OEE recently celebrated its first birthday at manufacturer Caterpillar Forest Products in LaGrange, Ga., and the anniversary has been a good one. The metric, more formally referred to as overall equipment effectiveness, was implemented in the facility’s machining area, for good reason.

Importantly, it has driven a good result.

Caterpillar Forest Products, which manufactures large forestry machines, had a constrained machine that limited output and led to the outsourcing of work, explained Kurt Schrom, facility manager. With the mindset of “creativity before capital,” however, the team at the facility sought means to eliminate the constraint without expending large amounts of money.

“In the old days [with] a lot of companies, if there was a constrained machine, you would buy a new machine. Then spending money on capital became a bigger deal,” Schrom says.

Caterpillar’s creativity led to the introduction of OEE, a measure that tells users the percentage of time that equipment, when running or required for production, is producing good-quality product at an acceptable rate. It is calculated by multiplying availability rate (utilization) by production rate (efficiency) by first-pass yield (quality).

Caterpillar used the information provided by the OEE metric to institute changes that addressed the constraint. As a result, build rates improved and outsourced work came back inside the plant.

“The success is huge,” Schrom says.

Lean in Low Volume

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