OEE is often used to measure performance in the production environment, making it a commonly used KPI in manufacturing companies. In this blog, we’ll explain what OEE is, how to calculate it, and how it can improve the efficiency of the production process.
What is OEE?
The full meaning of OEE is Overall Equipment Effectiveness. It is a method used to measure the overall efficiency and performance of the production process. This includes looking at both machines and equipment, as well as people. OEE shows the difference between the maximum production output that theoretically should be achievable and the actual production output. The OEE calculation refers to performance, availability, and quality to determine the ratio between potential and reality. An OEE score of 100% would mean that efficiency is optimal, with performance, availability, and quality each scoring perfectly.
What is Overall Equipment Effectiveness used for?
With the insights provided by OEE, it becomes easier to measure underlying losses. It also gives you a better understanding of how you can systematically improve production processes to work towards an OEE of 100%. OEE is therefore used as an important benchmark for identifying losses, eliminating waste, and improving equipment productivity. By looking at both machines and equipment, as well as people, OEE is also used to create a motivated and engaged atmosphere in the workplace. In this way, OEE contributes to the culture within the company and to production efficiency. Additionally, OEE can be beneficial for audits by providing insights into the achieved results of ongoing processes.
How do you calculate OEE?
OEE consists of several factors: availability, performance, and quality. The OEE calculation is therefore made from the following formula:
OEE = Availability × Performance × Quality
To calculate each factor separately, we use three formulas:
Availability = (Total operating time – Planned non-operational time) / Total operating time
Performance = (Net production time / Total operating time) × 100%
Quality = (Good products / Total produced products) × 100%
Each formula yields a percentage. These percentages can then be inserted back into the OEE formula. The higher the outcome of this calculation, the better the production performance. The lower the outcome, the more opportunities for improvement there are.
Example OEE calculation
With the formulas outlined above in mind, we’ll provide a simple example of OEE for you. Let’s assume:
- The total operating time is 8 hours (480 minutes)
- The planned non-operational time is 1 hour (60 minutes)
- The net production time is 6 hours (360 minutes)
- The total produced products are 800 units
- The number of good products is 720 units
With this data, we’ll fill in the three formulas to calculate the OEE factors.
Availability = (480 – 60) / 480 = 87.5% (0.875)
Performance = (360 / 480) × 100% = 75% (0.75)
Quality = (720 / 800) × 100% = 90% (0.90)
The OEE is then: 0.875 × 0.75 × 0.90 = 59.1%. There is still plenty of room for improvement!
The OEE is calculated, what now?
With the result of the OEE calculation, you can take various actions to improve the efficiency of the production process. For example, you can identify improvement opportunities that are currently seen as weaknesses in the production process. Think of performance issues with machines, quality problems, or staff shortages. Then, you can prioritize the improvements, focusing first on areas that can have the greatest impact on the outcome of the OEE calculation. Implementing improvement measures is, of course, the next step. Based on the analysis of the Overall Equipment Effectiveness, specific measures can be taken, such as optimizing maintenance planning or reducing defects in the production process. Once the measures are underway, it’s time to monitor. What is the impact of the measures on the production process and how does this affect the OEE? Regularly measuring the OEE is therefore essential. That said, we can’t ignore the process of continuous improvement. OEE calculations are an excellent starting point for continuously monitoring production performance, promoting process confirmation, and thus consistently working on continuous improvement.
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