OEE - Still a blur on the radar screen

Among the key performance indicators (KPI's) that grocery manufacturing executives think are most important, overall equipment effectiveness (OEE) is number four on the list after quality, cost and safety. Yet compared to the first three, there is little understanding of how to implement the OEE measurement. I believe this is yet another indication of the suits and the geeks failing to communicate.

Dave Donnan is the facilitator of the Grocery Manufacturers Association Manufacturing Excellence Share Group. As such, he gets to listen in on what top executives belonging to this powerhouse group of packagers have to say on contemporary topics. At the PMMI MarketTrends Roundtable held this month in Chicago, Dave reported on what key performance indicators mean to machine builders' customers and equipment.

Having spent many years working with a balanced scorecard of KPI's, I wasn't surprised to hear that the leading companies who took part in this share group were doing the same. On a scale of 1 to 5, this group scored 4.2 on linking KPI's to their corporate objectives and 3.8 on using them to drive business action.

What did surprise me was that OEE ranked so high on the executives' scorecard. Although OEE has been on the engineers' list of valued measurements for many years, it never made the executives' list when I was working in manufacturing. The gap between the measurement that the suits liked (percent of standard) and the measurement that the geeks liked (OEE) was huge. So huge, that even discussion of the topic was difficult and fraught with nuance about the meaning of terms. This is probably why there is still so much confusion about how to apply OEE.

The executives reported interest in creating standards for the application of OEE. No doubt they are unaware of the standards already developed by the OMAC Packaging Workgroup to facilitate the application of OEE . Suits and their business consultants rarely participate with such engineering groups and are unlikely to seek out geek advice on how to implement their number-4-ranked KPI.

It's great that OEE is on the radar screen. If we get the suits and the geeks working together, perhaps we can turn it from a blur into a clearly defined point that may be used to help navigate through troubled waters.

TrackBack

Comments OEE is an exciting opportunity for all CPG companies that needs more basic education. A recent study we conducted showed that the top opportunities to reduce case costs, in order, were increase good cartons/minute, reduce product and package waste, and third in line, is reduce headcount. That was a dramatic finding for me personally. Posted by: Bob Esse on June 7, 2009 Post a comment (If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.) Name: Email Address: URL: Remember personal info? Comments: (you may use HTML tags for style) Type the word 'packaging' (required):