MERLIN Financial OEE (FOEE)

FOEE is the Holy Grail of manufacturing

Manufacturing has seen many continuous improvement initiatives over the years. Lean, Six Sigma, Deming Cycle, and Hoshian Kanri, to name just a few, are all intended to help reach goals of improved quality and productivity.  Many of these efforts have had mixed results for a number of cultural, tactical, business and technical reasons. They also leave the two most basic questions that any CxO or anyone in manufacturing management would like to know – “How well is / are my plant(s) running?” and “Am I making money?”

Manufacturing management needs a proven methodology to determine the profit dollar value of their decisions, connecting the plant floor to the income statement in real-time.  At MEMEX, we believe that if OEE is the gold standard for factory productivity, Financial Overall Equipment Effectiveness (FOEE) is the Holy Grail of manufacturing.

Robert C. Hansen of R. C. Hansen Consulting LLC guided MEMEX’s FOEE software development effort. He is a worldwide thought leader and author on OEE and Financial OEE.  Financial OEE can accurately quantify where a manufacturing company is making or losing money on a per part and per machine basis.

The foundation for Financial OEE starts with OEE. OEE is availability multiplied by quality multiplied by performance.  For example, world class OEE is 85% with each of the three factors being at 95%.  While OEE is certainly an important metric, it tells management absolutely nothing about the financial side of manufacturing.  There are tough questions that a manufacturing company’s Board of Directors might ask of senior plant management such as:

  • What are you doing, more importantly, what should you be doing to make more Income From Operations (IFO)?
  • What is holding you back from reaching your best profit potential?
  • Are you optimizing the use of your resources?

FOEE enables factory organizations to link their shop floor performance to actual profit dollars. FOEE promotes lean manufacturing and operational excellence initiatives, while minimizing costs and maximizing value.

Further harnessing the power of MERLN Tempus Enterprise Edition, MERLIN FOEE calculates the average profit throughput rate by utilizing the data, the number of units produced and the total scheduling time by machine and by products, which is already tracked and collected by MERLIN Tempus EE. The derived average throughput rate along with data associated to sales units, unit material cost and hourly OPEX cost of the machine, is used by MERLIN FOEE to calculate the Contribution of Constraint hour (CCh).

The MERLIN FOEE software tool then compares the average CCh, previously calculated, with the best-ever CCh and displays the FOEE for the organization.

Features & Benefits

With MERLIN FOEE:

  • Know hourly profit rate of individual products on individual machines
  • Quickly determine the highest profit generating machine/product combination
  • Discover the hidden factory
  • Identify setup time losses
  • Monitor performance progress on a specific machine and product
  • Value information for Continuous Improvement teams
  • Pro-active planning and scheduling strategies based on actual data
  • Impactful visualization of the production process
  • Empowers the organization to set SMART goals
  • Enables higher revenue and lower cost providing a competitive edge
  • Visually display production profit

MERLIN FOEE features include:

  • Comprehensive operations grid
  • Matrix & heat map with values color coded from highest (green) to lowest (red), rates per hour, IFO, throughput
  • Optimized schedule ‘sandbox’ recommendations
  • Machine/product OEE performance curve(s)
  • FOEE result and profit contribution by product and by machine
  • FOEE performance comparison across products on a machine
  • FOEE performance comparison of a product across capable machines
  • Additional Continuous Improvement (CI) value tools
  • World class benchmarking option
  • Product setup comparison, OPEX, COGS, ideal ranking
  • Browser-based display for any device

Next Steps