Glossary Item

OEE - Overall Equipment Effectiveness


OEE uses measures of downtime and downtime reasons to evaluate whether production is running at or near capacity. OEE takes into account, at a minimum: Availability (of production capacity); Performance rate (production speed); and quality performance (good product produced). Theoretically, 100% therefore means that we ran at rated speed with no defects for all the time available. (Although, depending on the math, it is theoretically possible to achieve 110% by running with no defects at faster than rated speed for 100% of the available time!)

Proponents of OEE say that OEE truly reduces complex production problems into simple, intuitive presentation of information. It helps you systematically improve your process with easy-to-obtain measurements. While this is true, implementing and understanding what OEE is telling you is not easy. While the general formula for calculating OEE is simple multiplication: Availability * Performance * Quality, the specific mathematics of determining each of those intermediate variables are complex and every organization has its own complexities, and in many cases, its own formulae.

Conceptually it seems fairly simple - we want our production lines to be running as close to 100% capacity as possible. On a simple basis, if we capture total production time, each downtime event, its duration, and its reason, we have enough to calculate a crude OEE - total uptime / total available time. And this can be done at a reasonable cost. OEE systems become much more complex as various modifiers are applied for "reasonable" events such as set up time, scheduled maintenance, planned idle time, breaks, changeovers, etc. There are norms in various industries, but no hard and fast rules.

This is a key area where your want an enterprise oriented solution, and not individual plant or departmental systems. OEE can easily become a basis for compensation and it is absolutely essential that all of the calculations be identical regardless of where they are done. Depending on the mathematics and assumptions, the same picture can be expressed as a 90% utilization, or a 60% utilization!


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This page last updated: 02/20/2012