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The Overall Equipment Effectiveness (OEE) is a hierarchy of metrics developed by
Seiichi Nakajima in the 1960s to evaluate how effectively a manufacturing operation
is employed and utilized. It is based on the Harrington Emerson way of thinking
regarding labor efficiency. An OEE system is a powerful tool which is used best to
light up our understanding of the production process and identify opportunities to
initiate improvements. The results are stated in a generic form which allows comparison
between manufacturing operations in different units or manufacturing units in
different industries. It is not an absolute measure, but it reflects the comparative
performance with each other. It is used to identify the scope and direction for process
performance improvement. OEE was not designed to make comparisons from
machine-to-machine, plant-to-plant or company-to-company, but it has evolved to
these common levels of misuse.
If the cycle time is reduced, the OEE will increase, as more products are produced
in lesser time, but it is always not true. The reduction in cycle time may have adverse
effect on the quality of product. If the adverse effect over quality is more than the
improved effect due to time saving, OEE leads towards reduction. There may be
more interrelationships between many other factors. The reduction in cycle time
may have influence over rejection or rework quantity. The tool wear, initial cost,
machine wear and many other factors may alter if more products are produced in
lesser time. Hence, all impacts are combined to make OEE a common platform for
all the operations evaluation.
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