How to Calculate Your Overall Equipment Effectiveness (OEE) - ToughNickel - Money
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How to Calculate Your Overall Equipment Effectiveness (OEE)

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I am a trainer and consultant in lean manufacturing, Six Sigma, quality management, and business management.

Overall Equipment Effectiveness (OEE) is an important process performance measurement which has come out of TPM (Total Productive Maintenance.) This article will show you step-by-step how to calculate your OEE and its component measures.

OEE is a composite of three measures of the ability of your machine or process to produce product to specification reliably and repeatedly. These measures, based on the "six big losses" of TPM, are Availability, Performance, and Quality.

  • Availability: Breakdowns and changeovers
  • Performance: Minor stoppages and reduced speed
  • Quality: Defects and setup scrap

To calculate OEE, you must first accurately measure each of these individual measures of performance. These measurements should always be made by those closest to the process. They are the ones that can directly measure what is going on and will also be the ones able to identify why you have issues.

Only be measuring the performance of your machines and equipment can you know for sure if any improvements that you have made have had a positive impact.

Example of OEE Calculation

OEE Calculation

OEE Calculation

OEE Availability Calculation

Availability is a percentage measure of time actually available for the process against the total time available during the shift if there were no breakdowns or lost time due to changeovers. All measurements should be made in minutes.

The operators should record downtime for all breakdowns (usually defined as any stoppage of greater than 10 minutes.) Breakdowns are any unplanned stoppage of the machine for any reason which could cover anything from power interruptions to a vital part breaking. We do not include minor stoppages of less than 10 minutes such as changing a tool in this category.

Changeover or setup time is the time taken from finishing the last part of one batch and producing the first good part of the next batch. Always use the same definition for all of your calculations so that everyone knows precisely what needs to be measured.

The calculation for availability then becomes:

How to Calculate Availability for OEE

How to Calculate Availability for OEE

This then gives you a percentage performance figure for your availability which could then be plotted graphically and displayed at the workplace. The individual measure of availability is as important as the overall equipment efficiency measure itself and the individual measure itself should also be displayed as well as graphs of both breakdown time and changeover times.

OEE Performance Calculation

Your performance calculation for OEE is based around an expected number of products for a given time against the actual produced. This measure shows the effect of minor stoppages such as tool changes and slow working on your production rate.

The calculation for performance is:

How to Calculate OEE Performance

How to Calculate OEE Performance

The "available time" will come from the first calculation for availability, and "production rate" is your average expected production rate in parts per minute.

As with your availability, your performance measure should be displayed at the workplace and should be a focus for your team's improvement in its own right, not just for the OEE.

OEE Quality Calculation

The OEE Calculation for quality is a simple ratio of good parts produced against the total number of parts produced (Good and bad.) The defect parts will come from both setup scrap and also your defects whilst running.

The calculation for your OEE quality component is;

How to Calculate OEE Quality

How to Calculate OEE Quality

This will give you a simple ratio of good parts to total parts produced.

This calculation again should be displayed and be a focus for the action of your improvement teams. Your team should work to improve this ratio continuously, not just to improve the OEE, but also to reduce the waste due to rejected components as well as to reduce the risk of defects reaching the customer.

Your OEE Calculation

The overall OEE measure for your process is then the above three measures for Availability, Performance and Quality multiplied together to give your OEE. Note that multiplying OEE measures for multiple machines and processes is a meaningless figure and should not be used. OEE should be for a single machine or process.

How to Calculate your OEE

How to Calculate your OEE

OEE Example

The following shows step by step examples of how to calculate your OEE;

Calculating OEE Availability: Example

So if your shift is 8 hours long (8 x 60 minutes) and you experience 40 minutes of changeover time and 20 minutes of breakdowns;

Calculating your OEE Availability

Calculating your OEE Availability

Calculating Your OEE Performance: Example

If during your available 420 minutes of production you produced 800 parts, and your production rate is 2 per minute, your calculation for performance would be:

OEE Performance Calculation Example

OEE Performance Calculation Example

Calculating your OEE Quality: Example

If your 800 parts produced consisted of 750 good parts, 30 defective parts, and 20 parts of setup scrap, then you OEE quality calculation would be:

Calculating your OEE Quality

Calculating your OEE Quality

Calculating your Overall OEE: Example

Using the figures calculated in the examples above your overall OEE will be:

Example of OEE Calculation

Example of OEE Calculation

Total Productive Maintenance

OEE is a vital part of any Total Productive Maintenance (TPM) implementation.

OEE Calculation Video

What is "World Class" OEE?

Many people ask what is a good OEE, well my answer is one that has improved on last week’s OEE!

World class OEE is usually accepted as being over 85%, being made up with the following three percentages;

  • Availability 90% +
  • Performance 95% +
  • Quality 99.9% +

Obviously this is a very rough guide and every industry is different.

OEE is a measure to help you to continually improve your machines ability to meet your requirements (and your customers.) Applied in areas of scarce resource and at bottlenecks you can focus your efforts to ensure that you meet customer demand.

There is little need to work on areas where you have excessive capacity at the expense of those more important areas, focus your OEE efforts where you really need them not across every machine and process in your organization.

If you can save 10 minutes at a bottleneck operation, then you may effectively save 10 minutes at every stage in your process. That 10 minutes of extra production will be 10 minutes less waiting at the next operation. So always focus your efforts on the bottleneck operations or those that are critical to your operation. Don't forget that as you improve one bottleneck you may uncover another elsewhere in the operation.

The problem with using a benchmark figure to see how you are performing is that you may be lulled into stopping making improvements. Just remember that your competitors will never stand still; you must ensure that you continually improve your processes to increase that OEE. But be sensible; if it is going to cost a fortune to make a 1% improvement and you already have a performance that satisfies your customers, do you really need to spend the money?

Continually Improve OEE

Problem solving tools

Problem solving tools

Plan your improvement of OEE

Plan your improvement of OEE

Using OEE for Improvement

Overall equipment effectiveness should not be just "measured"! Too many companies spend all of their time collecting and displaying data and minimal effort on actually improving their KPIs (Key Performance Indicators). Unless you actually take the time to make improvements to your process there is no point at all in making the measurements and yet this is precisely what many companies do.

The individual components are all areas of your OEE where your improvement team needs to focus. They should use problem solving tools, PDCA, Kaizen or any other technique to investigate methods to increase availability, performance and quality.

You should also not try to measure and improve the OEE on every machine at the same time. Look for the bottleneck within your operations and make your improvements there, as your bottleneck is the point that controls every operation in your factory. So focus your energy to improve OEE at this point.

Calculating OEE

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

Comments

Aaron Alexis on February 12, 2020:

Damn informative! Give me lots of valuable information about the OEE calculation. OEE calculation plays a very important role in increasing the productivity of an industry. Only some good software like "Thrive's OEE Tracking Software" can perform such tasks very effectively. Looking for others to share their opinion. Thanks!!

Tony (author) from At the Gemba on October 20, 2011:

Thanks for reading and leaving comments billabongbob, I have lost count over the years of the number of people that could not calculate their OEE even though they were running TPM and so on.. Most of them were just throwing numbers into a spreadsheet or a piece of software and had no understanding of the OEE calculation itself.

I have always found that people understand these ideas better if they have to do the calculations themselves and they are not difficult to do as you have said.

billabongbob from South Wales, UK on October 18, 2011:

Great technical information, easy to understand, even for a maths numpty like me. Good, clear instructions and explanations.

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