OEE Dashboard

What is Overall Equipment Effectiveness (OEE)?

Overall equipment effectiveness (OEE) is a term used to evaluate how efficiently a manufacturer’s operation is being used. In other words, overall equipment effectiveness helps you notice a problem in your operations, identify which percentage of manufacturing time is actually productive and fix it while giving you a standardized gauge for tracking progress. The goal for measuring your OEE is continuous improvement.

How to Use Overall Equipment Effectiveness (OEE) to Measure Manufacturing Productivity

Overall equipment effectiveness is a powerful figure. It provides a lot of information in one number, so there are multiple ways OEE is used to measure manufacturing productivity. When calculated and interpreted correctly, it can significantly maximize your production. Overall equipment effectiveness is used as a benchmark to compare any given production to industry standards, in-house equipment or other shifts working on the same piece of equipment. Standard OEE benchmarks are as follows:

• An OEE score of 100 percent is considered perfect production, meaning you’re only manufacturing quality parts as quickly as possible with no downtime.

• An OEE score of 85 percent is considered world class for discrete manufacturers and is a sought-after long-term goal.

• An OEE score of 60 percent is typical for discrete manufacturers and shows there is considerable room for improvement.

• An OEE score of 40 percent is considered low but not uncommon for manufacturers just starting to track and improve performance. In most cases, a low score can easily be improved through easy-to-apply measures.

How to Calculate Overall Equipment Effectiveness (OEE)

Effectiveness is the relationship between what could technically be produced and what is actually produced at the end of a production period. For example, if your machinery is capable of making 100 products an hour and it only makes 80, then it is 80 percent effective.

However, this doesn’t tell us how efficient the machinery is because we didn’t consider things like the number of operators, energy and the materials needed to reach 80 percent effectiveness. For example, if your machinery runs 60 percent effective with one employee and becomes 75 percent effective with two employees, the effectiveness increases by 25 percent, but efficiency decreases to 50 percent based on labor.

There are two main ways to calculate OEE:

• Simple Calculation: The easiest way to calculate OEE is the ratio of fully productive time to planned production time. It looks like this: OEE = (Good Count x Ideal Cycle Time) / Planned Production Time.

• Preferred Calculation: This type of OEE calculation is based on the three OEE factors discussed earlier – availability, performance and quality (good count). It looks like this: Availability x Performance x Quality = OEE. This is the preferred calculation method because not only do you get your OEE score showing how well you’re doing, but you get three numbers (availability, performance and quality) showing what caused your losses.