What is OEE? Understanding and Calculating Overall Equipment Effectiveness.

Overall Equipment Effectiveness (OEE) is often touted as the gold standard for measuring manufacturing productivity. A core metric in Total Productive Maintenance (TPM), OEE indicates the degree to which a manufacturing plant is truly productive.

It should be noted, however, that while OEE is a useful metric for measuring manufacturing efficiency, to drive the number higher requires buy in from across the organisation coupled with a consistent process for review and action. A topic our Global Sales Director James Magee will cover in an upcoming article.

Why measure your OEE?

• Measuring your OEE shows you the impact of production inefficiencies, like unplanned downtime, short stops and defective products.
• Historical data on machine performance helps justify CAPEX, ensuring you achieve the highest ROI when maintaining and replacing machinery.
• Operators are more engaged when they are able to tangibly track their performance.  
• OEE scores provide management with a set of KPIs to measure the performance of their production facilities, showing them how efficiently their plant is running.

How do you calculate OEE?

‍Please note: There are a variety of metrics and calculations that can be used to measure OEE. Depending on your operations, the standard metrics listed below might not be applicable. If you’d like to learn about the different ways of calculating OEE, click here to access our OEE whitepaper.

OEE is calculated using three measures: Availability, Performance, and Quality. An OEE value of 100% indicates that the operation is producing perfect products, with no waste (100% Quality), as fast as possible (100% Performance) and without any downtime (100% Availability).

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It seems simple enough, right? But as OEE is often calculated incorrectly, we’ve broken down each of the above measures to ensure you are able to calculate them effectively.  

Availability

‍Availability depicts the share of planned production time in which a machine is available for production. A decrease in availability is often due to setup times, changeovers between SKUs or planned and unplanned downtimes. An availability score of 100% means that the manufacturing process ran uninterrupted for the entire duration of the shift, in other words, no downtime occurred.

The basic calculation for availability is:

Availability = Operating Time / Planned Production Time

Performance

‍Performance measures all losses as a result of machinery not running at optimal speed. A decrease in speed is often caused by slow cycles or small stops. A performance score of 100% means that the manufacturing process for running at an optimal speed for the entirety of the production run.

The basic calculation for performance is:

Performance = (Idle Cycle Time * Total Count) / Operating time

Quality Quality takes into account manufactured parts that do not meet quality standards.This includes rejects, reworks and defective products that slow production and reduce output. For a quality score of 100%, all manufactured products would be of an acceptable quality to be sold.

The basic calculation for quality is:

 Quality = Good Count/ Total Count

How do you measure up?

Matthews, in their Application Paper on OEE, provided benchmarks on what is considered a “good” OEE score.

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• An OEE score of 100% is perfect production. This means manufacturers are only making high quality products, as fast as possible and are experiencing no downtime.
• An OEE score of 85% is considered world-class for discrete manufacturers.
• An OEE score of 60% is typical for discrete manufacturers, but highlights the room for improvement.
• An OEE score of 40% is low, but not uncommon for manufacturing companies that are just beginning to track and improve their manufacturing performance.

Automating your OEE:

According to All About Lean, OEE is one of the most lied-about measurements on the shop floor. To ensure that your measurements are accurate, look into implementing an automatic data capture solution like OFS. OFS ensures that your production data is accurate, easily accessible and available in real-time. If you’re interested in learning more about how OFS helps manufacturers with their production efficiency, click here to contact the sales team or email us at sales@ofsystems.com