OEE Leads to SMART Solutions at PMC

by Dianna Brodine, managing editor
Plastics Business

Overall Equipment Effectiveness (OEE) is – at its most simple – a measurement of manufacturing productivity. Developed as a tenet of lean manufacturing, the aim of OEE is to provide metrics that can be used to improve a manufacturing process.

Three components provide data when assessing OEE, as described at www.oee.com. The first is availability, which measures whether the process is running as scheduled. The second factor, performance, assesses whether maximum manufacturing speeds are reached. Quality, which counts defects, is the third component.

According to www.oee.com: An OEE score of 100 percent means you are manufacturing only Good Parts, as fast as possible, with no Stop Time. In the language of OEE that means 100 percent Quality (only Good Parts), 100 percent Performance (as fast as possible) and 100 percent Availability (no Stop Time).

In a manufacturing environment, where the smallest improvement can make a significant difference in profitability, OEE provides a basis for measuring important metrics and then tackling those metrics that don’t meet standards.

PMC SMART Solutions, located in Shelbyville, Indiana, had a measurement system in place, but the metrics didn’t match the bottom-line results. That wasn’t good enough for a company aiming to achieve perfection in its manufacturing processes.

Values drive PMC to perfection

In 1929, Plastic Moldings Company was founded in Cincinnati, Ohio. Over nearly nine decades, the precision plastics manufacturing firm has evolved into a leader in precision medical, electronic and automotive molding and assembly. PMC is a contract manufacturer for 10 of the top global Tier 1 automotive manufacturers, focused on safety-critical products in fuel, brake, steering, transmission, on-board electronics and other under-the-hood engine management system applications. In addition, the company prides itself on manufacturing products that save lives, including sterile-packaged disposable medical devices, injection molded assemblies, biomaterial implants and components.

One of the company’s core values – which are stated on its website as a commitment to employees, customers and stakeholders – is continuous innovation, defined as “personal, organizational and technological growth are a way of life.” That innovative spirit drives aggressive achievement goals for its customers as PMC channels a scientific, data-driven approach to manufacturing processes into zero PPM quality levels; on-time delivery; and first-time, on-time, 100 percent-to-customer-specification product launches.

With such high internal standards, the company had a continuous improvement plan in place, but wanted to implement a 5S system. OEE was the tool chosen to assist with that – and then PMC realized there was potential for much more.

The beginning

“We wanted to maximize the use of the equipment in our plant, and we thought OEE would identify waste in our processes,” said Vern Nightenhelser, plant general manager for PMC SMART Solutions. “This was in 2006, when we decided to add 5S to our existing continuous improvement process. We weren’t going to use OEE as the savior – it was just another way to help eliminate waste in our manufacturing system.”

Eventually, OEE would lead to significant changes in staffing, capacity planning and standards at PMC, but that wasn’t how it started. “It wasn’t meant to be the thing that drove our company,” said Nightenhelser, “because we already had a continuous improvement plan. But as we looked at the reports generated to reflect what OEE tracks – availability, performance and quality – at the end of the month, the profit/loss statement didn-t really match what we thought we were running in our plant. One thing that could cause that difference would be incorrect standards – the numbers had to be off somewhere, whether that was in labor efficiency, machine uptime, process time or quality expectations. That’s when we started gaining some traction.”

Setting the standards


Before the standards could be adjusted, more accurate data were needed. The processes used to generate the data were the first target. “We fixed the mold set-up procedures,” Nightenhelser explained. “We rewrote our operator instructions to have baseline instructions across all three shifts – and then started holding people accountable.”

Once standard operating procedures were in place, the reports became more consistent across shifts and PMC was better able to assess what its standards really were. This wasn’t accomplished quickly. “It took us about three years to get all of our expected numbers in line with what our actual performance on the floor really was,” he said.


Today, PMC lays outs its standards in incredible detail. For instance, a bill of materials might have four levels and, for each one of the areas where the company has a cost, it also has a standard expectation – from molding to secondary operations to packing the product.

“Once we had the layers of data provided by our standards, we started getting true numbers in our manufacturing efficiency,” said Nightenhelser. “Then we realized we weren’t as good as we thought we were, so we had to take the next step. In some cases, we were able to make process improvements, and in others we changed the standards to reflect what was actually happening on the production floor. The most important thing was to have realistic numbers to give us a baseline.”

Machine uptime plays a critical role

Maintaining machine uptime is crucial to achieving OEE goals, and Nightenhelser said preventative maintenance and tooling are the support systems that keep the manufacturing plant running the right way.

“OEE is about eliminating waste,” he explained. “When the quality of the parts is predictable coming out of the mold because the mold and the equipment have been maintained the way they should be, we reduce the amount of reject waste. In our business, material costs are 45 percent of our cost structure, so when our owner put me in charge of the profit and loss statement for the plant, quality issues were the first thing I had to fix, and those were directly tied to uptime rates!”

PMC already had a toolroom in place, which allowed the company to implement a preventive maintenance plan for its tooling. Three employees perform maintenance and minor repair functions.

“We now have a very robust preventative and predictive maintenance system for both equipment and tooling,” he said. “We don’t run things until they break. As a result, our OEE score doesn’t take a hit from machine or mold breakdowns.”

One area where PMC differs from traditional OEE tracking is that the company chooses not to use set-up time as part of its machine uptime calculations. PMC runs hot tools, which means each mold has to have a cool-down time and a heat-up time built into the process. “We tried preheating the tooling before taking it to the press, but there were safety issues,” said Nightenhelser. “Instead of taking the hit to OEE for something that we cannot change, we measure changeover time separately. We attacked that part of the capacity issue in a different way, with a different metric.”

For OEE calculations, time is tracked from the point the material manager schedules the mold in the press. Anything unplanned – such as a tool being down, a missing operator or material that isn’t ready – then is counted toward unplanned downtime.

Transparency and continuous evaluation


At PMC, the metrics are published on the floor so all employees can see them. Clear goals are set and tied into a bonus plan. “Our people know their performance affects those goals and their bonus,” Nightenhelser explained. “That’s part of the culture – we want everyone to feel ownership for the parts we’re putting in the boxes.”

That ownership process starts before production even begins. An OEE analysis is run for four hours at the start when the manufacturing team takes over the process. That four-hour run data is then compared against the quote’s expectations. At that point, the standards can be adjusted to reflect actual manufacturing standards – or, if OEE is under 85 percent, the process can be sent back to the launch team to improve the performance of the process.

“We’ve learned a lot about our quoting and have improved our process significantly,” said Nightenhelser.

Once the initial OEE is approved, that becomes the process’s first set of standards. From that point forward, the manufacturing teams on the floor are evaluated off those numbers. “It puts pressure on the managers and the people upstream to deliver a product that makes the profit the owner wants, and it puts pressure on the manufacturing team to make it better than what they were given at the beginning,” he explained. “Everyone has a stake.”

In November, as Nightenhelser begins the annual budget process, he evaluates each one of the standards, just as he did when the OEE process was first implemented. “We go through every job in here and evaluate where we are, creating new standards from improvements that were made in cycle times, scrap rates – all of it. We inch the improvement along a little at a time, and that continuous improvement drives the OEE scores up.”

A passion to get better

“I’m not a genius,” Nightenhelser said. “I’m a manufacturing guy. To get better in your facility, you have to find the right tool. OEE is a tool: It’s a tracking system that highlights your shortcomings, and then you have to figure out how to fix them.”

At PMC, the frontline leadership has a passion to get better. That passion is what drives OEE, pushing them to ask questions and identify processes that cause waste. “If you don’t have that passion, you may have to make some tough decisions,” he said. “Shops have employees who have been there 20 or 25 years, and change isn’t easy.”

But, the reward is sweet. “When I come into the shop in the morning, I don’t have to run around fixing problems,” he said. “I can work on continuous improvement while the rest of the building runs as it should. That’s what happened here over the years, and our profits have gone up consistently since we implemented OEE.”