OEE (Overall Equipment Efficiency) Vs AU (Asset Utilization)

Posted by dtcsolutions on October 31st, 2018

Our world has become extremely competitive not just in terms of production and manufacturing but every other related and non-related field. Everyone is demanding for the best at the most cost-effective tenure. We are constantly evolving to do more with less, to become more productive and more efficient. But making decisions that uncover value, eliminate loss, and allow for proper strategic planning for the future is a monumental task. The key lies in the data which we acquire to make decisions. Behind every good, strong decisions are good, strong data.

But now we are also faced with the challenge of determining which data to utilize and which ones to discard. We also have to verify which metrics illustrates our current levels of performance in the best possible way.

Before going into any more complicated discussion let us know a little bit about the key performance-based metrics: Asset Utilization (AU) and Overall Equipment Effectiveness (OEE) because these calculations result in effective facility management and in providing sound backing for potentially difficult business decisions to be made in future.

Asset Utilization (AU)

AU calculates how much revenue a company has earned for every dollar of assets owned by them. An increase in AU ratio means the company is being more efficient with each dollar of assets it has. This ratio is frequently used to compare a company's efficiency over time.

The calculation of AU is done using the formula:

Asset Utilization = AVAILABILITY x RATE x QUALITY

Overall Equipment Effectiveness (OEE):

On the other hand, OEE metrics is a manufacturing best practice thatis used to measure manufacturing productivity by identifying the percentage of manufacturing time that is truly productive. An OEE score of 100% signifies that a company is manufacturing only good parts, as fast as possible, with no stop time. That means 100% Quality, 100% Performance and 100% Availability.

Measurement of OEE provides important insights on how to systematically improve the manufacturing process. It helps in identifying losses, benchmarking progress, and improving the productivity of manufacturing equipment.

Overall Equipment Effectiveness (OEE) is calculated with the formula:  

OEE = UPTIME x RATE x QUALITY

AU and OEE are similar since both are calculations for RATE and QUALITY. So let us see how to calculate RATE and QUALITY first.

RATE = AVERAGE RATE/BEST DEMONSTRATED RATE RECORDED

Here the average rate refers to the speed or efficiency of a system that under analysis for a given time period. Best demonstrated rate is an empirical data that gives a better model of the system in question.  A 100% RATE calculation signifies that the system is operating consistently at its maximum demonstrated speed. 

QUALITY = FIRST PASS UNIT/TOTAL UNITS

First pass units refers to the good units produced over a certain time period that meet customer specifications. These are compared to the total units produced – which also include those that do not meet customer specifications.  A 100% QUALITY calculation signifies no scrap or rework.

Difference between AU and OEE:

The above formulas delineate that the difference between OEE and AU refers to how they compare availability and uptime. Let us find out the difference between AVAILABLITY and UPTIME.

AVAILABILITY = OPERATING TIME/CALENDAR TIME

UPTIME = OPERATING TIME/SCHEDULED TIME

Operating time refers to the amount of time that the system operates. Calendar time is based on the “no stop time” schedule, which means that the system runs 24/7 for 365 days. Scheduled time refers to the amount of time the system was scheduled to operate.

According to the above formulas, if a system operates for six hours on one eight hour shift on a given day, the UPTIME is 6/8 or 75%, while the AVAILABILITY is 6/24 or 25%.

In other words, OEE illustrates how well systems or assets perform based on a production schedules by breaking down the performance of a manufacturing unit into three separate and measurable components: Availability, Performance, and Quality. Each component points to an aspect of the process that can be targeted for improvement. OEE can also be applied to individual Work Center or to individual Department or Plants.

AU illustrates how well that system or asset is currently being utilized and allows insight for future business planning by calculating what type of production could be achieved. It is a true measure of how well an installed capacity is being utilized. Unlike OEE, it accounts for all losses, not just those directly associated with the production or manufacturing process.

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