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.

Listen 0:00 / —:—

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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  KIE Factory Stories: Why Did the Operator Refuse to Follow the Standard Procedure?
  “The procedure says to do it this way. But I know a faster way.” The supervisor was ready to issue a warning. Advertisement The operator had been using a different method for months. And surprisingly, he was producing more parts than anyone else on the shift. The Industrial Engineer decided to watch him work. The difference was simple. Listen 0:00 / —:— The standard procedure required the operator to pick up a tool, turn around, complete the operation, and return the tool to its original place. The operator had rearranged his workstation. The tool was now within easy reach. He… Read more: KIE Factory Stories: Why Did the Operator Refuse to Follow the Standard Procedure?
• What is A3 Problem Solving?
  A3 Problem Solving is a structured approach to understanding problems, identifying root causes, developing countermeasures, and monitoring results. It presents the entire problem-solving process on a single A3-sized sheet of paper, encouraging teams to focus on facts, logic, and clear communication. Advertisement In simple terms Instead of creating a long report about low production output, an Industrial Engineer summarizes: What is the problem? What do the facts show? Listen 0:00 / —:— Simple Manufacturing Example A production line has a target of 1,000 units per shift but produces only 850. The team investigates the losses and discovers that frequent material… Read more: What is A3 Problem Solving?
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  KIE Factory Stories: Why Did the Plant Head Reject a ₹20 Lakh Cost-Saving Proposal?
  “We can save ₹20 lakh every year.” The Finance Manager was impressed. Advertisement The engineering team had proposed removing a small inspection step from the production process. It would reduce labor costs, shorten cycle time and increase output. The numbers looked excellent. But the Plant Head asked one question. Listen 0:00 / —:— “What happens if we stop this inspection?” The Quality Manager explained that the check helped detect a defect before the product reached the next process. “Can the machine detect the same defect automatically?” The team investigated. The machine could detect some defects, but not all of them.… Read more: KIE Factory Stories: Why Did the Plant Head Reject a ₹20 Lakh Cost-Saving Proposal?
• What is 8D Problem Solving and How Does It Help Manufacturing Quality?
  What is 8D Problem Solving? 8D (Eight Disciplines) is a structured problem-solving method used to investigate recurring quality issues, identify root causes, and implement corrective actions that prevent recurrence. Advertisement It encourages teams to solve problems using evidence rather than assumptions. In simple terms Imagine a customer repeatedly receives defective components from your factory. Instead of inspecting more parts and blaming the operator, an 8D approach helps the team contain the problem, investigate why it happened, and fix the underlying cause. Listen 0:00 / —:— The 8 Disciplines D1 – Establish the Team: Bring together people with the right knowledge.… Read more: What is 8D Problem Solving and How Does It Help Manufacturing Quality?
• What is Gauge R&R and Why Is It Important in Quality Control?
  What is Gauge R&R? Gauge Repeatability and Reproducibility (Gauge R&R) is a measurement system analysis method used to determine how much variation comes from the measurement system rather than the parts being measured. Advertisement It evaluates two important sources of variation: In simple terms Imagine three quality inspectors measuring the diameter of the same metal component. Inspector A records 10.02 mm. Listen 0:00 / —:— Inspector B records 10.08 mm. Inspector C records 9.97 mm. Are these differences caused by the component, the measuring instrument, or the way each inspector measures? Gauge R&R helps investigate this question. Simple Example A… Read more: What is Gauge R&R and Why Is It Important in Quality Control?
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  KIE Factory Stories: Why Did the AI System Approve a Defective Part?
  “The new vision system has approved all 500 parts.” The Quality Manager looked relieved. Advertisement The factory had installed an AI-powered camera to detect surface defects. It was faster than manual inspection and never complained about repetitive work. But a customer returned a part with a clear scratch. The Quality Manager checked the inspection records. The AI had marked the part as good. Listen 0:00 / —:— “How did it miss something this obvious?” The team reviewed the images. The defect was clearly visible to the human eye. But most of the images used to train the system contained clean… Read more: KIE Factory Stories: Why Did the AI System Approve a Defective Part?
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  How to Grow Faster in Your Manufacturing Career: The Knowledge, Strategies and Decisions That Make the Difference
  Why do some manufacturing professionals become managers and plant heads while others remain in the same positions for years? Discover practical career-growth strategies that go beyond technical skills, experience and hard work. Two Engineers, Two Completely Different Careers Imagine two mechanical engineers joining the same manufacturing company on the same day. Advertisement Both have similar educational qualifications. Both are hardworking, sincere and technically capable. Ten years later, their careers look very different. One has become a Plant Manager, handling hundreds of employees, multiple departments, production targets and important business decisions. The other is still working as a Senior Engineer, waiting… Read more: How to Grow Faster in Your Manufacturing Career: The Knowledge, Strategies and Decisions That Make the Difference
• What is Statistical Process Control (SPC) and How Does It Improve Quality?
  What is Statistical Process Control? Statistical Process Control (SPC) uses statistical methods to monitor a manufacturing process and understand how it changes over time. Advertisement It helps teams distinguish normal process variation from unusual changes that may require investigation. In simple terms Suppose a machine produces metal shafts with a target diameter of 10 mm. Even when the process is operating normally, measurements will vary slightly. Listen 0:00 / —:— SPC helps determine whether that variation is expected or whether something unusual may have happened. Simple Example A machine produces shafts with a target diameter of 10 mm. Measurements remain… Read more: What is Statistical Process Control (SPC) and How Does It Improve Quality?
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  KIE Factory Stories: Why Did the HR Manager Refuse to Hire More Workers?
  “We need six more operators. Otherwise, we will miss the monthly target.” The Production Manager was frustrated. Advertisement Orders were increasing, overtime was rising, and the team was struggling to keep up. HR started preparing the recruitment plan. But before approving it, the HR Manager asked to observe the production line. She watched one operator walk across the workstation to collect parts. Listen 0:00 / —:— Another operator waited for a tool. A third operator kept leaving the station to bring empty containers back. “Are these people short of work?” she asked. “No,” said the Production Manager. “They are short… Read more: KIE Factory Stories: Why Did the HR Manager Refuse to Hire More Workers?
• What is a Spaghetti Diagram and How Does It Improve Factory Layout?
  What is a Spaghetti Diagram? A Spaghetti Diagram is a visual tool used in Industrial Engineering to map the actual movement of people, materials, or equipment through a workplace. Advertisement The movement paths often look like tangled spaghetti, revealing unnecessary travel and inefficient layouts. In simple terms Instead of guessing why an operator spends too much time moving around, observe the actual work and draw the movement path on a layout. The diagram helps identify where time and effort are being wasted. Listen 0:00 / —:— Simple Example An operator assembles a product at Station A but must repeatedly travel… Read more: What is a Spaghetti Diagram and How Does It Improve Factory Layout?