Friday, October 16, 2015

Overall Equipment Effectiveness (OEE) 101

overall equipment effectiveness 101 OEE

Overall Equipment Effectiveness (OEE) is a ratio that demonstrates the number of parts produced by a machine versus its theoretical or optimal capacity.

Why OEE is Important
Every manufacturer needs to know how effectively their equipment is working. The ability to compare actual versus possible output provides valuable feedback regarding the equipment’s operating condition. Managing a workflow process and seeing when problems arise based on this ratio makes it easier to detect issues before they become bigger problems. Production variances are investigated before creating a remediation plan.

Two key pieces of data are needed for OEE. The first is the theoretical capacity of the equipment. This often is different than the practical capacity of the machine.  For instance, a machine operating around the clock for seven days a week could produce “x” widgets. However, the practical capacity is much lower, as repairs and maintenance will bring the capacity time down to a more realistic level. The second piece of data needed is what management deems an acceptable ratio to be. This will of course vary from industry to industry, and indeed from machine to machine.

An OEE Example in Action
For example, a machine producing 80 parts per hour when it has the capacity to produce 100 parts per hour needs management assessment and action. The manager needs to investigate why the actual numbers are below the target. This could be the result of several factors: insufficient training of the person operating the machine, poor overall production planning, lack of regular maintenance and other such problems. OEE provides an objective metric of availability, performance and quality for the actual operation of the equipment. It provides clues to improve processes, quality, consistency and productivity.

How to Calculate OEE
The OEE accounts for availability, quality and performance:
  • Availability=Operating Time/Planned Production Time
    • Accounts for down time loss such as maintenance, breakdowns and changeovers
  • Quality=Good Pieces/Total Pieces
    • Accounts for quality loss such as scrapped pieces, imperfections and reworked pieces.
  • Performance=Ideal Cycle Time/(Operating Time/Total Pieces)
    • Accounts for speed loss such as wear and tear and slower settings than intended.
Overall OEE = Availability x Performance x Quality


Six Types of Production Losses
After the ratios are computed and compared to their norms, the investigative process begins. Each possibility needs to be investigated in order to determine the cause of the problem. Normally, there are six main types of production losses that affect time, speed or quality. They are:

  1. Breakdowns
  2. Set-ups and Adjustments
  3. Small Stops
  4. Reduced speed
  5. Startup rejects
  6. Production rejects 
OEE does have its limitations. It can only be used to gauge equipment productivity for discrete processes that make individual parts. OEE should only be used when improvements will be made once all the numbers are calculated, otherwise working through the process is fruitless. For more information, contact MMTC at 888.414.6682, visit www.mmtc.org or email inquiry@mmtc.org.


Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.mmtc.org.

1 comment:

  1. The objective metrics provided by the overall equipment effectiveness analysis forms the basis of corrective steps to be taken in order to boost productivity. OEE provides objective analysis of the reasons for the shortfall in production. It takes into consideration the whole process and its subsidiary components. Hence, leaving no room for subjective speculation which many a times leads to wrong professional decisions. This can be especially very harmful when one is in dire need to boost production for fulfilling the orders.

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