**Introduction**

Overall Equipment Effectiveness or OEE has existed in the manufacturing and production world since the 1960s and continues to be a critical measure of the product line effectiveness and how to drive improvement in that line. In November 2017, we published “How Efficient is Your Case Packer?” as a part of this blog. With the launch of the newly improved, next generation M2000, we thought it was a great time to revisit the topic. Part 1 will be a general review of OEE, but stay tuned for Part 2 as we correlate M2000 design components to their effect on the machine’s OEE.

**Case Packer Effectiveness**

We often here the acronym OEE and see it in vendor response, but what does this really mean and how does it translate to a specific piece of equipment? In order to understand that we start with the answer to the question: What does it mean for a piece of machinery to be effective? Looking at the generic definition for effectiveness:

*Effectiveness: producing the intended or expected result*

From a production standpoint, effectiveness becomes a time-based evaluation of the intended production rates compared to the actual production rates. This is a simple calculation that produces a simple response; which raises the question if my effectiveness ratio is not 100% where do I start making improvements.

That is where OEE or Overall Equipment Effectiveness comes into play. OEE provides an all-encompassing picture of machinery performance and directs you to determining where your losses are coming from. The official formula to calculate OEE is:

*OEE = Availability x Performance x Quality*

When calculating OEE you receive an objective set of data which will lead your operations team down the path to overall improved production. We are going to look at the three components of OEE in light of case packing and suggestions for improving machine effectiveness.

**Availability**

The first component of the formula is availability. In the most basic sense, availability is the time that a machine is up and running. This ratio compares ideal run time to actual run time. Let’s look at a practical example of how availability can be calculated.

To calculate the availability ration by shift:

**Availability: (Total Time per shift –downtime)**

**Total Time per shift**

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Assuming your facility runs on 8-hour shifts, the total planned production time is:

**Total Time per shift = 8 x 60 **

**= 480 minutes of planned production time**

Next let’s look at downtime per shift. For this example, we will also assume employees receive two 15-minute breaks and one 30-minute lunch. In addition, the shift had 80 minutes of changeover and 60 minutes of other stoppage throughout the day. Going back to our formula, the top of the ratio then becomes:

__480 min – 60 min (breaks) – 80 min (changeover) – 60 min (stoppage) __

**480 minutes of total time per shift**

All in all, of the 480 shift minutes the case packer is only running 280 – that is a loss of 200 minutes. The availability ratio is 58.3%.

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**Performance**

The second component of OEE is performance. Here we look at performance as the measure of throughput or whether the number of cases per minute meets the ideal production rate. The ratio is calculated:

**Performance = Actual production rate or cases per minute (cpm)**

** Ideal production rate or cases per minute (cpm)**

Going back to our example, our case packer should run at 35 cases per minute at 280 minutes of actual run time yielding 9,800 cases, this is demonstrating ideal performance. If the packer began running at a reduced speed, say 25 cases per minute, you have now reduced the performance of the machine to only 7,000 cases in that same shift.

Going back to the formula:

**25 actual cpm / 35 ideal cpm = 71.4% Performance Ratio**

**Quality**

The final component of OEE is quality. Quality addresses the quantity of production that was made to spec. In reference to case packers, we look at how many cases were constructed according to spec. Were any cases rejected due damage, incorrect pattern or weight? The quality ration is calculated with the formula:

**Qualify = Saleable cases produced**

** Total cases produced**

When reviewing the performance ratio earlier, we calculated a total production of 7,000 cases per shift. However, for quality we also need to know how many of them were saleable units or met spec. Looking at the data we discover that 250 cases have been rejected for not meeting spec. This makes the total saleable cases during the shift 6,750.

**6,750 saleable cases / 7,000 total cases = 96.4% Quality Ratio**

**Calculating OEE**

Now that we have calculated the Availability, Performance and Quality Ratio, we can calculate the overall OEE for the case packer in the example. Let’s recall the original OEE formula:

*OEE = Availability x Performance x Quality*

Utilizing our calculations for availability, performance and quality, we calculate the OEE for our case packer example as follows:

*OEE = 58.3% x 71.4 % x 96.4% = 40.2 %*

*The results are in and this case packer demonstrated an OEE of 40.2%.* This ratio is achieved by comparing time not running (availability = 58.3%), time lost by running at a slower rate (performance = 71.4%) and time lost by producing unapproved cases (quality = 96.4%).

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**Driving Change Using OEE**

In our example, the case packer with an OEE of 40%, we can use the components of the OEE formula to drive improvement in the production line. Looking at the lowest of the three ratios: availability, we see that general downtime and changeover negatively affect the case packer availability. Decreasing the amount of time lost to either changeover or downtime will positively influence the overall OEE. If we can execute changes to reduce both the downtime and changeover by one-fourth (only 60 min changeover and 45 min downtime), the formula now becomes:

__480 min – 60 min (breaks) – 60 min (changeover) – 45 min (stoppage) __

**480 minutes of total time per shift**

Increasing availability from 58.3% to 65.6%. The new OEE becomes 45%. This targeted approach to process improvement helps spend precious time and resources where they can make the greatest impact.

The closer you get your OEE to 100% the smoother your line will run, most facilities aim for 85% OEE. Take the time to evaluate your case packer’s availability, performance and quality; your bottom line will thank you!

*Stay tuned for Part 2 of our blog “How the M2000 Design Improves the Machine’s OEE?”*