Efficiency of the production system: how to measure it?

One of the metrics, also called Key Process Indicators (KPI), which are often used to calculate production efficiency is the so-called OEE, an acronym for Overall Equipment Effectiveness. This metric has now become an industrial standard and therefore widely spread in the factories and implemented in the various MES.

However, this metric is mostly used to evaluate the efficiency of use of an industrial asset, therefore very often a limited part of the entire production process, mostly consisting of a series of mechanical processes, treatments, manual operations, transport, inspection and testing.

In my past experience I have worked in industrial contexts where the OEE of the plants was higher than 70-75%, however the total lead time was months, compared to a cycle time of hours.

Can we define this process as an efficient production process? In my opinion absolutely not.
Can we therefore rely only on the OEE as a control parameter? Obviously the answer is no.

In this post we try to define what the metrics and tools can be used to give a more comprehensive answer to the measurement of the efficiency of a process.

Effectiveness, efficiency and lead time

Before going into the heart of the matter, in my opinion it is necessary to clarify two concepts that are often confused: effectiveness and efficiency. A process is effective when it is able to satisfy the customer’s requests, therefore it is able to produce goods respecting deliveries, at cost, on time and with the agreed quality. Conversely, a process is efficient when it is able to meet these requirements using the fewest possible resources. Although they are distinct concepts, effectiveness and efficiency are strongly correlated and one of the metrics that highlights this correlation is the Lead Time (LT). When the LT is high, there can be several root causes, including:

Low system efficiency (plants, flows, workforce)
Low quality (additional process controls, management of non-conformities, rework etc.)

Therefore, this also entails scarce effectiveness, as clearly there will be higher costs associated with the process and it is unlikely that the expected deliveries will be respected. High lead times generally correspond to poor effectiveness and efficiency of the system. Conversely, low LTs often mean high system efficiency and high customer satisfaction. Is it possible to satisfy the customer (therefore be effective) without being efficient? In the case of a poorly competitive market, certainly yes. In fact, a company can deliver products at the required quality, within the required time frame and at an agreed cost if the margins are high. This means that in the face of low efficiency (therefore high costs and LT) it is still possible to satisfy the customer. However, global competitiveness is growing rapidly today and companies are forced to improve their efficiency if they don’t want to be cut off from the market. To satisfy the customer you need to be effective, but to be effective you also need efficiency.

How to measure the efficiency of the production system?

So let’s get to the heart of the matter. A production system is made up of a series of operations which, in general terms, can be summarized in the following points:

Processing: machining, bending, die casting etc.
Special processes: heat treatments, chemical processes, washing etc.
Logistics: transport of parts from one operation to the next (both internal and external to a supplier)
Manual operations: bench work, assembly etc.
In process inspection and final testing: manual or automatic

How to measure the plant efficiency?

The OEE is usually used to measure the efficiency of an industrial asset, be it a plant or a machinery. There are several articles explaining how to measure it, for example this one, so we won’t go any further. Today the OEE can be calculated automatically thanks to the connection and integration of the systems with the IT systems that are able to collect information from the asset and calculate this value in real time.

How to measure the process flow efficiency?

Many times we focus on machinery without considering the fact that often a semi-finished product spends at least 80% of its time traveling and waiting. A simple way to measure the efficiency of a production flow is to estimate how long the transport should ideally last between two successive operations, considering lifting times and tools without considering any waiting time. The Tideal / Treal ratio, for each part of the flow, provides an estimate of the efficiency. In practice, it becomes very difficult if not impossible to calculate this value, as it would be necessary to measure each stretch of flow for each component, which is difficult to implement without the use of new technological solutions. The main technology that comes to our aid in this sense are real-time locating systems (RTLS), capable of automatically calculating the actual transport or waiting time, in real time. Once these data have been collected, the use of Discrete Event Simulations (DES) certainly represents a fundamental tool for carrying out flow analysis, identifying bottlenecks and inefficiencies caused by waiting times and unbalanced lines, especially in the presence of a production mix. high. To learn how to balance a production line and thus minimize buffers, read here.

How to measure the workforce efficiency instead?

Also in this case, it is possible to estimate the Tideal required for the operation and divide it by the Treal employed. The Treal will be longer than the ideal time as there will often be activities with no added value that will often be requested by the operator and which will therefore affect efficiency.

Tideal: Tva
Treal: Tva + Tnva
Efficiecy: Tideal / Treal

where Tva stands for “time of value added activities” and Tnva stands for “time of non-value added activities”. The measurement of the efficiency of manual operations in real time today can be performed in an easy and economic way thanks to the use of computer vision, which is a branch of artificial intelligence. Thanks to the use of cameras, in fact, the system is able to identify value-added and non-value-added activities and thus accurately estimate the efficiency of manual operations. .

How to measure the efficiency of process controls and final tests?

As previously mentioned, process controls and tests are divided into 2 categories:

Automatic inspection, for example thanks to NC machines. In this case, the OEE can be used as a control metric
Manual inspection, for example bench tests. In this case, the above formula can be used

Overall efficiency of the production process

The overall efficiency of the system will therefore be nothing more than the average of the efficiencies calculated for each phase of the process. For practical purposes, overall efficiency can be of little use as it does not tell us where to go to focus our attention to improve the efficiency of the process. On the contrary, the breakdown by sub-process allows you to act in a timely manner where the inefficiency is greater, or where its effectiveness is most affected.

Where to start?

In this post we have emphasized that the use of the OEE parameter alone does not provide us with a reliable value of the entire production process, unless this involves the use of automatic assets only.

Using a system approach, we can calculate the efficiency of each phase of the process in an extremely simple way, so as to intervene in a timely manner to improve the effectiveness and efficiency of the production process, thus satisfying at the same time the customer, who will see his requests met and company management that will see its resources used in an appropriate manner.

To do this, the new technologies of industry 4.0 come to our aid:

Assets interconnectivity to the company IT system
Use of real-time locating systems (RTLS)
Using Discrete Event Simulations (DES)
Computer Vision

In this sense, SkillS4i makes a series of contents available on its platform to help companies improve their knowledge:

Do you have industrial skills and want to contribute to our blog or create your own courses? Read here, or contact us!

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