OEE stands for Overall Equipment Effectiveness. OEE is a universally accepted set of metrics, used by manufacturing entities.

OEE is a productivity metric, containing quality related factors that truly affect the effectiveness of manufacturing machines and processes. The metric represents the ratio of good output vs the theoretical good output. 100% OEE means, that we produce only good parts without downtime, at the required maximum speed.

The principles of OEE were deployed in 1982 by Seiichi Nakajima, as part of the TPM concept (Total Productive Maintenance or Total Productive Manufacturing). During the 80’s and 90’s, OEE conquered the World, spreading among multinational companies. Even after the year of 2000, an extensive literature of OEE evolved, thanks to experts and pioneers.

Properly implementing OEE in a manufacturing environment provides many benefits, such as:

The general concept of measuring manufacturing performance or effectiveness holds two major and four minor metrics. The major metrics (OEE and TEEP) rely on the minor ones (Loading, Availability, Performance and Quality).

The most commonly used metric among the major ones is the OEE, which is the multiplication of three minor metrics: Availability, Performance and Quality. Having known these three metrics, we are able to map the landscape of losses and waste, thus we can focus on the bottlenecks and improve the major causes. When we create the OEE mapping, we can clearly see the differences between the actual output, and the theoretical maximum capacity.

OEE measures the effect of "6 big losses", which reduce our OEE score. Each two losses can be directly linked to the availability, performance and quality metrics.

Availability: the metric shows the ratio of actual production time and potential (planned) production time in percentage. If the machine operates full time compared to the maximum of the given shift / day / month / etc., the rate is 100%.

Availability = Actual Production Time / Potential Production Time * 100%

Performance: this metric provides the speed of the machine, represented by the ratio of actual output, and potential (theoretically maximum) output. If the machine is capable to produce at the rate of 5 pieces / minute, and it produced 300 pieces in one hour, than the performance rate of the given machine was 100% in the particular hour.

Performance = Actual Output / Theoretical Output * 100%

Quality: until now the OEE minor metrics were focusing simply on quantity. But wastes are also generated on quality side. The Quality metric focuses on the quality ratio, which is the share of good products compared to the number overall produced parts. If we only produce good parts according to the specification, our Quality rate is 100%.

Quality = Good Products / Actual Output * 100%

Having all three minor metrics, the calculation of OEE is simple:

The following table summarizes the OEE mapping, containing the losses of availability, performance and quality. Focusing on the measured losses is the key to improve OEE.

Let's see a complete example for OEE calculation. We will analyse the OEE of a production line in one given shift. Example: the line produces a particular product in the given shift with a given availability, performance and quality rate.

OEE is not only the one major metric that was mentioned before. The other one is TEEP, which stands for Total Effective Equipment Performance. TEEP relies on OEE and a forth minor metric which is loading.

Loading: the metric shows the scheduled operation time compared to the total calendar time. Loading contains the loss factor of unplanned operation time and planned downtime. If loading is 100%, it theoretically means we plan to produce during the whole year with no planned downtime.

By having our OEE and Loading factor, we can calculate TEEP.

Example: our average OEE is 90% throughout the whole year. We plan to run our production only on workdays, and we also consider a 2 hours of planned maintenance each day.

In this case our scheduled operation time is 22 hours * (5 / 7) * 365 days, while the total calendar time is 24 hours * 365 days. The two numbers give the loading score: 5735 hours / 8760 hours, which is equal to 65.4%.

Knowing our average OEE (90%) and our loading score (65.4%), TEEP can be calculated according to the followings:

TEEP = Loading (%) * OEE (%) = 0.654 * 0.9 = 0.588 = 58.8%

By other words, the 58.8% value of TEEP means that we could almost double our production output by improving:

From minor shop floor improvements to wide Six Sigma projects, all can be successful to improve OEE, by finding and eliminating the root cause of "efficiency losses".

An OEE 100% means perfect production, however it is rarely achievable. Despite that, the focus must be always on tending towards this value. A world class production is usually over 85%.

It is important to note, that the term "Good Products" mean products that conform to the specification according to the actual test coverage. Customer claimed parts are not counted in the OEE, so the good parts are those ones, which can be shipped to the customer.

OEE and TEEP calculation is easy, however it can be quite complex and difficult in case of high number of different part numbers, lines, etc. It is suggested to use special-purpose software intended for OEE tracking