OEE vs. Flow

A very common metric that is tossed around in the lean world is Overall Equipment Effectiveness (OEE).  A couple of weeks ago I posted a blog about clear and relevant metrics and used OEE as an example of how it is not very clear or relevant to the people doing the work.  There is another hang up with OEE.  People become so focused on OEE that it starts to hinder flow.

When transforming the thinking of an area, people can latch onto OEE very easily because it is very silo’ed or machine focused.  The metric focuses on how much the machine is up and how efficient it is with its time and materials.  On the surface, this is all great.  So how does this hinder flow?

When creating flow we want to eliminate/reduce the work-in-process (WIP) between processes.  Once the machines are reliable we might try to create a work cell with several machines.  When creating the work cell it may be necessary to slow one of the machines down to match the pace of another machine.

If the focus is on OEE and not flow, the report will show the machine that was slowed down not being very efficient and cause the OEE to drop.  When this happens a traditional thought process would be to insert more work in order to keep the machine running at full speed.  When this happens, the extra work inserted into the processes causes a jam up of the work trying to flow through the cell.  This will cause lead times to increase and WIP to build back up between the processes.

The ideal state is to get the work flowing without stopping as much as possible.  Make the 80% of the work that is the norm flow and learn how to manage the other 20%.  If the 80% can flow with no effort, it means less work for the supervisors and managers because now they are not worrying about the 80% only the 20%, which is better than worrying about all 100% and managing the WIP it brings.

I know it sounds like I am against OEE but I’m not.  It can be a beneficial metric when used properly.  Like analyzing one single piece of equipment that is the constraint in a process in order to increase the capacity of the entire process or flow.

We shouldn’t focus on the equipment.  We should focus on the flow of the product.  The product should flow like a river.