What is OEE (Overall Equipment Effectiveness)?

OEE, or Overall Equipment Effectiveness, is a term used widely in the manufacturing industry. OEE is regarded as a valuable component of manufacturing best practice guidelines. It relates to the proportion of time that is truly productive. The higher the OEE score, the higher the production time. Boosting productivity is beneficial for manufacturers and the companies and clients they work with. In this informative guide to OEE, we’ll discuss what OEE is, why it’s important and how to measure it. We’ll also explore the key factors that impact overall equipment effectiveness and share tips to improve OEE. 

What is OEE?

OEE stands for Overall Equipment Effectiveness. An OEE calculation is seen as the gold standard in measuring and monitoring equipment performance and productivity. In basic terms, an OEE score gives a reading of truly productive manufacturing time. If you check your OEE score, you’ll gain an insight into how well your equipment and processes are performing in relation to their overall potential. 

OEE is one of the most effective and valuable plant floor metrics. By using OEE as a KPI (key performance indicator), manufacturing companies can assess equipment function, efficiency and performance, reduce waste, enhance quality control processes, identify inefficiencies and weaknesses and measure progress. It is important to note that overall equipment efficiency is different from overall equipment effectiveness. Overall equipment efficiency can contribute to OEE, but it is primarily an indicator of how quickly equipment works and how it reduces waste. 

The key to utilizing overall equipment effectiveness as a measure of performance lies in being able to understand what it is, measuring OEE effectively and implementing changes and modifications to achieve continuous improvement. 

The definition of OEE

OEE is a commonly used key performance indicator, which calculates the percentage of truly productive time. A good OEE score indicates high levels of manufacturing productivity and gives a measure of actual performance in relation to overall potential. The higher the percentage OEE score, the more productive the manufacturing process. 

Key factors involved in calculating and measuring OEE

There are three factors that influence OEE. These are:

• Availability
• Performance
• Quality

A perfect OEE score of 100% means that the company is manufacturing high-quality parts only with no unplanned stops at high speed. 

• Availability

Equipment availability relates to the continuity of manufacturing. This metric takes unplanned and planned pauses and stops into account. If the availability score is 100%, this means that the process runs continuously with the exception of planned stops. During scheduled production time, a high availability score indicates few unexpected pauses. 

• Performance

The performance score measures how efficiently processes run during scheduled production time. If the score is 100%, this means that the process is running as quickly and effectively as possible during planned production time. The performance score takes factors that contribute to reduced speed into account, including small stops and slow cycles. 

• Quality

The quality OEE score measures the efficacy of the manufacturing process in terms of producing good parts. If the score is 100%, this means that the production line is not generating any faulty or defective products or components. The quality score highlights process defects. If there is a defective unit, this contributes to quality loss, which will affect the percentage score. 

By focusing on these three key factors, manufacturers can calculate, measure and track overall equipment effectiveness (OEE). The total score reflects all the elements and losses. A perfect OEE score represents faultless production. It is very difficult to achieve an OEE score of 100%. A figure of 85% or over is regarded as a world class OEE score. 

Why is OEE important?

There are several reasons why OEE is important. Benefits of measuring equipment performance and efficacy and collecting and analyzing productivity data include:

• Measuring equipment effectiveness rather than human performance: many key performance indicators focus on workforce productivity and efficiency. OEE is important because it analyzes the efficacy and performance of machinery and technology. The aim is to boost overall equipment effectiveness and facilitate improvement by highlighting problems or barriers, identifying weaknesses and addressing issues.
  
• Speaking in a language everyone understands: production teams are familiar with OEE and they understand what it means and why it plays a crucial role in achieving objectives and hitting targets. By calculating the OEE score, plant managers, production supervisors, controllers, maintenance engineers, financial controllers and production line operatives can ensure they are speaking the same language and using metrics that are simple to understand.

• Realizing your potential: OEE measures equipment effectiveness in relation to its potential. By tracking OEE, companies and manufacturing plants can build on successes and highlight areas for improvement to realize their full potential. If there is a substantial gap between the equipment’s actual performance and the potential performance levels, for example, being proactive in solving problems and enhancing processes or equipment will make a difference.

• Understanding the manufacturing process: one of the most significant advantages of measuring manufacturing productivity is gaining a better understanding of the manufacturing process or processes in place. By measuring and monitoring availability, quality and performance, you can identify issues, understand how they impact the overall process and prioritize them to deliver results faster.

• Reducing costs and improving ROI (return on investment): optimizing OEE is often a cost-effective solution. Using productivity data, teams can iron out efficiencies, identify and implement solutions to process defects and unleash the full potential of equipment and resources.

• Gaining a competitive advantage: the manufacturing industry is fiercely competitive. It is challenging to attract and retain clients. OEE analysis can help companies to gain a competitive advantage by implementing effective processes, boosting performance levels and reducing the risk of barriers that could cause businesses and firms to lose customers. Examples include a reduced yield, unscheduled downtime, quality loss, delays and disruptions and product defects.

• Protecting your reputation: a high overall equipment effectiveness score can help you to protect your reputation within the industry and prevent potentially damaging situations, including product recalls, complaints and safety issues.

• Lowering maintenance and machine costs: measuring OEE can help companies to save money by lowering machine and maintenance costs. Analyzing performance and checking equipment frequently allows for well-planned preventive maintenance schedules, which save time and money and reduce the risk of machine breakdowns. 

How is OEE calculated?

The easiest OEE calculations compare fully productive time with planned productive time. However, this basic OEE calculation doesn’t include details of losses linked to the three key factors: availability, performance and quality. 

Measuring OEE usually involves using this preferred OEE formula, which multiplies availability, performance and quality to give an overall equipment effectiveness score as follows:

A x P x Q = OEE

To ascertain individual figures, you can use the following OEE calculations:

1. Availability: Availability = Runtime / Planned Production Time
2. Performance: Performance = (Optimum cycle time x Total Count) / Runtime
3. Quality: Quality= Good Count / Total Count

What is a good OEE score?

Using the OEE formula above, you can work out your overall equipment effectiveness rating. A perfect score of 100% is unrealistic for most organizations. A score of 85% is considered world class. Most companies have a score of between 60% and 85%. Being aware of your OEE measurement enables you to gain insight into how well the equipment you use is working and how productive it is, identify ways to improve and establish new targets. 

How to improve OEE

Accessing OEE data points will help you to improve equipment effectiveness. The primary aim is to achieve continuous improvement by preventing or reducing losses that impact availability, performance and quality and subsequently affect your OEE measurement. The six big losses that contribute to low OEE scores include:

• Manufacturing equipment failure
• Setup and adjustment time
• Slow cycles
• Reduced production speed
• Reduction in the number of units produced (decreased yield)
• Small or minor stops

To improve scores, here are some effective steps:

• Get to grips with OEE

To utilize data analysis and capitalize on the benefits of calculating OEE scores, it’s essential to get to grips with OEE and what it means. Every member of the team should be aware of the metrics involved and the key factors that drive effectiveness and ensure that they understand what the percentage means. Organizing regular meetings, analyzing and evaluating data together and providing training can all be beneficial. 

• Highlight mission-critical equipment

Some types of equipment and machinery are more important than others when it comes to keeping production lines running and ensuring plants work quickly and effectively. Highlight mission-critical equipment and ensure that you take steps to minimize the risk of issues and make sure problems are dealt with as swiftly as possible. Performing maintenance tasks on essential equipment can help to boost production time, prevent unplanned stops and equipment failures and lower repair costs. 

• Make use of data collection and analysis

Today, we have access to more data than ever before. Take advantage of cutting-edge data collection methods and use root cause analysis to pinpoint potential causes of losses and identify and implement solutions. 

• Embrace manufacturing best practice guidelines

Following best practice guidelines and keeping up to date with regulations and industry standards is essential for optimizing results, enhancing your reputation and keeping up with competitors. 

• Implement an OEE program

A dedicated OEE plan, template guide or policy can help you to customize metrics and performance indicators, prioritize data points and critical equipment and ensure that OEE is measured continuously and used to its full potential. 

• Adapt metrics to suit your company objectives

Every company is different. While the OEE formula provides universal benefits, it’s important for teams to adopt strategies that align with their key objectives. Some factors may be much more important to some businesses than others, for example, quality is a top priority for medical device and instrument manufacturers. Outline objectives and goals that are relevant to your company. 

• Invest in maintenance

Preventive maintenance plays an integral role in improving the availability score and maintaining stable production and it can also affect quality and performance. Invest in maintenance and try to prioritize predictive maintenance over reactive maintenance. This will help to reduce the risk of breakdowns, unscheduled downtime, product faults and a reduced yield (a reduction in the number of units produced). 

• Consider the environment

We often talk about the effect of the workplace environment in terms of human health, well-being and productivity, but the environment can also impact the efficacy of machinery and equipment. Just as adjusting the environment and tackling problems and risk factors can maximize workforce productivity, ensuring the conditions are right can also improve OEE. Examples of positive changes may include eliminating grease and oil, decreasing exposure to fumes and reducing dust. 

Summary

OEE (Overall Equipment Effectiveness) is a measure of how well manufacturing equipment works. It is considered a gold standard in assessing and evaluating manufacturing productivity and provides a broad spectrum of benefits for companies and organizations that operate within the manufacturing industry. Collecting data and measuring effectiveness can help businesses and plants to identify weaknesses and causes of losses, adapt systems and procedures to optimize performance, assess equipment continuously, lower costs and improve productivity. 

OEE FAQs

• What does OEE stand for?

OEE stands for Overall Equipment Effectiveness. 

• What is OEE?

OEE is a metric used to measure and assess the effectiveness of equipment. The key factors that impact OEE include availability, performance and quality. The score is given as a percentage. An excellent score is 85 or over. 

• Why is OEE important?

It’s important to measure OEE to understand how well equipment and production lines are working in comparison with their potential. Calculating an OEE score provides teams with valuable data and information about different types of losses and causes of losses and highlights areas for improvement. Increasing the score enables companies to boost productivity, gain a competitive advantage, improve ROI and keep equipment in good working order for longer. By using accurate data and implementing best practice guidelines, companies can lower the risk of losses, get closer to realizing their full potential and work towards productivity targets. 

• How do you calculate OEE?

To calculate OEE, you multiply the scores for availability, performance and quality. This will give you an overall percentage total. 

 

Want to learn more about how implementing an OEE software into your manufacturing can help improve output, prevent machine downtime, along with the other benefits mentioned above? 

Speak to one of our experts today to learn how we can get this implemented for your business so that you can improve your OEE score.