Parsec Automation urges tangible financial spin on OEE

Operational equipment effectiveness (OEE) looks at three factors: asset availability, performance or rate, and quality. Getting plant managers, Six Sigma gurus, and other process excellence experts excited about OEE metrics is one thing, but senior executives are an entirely different proposition. Unless, of course, OEE is given a financial spin.
By Staff December 1, 2007

Operational equipment effectiveness (OEE) looks at three factors: asset availability, performance or rate, and quality. Getting plant managers, Six Sigma gurus, and other process excellence experts excited about OEE metrics is one thing, but senior executives are an entirely different proposition. Unless, of course, OEE is given a financial spin.

At its recent conference, Parsec Automation —with its TrakSYS suite for real-time performance management and plant intelligence—actually shed some light on how OEE can gain senior approval.

While a plant can have an overall OEE metric, conference presenter Bob Hansen, principal of R.C. Hansen Consulting , Fort Collins, Colo., says an average isn’t very useful.

“Why would you want to look at an average?” asks Hansen. “A plant could be above average on products that are easy to run, which means the plant would not actually be doing its best. OEE should be product-specific.”

“The real world is not so neat that all the information you need for OEE comes straight from machines.”

—Eddy Azad, president and CEO, Parsec Automation

Hansen urged attendees to consider the financial aspects of OEE, which might include the contribution margin for different product runs. After performing some value analysis of lines by work center, and looking at historical data on product runs and margins, plant managers are better able to determine where to focus OEE improvement efforts.

Hansen also urges companies to track output and profitability at current performance rates, and estimate the profit level that could be achieved by a more productive plant with even modestly higher OEE. Whatever automated or semiautomated system is used for OEE, data should account for all losses in yield or availability.

Parsec CEO Eddy Azad says TrakSYS brings in margin data to assess alongside OEE data—even down to the work-center level. A MODELTrak module allows users to map out which data and events they want to track at each stage of production, such as time spent on an operation, or material cost. Financial data also can be pulled into TrakSYS from ERP systems via open programming interfaces.

Parsec also offers a feature called SCRIBETrak that allows operators to input basic OEE-related data into a user interface. “The real world is not so neat that all the information you need for OEE comes straight from machines,” says Azad. “We have tools that allow you to deal with this reality.”