Waste and OEE

It doesn’t matter where I go – scrap is the form of waste most prominent in the minds of manufacturing companies.  To my knowledge, steel is the material most roll formed in North America and around the world.  In many companies the price of steel is a constant concern, because it can fluctuate wildly and it’s frequently the single biggest cost when it comes to calculating margin.  I’ve seen companies make more money buying and re-selling coils than they could by turning that coil into finished product and selling it to their customers – at least when the market was particularly volatile.

I think the main reason companies focus on scrap is because it’s right there.  You can see it, touch it, smell it, and weigh it.  There’s a problem with the focus on scrap, because its usually not the biggest contributor to waste.  Scrap is usually the third-biggest contributor to waste.

It’s important to note that I’m not saying you should ignore scrap or that you shouldn’t care about it.  You should.  In most roll forming applications, it should be relatively easy to hold scrap percentage to 0.5% or less.  If you’re close to that value on your production lines, then you’re doing pretty well.

Speed-loss is usually a bigger contributor to waste than scrap.  And the most common form of waste is downtime.  If you have a lot of excess capacity in your plants, then downtime waste might not be an important concern for your company.  If you’ve captured a lot of the market and your customers are saturated so that your Sales function cannot sell the capacity you already have, then you’re doing very well and this blog post might not be for you.  If your company isn’t sitting pretty at the top of the heap, or if you’re struggling to find capacity without buying new equipment then you should continue reading.

Scrap Percentage, Feet per Hour, Speed (or Throughput) are the KPI most frequently used across the Roll Forming Industry.  These performance indicators can be useful, to be sure, but they are only pieces of the picture.  Even when all three are used, they lack a cohesive framework by which real, data-driven decisions can be taken, especially when it comes to Continuous Improvement efforts.  Sadly, the benchmarks for these indicators are frequently meaningless.  They are generated by people who don’t really understand how they’re applied or what they mean to the processes they’re supposed to measure.  Worse, the numbers set as benchmarks for Operators to hit are often based on Sales forecasts.  That’s a constantly moving target at best, and a case of fantasy wish-casting at worst.  More to the point, they’re almost never based on the machine’s capabilities.

Overall Equipment Effectiveness (OEE) is the framework that helps all the other metrics make sense.  OEE is expressed as a percentage of the machine’s efficiency and capacity, and it is based on the outputs directly measured in terms of runtime, speed, and yield (good footage).  It captures everything associated with the process, including the Operator’s abilities, as well as how leadership manages.

If your company really wants to be able to predict the output of a machine or a plant, OEE is the way you achieve the ability to truly forecast your capabilities.  It requires honesty, accuracy, and ruthless data collection.  So, it is most compatible with a system that can digitally track time, speed, and material with as much automation as possible.  Trying to use OEE with a paper-based system is next-to-impossible.  Human beings are just not reliable and consistent when it comes to recording stop/start times, measuring lengths, and reporting scrap.  In fact, most are incentivized to fudge the numbers simply by virtue of the fact they know their performance is also being measured.

If your company doesn’t have a computer-integrated manufacturing system tying the office to the machine controls, you should investigate the option.  If you already have one, then you’re on your way to gaining the benefits of OEE.

The gif above steps through the OEE concept.  I’ve never seen a better tool to help Operators, Supervisors, and Leadership understand what’s happening with their equipment and plants.  Here’s how it works:

  • Total Time: this bar represents all the minutes you could possibly use to produce during a shift.  It represents the theoretical maximum output of a machine, process, or plant.  If you think of it in terms of a roll forming line, this would be your output if you could run the machine at it’s maximum speed, never stopping for breaks, tooling or material changes, or a breakdown AND if you could keep every inch of material during the run.
  • Availability %:
    • Available Production Time is modified by Scheduled Down Time.  Scheduled Downtime is technically categorized as time you had no production orders the machine could fill, or time devoted to preventative maintenance.  These downtimes don’t count against the runtime percentage of the machine or operator.
    • Running time is modified by Unscheduled Downtime – this is any downtime where the machine could have run production, because there were orders to be produced.  This bar represents the total output of the machine – assuming you were able to run at maximum speed and could keep all of the footage.
  • Speed %: 
    • Max Speed is just that – the maximum speed the machine can run a given length of product.  There’s an important distinction here, because there are cases where a shorter length might not be physically possible to run at a higher line speed.  A really good control system can take this into account and allow for defining maximum speeds for different lengths.  What should not be considered are other issues related to running at higher speeds, such as problems with the dies or tooling, or mechanical issues with the machine.
    • Actual Speed is the speed the line actually runs at for the time period examined.  It is modified by Speed Loss, which is any reason for running the line at a rate that  is lower than what is physically possible to run a given part length.  This bar represents the total output of the machine – assuming you could keep all the footage.
  • Yield %:
    • Total Footage is all the footage produced from the machine for the time that and speed that it runs.
    • Actual Footage is all the good footage off the machine that you can sell to a customer.  It is modified by Scrap, which is the material you must throw away.
  • Actual Production is the final result.  It is modified by Unrealized Capacity, which represents the potential capacity you aren’t getting on a day-to-day basis from the machine.

The OEE chart demonstrates why scrap is probably the least of your waste problems.  If you have orders you should be producing.  If you aren’t producing, then you have downtime.  Downtime is time you can never get back.  You cannot run the machine faster than its maximum speed – unless it’s wired to a flux capacitor and you can get it up to 88 mph…

Companies rarely focus on downtime, because you cannot see or weigh the invisible minutes that pile up around the machine.  There’s overtime, if you aren’t already running multiple shifts, but these are increased costs incurred from not getting the job done during the time you had planned for it.

Most companies would get to the bottom line on the OEE chart and say, “Whew!  We could not squeeze another inch of production from that line.  We need to buy another machine!”  But the chart indicates there’s about 1.5 machine’s worth of unrealized capacity right now.  If you could simply run the machine more efficiently, there would be no need to consider an additional CapEx project.

The example in the OEE chart is actually very forgiving.  The bars are lengthened to make the concept easy to illustrate.  Most of the time, the downtime portion of the chart is ≈ 70% or more of the Available Production Time.  It’s extremely common to begin looking at the numbers for the first time and find that most machines are only hitting 15% – 25% of their total capacity.

To be fair, most roll formers will never achieve 100% of their theoretical capacity.  In my experience, only tube mills with coil welders and accumulators hit OEE numbers in excess of 90%.  For most roll forming lines, 80% of theoretical maximum is considered “World Class OEE”, and if you are getting that efficiency from your lines, then you are a World Class Roll Forming Company.

In this context OEE represents both efficiency and capacity, because they are really the same thing.  Efficiency improvements are capacity improvements.  Next, we’ll walk through a typical example and see how a small improvement in OEE can result in a big improvement in output.

Example Machine and OEE

We have a roll forming production line that is capable of 350 fpm and we run a single 8 hour shift.  We’ve recently installed a computer-integrated manufacturing (CIM) system that allows us to automatically and digitally track production metrics.  After a week of running the system, we look at the weekly averages for runtime, speed, and good footage (yield):

  • Runtime Percentage = 35%
    • We block off 30 minutes per shift for Preventative Maintenance.  We are currently at maximum capacity (barely keeping up with orders from Sales).  So, we need to run every possible minute.  5 days x 450 mins = 2,250 minutes of available production time.
    • The CIM system reports the machine was in Run mode for 787.5 minutes.
  • Speed Percentage = 60%
    • The machine’s maximum line speed is 350 fpm.
    • The CIM system reports the average line speed for the week was only 210 fpm.
  • Yield Percentage = 97.5%
    • The total footage off the machine was 165,375 ft for the week.
    • 4,134 ft was scrapped, leaving a yield of 161,241.
  • OEE is equal to the product of Runtime, Speed, and Yield = 0.35 x 0.60 x 0.975 = 20.475% OEE

To see if our math works out, we can take the theoretical maximum output of the machine, multiplied by the OEE percentage, and it should equal what we physically ran in good footage.  The Maximum Output should be equal to maximum line speed (sM) multiplied by the available production time (tM).

Maximum Output = sM x tM

Maximum Output = 350 fpm x 2,250 min

Maximum Output = 787,500 ft

Actual Output = Maximum Output x OEE Percentage

Actual Output = 787,500 x 20.475%

Actual Output = 161,241 ft

If we represent the results on a graph, it looks like this:

Representing output this way helps people understand that what you get from the machine is 97.5% of 60% of 35% of what we could have gotten if we had kept the line running for the entire shift.  In this case, the largest source of waste is downtime.  Speed-loss is the second largest source of waste.  Scrap is practically insignificant.

With this new understanding of waste in our facility, we can begin to focus on the reasons for downtime.  Small improvements can lead to big increases in output, and if our Sales group can sell those increases, that’s an incremental revenue increase.

If you aren’t using OEE as a key performance metric, you are probably wasting your time – pun intended.

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