Invisibility of impact from customer demand and relations between processes in Overall Equipment Effectiveness (OEE)

Abstract

Customer demand is crucial in production planning and capacity expenditure. In fact, variation of production rate with respect to customer demand affects the performance of a production system due to the existence of relations between processes. Simulation model has been established in this study to represent a production line in aerospace part-manufacturing company. Different production rates are simulated to examine the impact from the circumstances only emphasizes on maximization of availability or equipment utilization. On the other hand, bottleneck process with critical utilization is introduced to examine interrelationship among processes. The results show that higher equipment utilization or availability ratio as promoted by Overall Equipment Effectiveness (OEE) is not always Lean especially when the blocking phenomena occurs and relations between processes has been ignored. High availability is preferable under OEE although it consumes excessive resources and results in unnecessarily higher throughput to fulfill particular demand. Besides, bottleneck process could lead to lower equipment utilization of customer processes that it connects with. The so-called interrelationship between processes is invisible under OEE which focuses on individual process. In order to justify the findings, performance ratio under OEE is computed and it shows that delay propagation of bottleneck process is not quantified. None of the increase in waiting time and lead time of each entity spends is considered in OEE. The hidden wastes exist because OEE promotes maximum resource utilization without considers demand required and on-time delivery of entity. In short, it is important to consider effectiveness of both entity and equipment by respecting the customer demand and impact of interrelationship between processes onto the entire production system.

Keywords

• equipment utilization
• availability
• customer demand
• bottleneck
• interrelationship
• throughput
• delay propagation
• overall equipment effectiveness
• oee