipment is not available to the production team or when operations management does not want or cannot schedule the equipment. Examples are ‘No Orders’, ‘Legal Restrictions’ like energy contracts and mandatory holidays and test runs for R&D.

Definition of Availability in Operations Effectiveness

definition of availability in OOE

In the definition of OOE, regular shift-time that was unscheduled (due to no demand, R&D test runs etc.) from the regular shift time is taken into the KPI. In OEE it is being excluded from availability since this is something that happens outside the scope of the shopfloor-team responsible for the OEE. However, since  it is an operations management loss, it is being included in the availability rate of the Overall Operations Effectiveness (OOE).

TEEP

Total Effective Equipment Performance

Operations effectiveness goes beyond the scope of the production team (Maintenance – Operator – Engineer). It includes the operations time the equipment is not available to the production team or when operations management does not want or cannot schedule the equipment. Examples are ‘No Orders’, ‘Legal Restrictions’ like energy contracts and mandatory holidays and test runs for R&D.

Definition of availability in TEEP

defin

In the definition of TEEP the question is no longer whether there was ‘demand’. The time that the machine could theoretically haven been in operation is simply 24×7, regardless whether there was demand or whether it was scheduled to run or not.

This leads to the following situation:

  • Performance- and Quality Rates remain the same in OEE and TEEP
  • ‘OEE availability’ and ‘TEEP availability’ are (usually) different values due to its different horizons of 100% (since TEEP includes unscheduled and nonscheduled time.)

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