Track: Operations Management

Abstract

Overall Operational Efficiency (OOE) is the key lever in the Apparel/Footwear Manufacturing industry today which drives the costing, productivity and optimization of resources. Consequently it is significant to determine the reasons for low OOE to mitigate the risk of higher cost, low productivity and excess use of resources. In most of the cases, the common practice is to use the 1^st Degree formula only to calculate OOE which is challenging in case of detecting the root cause for low efficiency. This study deals with this challenge by outlining the Three (3) degrees of Breakdown of OOE in a manufacturing unit that finally drives to decide which the main factor to pull down the Efficiency is. The analytical approach formulates the 2^nd & 3^rd degree of OOE measurements by correlating all the possible parameters by using conventional theory of OOE (1^sr Degree ) and introduces the four possible factors of OOE : Availability Rate, Level of Performance, Quality Rate & Direct-Indirect labor Ratio. The correlation was proved later on by the data collection, data plotting on the derived formulas and further analysis from a manufacturing unit. Finally, the macro level to micro level derivation illustrates how an Apparel/ Footwear manufacturing factory can identify the factors related to low Efficiency & take faster decisions on those factors to take the right actions to improve the Efficiency.