Have You Optimised the Effectiveness of Your Equipment?

equipment utilisation

Profit is directly affected by Asset Utilisation and Overall Equipment Effectiveness

 

Today’s market is extremely competitive and suppliers are increasingly required to deliver more for less to attract new business and maintain relationships with long terms clients in the face of aggressive competitors. Now more than ever, companies are asking their employees to increase productivity and be more efficient with the same budget.

Asset Utilisation (AU) and Overall Equipment Effectiveness (OEE) are key performance metrics that companies are reviewing with increased scrutiny right now. Getting the most out of your equipment has never been more important to companies in the print industry. When AU and OEE are correctly calculated, and their necessity and systems are properly communicated to staff, they become valuable assessment tools for companies looking to maximise the output of their equipment assets.

In our current post-Covid climate, companies are looking for strategies that improve efficiency, lower operating costs and increase profitability. In the print industry (especially in finishing departments) a lot of equipment is dramatically underutilized, resulting in very low AU and OEE.

What is OEE?

Overall Equipment Effectiveness is a measurement that indicates how effectively a company’s equipment is being utilised. It is identified by the percentage of planned production time that is truly productive i.e., {Good Parts Produced x Ideal Cycle Time]/Planned Production Time.
A world-class operation typically has an OEE score of 80% or better – something that takes a lot of time and effort to achieve. On the other hand, a score of 60% and below is cause for concern as it indicates that there is substantial room for improvement.
Measuring OEE helps companies understand the impact of productivity losses, as well as identify areas for potential improvement in order to drive operational excellence – which is applicable to any operational process or industry.
OEE is the result of three factors: Availability, Performance and Quality. Essentially OEE = A x P x Q. Availability is reduced by equipment failure, incorrect setup and adjustment. Performance is reduced by idling, minor stops and reduced production speed. Quality is reduced by process defects and startup losses.
It is recommended that companies monitor OEE and use it as a baseline for improvements efforts as it is universally accepted as a significant Key Performance Indicator (KPI).

What is AU?

Asset Utilisation measures how well a business uses the company’s assets to produce revenue. This is done by measuring the production capability of an asset and comparing it to what it is actually currently producing. Essentially AU = {Actual Output/Maximum Capacity} x 100.  This gives us the AU percentage, but we are also able to calculate the Opportunity Gap {Maximum Capacity – Actual Output}.

There are a number of factors that can affect AU, resulting in a low score and a large Opportunity Gap:

  • Overall Equipment Effectiveness: Calculating the availability of an asset, as well as its performance and the quality of its output. Availability x Performance x Quality.
  • Production Yield: The number of usable units produced. Number of Units Finished / Number of Units Started.
  • Unplanned Downtime: The time an asset isn’t operating even though it is scheduled for production. {All Downtime – Planned Downtime} divided by Total Time Available.
  • Maintenance Spend: The cost of all maintenance divided by the total cost of goods sold. Maintenance Costs / Production Costs.

When correctly calculated, AU allows companies to understand how well an asset or system is being utilised and can be used to plan future production and business profitability.

Using Data to Work Smarter

The phrase “Work smarter, not harder.” is often tossed around in conversations about company productivity and profitability. But without proper insight, it can be very difficult to maximise efficiency and streamline workflow. Strong data is essential to making good decisions, and so a thorough analysis of assets and their production outputs is necessary.
An in-depth analysis may reveal that:

  • Your equipment is underutilised and costing the company more than it is profiting the company.
  • Your equipment is underperforming and in need of service or repairs.
  • Your equipment is underperforming and there is a need for more modern equipment to be purchased.
  • Equipment operators need to undergo additional training in order to maximise the equipment’s utilisation and output.
  • Your equipment is over-utilised and there is a need for additional and/or new equipment to be purchased.
  • Your equipment is over-utilised and in need of service or repairs.

Once the data has been gathered and analysed, it is important to determine the cost of improving AU and OEE. There may be multiple solutions to improving these metrics, with varying costs involved.

Essential elements to consider include:

  • The cost of maintenance programs as these dramatically impact OEE and AU.
    • Preventative maintenance aims to identify issues that are critical to production and fix problems before they occur. This can assist in minimising downtime and equipment failure.
    • Breakdown repairs can end up costing far more than preventative maintenance costs. They also affect production costs and project deadlines.
  • The cost of operating underutilised or underperforming equipment.
    • Some equipment may cost more money to operate than the profitability of its output. This is especially true of older and/or outdated equipment.
    • Older equipment may have high maintenance costs, especially if replacement parts are rare and difficult to source.
  • New versus old equipment.
    • Older equipment may not only be more expensive to run but may also be costing you business with longer production times that push out project deadlines.
    • Newer equipment may be more streamlined and can help improve overall output as well as shorten project production times, but may also be expensive to purchase.
  • Analogue vs digital systems.
    • The analysis and troubleshooting diagnosis of analogue systems may take longer.
    • Digitalised systems generally have longer uptimes, thanks to digital monitoring of parts and production that allows for predictive analytics.
  • The cost of training operators.
    • Operators can be trained to maximise the utilisation of current equipment, as well as trained to minimise the need for breakdown repairs.
    • Newer equipment may cost significantly less in operator training, especially if the equipment is digital and has built-in operator assistance programs.

Companies that thoroughly examine their OEE and AU will be able to establish a strategy to improve business operations and profitability, as these numbers will provide valuable insight into the effectiveness of day-to-day operations.

One of the key areas in which Thunderbolt is assisting clients to gain a competitive edge right now is through AU and OEE assessment of current equipment. We’ve been able to help our clients with equipment upgrades and replacements, and we have also helped clients sell equipment that is underutilised or not profitable. This has enabled these clients to streamline their business and maximise their efficiency.

To discuss your AU and OEE, and the various solutions available to you (such as selling your underutilised equipment), contact Dane on 082 498 3241 or email dane@thunderbolt.co.za.

 

 

 

 

 

 

 

 

 

 

 

 

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