OEE (Overall Equipment Effectiveness) is a “best practices” metric that identifies the percentage of planned production time that is truly productive. An OEE score of 100% represents perfect production: manufacturing only good parts, as fast as possible, with no downtime.
OEE is useful as both a benchmark and a baseline:
So, as a benchmark, what is considered a “good” OEE score? What is a world-class OEE score?
So how is the OEE score calculated?
In simplest terms, OEE is the ratio of Fully Productive Time to Planned Production Time. In practice, OEE is calculated as:
Let’s define some terms used in the OEE Formula:
The preferred way to calculate OEE is mathematically equivalent to the simple formula described above but provides a much richer understanding of waste in the manufacturing process by breaking it down into three factors:
Availability takes into account Availability Loss, which includes all events that stop planned production for an appreciable length of time (typically several minutes or longer). Availability Loss includes Unplanned Stops (such as equipment failures and material shortages), and Planned Stops (such as changeover time).
Availability is calculated as the ratio of Run Time to Planned Production Time, where Run Time is simply Planned Production Time less Stop Time:
Where Run Time = Planned Production Time − Stop Time
Performance takes into account Performance Loss, which includes all factors that cause the production asset to operate at less than the maximum possible speed when running (including Slow Cycles and Small Stops).
Performance is calculated as the ratio of Net Run Time to Run Time. In practice, it is calculated as:
Ideal Cycle Time is the theoretical fastest possible time to manufacture one piece. Therefore, when it is multiplied by Total Count the result is Net Run Time – the theoretical fastest possible time to manufacture the total quantity of pieces.
Here is a simple example of a Performance calculation:
|Ideal Cycle Time
|Theoretical fastest time to produce this part.
|Total quantity of pieces manufactured during this shift.
|Run time of this shift (planned production time less stop time).
|(Ideal Cycle Time × Total Count) / Run Time = (1 × 300) / 330
Quality takes into account Quality Loss, which factors out manufactured pieces that do not meet quality standards, including pieces that are later reworked.
Quality is calculated as the ratio of Fully Productive Time (only Good Count manufactured as fast as possible with no Stop Time) to Net Run Time (fastest possible time for Total Count). In practice, it is calculated as:
OEE takes into account all losses (Stop Time Loss, Speed Loss, and Quality Loss), resulting in a measure of truly productive manufacturing time.
OEE is calculated as the ratio of Fully Productive Time to Planned Production Time. In practice, it is calculated as:
If the equations for Availability, Performance, and Quality are substituted in the above equation and then reduced to their simplest terms the result is:
This is the “simplest” OEE calculation described earlier. With a bit of reflection, it can be seen that multiplying Good Count by Ideal Cycle Time results in Fully Productive Time (manufacturing only good parts, as fast as possible, with no stop time).
Earlier, an OEE score of 100% was described as perfect production: manufacturing only good parts, as fast as possible, with no stop time. Let’s tie this notion of perfect production to the OEE calculation:
Working through real-world examples is a great way to master the OEE calculation. For free worked examples, templates, spreadsheets, and other resources visit: https://www.oee.com/.
OEE is a great tool for managers, but for plant floor employees it can be a bit abstract. Plant floor employees will perform best when they are given goals that are real-time, easily interpreted and highly motivational. A good example of an effective set of plant floor metrics is TAED:
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