Overall Equipment Effectiveness (OEE)

What is Overall Equipment Effectiveness (OEE)?

Overall Equipment Effectiveness (OEE) is a tool that helps manufacturing leaders answer the question: “Am I making money?”

The most accurate answer to that question (Am I making money?) comes too late. It comes at end of the month, the end of the quarter or the end of the year. That’s when the accountants can deliver the ultimate score card: The Profit & Loss statement.

But the Profit & Loss statement is, at best, a snapshot in time. And worse, it is seen through a rear-view mirror.

Manufacturing leaders need tools to evaluate whether they are on track to meet their profitability goals. And when things aren’t on track, they need real-time diagnostic tools that enable them drill down to the root cause so they can make necessary changes.

Overall Equipment Effectiveness gives leaders an up-to-the minute status about three critical inputs to manufacturing profitability. These inputs can be summarized in these three questions:

  • Are my machines (assets) running? (Availability)
  • Am I meeting production goals? (Performance)
  • Is my quality OK? (Quality)

By tracking these three metrics (and their relationship) over time leaders are able to build correlation between Overall Equipment Effectiveness and financial performance.

These three component measures are multiplied together to calculate the Overall Equipment Effectiveness value.

GainSeeker Overall Equipment Effectiveness (OEE) Combined Chart

Overall Equipment Effectiveness (OEE) Combined Chart displays OEE, Availability, Performance and Quality on one chart. In this example we compare OEE across two manufacturing plants in the supply chain.

Overall Equipment Effectiveness (OEE) formulas

In the classic textbook definition, Overall Equipment Effectiveness is made up of three component measurements: Availability, Performance, and Quality.

Metric Definition Formula World Class
Availability (Up Time) The percentage of the scheduled time that a machine is able to operate. Availability = (Available time – Down Time) / Available Time 90%
Performance The speed that the equipment is running at, relative to its target speed. Performance = Total count of parts produced / Expected Count 95%
Quality The ratio of good units compared to all the units that were started. Sometimes called First Pass Yield. Quality = Good count / Total count 99.9%

Each of these three component measures is presented as a ratio, so each is multiplied by 100 and reported as a percentage.

Once all three component measurements are in place, a combined Overall Equipment Effectiveness metric may be calculated:

Metric Definition Formula World Class
Overall Equipment Effectiveness Result of multiplying all three ratios together. OEE = Availability * Performance * Quality 85%

See also OEE Defined – Quality, Performance, Availability.

Benefits

Use Overall Equipment Effectiveness charts to:

  • Pinpoint times and shifts when production tends to flourish or falter.
  • Increase equipment reliability by reducing downtime through planned maintenance, not reactive equipment repair.
  • Identify missed opportunities when more first-pass yield could have been produced.
  • Increase profitability by reducing scrap, variation, rework and other costly waste.
  • Get the most out of what you already have.

Apply Overall Equipment Effectiveness analysis to a single asset (machine or piece of equipment), a department, or your entire manufacturing floor.

Rolling up OEE across multiple assets makes it possible to prioritize improvement efforts across the organization. Tracking improvement over time ensures improvements are successfully maintained.

Overall Equipment Effectiveness can:

  • Reduce downtime costs
  • Reduce repair costs
  • Increase labor efficiency
  • Reduce quality costs
  • Increase personnel productivity
  • Increase production capacity

See also these case studies about Real-time OEE Dashboards and GainSeeker OPC solution boosts OEE.

GPL OEE Kit Plant OEE Desktop

Real-time Overall Equipment Effectiveness (OEE) Dashboard showing comparative performance of two assets.

OEE is a scalable metric

Overall Equipment Effectiveness can be deployed at a single asset or a collection of assets. In an ideal world, the metrics are collected across all assets, all lines, and all plants in a manufacturing supply chain. This makes it possible compare performance across the supply chain, and over time.

OEE Drill Down

Overall Equipment Effectiveness is a powerful diagnostic tool. Address problems early to maximize financial performance.  This can be most effective when data is organized for easy drill down analysis. Overall Equipment Effectiveness should enable you to answer questions such as:

  • How are my assets performing over time?
  • Which assets are under-performing?
  • Why are they under-performing?

Potential OEE pitfalls

Overall Equipment Effectiveness isn’t magic. It can’t solve everything. Some potential pitfalls include:

  • Overall Equipment Effectiveness doesn’t say anything explicitly about profitability.
  • It is not a direct measure of customer satisfaction.
  • For these reasons, best practice is to use OEE as part of a larger evaluation of Key Process Indicators (KPI). Often this requires evaluating KPIs across silos of data. Often optimizing one metric causes sub-optimum performance for other metrics. Work for a balance of KPIs that are unique to your situation.
  • Multiplying three ratios together to get a fourth value may hide important signals. For example, a shift of one of the component values may completely mask a shift in the opposite direction by another component value.
  • It can be challenging to compare OEE across assets and across facilities. Each asset has its own baseline for performance. If you fail to consider that variation in your rolled up numbers, you may compare dissimilar values.

For additional discussion, see this post: Beyond the hype and the critique – making OEE more effective

OEE Data Entry for Downtime Reasons

OEE Data Entry form for Downtime reasons. OEE data can come from automated equipment, or from operators, or a combination of human and machine sources.

OEE in GainSeeker Suite

GainSeeker® Suite turns your manufacturing data into useful Overall Equipment Effectiveness analytics tools.

Use OEE charts to:

  • Pinpoint times and shifts when production tends to flourish or falter.
  • Increase equipment reliability by reducing downtime through planned maintenance, not reactive equipment repair.
  • Identify missed opportunities when more first-pass yield could have been produced.
  • Increase profitability by reducing scrap, variation, rework and other costly waste.
  • Get the most out of your existing assets. Delay or avoid costly capital projects.

You can apply this analysis to a single asset, a production line, a manufacturing plant or the entire supply chain.

See also the GainSeeker online manual for OEE Charts.

OEE chart types

Display these Overall Equipment Effectiveness chart types as line or bar charts:

  • Performance chart
  • Availability chart
  • Quality chart
  • OEE Overall chart
  • OEE Combined chart

Display individual charts for each component metric, or display all charts together on a desktop. Display the OEE metric and all three component metrics on an OEE Combined chart. Drill down to target factors and slot them for improvement.

Flexible two-level grouping aids understanding of the underlying data.

Combined OEE Chart with component charts for Availability, Performance, and Quality.

Overall Equipment Effectiveness (OEE) Combined Chart in the top window can be expanded out to all of the component metrics in their own windows.

GainSeeker Platform Library OEE Kit provides practical guidance for OEE Implementation

For guidance on implementing Overall Equipment Effectiveness in GainSeeker Suite, check out the OEE Kit in the GainSeeker Platform Library. The library is a treasure trove of insights compiled from years of experience helping other clients maximize the value of manufacturing data. The OEE Kit includes useful information on setting up data collection, structuring data storage for maximum value, and using analytic tools to predict, diagnose, and prevent production problems. If you’re a GainSeeker Suite user, you’ll be able to download an installable data set with data structures, inspections, desktops, dashboards. And anyone can take watch the instructional videos.