11 indicators for equipment management

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➤ Indicator evaluation for equipment management I. Equipment integrity rate – This is the most commonly used indicator, but its role in facilitating management is limited. The so-called availability rate refers to the ratio of functional equipment to the total number of devices during inspection (Availability Rate = Number of functional devices/Total number of devices). Many factories manage to achieve an availability rate of over 95%. The reason is simple: at the time of inspection, if the device is running and not malfunctioning, it is considered to be in good condition, so this indicator shows a good value. If it looks very good, that means there isn’t much room for improvement; it means nothing can be improved further, and it also means it’s difficult to make 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 obtained from these inspections as the good rate for that month. This is of course better than checking once, but it still represents a good rate on a point-by-point basis. Later, it was proposed to use the ratio of available machine hours to calendar working hours, with the available machine hours equaling the calendar working hours minus the total hours spent on failures and their repairs. This indicator needs to be as accurate as possible. Of course, there are again issues related to the increased workload in statistics and the accuracy of those statistics, as well as debates over whether to deduct costs when it comes to preventive maintenance. 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. II. Equipment failure rate: This metric is easy to confuse, as there are two definitions for it. 1. If it refers to the failure frequency, 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) ； 2. If it is the failure downtime rate, then it is the ratio of the time the equipment is down due to failures to the sum of the time the equipment is actually in operation and the time it is down due to failures (Failure Downtime Rate = Time down due to failures / (Time actually in operation + Time down due to failures)). Clearly, the failure downtime rate can reflect the actual condition of the equipment more accurately. III. Equipment availability: This concept is widely used in the West, while in China there are two different terms used to describe it – planned time availability (planned time availability = actual working time/planned working time) and calendar time availability (calendar time availability = actual working time/calendar time). By definition, the availability rate as defined in the West is actually the calendar time utilization rate. Calendar time utilization reflects the full utilization level of the equipment; in other words, even for equipment that operates on a single shift basis, we calculate the calendar time based on 24 hours. Because whether the factory uses this equipment or not, 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. IV. Another term for the mean time between failures of equipment, MTBF, is mean time without failure (Mean time between failures of equipment = total time of fault-free operation during the statistical period / number of failures). It reflects the frequency of failures, that is, the health status of the equipment, in a complementary manner to the failure downtime rate. It is sufficient to use one of the two indicators; there is no need to measure something using related indicators. Another indicator reflecting maintenance efficiency is the Mean Time To Repair (MTTR) (Mean Time To Repair = 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, it is difficult to determine a fixed value for maintenance time due to factors such as the complexity of the equipment, the difficulty of repairs, the location of faults, the average skill level of maintenance technicians, and the age of the equipment. However, we can use these factors to assess its average performance and levels of improvement. V. Overall Equipment Effectiveness (OEE) is an indicator that provides a comprehensive reflection of equipment efficiency; it is the product of availability, performance, and quality factors. Just like a person, the time utilization rate represents the attendance rate; the performance utilization rate indicates whether one works hard after starting work and achieves the desired efficiency; the quality rate reflects the effectiveness of the work, showing whether mistakes are made frequently and whether tasks can be completed with both quality and quantity met. The simple formula for OEE is: Overall Equipment Effectiveness OEE = Output of qualified products / Theoretical output for the planned working time (for detailed explanations, see above). 6. Total Effective Productivity TEEP is the formula that best reflects equipment efficiency, rather than OEE. True Effective Productivity TEEP = Output of qualified products / Theoretical output based on calendar time; this indicator reflects various deficiencies in the systematic management of equipment, including upstream and downstream impacts, effects related to the market and orders, imbalances in equipment capacity, and unreasonable planning and scheduling. This indicator is usually very low, which doesn’t look good, but it is highly accurate. There are also relevant indicators reflecting maintenance and its management. ➤ Regarding maintenance and its management, there are also relevant indicators. I. The first-time pass rate for maintenance quality is measured as the ratio of the number of times the equipment, after maintenance, meets the product quality standards upon its first trial run to the total number of maintenance sessions carried out. It is worth examining whether the factory uses this indicator as a performance metric for the maintenance team. II. Rework rate is the total number of times equipment needs to be reworked after maintenance, divided by the total number of maintenance sessions. This reflects the maintenance quality more accurately. III. Maintenance cost ratio: There are various definitions and calculation methods for this 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 during that year; yet another is the ratio of annual maintenance costs to the total replacement cost of assets in that year; there is also the ratio of annual maintenance costs to the total net value of assets in that year; and finally, it is the ratio of annual maintenance costs to the total production costs for that year. The author believes that the last algorithm is more reliable. 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 is what creates value and output. Insufficient investment and significant production losses affect output ； Of course, excessive investment is also not ideal; it is known as over-maintenance and represents 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 further one deviates from this indicator, the less ideal it is. ➤There are also many indicators related to spare parts management. I. The spare parts inventory turnover rate (Spare parts inventory turnover rate = Monthly cost of spare parts used / Average monthly value of spare parts inventory) is a relatively representative indicator. It reflects the liquidity of spare parts. If a large amount of inventory capital accumulates, 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 enterprise’s equipment. This value varies depending on whether the factory is located in a central city, whether the equipment is imported, and the extent of the losses caused by equipment downtime. If the daily downtime cost of a piece of equipment amounts to tens of millions of yuan, or if the malfunction poses serious threats to environmental pollution and human safety, and if the lead time for obtaining spare parts is long, then a higher level of spare parts inventory is necessary; otherwise, the capital investment associated with spare parts should be kept as low as possible. II. Intensity of maintenance training (Intensity of maintenance training = Hours of maintenance training / Hours spent on actual maintenance work). Training includes knowledge related to the equipment’s structure, maintenance techniques, professional ethics, and maintenance management. This indicator reflects the degree of emphasis and investment companies place on improving the skills of their maintenance personnel, and it also indirectly indicates the level of their maintenance technical capabilities.