Overall Equipment Effectiveness (OEE)

OEE is a measure of how well a planned production time of an equipment is utilized to produce good products. It can be measured from 0% to 100%.

Its not only the equipment, effectiveness of achieving target number of good products, of all operations, whether it is manual, automatic or semiautomatic can be measured using OEE.

Now we shall discuss all factors which will affect OEE.

OEE Factors

OEE depends on three major factors.

• Availability
• Performance
• Quality

We will be discussing these three factors in the following sections…

How to calculate OEE

We can calculate OEE by two methods. One is very simple and less data is required. The other one requires more data, but for improving OEE we prefer second method since it has more data.

Lets move into detail…

OEE calculation – Method 1

Following formula is used for calculating OEE in this method.

OEE = (Total no of good products produced × cycle time) / Planned production time

But in this method, we did’t get an idea of which three factors of OEE is lagging behind. Only after knowing this information, we can improve those factors.

But for quick calculation we can use this method.

OEE calculation – Method 2

Initially we need to calculate three factors, Availability, Performance and quality.

And finally OEE is calculated by multiplying these three OEE factors.

Lets look in to these factors, in detail…

Availability

Availability factor is the measure of how well a planned production time is used for producing products.

Availability is calculated by the following formula,

Availability = Run time / Planned production time

Run Time is obtained by reducing idle time from Planned production time.

           Run Time = Planned production time − Idle time

Idle time is the time for which machine is not running. This can be due to breakdown, material shortage, power failure, change over, etc.

Performance

Performance factor is a measure of how well a machine is able to maintain its cycle time for producing parts.

Performance factor is calculated by following formula,

Performance = (Cycle Time × Total products produced) / Run Time

Cycle time can be calculated by time study.

Quality factor

Quality factor measures how well a machine is able to produce good parts.

Quality factor is calculated by following formula,

Quality factor = No of good products produced / Total no of products produced

OEE calculation

OEE is calculated by multiplying the above three factors

OEE = Availability × Performance × Quality

If the equations for Availability, Performance, and Quality are substituted in the above and reduced to their simplest terms the result is:

OEE = (No of good products produced × Cycle Time) / Planned Production Time

OEE calculation Example

Now let’s walk through a complete example using the method 2 of OEE calculation. Here is data recorded for the first shift:

Initially we need to calculate the following …

Planned production time

Formula for calculating planned production time is,

Duration of shift − Total break duration

480 minutes − 60 minutes = 420 minutes

Run time

The next step is to calculate the amount of time that production was actually running.

The formula is,

Run Time = Planned production time − Idle time

= 420 minutes − 55 minutes

= 365 minutes

No of good products produced

No of products produced =  Total products produced − Total rejected nos

= 490 products − 40 products

= 450 products

Availability

Availability = Run Time / Planned Production Time

= 365 minutes / 420 minutes

= 0.869 (86.90%)

Performance

Performance = (Cycle Time × Total products produced) / Run Time

= (40.0 seconds × 490 ) / (365 × 60 seconds)

= 0.895 (89.5%)

Quality factor

Quality factor = No of good products produced / Total no of products produced

= 450 / 490

= 0.9183 (91.83%)

OEE CALCULATION

Finally, OEE is calculated by multiplying the three OEE factors.

Availability × Performance × Quality

= 0.869 × 0.895 × 0.9183

= 0.7142 (71.42 %)

OEE can also be calculated using a simple method (method 1).

Formula is,

OEE = (Total no of good products produced × cycle time / Planned production time

= (450 products × 40.0 seconds) / (420 minutes × 60 seconds) = 0.7142 (71.42%)

The result is the same in both cases. The OEE for this shift is 71.42%.

Thanks for reading

I am thankful to Mr. Abin Antony for contributing to this article.

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  Edge AI in Manufacturing: How Factories Make Intelligent Decisions Without Depending on the Cloud
  Edge AI brings artificial intelligence closer to factory machines, cameras, sensors and production processes. Explore how it works, where it can be used and what manufacturers should evaluate before implementation.
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  What Is Culture Actually? A Simple Explanation With Real Workplace Examples
  Many people think culture means company values, motivational posters, annual day celebrations, team photos, or a statement written on the office wall. But culture is much deeper than that. Advertisement Culture is not what a company says. Culture is what people actually do every day. In simple words: Culture is the repeated behavior of people inside a workplace. It is how people speak, decide, react, support, blame, solve problems, and behave when nobody is watching. Culture Is What People Accept and Repeat A company may say, “Quality is our priority.” But if defective parts are allowed to move forward just… Read more: What Is Culture Actually? A Simple Explanation With Real Workplace Examples
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  Self Respect – You May Be Forgotten, But Do Not Forget Yourself
  There is a powerful meaning behind the line: “You will be forgotten either way. So live in such a manner that, while you remain, you belong to yourself.” Advertisement At first, it may sound negative. But actually, it is a very practical reminder for life and career. Do Not Live Only for Recognition Most people spend a large part of their life trying to be accepted, praised, promoted, noticed, or remembered. Professionals do this too. We try to build a good image, impress seniors, satisfy customers, grow our business, and prove our value to others. There is nothing wrong with… Read more: Self Respect – You May Be Forgotten, But Do Not Forget Yourself
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  Intralogistics
  In manufacturing, people often talk about production, quality, maintenance, automation and supply chain. But there is one area that quietly decides the speed of the entire factory: intralogistics. A factory may have good machines, skilled operators and proper planning. Still, if materials are not available at the right place, in the right quantity and at the right time, production will suffer. Operators will wait. Machines will stay idle. WIP will pile up. Space will become congested. Dispatches will get delayed. Advertisement This is where intralogistics becomes important. What Is Intralogistics? Intralogistics means the movement, storage, handling and control of materials… Read more: Intralogistics
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  3PL Ecommerce in Manufacturing
  Manufacturing is no longer only about producing goods and sending them to distributors. Today, many manufacturers are also selling directly to customers, dealers, retailers, and online buyers through ecommerce platforms. This shift has created a new challenge: how can a manufacturer manage storage, order picking, packing, shipping, and returns without disturbing core production activities? This is where 3PL ecommerce becomes important. Advertisement 3PL ecommerce means using a third-party logistics provider to handle ecommerce fulfillment activities. Instead of the manufacturer managing every online order from its own factory or warehouse, a 3PL partner stores the finished goods, picks customer orders, packs… Read more: 3PL Ecommerce in Manufacturing
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  Manufacturing Resource Planning
  Manufacturing Resource Planning is one of the most important activities in any factory. A factory may have machines, manpower, materials, tools, space and orders, but if these resources are not planned properly, production will still suffer. Many factories face the same problems every day. Advertisement Material is not available when production needs it.Machines are overloaded in one area and idle in another area.Manpower is arranged at the last minute.Production plans change frequently.Customer delivery dates are missed even when people are working hard. Most of these problems are not only production problems. They are planning problems. This is where Manufacturing Resource… Read more: Manufacturing Resource Planning
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  AI and Lean six sigma
  This article is written by Shivani Kadam. She is experienced in Project Management. Walk into any manufacturing plant today and you will find two parallel conversations happening, related to AI and Lean six sigma. Advertisement The first is familiar. Teams are discussing scrap reduction, line balancing, cycle time improvements, OEE losses, and corrective actions. Whiteboards are filled with Pareto charts, fishbone diagrams, and action trackers. Lean Six Sigma continues to be the language of operational excellence. The second conversation is newer. It revolves around machine learning models, digital twins, predictive maintenance, computer vision, and generative AI. For many organizations, these… Read more: AI and Lean six sigma
• Manufacturing Execution System: Meaning, Benefits, and Why Factories Need It
  In manufacturing, every minute matters. A machine waiting for material, an operator waiting for instruction, a supervisor searching for production status, or a planner working with outdated data can silently reduce factory performance. Many factories invest in machines, manpower, and materials, but still struggle because the information flow inside the factory is not clear. Advertisement This is where a Manufacturing Execution System, commonly known as an MES system, becomes important. A manufacturing execution system helps a factory control, track, and improve production activities in real time. It connects planning with actual shop floor execution and gives better visibility to managers,… Read more: Manufacturing Execution System: Meaning, Benefits, and Why Factories Need It