Overall Operations Effectiveness (OEE)

What is OEE?

Overall Operations Effectiveness (OEE) is a measure of the performance of any asset, production line or production machine.

OEE measures the Actual Performance (units produced) as a percentage of Theoretical Performance. It is considered the gold standard for measuring manufacturing productivity.

There are several factors that affect Overall Operations Effectiveness resulting in an OEE value of less than 100%. Each of these factors are dealt with separately on our web site. These factors include:

1. Availability: Some examples why a machine may not be 100% available are breakdowns of the machine itself, or perhaps material supply to the machine may be interrupted. Note that Availability in this context means planned availability. We do not count periods where no production is planned, or where there is planned maintenance of planned product changeover. It is only unplanned downtime that contributes to sub 100% availability. See Downtime. Measured as actual availability as a percentage of full planned availability.

2. Performance: The machine may not be able to run at full speed for all products. Perhaps a bottling machine runs at a lower unit rate for larger bottles. See Performance and Production Recording. Measured as actual performance as a percentage of full theoretical performance (rate).

3. Quality: A machine may produce a small percentage of defective products, and this may vary for different product types. See Quality. Measured as good quality products as a percentage of total products produced.

OEE Formula

OEE = A x P x Q

A = Availability %
P = Performance %
Q = Quality %

OEE Values

It is important to note that an OEE value of 100% is not realistic. Best practice OEE is considered to be 85%.

Using OEE

OEE is best used as an improvement metric.

OEE helps match the theoretical capacity of equipment with production demands. If you are not meeting demand and you find that equipment is underperforming (operating at a low OEE), you know you have an equipment effectiveness problem that can be improved. If equipment is operating at a high OEE but not meeting customer demand, you know you have a capacity problem.

First of all, never try to multiply OEE rates across multiple machines, lines, or processes. You can’t calculate an aggregate OEE for a plant, only an average.

Key 3: There is no absolute that works as an OEE benchmark or target – it’s relative to your situation.

Your target should not be a world-class benchmark. It’s about drawing a line in the sand for a given piece of equipment (most often your constraint or bottleneck) and checking where you are relative to that line. Certain processes will never be capable of giving you a world-class number, because they weren’t designed to do that.

It isn’t about changing a number; it’s about the things we do that cause that number to change. I fully agree with Leflar’s comment: “The number itself doesn’t mean anything. You could be at 17%, or, as I’ve seen, 120%. It depends on what you define as the normal operating rate. So it’s not whether your OEE is 85% or 25%; the rate at which you improve is the real measure of world class.”

Key 4: It’s a yardstick.

Like any other metric, OEE can be used as a club to reprimand or blame people, but it’s really intended to be a yardstick for measuring improvement. Unless you use it as the latter, you will get the numbers you are looking for, but you won’t get the expected results. The proper use is to get beyond blaming people and understand what needs to be changed in the process. Only then will you get the true value out of OEE (or any metric for that matter) and out of TPM.