Regardless of your position on fossil fuels, the sheer scale, complexity, and ferocity of a refinery will strike you with awe. At a refinery, as with any other process manufacturing facility, the best days are the boring days–ideally without any “unplanned pressure releases” similar to those experienced in the rocket industry. The cost of mistakes, in terms of operating income without considering the employee or environmental risk, can easily reach millions of dollars per day.
So, as we examine our own careers in search of fresh ideas and inspiration, an important performance metric from the process manufacturing industry called OEE can help.
OEE stands for Overall Equipment Effectiveness and is measured on a scale from 0% to 100%. While I will avoid an extended discussion of how to establish the 100% level, understand that OEE is the product of three terms: availability, utilization, and yield. Let’s explore how any business process owner can benefit from getting these three terms as close to 100% as possible, typically in that order.
Availability: when I push the green button, does it go?
Availability measures what percentage of total time a process or asset is ready to run when called upon. Avoiding the nuances of this calculation, let’s look at why availability matters in a business setting. Perhaps you are responsible for an email marketing system, or a database, or even human assets like a sales team. How much downtime does this asset experience? How often do the emails fail to send? How often is the database offline? How often does a sales rep call out sick or no-show for meetings? Clearly to make any significant improvement in overall performance, the availability of an asset or process needs to reach a moderately high and sustained level. Furthermore, the people responsible for the asset or process won’t gain the trust of the rest of the organization or have the credibility to advise on more complex issues until they get their availability in order. So, for most leaders, improving availability is a critical first step.
Utilization: when it’s available, is it running?
Utilization measures the percent of available time that a process or asset is operating. Any time spent idle, either waiting for inputs from an upstream process or waiting for a downstream process to take away its outputs will penalize both utilization and OEE. If availability is about solving maintenance and reliability issues, then utilization is about planning, scheduling, and load balancing across assets and between departments. Your database job schedule might need a closer look, or your lead flow process might need tweaks to keep a steady pace of calls and meetings in front of your sales team. Step back from an individual asset or process to look for gains in utilization at your “bottleneck” in order to reap the largest overall results.
Yield: when it’s running, is there zero waste?
Disciples of the Lean movement will readily rattle off the seven flavors of muda, or waste. Generally, yield losses occur when running at less than 100% speed and/or producing less than 100% first level quality output. Whether comparing the results of your asset/process to an external benchmark, an internal best, or a design capability, you will likely find yield opportunities easily. Typically yield optimization is the most interesting type of problem to solve because it requires delving into the unknown. For high availability systems, it is also the most frequent problem to solve–if it ain’t running, you can’t work on yield! So whether you are looking for a higher email conversion rate, lower error rates on database jobs, or higher win rates on sales opportunities, yield optimization is likely a well-trodden path for your team, and the harder you look, the more you will find.
Where to start? Follow the money
An optimist will see a low OEE system as a playground full of valuable and interesting opportunities. When looking across the areas of availability, utilization, and yield, it’s likely that different people will have different opinions on where to start. A straightforward and non-confrontational approach is to value each opportunity with a common metric, like $. With a straightforward spreadsheet you will be able to value what a 1% improvement in availability, utilization, and yield–above the current baseline values and holding the other two constant–will be worth on a per day or per year basis. This should not prevent your team from making improvements in all areas, instead it should inform prioritization in a resource-restricted world.
So whether you are a database administrator, marketer, or sales manager, take a page from the refining world and think about how to maximize your OEE. And you won’t even have to put on fireproof coveralls to do it.