Placeholder. This article is placeholder copy written to test layout and tone. It is not published research and makes no factual claims.
OEE, overall equipment effectiveness, multiplies availability, performance and quality into one ratio. This piece explains what the ratio can and cannot tell a finance partner, and what to ask for instead.
One OEE score can hide three different losses
Two lines with the same score can lose time in very different ways. The categories behind the score matter more than the score itself.
Exhibit 1
In this illustrative line, availability losses outweigh performance and quality losses combined
Illustrative data
OEE losses by category, one line, one year, percentage points of planned time
Show data table
| Category | Value |
|---|---|
| Availability | 18 pp |
| Performance (speed) | 9 pp |
| Quality | 4 pp |
Note: Values are placeholders chosen to demonstrate the exhibit format. OEE is overall equipment effectiveness; performance loss is time lost to running below rated speed.
Source: Illustrative data; placeholder pending research
Convert OEE points into hours
A percentage point of OEE means different hours on different lines. Converting each category into hours of planned time makes the losses comparable and ready to price.
On the illustrative line, one OEE point is worth $72,000
On the flagship report’s illustrative line, one point of OEE is 60 hours of planned time, 60,000 units, or $72,000 of contribution a year (Illustrative). That conversion turns a percentage that nobody funds into a sum that can sit beside a capital request.
Exhibit 2 · The capacity you already own
In this illustrative line, the four losses cost $1.65 million a year
Illustrative data
Annual cost of losses, one constraint line, thousands of dollars of contribution, plus variable cost of scrapped units
Show data table
| Item | Value | Unit | Cite |
|---|---|---|---|
| Changeovers, contribution | 600.0 | USD thousand per year | Illustrative |
| Slow running, contribution | 499.2 | USD thousand per year | Illustrative |
| Unplanned stops, contribution | 360.0 | USD thousand per year | Illustrative |
| Scrap, contribution | 114.8 | USD thousand per year | Illustrative |
| Scrap, variable cost of scrapped units | 76.5 | USD thousand per year | Illustrative |
| Total | 1650.6 | USD thousand per year | Illustrative |
Note: Prices apply only on a constraint line with demand above output. A scrapped unit forfeits the contribution of its line time and its variable cost. Not a description of any real plant.
Source: Illustrative data. Trapped Capacity illustrative line model: price $2.00 and variable cost $0.80 a unit ($1.20 contribution), 1,000 units an hour ($1,200 a constraint hour).
Flagship report
The capacity you already own
Why the next line should be found before it is funded, and how to price the one already standing.