Contemporary Business
monitoring Ratios:
a)
Overall Equipment Efficiency (OEE)
b)
On time & full Dispatch (OTIF)
In the current competitive
business era, top management cannot afford to spend much of its time on
operational activities. Top management is spending much of its times to
visualize & control external factors affecting the business that includes
evolution of business strategies to achieve long term objective &
goals like, expansions plan, fund management, business diversification etc.
that utilize 80% to 90% time of entrepreneurs.
At the same time importance &
efficacy of operational level control cannot be ignored. In the constraint of
limited time, top & bottom line pressures & better control of
business performances, two major business ratios (OEE & OTIF) are devised.
If these two ratios are within control or on improving trends & top
management can consider business is meeting the goals & objectives to a
large extend.
What
is OEE (Over all Equipment Efficiency?)
OEE:
measures the combined ratio of a)
Availability % X b) Performance % X c) Fresh production %)
A)
Availability: Equipment
have sufficient production program to produce & & availability of
raw material & utilities.
Available % = ( Total Time – No Program- No Material –
Stoppage due to Utilities )/Total Time
B)
Performance: Equipment’s
ability to produce against the rated production parameters/standards like
speed, efficiency, workers efficiency etc.)
Performance % = Actual Production / Standard
Production
C)
Fresh Production: This measures quality parameters whether produced quantity is
meeting customers quality parameters or not
Fresh Production % = ( Total Production –
Rejection) / Total Production
Table
Showing OEE Calculations
Parameters
|
Should Be OEE
|
Minimum Desired OEE
|
Availability
|
97%
|
94%
|
Performance
|
94%
|
90%
|
Fresh Production
|
97%
|
95%
|
OEE
|
85.79
or 85%
|
80.37
or 80%
|
What
is OTIF (On time & full)
OTIF:
This ratio measures company’s ability
to meet customer delivery time & quantity.
a)
On time & Full: This measures how many dispatch deliveries are meeting
customer time lines & in desired quantities. If deliveries or on time but
fails to meet desired quantity cannot be considered as OTIF compliance. Ideally
this ratio must be > 85%.
