oee calculation, OEE Software, visual work instruction software, mes software, Boston, New York, Sackville, Moncton, Halifax, Montreal, Canada, USA

What is OEE?

by / Monday, 28 December 2015 / Published in FAQ, Latest posts, OEE and Machine Downtime, ShopFloorConnect
oee calculation, OEE Software, visual work instruction software, mes software, Boston, New York, Sackville, Moncton, Halifax, Montreal, Canada, USA

What is OEE?

The Origin of OEE

OEE or Overall Equipment Effectiveness originated from the Total Productive Maintenance (TPM) movement in the early 80’s and was first referenced by Seiichi Nakajima’s book “TPM tenkai” (1982, JIPM Tokyo). The intention of OEE is that any machine in any plant around the world can be measured by the same standard. This concept took some time before being used in North America, but started to gain momentum in the late 90’s and early 2000’s with the creation of the OEE Foundation which created the OEE industry standard and have been administering and revising it since 2003. Currently, measuring OEE has become a very important part of many companies lean management process.

OEE Calculation

OEE is calculated by answering 3 simple questions:

  1. Is my equipment running?
  2. How fast is my equipment running?
  3. I am producing product to specification?

Therefore OEE = Availability x Performance x Quality


Availability = Availability is  a percentage of how much time the machine was producing product when it should have been producing product. This calculation does not consider the speed at which the machine is running or is the machine is producing bad product. Instead, availability is affected by unplanned downtime, planned downtime and setup time. Some companies choose to exclude planned downtime or setup time from their OEE calculation, but in my opinion that provides score that does not represent the true availability of your equipment and hides many opportunities for improvement. I do agree however that you should only measure availability of your equipment during the time you have demand for it.

Performance = Performance is a percentage of the maximum speed that a machine can run to produce a product. This can pose some problems when calculating OEE based on the maximum speed that the machine can run, versus the maximum speed that a part can be produced. An example of this would be in the food packaging industry where certain films need to be run slower than others in order to achieve the desired quality, it wouldn’t be accurate to measure these 2 types of film against the same standard.

Quality = Quality is a percentage of the parts produced that meet specification. Unlike Availability and Performance which lead to a lot of internal debate, Quality is pretty simple.

OEE Calculation Example

The ideal production rate of part A = 100 parts / hour

The ideal production rate of part B = 200 parts / hour

Machine 1 – producing part A:

  • Production rate = 85 parts / hour
  • Lot run time = 7 hours
  • Lot setup time = 0.5 hours
  • Scrapped parts = 10

OEE =(7 hours/7.5 hours) x {(85 part/ hour) / (100 parts / hour)} x {(85*7-10)/(85*7-10)}

OEE = 93% x 85% x 98%

OEE = 77.5%

Machine 2 – producing part B:

  • Production rate = 150 parts / hour
  • Lot run time = 10 hours
  • Lot setup time = 1 hour
  • Scrapped parts = 25

OEE =(10 hours/11 hours) x {(150 part/ hour) / (200 parts / hour)} x {(150*10-20)/(150*10)}

OEE = 91% x 75% x 98%

OEE  = 66.9%

In the example above, machine 2 is actually producing more parts than machine 1, but because it was only producing at 75% of the ideal rate, it has a lower OEE.

Using OEE to prioritize your improvement effort

Although OEE gives you 1 number to work with, you must really look at all 3 numbers to prioritize you improvement effort. Once you know what area (s) you need to focus on (i.e. Availability, Productivity or Quality), you will need to focus on the root cause of why the numbers are so low.

Availability Issues:

Low availability is one of the biggest causes of poor OEE, understanding your availability requires you to document your causes of downtimes. The most common of these are:

  • Setup Time
  • Unplanned downtime / machine breakdown
  • Planned downtime
  • Waiting for material
  • Waiting for inspection
  • No operator available

The challenge with measuring your downtime causes will be to ensure that the operator always indicates the downtime reason before they restart running. This proves almost impossible unless you have a system like ShopFloorConnect that can prevent the operator from restarting the machine unless the downtime code has been picked, for more information on ShopFloorConnect, click Here.

Productivity / Quality Issues:

The root cause of poor productivity often have the same as the root causes as poor quality. These causes are a little more challenging to measure, and require more of a root cause approach. However, some of the most popular root causes are:

  • Poor die / tooling design
  • Poor die / tooling condition
  • Poor manufacturing process (Example: injection moulding, poor feed and speed)
  • Poor CNC cutting program (i.e. CNC Milling)
  • Poor condition of the machine / improper preventative maintenance

If you would like more information about OEE or ShopFloorConnect click Here or if you would like to schedule a demo of ShopFloorConnect click HereIf you would like to read more of our blogs, check our our Lean Manufacturing Blog or you can also like our Facebook page or follow us on Google + page for the latest on all our process improvement information.


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