Efficiency is an important factor for any business. The more efficient the operation, in all its aspects and sectors, the better the productive results, the less production costs will be and it will be possible to maximize the average yield through efficient management. One of the main OEE benefits is increased competitive advantage, getting ahead of your competitors and gaining a larger share of the market, as well as building customer loyalty. 

Finally, it is essential that every manager is aware of the metrics of the processes carried out in the company, finding potential failures and problems that may occur and seeking the best solutions. Let us explore the definition and its importance.

What is Overall Equipment Effectiveness (OEE)?   

However, what is OEE? The Overall Equipment Effectiveness is an important index used to measure the productivity of machines involved in production. The Japan Institute of plant maintenance developed this method to measure whether the industrial equipment were working correctly, if needed any maintenance, had broken, average production time, quantity and quality, etc. The engineers wanted to verify how these metrics could enhance the production chain in the factory. A company can apply OEE individually on machines, in a set, on an entire production line or even an entire production plant.

How can it make your business more efficient – Benefits?

What are the benefits of OEE implementation in your organization? What can it bring positive to your business routines?

1. Increase production

When evaluating the efficiency of the machinery or the production line, it is possible to see which faults are harming the final result as a whole and to repair them. With it, it is possible to increase the total production.

2. Allows you to fulfill more orders with the same structure

By improving the functioning of your production plant and, consequently, achieving an increase in total production, it is possible to fulfill more orders from your customer base with the same initial structure. It is just improving the efficiency of the set of equipment you already have in your organization. 

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3. Decreases manufacturing costs

Items that need maintenance can lead to higher production costs. Costs will decrease with increased production using the same availability used previously. In some cases, due to wrong adjustments, raw material can be lost, generating losses. It increases manufacturing costs, as you will need more raw materials to produce.

4. Evaluates productivity

From the analysis of the OEE index, it is possible to have an objective and analytical measurement of your company’s production. Thus, the management will be aware of the total capacity that is possible to reach with the entire production line working efficiently and will be able to invest in increased productivity through improvements in equipment.

5. Increases indices according to error correction

The diagnosis of errors in equipment, through the OEE index, allows finding faults that would take longer to become evident without the use of this assessment. 

6. Increase in total profit

We have seen that for every 1% of OEE lost in the assessment, the organization has a reduction of 3% to 7% in net income. Any improvement in the efficiency of the production chain brings an important return to the company in net profit. Therefore, it is essential to carry out the assessment constantly and verify the main causes of the reduction.

In the end

In other words, the use of the Overall Equipment Effectiveness index is essential to recover the productivity of your business, find possible failures that are compromising your profitability, reduce production costs, and a series of other advantages that we list in this content. The simple formula for calculating the OEE index is – 

Availability x performance x quality = OEE index

What is desirable is that the OEE index is as close as possible to 100%, which would be the result when everything is working properly, without any problems or losses.