Relationship between overall equipment effectiveness, throughput and production part cost in semiconductor manufacturing industry

Globalization and highly competitive business environment are pushing many organizations to realize numerous productivity improvement efforts in order to continue to survive. To gain competitive advantage, manufacturing organizations are compelled to adopt productivity enhancement programs such as total quality management (TQM), total productive maintenance (TPM), lean manufacturing concept to achieve operational excellence. Overall Equipment Effectiveness (OEE) is a well-accepted production performance measure to gauge the equipment effectiveness. OEE is defined as how much the equipment is performing to meet the production planned target. OEE, in manufacturing is merely a percentage figure to evaluate how effective the manufacturing equipment is utilized. OEE is not directly linked to profitability. Most companies do not associate increases or decreases in OEE to financial performance. This paper presents the relationship between OEE, production throughput and production part cost in order to express and translate OEE in monetary units.