CMMS Insight Blog

The Formula Used to Measure and Calculate Overall Equipment Effectiveness (OEE)

Jan 16, 2019 3:16:13 PM / by CMMS Insight Staff

There’s a bit of confusion about Overall Equipment Effectiveness (OEE) and its necessity (or lack thereof) in company operations. Contrary to some believers, OEE isn’t just a metric that’s nice to have. Rather, with accurate calculations, OEE can add real value to your company’s bottom line.

Let’s look at what OOE is, how it’s calculated, and why it deserves a place in your maintenance strategy.

What Is OEE?

OEE is a best practice in manufacturing that measures the effectiveness of your equipment.

OEE is commonly misunderstood as a measurement of efficiency, but the two are not the same. Rather, OEE focuses on how effective a piece of equipment is at performing the job it’s designed to do. For example, a machine that suffers from frequent breakdowns is unable to do a job as effectively as a machine that rarely suffers a malfunction.

OEE takes into account the specific equipment issue and its underlying losses so companies can make data-driven insights on how to improve.

Why OEE Matters

As one of your biggest indicators of machine performance, OEE sets the benchmark for a piece of equipment’s potential functionality and can signal when that machine starts to deteriorate.

OEE can be broken down into three main components: Availability, Performance, and Quality. Each of these is important to identify where productivity may be lacking, why it’s lacking, and what you can do to fine-tune your manufacturing processes.

In addition, it can also indicate the effectiveness of your maintenance team. Some maintenance techs will spend the bulk of their time fixing specific issues without solving or preventing long-term problems. This is often the case when machines are continually breaking down or experiencing errors.

Rather, a good maintenance team knows that prevention is often the best defense against equipment failure. They routinely inspect equipment for issues and solve them before they grow into larger problems.

How OEE Is Calculated

Ideally, OEE would indicate that all manufacturing systems are functioning as normal, they’re reaching their maximum production capacity, and every unit produced is perfect. We all know that’s almost never the case.

100% OEE is rare (though not entirely unachievable).  An OEE score of 85% is considered world-class. A 60% OEE rating is most common.

Historically, the formula to calculate OEE divides the time a machine is fully productive by the planned production time.

However, this formula doesn’t take into account the three factors related to loss (availability, quality, and performance). For example, if a machine is producing defective products because there is something wrong in the process, the machine’s effectiveness rating won’t suffer using the above formula.

The Preferred Calculation multiplies Availability, Quality, and Performance to get OOE.

  • Availability is calculated by dividing the equipment’s Run Time (Planned Production Time minus Stop Time) by the Planned Production Time. Stop Time is the combination of planned and unplanned stops in production, whether due to breakdowns, maintenance, or changeovers.
  • Quality is measured by dividing the “good” count by the total pieces produced. This way, only usable products contribute to the OEE score.
  • Performance is calculated by dividing the Net Run Time by the Run Time. Net Run Time can be calculated by multiplying the ideal cycle time (the fastest cycle time in a process) by the total count.

Final Thoughts on Measuring OEE

Operational Equipment Effectiveness is truly a balance of art and science. It takes time and ongoing effort to understand, measure, calculate, and use it to your advantage. But once you do, you’ll be able to make noticeable improvements to your productivity, processes, and overall profitability.

Topics: Preventative Maintenance, Metrics

Written by CMMS Insight Staff