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 facilitys 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.
Caterpillars 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
That said, OEE is simply one of multiple tools driving improvement at the LaGrange location, which also serves as divisional headquarters for Caterpillar Forest Products. It is the Cat Production System that drives lean operations at this low-volume, high-mix producer, in combination with an engaged workforce that emphasizes safety.
And if you think low-volume, high-mix operations dont lend themselves to lean, think again, Schrom suggests.
The principles of lean are pretty basic and apply whether you are high volume or not. You still apply the principles. There are still tools in the toolbox to drive improvement, he says.
A customer-driven quality system serves as Caterpillars voice-of-the-customer center. It is focused on customer feedback or dealer feedback from the field, which is where it all starts, Schrom says. The organization collects feedback, analyzes it and uses that information to continually improve product quality.
Product Champion Round Tables -- cross-functional groups for each product line -- are yet additional tools to drive product and process improvements.
Metrics Matter
Inside the facility four key metrics drive action: people (recordable injury frequency), quality (defects per unit), velocity (committed ship date) and cost (productivity).
The four key metrics are tracked on what is called the facility board, which is updated at the end of each month and formally reviewed by the leadership group at the middle of each month. In addition to the metrics, the board shows planned actions and updates. Its your plan, do, check act, Schrom says.
The facility manager notes that while formal reviews are held monthly, the metrics are reviewed daily.
Schrom says Caterpillar Forest Products has a strong order board. It has been ramping up to meet that demand with the aid of all the tools in its product and manufacturing improvements toolbox.
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