A mill in New Zealand has improved performance through measuring overall equipment effectiveness (OEE)
January 2008
By Tuija Kinnunen-Härmälä
The overall effectiveness of production equipment is commonly measured using the OEE metric (Overall Equipment Effectiveness), calculated by multiplying the process's availability (A) by its performance rate (P) and quality rate (Q).
The resulting key figure indicates how much of the plant's existing capacity can be economically utilized.
However, in addition to this it is essential to identify the main production bottlenecks that can be eliminated to gain improvements.
"Despite their scope, production disturbances are not always easy to perceive. Only the tip of the iceberg is visible; for example the direct costs and equipment malfunctions," emphasizes ABB product development manager, Simo Säynevirta.
A lot remains hidden: direct and indirect losses caused by downtime; losses caused by reduced production speed; waste of electricity, fuel and raw materials; waste processing costs; possible environmental sanctions; costs incurred by delayed deliveries; overtime pay....
"Improvements and corrective actions based on accurate metrics and analyses can improve the efficiency of the production process by several percentile units – and even a single percent has a large effect on the bottom line," notes Säynevirta.
Maintenance – using the same metrics
In January 2003, Carter Holt Harvey (CHH) and ABB signed a Full Service partnership agreement. The five-year agreement covers all maintenance services for the Kinleith pulp and paper mill in Tokoroa, New Zealand.
The agreement is based on production efficiency metrics, including the overall effectiveness of the production equipment, maintenance costs and the inventory value of maintenance spare parts.
Close monitoring and analysis of the OEE metric – and the planning and implementation of, for example, flexible work shift patterns in cooperation with the staff – have brought the mill clear benefits: Production volume increased by 8% over two years, while productivity (tonnes per person) increased by more than 36%. Labor costs decreased by 22% over two years, and maintenance costs by 15% during the first year alone.
One thing to note in Kinleith's OEE metric is that both production and maintenance use the same metric. It is in everyone's interest to ensure and maximize productivity in the name of the common good. Encouraged by the results to date, Carter Holt Harvey has made a similar partnership agreement for its Tasman mill.
In August 2006, New Zealand's Equal Employment Opportunities Trust granted the First Steps Award to ABB Kinleith, which is responsible for the maintenance of the Kinleith mill. The award is given to a company that is successful in its market and whose staff participate in the creation of the corporate culture through practical means.
At ABB Kinleith, the staff has actively participated in shaping the company's vision, mission and values, and the planning of flexible shift work patterns. Sick leave has also decreased from 11% in 2002 to 3.7% in 2005.
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