Overall Equipment Effectiveness (OEE): Definition, Formulas, and FAQs

What Is Overall Equipment Effectiveness (OEE)?

OEE’s meaning in manufacturing refers to a best practices metric used for measuring plant performance by identifying the percentage of planned production time that is actually productive.

An overall equipment effectiveness score of 100% represents a perfect production model that puts out only the highest quality parts, as fast as possible, with zero downtime.

OEE was conceptualized and introduced by the father of Total Productive Maintenance (TPM), Seiichi Nakajima. In his book, Introduction to TPM, published in 1988, he notes that prize-winning companies have OEE scores of 85% or more — known as the world-class rating. An average company, on the other hand, might have an OEE score of around 40%.

Why Is Overall Equipment Effectiveness Important?

Calculating a plant’s OEE helps identify areas that are holding it back from performing at maximum capacity, and can be helpful as both a baseline and a benchmark:

• When used as a baseline, overall equipment effectiveness can track progress in eliminating waste from any given production asset.
• When used as a benchmark, overall equipment effectiveness can compare the performance of any given production asset to: 
• Industry standards
• Similar in-house assets
• Results for different shifts working on the same asset

Request a Demo

 

3 Steps To Calculating Overall Equipment Effectiveness

Three main factors drive a manufacturing plant’s performance: 

1. Availability
2. Performance efficiency
3. Rate of quality products

Seiichi Nakajima further provides ideal scores for each of these factors to achieve a world-class OEE rating:

• Availability > 90%
• Performance efficiency > 95%
• Rate of quality products > 99%

Nakajima encourages companies to strive for an OEE of 77% or greater.

Step #1: Availability

Availability quantifies the amount of time that equipment can perform its function. 

It is calculated as the ratio of the actual operation time to the available time per day, with the available time per day equating to a full working shift.

For example, assuming that a full working shift per day is eight hours, with an accumulated planned downtime of one hour per day, the actual operation time equals 7 hours per day.

This brings the availability to 87.5% as shown by the calculation:

Availability = (Actual operation time / Available time) = [(Available time - Planned downtime) / Available time)] = (8 hours - 1 hours) / 8 hours = 7 hours / 8 hours = 0.8750 = 87.5%

Step #2: Performance Efficiency

Performance efficiency quantifies how much longer it takes to complete a process as compared to its ideal cycle time.

A simplified calculation is taken by multiplying the number of processed units by the ideal cycle time and dividing the product by the actual operation time.

For example, if 440 units are produced with an ideal cycle time of 0.5 minutes production time per unit and the actual operation time is recorded as 420 minutes, the performance efficiency is calculated as 52.38% as shown below:

Performance efficiency = [(# Processed units * Ideal cycle time) / Actual operation time]]

Example:

[(44 units * 0.5 minutes per unit) / 420 minutes] = 0.5238 = 52.38%

Step #3: Rate of Quality Products

Rate of quality products quantifies how much of the total produced units are within the acceptable standards of good quality.

For a batch of 440 units produced with only 435 units of acceptable quality, the rate of quality products is 97.73%:

Rate of quality products = (# Units of acceptable quality / # Units produced)

Example:

435 Units of acceptable quality / 440 Units produced = 0.9773 = 97.73%

Overall Equipment Effectiveness = Availability + Performance + Quality

The overall equipment effectiveness is then calculated by taking the product of its three main factors. 

Given the examples above, the OEE score is 44.79% as shown by the following calculation:

OEE = Availability + Performance + Quality

Example:

0.8750 + 0.5238 + 0.9773 = 44.79%

Request a Demo

 

6 Ways To Improve Overall Equipment Effectiveness

Being aware of the factors contributing to overall equipment effectiveness allows for proper planning to enable companies to proactively reduce process inefficiencies and losses. Improving one or all of the factors will, in turn, improve the overall equipment effectiveness of the plant.

A good start toward boosting the plant’s effectiveness is eliminating the “six big losses.” 

Each of these six points directly impacts at least one of the factors constituting the overall effectiveness. Addressing these losses will inevitably lead to an improved OEE.

#1: Avoid Equipment Failure

Equipment failure, also known as unplanned stop or downtime, refers to mechanical breakdowns of key equipment or any unplanned downtime that can cause a significant decrease in availability or an asset.

Examples of equipment failure include: 

• Tooling failure
• Breakdowns
• Unplanned maintenance
• Lack of operators or materials
• Being starved by upstream equipment,
• Being blocked by downstream equipment

#2: Expedite Setup and Adjustment

Setup and adjustment accounts for any significant amount of reduced or stopped activity (usually planned) when equipment is set up and adjusted.

This may include: 

• System preparations
• Warmup time
• Planned maintenance
• Hangovers
• Major adjustments
• Tooling adjustments
• Cleaning
• Quality inspections

#3: Minimize Idling and Minor Stoppages

Idling and minor stoppages, also referred to as small stops, account for minor interruptions in production that can cause unnecessary increases in production time. 

Examples of common reasons for idling and minor stoppages include things such as: 

• Misfeeds
• Material jams
• Obstructed product flow
• Incorrect settings
• Misaligned or blocked sensors
• Equipment design issues
• Periodic quick cleanings

Most idling and stoppages are under five minutes long and don’t require the help of maintenance teams. Since the underlying problem is usually chronic, meaning the same problem recurs on a different day, operators are often blind to their impact. 

#4: Troubleshoot Reduced Speed

Reduced speed (slow cycles) accounts for time when equipment runs at increased cycle times that vary considerably from ideal levels.

Examples of reasons for reduced speed include:

• Dirty or worn equipment
• Poor lubrication
• Substandard materials
• Poor environmental conditions
• Operator inexperience
• Startup and shutdown

#5: Minimize Defects in Process

Process defects account for any errors along the processing flow that cause flaws in the finished product and therefore a decrease in the number of “quality products”.

Since OEE measures quality from a first-pass yield perspective, process defects include defective parts produced during stable (steady-state) production and scraped parts that can be reworked. 

Examples of reasons for process defects include: 

• Incorrect equipment settings
• Operator or equipment handling errors
• Lot expiration

#6: Prevent Reduced Yield

Reduced yield occurs when equipment is not working under the optimal conditions to produce products within the acceptable quality standards (e.g. units produced while the equipment has just started running or is being set up).

Examples of reasons for reduced yield include:

• Suboptimal changeovers
• Incorrect settings when a new part is run
• Equipment that requires warm-up cycles
• Equipment that inherently creates waste after startup (e.g., a web press)

Request a Demo

 

Overall Equipment Effectiveness FAQs

Can OEE Be Applied to All Types of Manufacturing Processes?

Absolutely. 

Since overall equipment effectiveness focuses on the universal concepts of equipment efficiency and productivity, it can be applied to all types of manufacturing processes, regardless of the industry.

How Often Should OEE Be Measured?

To receive the ultimate benefits of real-time insights and trends, OEE should be continuously measured. At the minimum, however, it should be reviewed daily so any issues can be addressed promptly. 

How Does OEE Differ from Other Performance Metrics?

OEE is unique in that it combines multiple aspects of production efficiency into one comprehensive metric. Many other metrics focus solely on a single aspect, such as production speed or uptime.

What Are Common Challenges in Achieving High OEE?

Common challenges in achieving high overall equipment effectiveness include: 

• Production defects
• Long setup and adjustment times
• Minimizing idling and minor stoppages
• Troubleshooting reduced speed
• Minimizing defects in processes
• Preventing reduced yields

Are There Tools or Software That Can Help Measure and Analyze OEE?

Yes. 

OEE software tools and systems are available to help manufacturing companies monitor and improve equipment effectiveness.

UpKeep’s OEE tracking solution allows you to measure the overall equipment effectiveness of your production to help you understand where you can improve processes to get maximum output. 

Simplify and Improve Your Production and Operation Processes With UpKeep

UpKeep gives you the tools and insights you need to understand exactly where your production processes can improve. 

With UpKeep, you'll be able to:

• Ditch the paperwork. Get seamless collaboration and real-time updates for work orders within and across locations.
• Access info at your fingertips. Your entire asset history is in your back pocket, from maintenance history to warranties and depreciation.
• Make data-driven decisions. Use real-time data and advanced analytics to help you optimize asset performance.
• Track assets in real time. Wireless sensors make it easy to monitor assets remotely to take preventive maintenance to the next level.

Start your free trial today. 

Request a Demo