Overall Equipment Effectiveness

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Before you can improve the productivity of your business, you need a way to measure its current productivity in terms that are straightforward and useful as a baseline comparison point. There are a number of convoluted ways to accomplish this, but the most popular is known as Overall Equipment Effectiveness (OEE). Used in diverse industries throughout the world, OEE has been described as “the single best metric for identifying losses, benchmarking progress, and improving the productivity of manufacturing equipment.”

OEE by the Numbers

Almost all OEE calculations rely on three factors:

Availability: This factor describes planned and unplanned stoppages in production, even those that last mere minutes. A process with 100% Availability has no stops, and products are created at a consistent, rapid pace. That triple-digit percentage falls, however, with each stoppage, regardless of why the stoppage occurs.

Availability can be expressed by the following equation: Availability = Run Time / Planned Production Time

Planned Production Time is, obviously, the amount of time allotted to create a product, while Run Time is Planned Production Time minus all stoppages that have occurred.

Performance: Performance covers anything that causes a process to slow, whether it be equipment damage, upstream problems with the production line, or simple user errors. Performance also takes into account minute stoppages too small to fall under Availability.

Performance can be expressed as: Performance = (Ideal Cycle Time x Total Count) / Run Time

Ideal Cycle Time is a measurement of the maximum speed with which a process can create a product. If everything is running flawlessly, you should be able to reach Ideal Cycle Time (but, as the “Ideal” would suggest, this is a rare occurence that serves more as a distant goal than a realistic objective). Total Count, meanwhile, is a measure of all products (including defective products) created by a process. Multiplying Ideal Cycle Time by Total Count gives you a measurement known as Net Run Time. Dividing Net Run Time by Run Time, in turn, offers Performance.

Quality: A measurement of how frequently a process is creating defective products, and how often the process creates a good quality product in a single pass.

A relatively simple measurement, Quality is expressed as: Quality = Good Count / Total Count

As you’d expect, Good Count describes the number of good quality products created by a process, while Total Count tallies up all products, whether they’re functional or defective.

Once these three factors have been calculated, finding the Overall Equipment Effectiveness of a process requires a single simple equation: Overall Equipment Effectiveness = Availability x Performance x Quality

The After Math

Once you’ve calculated Overall Equipment Effectiveness, what’s next? Well, that’s up to you. Finding Overall Equipment Effectiveness will not enhance productivity or efficiency by itself, but it equips you with the important numbers you need to determine whether you’re moving in a positive or negative direction. Regular OEE measurements should be taken, with the goal of pushing OEE as close to 100% as possible. It’s very unlikely you’ll ever actually hit that legendary number, but it serves as an overarching goal that is otherwise missing from most efficiency enhancing efforts.

As for how you work to improve OEE, there are many options available, including myriad strategies within the popular 5S and lean methodology frameworks. We recommend looking into our recently-released (and entirely free) guide to Total Productive Maintenance, then peruse our selection of articles, particularly our articles on Kaizen, and Fault Tree Analysis. Whichever route you decide to take, remember: If your Overall Equipment Effectiveness is decreasing over time, something needs to change.


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