OEE: The first step towards machine optimization

What is OEE?

OEE (Overall Equipment Effectiveness) is an international standard that measures the extent of a machine's or production line's true performance in production compared with their nominal capacity. Originally part of the TPM (Total Productive Maintenance) system, the OEE method was first developed in Japan. OEE measurements provide an insight into machine improvements and other options for process-related optimization. This OEE is calculated as follows:

OEE calculation

The OEE is based on three aspects of a production line that have identifiable losses: machine availability, production rate, and quality of production output. These factors are expressed in percentages and multiplied by each other to produce an OEE score, which offers a valuable insight into and an accurate picture of how effective a production process is. This also makes it easier to monitor the effects of process improvements over time and, if necessary, to adjust processes. The three aspects:

Machine availability

The availability of a machine indicates the extent to which a machine was actually producing during the planned production time. This aspect factors in all disruptions that halt planned production, including stoppages and standstills, unplanned stops, maintenance, and faults and conversions. The availability percentage is calculated by dividing the actual runtime of a production line by the planned production time:

Production rate

The performance score indicates the extent to which the production process performs at the maximum achievable rate. It looks at everything that causes the production process to proceed less quickly than the maximum achievable rate that the process can achieve in optimal conditions. Examples of these performance losses include small stops and slow cycles. The performance score must never exceed 100%. If it does, this usually indicates that the ideal cycle time has been set incorrectly (it’s too high and outstrips the machine's capacity).

Quality of production output 

The quality score indicates the percentage of products produced that meet the quality standards. In order to calculate the quality score, we need to look at the manufactured products that do not meet the quality standards.

From theory to practice

Put simply, OEE takes account of all losses and is calculated on the basis of the above factors:

Availability x Performance x Quality (x100%)

However, an optimal score in one of the three factors can be at the expense of one of the others. For example, having a machine that rarely or never stops could be at the expense of the quality delivered, preventing the production process from running efficiently. This will in turn result in a low OEE score. In practice, the OEE percentage for operational excellence is around 70 to 80%. In most manufacturing companies, however, we notice that this percentage is around the 40 to 60% mark.