Last Updated on 13 September 2023
Overall Equipment Effectiveness (OEE) is a key metric in Lean, and improving OEE is the main aim of Total Productive Maintenance. It measures the amount of output from a process compared to the maximum possible output.
Why is OEE so important?
When the plant is in downtime, you lose money. You will have other machinery, people and buildings costing you huge amounts of money to no gain. If OEE is low, your time waste will go up hugely as everyone waits for it to be fixed. Your losses will come from:
- Labor cost from staff waiting for the equipment to come back up again
- Overtime payments to catch up to production schedule
- Building costs (rent, taxes, heating, insurance etc) during the downtime that we’re not getting any payment for
- Cost of materials and labor cost of material lost to defects reducing Quality %
- Customers will miss their orders, losing reputation
- You may not be able to service as many sales, losing revenue
- Expedited freight to customers
By improving OEE such as through Total Productive Maintenance, you can significantly reduce the downtime to improve the profitability and effectiveness of your organization.
Your OEE score is the best metric for improving the productivity of the equipment that you use.
Overall Equipment Effectiveness formula
In order to improve OEE, you need to know how to calculate it.
OEE % = Availability % x Performance % x Quality %
OEE = A x P x Q
where:
- Availability % is the % of the time the equipment is available to use out of potential operating time
- Performance % is the rate at which products are produced as a proportion of the potential achievable output
- Quality % is the percentage of output that is ‘defect free’ and so doesn’t need rework or scrapping
The Overall Equipment Effectiveness is therefore the percentage of first-time good output compared to the maximum possible.
What to do when Overall Equipment Effectiveness is low
If you want to improve OEE, you’ve got to know why it is low. An easy indication comes from the formula above. From looking at which is low out of Availability %, Performance % and Quality %, you can quickly see which area contains your issue.
You can also look at what have become known as the six big losses of OEE:
Six Big Losses
There are many ways that the three parts of Availability, Performance and Quality can be under-performing. There are 6 main ones that have been identified, two per category. These are:
- Availability – Planned Downtime and Breakdowns
- Performance – Minor Stops and Speed Loss
- Quality – Production Rejects and Rejects on Start Up
Bottlenecks
Not everything that causes low OEE will be down to the process you are looking at. Bottlenecks caused by previous processes in the value chain not creating product fast enough can play havoc with your OEE%. This can often be fixed by balancing out your value stream by creating a value stream map then balancing out your cycle times throughout the flow by rearranging resources.
Example overall equipment effectiveness calculation
It’s always easier with an example, so here goes. You’ve got four things to calculate, so let’s take them in order:
Availability
So you’ve got a shift that starts at 8 am and ends at 5 pm, so you’ve got 9 hours or 540 minutes to play with.
There is some times when the machinery isn’t running, namely:
- 30 minutes lunch break
- Two 15 minutes breaks
- Changeover time of 10 minutes x 4
- 60 minutes when machinery was broken and being repaired
Adding these together gets a runtime of 540 – 30 – 2×15 – 10×4 – 60 = 380 minutes.
Availability = actual runtime / available runtime = 380 / 540 = 70.4%
Some operations only include downtime, in which case the available runtime would just be 380+ 60 = 440. In this case, if there is no downtime the availability would be 100%.
Performance
When there’s no issues and the process is running at full speed, it can manage 800 products per hour. During this shift though it was managing only an average 653 products per hour whilst it was operational.
Performance = products production rate / potential rate = 653 / 800 = 81.6%
Quality
There were 310 products created during the shift, but at first review, 44 had quality issues that either needed rectifying or scrapping, leaving 266 good parts.
Quality = good parts produced / total parts produced = 266 / 310 = 85.8%
OEE
This is the easy bit, you just multiply the three numbers you’ve got together.
OEE = Availability x Performance x Quality = 70.4% x 81.6% x 85.8% = 49.3%
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