11 indicators to improve equipment operational efficiency

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Manufacturing enterprises are becoming increasingly dependent on equipment, and there is a growing need to have a comprehensive understanding of the status of equipment management. At the same time, equipment has an increasingly significant impact on product quality, safety and environmental protection, energy consumption, etc. Modern equipment is characterized by being large-scale, high-speed, automated, and intelligent. The scaling up of equipment has led to a high degree of production concentration; consequently, the losses caused by equipment failures are much greater than those associated with smaller equipment. Additionally, large-scale equipment is very costly, which significantly affects product costs ； The increased speed of equipment has given rise to several techno-economic issues in industrial production; for instance, the energy consumption of drive systems increases accordingly, and there are higher requirements regarding the materials used for the equipment as well as its degree of automation ； Automation and intelligence increase the complexity of equipment, leading to more failure points and higher failure probabilities, which poses difficulties for equipment maintenance. Furthermore, the entire lifecycle of modern equipment, from research and development to disposal, extends beyond the boundaries of individual companies and industries, becoming increasingly socialized. It can be said that the rapid development of modern equipment has also brought about many new problems. In enterprises, there are many indicators used to measure the effectiveness of equipment management. For example, equipment integrity rate, availability rate, overall efficiency, overall equipment effectiveness, failure rate, mean time between failures, mean time to repair, inventory turnover rate of spare parts, spare parts capital ratio, maintenance cost ratio, first-time pass rate of maintenance quality, rework rate, etc. Different indicators are used to measure different management aspects. 01 Image: Evaluation indicators for equipment management. Image: Equipment availability rate. The so-called availability rate is the proportion of functional equipment to the total number of equipment during an inspection (Equipment Availability Rate = Number of functional equipment / Total number of equipment). The metrics for many factories can reach over 95%. But it also means there isn’t much room for improvement; there’s nothing left to enhance. In other words, it’s difficult to make any progress. To this end, many companies have proposed modifying the definition of this indicator; for example, they suggest conducting inspections on the 8th, 18th, and 28th of each month, and using the average of the good rate across these inspections as the good rate for that month. This is of course better than checking 1, but it remains a point-based reflection of the integrity rate. Later, it was proposed to use the ratio of good machine hours to calendar machine hours; the good machine hours equal the calendar machine hours minus the total hours lost due to malfunctions and their repairs. This indicator needs to be as realistic as possible. Of course, there are also issues regarding the increased workload of statistics and the accuracy of statistical data, as well as the debate over whether or not preventive maintenance hours should be deducted. Whether the integrity rate is an effective indicator of equipment management depends on how it is applied; different people may have different opinions on this. The failure rate of equipment is a metric that can be confusing, as there are two definitions for it. Definition 1: If it refers to the frequency of failures, then it is the ratio of the number of failures to the actual number of times the equipment was in operation (Failure frequency = Number of failures due to downtime / Actual number of operating hours of the equipment). Definition 2: In the case of the downtime rate, it is the ratio of the total downtime hours to the sum of the actual operating hours of the equipment and the downtime hours (Downtime rate = Downtime hours / (Actual operating hours + Downtime hours)). Obviously, the failure downtime rate can more accurately reflect the equipment status. The concept of equipment availability is widely used in the West; in China, however, there are two distinct terms: planned time utilization rate (planned time utilization rate = actual working time / planned working time) and calendar time utilization rate (calendar time utilization rate = actual working time / calendar time). By definition, the availability rate as defined in the West is actually the utilization rate of calendar time. The calendar time utilization rate reflects the full utilization of equipment; in other words, even for equipment operating on a single shift, the calendar time is calculated as 24 hours. Because whether or not the factory uses this equipment, it still consumes the company’s assets in the form of depreciation. The planned time utilization rate reflects the planned usage level of the equipment; in the case of single-shift operation, the planned time is 8 hours. Another term for the mean time between failures of a device, MTBF, is mean time without failure (Mean Time Between Failures = total time the device operates without failures during a given statistical period / number of failures). It, together with the failure downtime rate, reflects the frequency of failures, that is, the health status of the equipment. Either of the two indicators can be used; there is no need to measure something using related indicators. Another indicator reflecting maintenance efficiency is the Mean Time To Repair (MTTR) (Average time to repair equipment failures = Total time spent on repairs during a statistical period/Number of repairs), which measures the improvement in the efficiency of maintenance work. With the advancement of equipment technology, due to differences in complexity, difficulty of maintenance, locations of failures, the average technical skill level of maintenance technicians, and the age of the equipment, it is difficult to determine a fixed value for maintenance time. However, we can use this to measure its average conditions and levels of improvement. Overall Equipment Effectiveness OEE is an indicator that provides a comprehensive reflection of equipment efficiency; OEE is the product of the time availability rate, the performance availability rate, and the quality rate. Just like a person, the time utilization rate represents the attendance rate; the performance utilization rate indicates whether they work hard after starting work and achieve the desired efficiency; the quality rate reflects the effectiveness of their work – whether mistakes are made frequently and whether tasks can be completed with both quality and quantity ensured. It should be noted here that world-class manufacturing leaders such as Toyota and Samsung achieve an overall equipment efficiency of over 85%. Total Effective Productivity, TEEP, is the formula that most comprehensively reflects equipment efficiency, rather than OEE. True Effective Productivity TEEP = Output of qualified products / Theoretical output over calendar time; this indicator reflects various deficiencies in the systematic management of equipment, including upstream and downstream impacts, effects of market and order conditions, imbalances in equipment capacity, and unreasonable planning and scheduling. This indicator is generally very low, but it is highly accurate. There are also relevant indicators reflecting maintenance and its management. 02 Images: Indicators related to maintenance and its management. Image: First-pass rate for maintenance quality. The first-pass rate for maintenance quality is measured as the number of times the equipment, after maintenance, meets the product quality standards upon its first trial run, divided by the total number of maintenance attempts. It is worth examining whether the factory uses this indicator as a performance metric for the maintenance team. The repair rate is the total number of times equipment needs to be repaired after maintenance, divided by the total number of maintenance sessions. This more accurately reflects the quality of maintenance. There are many definitions and calculation methods for the maintenance cost ratio. One is the ratio of annual maintenance costs to the total annual output value. Another is the ratio of annual maintenance costs to the total original value of assets in that year. Yet another is the ratio of annual maintenance costs to the total replacement cost of assets in that year. There’s also the ratio of annual maintenance costs to the total net value of assets in that year. Lastly, there’s the ratio of annual maintenance costs to the total production costs in that year. Even so, the magnitude of this repair cost rate figure does not tell us anything. Because equipment maintenance is a form of investment, and investment creates value and generates output. Insufficient input leads to significant production losses, which affects output; of course, too much input is also not ideal – this is known as excessive maintenance and constitutes a waste. Appropriate investment is ideal. Therefore, factories should explore and determine the optimal ratio of inputs. High production costs mean more orders and a greater workload, which in turn increases the load on the equipment and raises the need for maintenance. Making investments in the right proportions should be the goal that factories strive to achieve. With this benchmark in place, the greater the deviation from this indicator, the less desirable it is. 03 Image: Indicators related to spare parts management. Image: Spare parts inventory turnover rate. The spare parts inventory turnover rate = Monthly cost of spare parts used / Average monthly capital invested in spare parts inventory, and it reflects the liquidity of spare parts. If a large amount of capital is tied up in inventory, it will be reflected in the turnover rate. Another indicator reflecting spare parts management is the spare parts capital ratio, which is the ratio of the total funds allocated to spare parts to the total original value of the company’s equipment. The level of this value varies depending on whether the factory is located in a major city, whether the equipment is imported, and the extent to which equipment downtime results in losses. If the daily downtime cost of a piece of equipment amounts to tens of millions of yuan, or if the failure poses serious risks to environmental pollution and human safety, and if the lead time for obtaining spare parts is long, then a higher inventory level of such spare parts is necessary; otherwise, the capital invested in spare parts should be kept as low as possible. Intensity of maintenance training: Intensity of maintenance training = hours of maintenance training / maintenance working hours. The training covers topics such as professional knowledge of equipment structure, maintenance techniques, professional ethics, and maintenance management. This indicator reflects the extent to which enterprises attach importance to and invest in improving the competence of maintenance personnel; it also indirectly reflects the level of their maintenance technical capabilities.