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OEE in packaging: deceptively simple

Overall equipment effectiveness (OEE) is being used with increasing frequency in the packaging industry. The reason for its popularity lies in the fact that the metric is easy to understand and relatively easy to apply. However, it is also easy to misuse. Here’s how to avoid doing so.

For Waechter GmbH, upgrading the automation components on its tray erector with help from Lenze has helped to increase the packaging machine's output from 25 to 30 cartons per minute.
For Waechter GmbH, upgrading the automation components on its tray erector with help from Lenze has helped to increase the packaging machine's output from 25 to 30 cartons per minute.

Overall equipment effectiveness (OEE) is older than many of this magazine’s readers. Devised in the 1960s in Japan, it was one of the many manufacturing methodologies developed there in the post-war period in an effort to get more performance from existing assets. In recent years, though, it has been gaining increasing prominence in the U.S. The degree of implementation varies widely with different industries, but packaging is proving to be one of the industries most receptive to this methodology.

>> What is OEE? Click here for more information.

There is little in the way of hard data on this, but Niels Andersen, vice president of manufacturing business consulting for Invensys Operations Management (iom.invensys.com), says, “OEE seems to be the most commonly used non-financial performance measurement on packaging lines today.”

An obvious question, then, is why? What benefits are packagers receiving that would make OEE so attractive to them?

Cheaper than machines
Competitive pressures in the packaging industry continuously heighten the importance of getting more productivity and value out of existing assets, as do other factors, such as the need to meet increased demand. “If a factory needs to output more product to satisfy demand,” says Tom Jensen, program manager, OEM business development for Lenze Americas (www.lenzeamericas.com), “they can either expand their facility or improve the productivity of the existing production floor.”

If the needed productivity increase is less than 40 percent, Jensen says, the response can be procedural rather than material—that is, the implementation of a process improvement methodology like Six Sigma or Lean manufacturing, with OEE acting as an enabler through its ability to identify the areas in greatest need of improvement.

“Once OEE is established, it gives an indication of the factory’s performance, and then tools like Six Sigma can be used to drive improvements,” he says. “In fact, OEE provides the feedback that proves if the measures taken in a business improvement model are having an effect.”

For these reasons, Jensen says, the procedural approach makes good sense when the needed productivity increase is less than 40 percent. “A decent gain in productivity,” he notes, “costs a lot less than the capital needed for expansions and new equipment.”

He also sees another factor pushing OEE use: “The need for larger global companies to create consistent product worldwide at the same cost per unit has become a goal of many larger producers. Beyond profitability, this is about customer retention and brand/market protection.”

Invensys’ Andersen mentions other benefits of OEE that are often overlooked in cursory discussions of the methodology:

• Successful OEE implementation can lead to a reduction in production time, which reduces the number of hours that a production line is running, thereby reducing labor costs, especially costs for overtime.

• The increase in production yield reduces production waste and lost production cycles.

Too simple?
One of the most attractive things about OEE is its simplicity. Users don’t need advanced seminars to tell them that if a machine is scoring lower in one or more of the OEE components today than it did yesterday, then something is wrong. But the methodology’s simplicity can also be a drawback. For example, OEE is simple enough to be charted with just a clipboard and a pen, a practice seen in many packaging plants. But it’s a practice that, experts believe, keeps users from gaining full benefit from the methodology.

“Some packaging operations are still calculating and evaluating OEE after the fact,” says Mark Davidson, principal analyst, LNS Research (www.lnsresearch.com), Cambridge, Mass. These operations, he says, “are typically using a combination of automated and manual data collection fed into spreadsheets. This is the simplest way for organizations to start,” but it keeps them from doing root cause analysis and making needed changes in a timely fashion, he says. These systems also tend to be error-prone and often lack the ability to detect the micro-stops that often plague machines or production lines.

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