Overall Equipment Effectiveness (OEE) Defined

OEE is a commonly used acronym in Lean manufacturing that stands for Overall Equipment Effectiveness. This is considered a best practice in manufacturing, as it is used to assess the productivity of a facility on a day-to-day basis. Production rates are analyzed, and solutions are determined to improve production processes, an essential component to a successful and sustainable business.

By calculating true efficiency, Overall Equipment Effectiveness is also extremely important to Total Productive Maintenance, or TPM. OEE takes into consideration for every possible reason for loss in production including but not limited to machine breakdowns, shift changeovers, coffee breaks, lunches, minor stoppages, reduction in production speed, and out-of-specification units. While some of these may seem insignificant, each will add up to a noticeable loss overtime.

OEE was developed to find an accurate estimation of just how much a company is losing in the production process. There are a few different strategies one can use when measuring their Overall Equipment Effectiveness, but the most common and simplest way is to figure out scheduled hours of production and what maximum production numbers would look like. You will then take these numbers and weigh them against the following OEE factors:

  • Availability: The scheduled time a production line is in operation, can also be referred to as uptime.
  • Performance: The actual speed at which a machine operates.
  • Quality: The number of saleable units vs. the total number of units produced.

In order to calculate the OEE, one should measure the APQ (availability/performance/quality) against the maximum rate of production. Understanding the results of an OEE will help managers to visualize losses and build a strong foundation for making a plan to increase production.

To see this process and formula in action, please check out our article explaining OEE in the workplace.

Total Productive Maintenance (TPM) Guide
Lean Manufacturing Powerpoint
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