How to Calculate Overall Equipment Effectiveness (OEE)
In production, "effectiveness" can refer to numerous factors. If these factors are all considered together, the overall effectiveness of the equipment and process may be rated.
Higher and lower ratings in overall effectiveness may be a more accurate method of pinpointing areas of improvement in a facility's production process.
What is Overall Equipment Effectiveness (OEE)?
It is easy for any technician or manager to examine the production factors under their direct control and use that data to make logical decisions on what to improve. This can certainly be useful, but it is important to investigate everything related to manufacturing to rate how well a system is actually performing.
Overall Equipment Effectiveness (OEE) is a combined rating system accounting for three distinct components that exist in all manufacturing scenarios.
Combining the three different areas makes assessing a system as a single rating to see the trend over time easier. But it also allows any trend changes to be addressed in a coordinated effort by those responsible for each of three major components. Those three components of production are availability, performance, and quality.
This first component addresses the commonly used concept of "downtime" by looking at the percentage of time the equipment is running or available for use. A qualifier for this calculation is that only scheduled uptime is used; it is unreasonable to expect all types of equipment to operate 100% of the time. Therefore, the actual equipment uptime divided by the scheduled equipment uptime is an assessment that can rate and compare processes across any industry.
Another word for this category could perhaps be "speed." Performance refers to another calculated percentage comparing the speed at which the process is running divided by the maximum expected speed. Speed does not always mean conveyor or motor speed directly, but rather a rate of produced product, or how many parts per second or hour are being produced. Obviously, for each industry, there are many ways to increase speed, but each is often limited by factors outside of control. You cannot simply produce parts as fast as you want.
The final element of production is the quality of the parts themselves. For item production, quality control is the process of qualifying a certain percentage of produced parts to fall within an acceptable percentage of the required specifications. In the case of quality, it is once again a percentage to allow an accurate comparison across industries. The calculation is defined as the total number of produced "good" items divided by the number of started items.
Figure 1. Overall equipment effectiveness (OEE) formula. Image used courtesy of Vorne Industries
Note that this performance factor does not account for cases where more units could be produced, simply the percentage of parts that were completed. You will recall the production speed falls within the category of performance.
Calculating Overall Equipment Effectiveness (OEE) Percentages
To calculate each of the percentage categories, any losses from other categories are excluded. For example, suppose the machine runs a majority of the time (availability). Even if it runs slowly and the part quality is low, the availability factor would be high. Only when all calculations are complete can the total OEE be assessed.
Availability examines the total time of expected operation during each 24-hour period (one, two, or three 8-hour shifts) then subtracts any time during that period in which the machine is not running. This is then divided by that total scheduled run time. The time can be measured in minutes or seconds; the percentage will remain the same.
Total Shift Time - Break (or other scheduled idle) Time - Unexpected Down Time
Total Shift Time
Notice that the time is not calculated based on an assumption of round-the-clock operation, since not every facility functions in this manner.
Likewise, performance as a speed characteristic is not calculated based on the max speed of the machines in the system, since not every process desires 100% speed. Rather, it is based on the minimum possible time per part as the benchmark, comparing it against the actual time per part.
However, the time per part may vary dramatically, even within a few minutes, so an alternative averaged calculation is used. The performance uses the time it should take to produce a certain quantity of units, then divides it by the actual time it took to produce those units.
Benchmark # of units lowest possible time/unit
Actual time to produce benchmark # of units
From this calculation, for example, if 100 units could be produced in 3 minutes/part at best, that should be completed in 300 minutes. The actual time to produce those 100 items will probably be more than 300 minutes, but a lower actual time will yield a higher percentage.
Finally, quality examines the number of good parts produced per batch. A "good" part rating may be subjective to the individual industry, and it will likely not be 100% free of any defect. Usually, there will be a tolerance level that must be met. Out of a total sample batch, the number of good parts produced, divided by the total parts that started the production process, will yield the quality percentage.
Good Parts Produced
Total Parts Started
As before, quality is calculated independently of the other factors. It may be possible to speed up the production or produce more parts in a day, but that is not factored into the quality characteristic.
The OEE is a method of quantitively measuring production. However, it should not be confused with optimization since improving a system is probably always possible. OEE compares the best that can be done right now divided by what is actually being done right now. However, we can always look for ways to strengthen and improve a system. The beauty of the industry is that we don't like to settle for "good enough."