How is OEE calculated?

Overall equipment effectiveness (OEE) is a Lean metric considered to be the gold standard for evaluating manufacturing operations. OEE is a percentage representing the amount of manufacturing time is truly productive; higher OEE scores means production is closer to meeting its full potential. Companies calculate OEE to uncover losses, identify opportunities for improvement, and track progress over time, making it a truly powerful part of the Lean toolbox.

Using the preferred formula, OEE is calculated by multiplying the three OEE factors:

Availability: The percentage of time available within a shift for a machine to run after taking into account setup and adjustments (planned stops) and equipment failure (unplanned stops). Availability is calculated by taking run time and dividing that number by planned production time.
Small stops and speed loss are taken into account when measuring performance. Having a 100% score would mean the manufacturing process is running at its maximum speed. Multiply ideal cycle time by total count for the net run time, then divide that by run time to calculate performance ratio.

Quality: Finally, quality looks at any inventory or material that is defective or does not meet the standard for quality. Find the percentage by dividing good count (what hasn’t needed rework) by total count (all produced parts, including defects).

The Six Big Losses are directly addressed in the OEE factors. Availability loss is made up of break downs and change overs, performance is affected by minor stops and reduced speed, and quality can be broken down into start -up defects and in-process defects. Identifying and measuring T=these OEE factors will help you focus on identifying the underlying cause of productivity loss so you can begin to individually target them for improvement.

A perfect OEE score of 100% is everyone’s end goal. This means the production line is running as fast as possible, producing only quality parts, with no downtime. That is most likely never going to be reached, but consistently setting goals to improve your OEE score over time will have major benefits throughout the organization.


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Additional Resources

5S Lean Guide
Lean Manufacturing Powerpoint
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