Overall Equipment Effectiveness (OEE)

What is Overall Equipment Effectiveness (OEE)?

Overall Equipment Effectiveness (OEE) is a maintenance metric that takes availability, performance, and production quality into account to rate the productivity of assets and systems.

Manufacturers across industries calculate OEE to better understand the effectiveness of their individual assets and their production processes as a whole. The calculations compare the asset or system’s actual productivity to peak performance. 

Digging into performance data and OEE calculations can offer surprising insights. Often, the process helps to identify the root causes of unplanned downtime and other inefficiencies to ensure maintenance teams can take corrective actions.

Tracking OEE is an essential component of lean manufacturing and Total Productive Maintenance (TPM). OEE scores help lean manufacturers locate and eliminate sources of waste to maintain continuous improvement. As a maintenance KPI, Overall Equipment Effectiveness offers a performance benchmark for any organization hoping to maximize their assets’ productive time.  

Table of Contents

Calculating OEE?
Factors affecting OEE scores
OEE formulas
Why is OEE important?
The Six Big Losses
Best practices for improving your OEE score

Calculating OEE

The numbers you’ll need for calculating OEE fall into two main categories: parts and time. 

Measuring the number of parts you have produced involves tracking the following: 

• Good part count: The number of good parts (parts that meet your standards for quality products without requiring scrap or rework) produced during a set period.
• Defective part count: The number of parts produced during a set period that failed to meet quality standards.
• Total count: The total number of parts made during a set period.

While measuring production time involves tracking theses data points: 

• Planned production time: The total amount of time a piece of equipment or system is expected and scheduled to run.
• Run time: The amount of time a production line or asset is actually operating as intended. Run time does not include downtime but does include small stops, brief idling, reduced speed, or time spent addressing rejected parts.
• Stop time: the total amount of time production was stopped due to both planned downtime (changeovers, make-ready events) and unplanned stops (equipment failures, material shortages).

Availability, performance, and quality: the factors affecting OEE scores

All of those data points eventually help you understand the three factors that make up Overall Equipment Effectiveness:  

• Availability: The amount of time your equipment is running as it should. Availability is expressed as a percentage and calculated by comparing planned operating time to actual operating time. Availability losses include all types of planned and unplanned stoppages.
• Performance: The speed and consistency of production. Performance is represented by a percentage, comparing actual run time to ideal run time. Performance losses may be caused by small stops or slow cycles.
• Quality: The quality of parts and frequency of defects. Quality is represented by a percentage that shows how many of the total parts you produced met quality standards. Sources of quality loss include operator error and poorly calibrated equipment. 

OEE formulas

To calculate OEE, you need to first calculate availability, performance, and quality. 

Availability = Run Time / Planned Production Time 

Performance = (Ideal Cycle Time x Total Count) / Run Time

Quality = Good Part Count / Total Count

Once you’ve calculated these three figures, you’ve got everything you need to determine OEE.

OEE = Availability x Performance x Quality

Achieving an OEE score of 100% would require producing defect-free products at maximum speed without any unplanned stoppages. As you can probably guess, even world-class organizations aren’t capable of sustaining a perfect OEE score. 

OEE standards vary from across industries and organizations. A common rule of thumb holds that 85% is a world-class score. What’s more important than the value itself is your team’s commitment to improvement. Once you’ve calculated OEE, you have a valuable baseline for understanding your performance and a roadmap for making changes. 

Why is OEE important?

OEE assessments empower you to make a bottom-line impact and optimize your manufacturing operations. Some benefits of improving OEE include: 

• Increased productivity and efficiency: Calculating OEE helps identify inefficiencies in manufacturing processes to quickly introduce improvements and continually exceed customer expectations. 
• Cost savings: Minimizing costly production delays and optimizing production quality help drive down costs. What’s more, efficient use of equipment reduces the wear and tear that leads to costly repairs and replacements. 
• Improved capacity and throughput: Eliminating bottlenecks and using equipment more efficiently enables manufacturers to capably produce larger quantities of high-quality products without putting additional strain on their people or assets. 
• Better decision making: All those data points enable you to make smarter, more strategic decisions. You’ll allocate resources more effectively, plan and schedule maintenance more efficiently, and think with a long-term vision in mind. 

The Six Big Losses

The ultimate goal of calculating OEE and driving continuous improvements is to address the Six Big Losses. They’re the primary drivers of inefficiency in manufacturing:

• Unplanned downtime
• Planned downtime
• Minor stoppage
• Reduced speed
• Product scrap
• Startup scrap 

You can’t avoid these losses altogether, but improving on the performance metrics that factor into OEE can minimize their occurrence and impact.