Overall Equipment Effectiveness (OEE)

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If you’re a business owner, maintenance technician, or manager, then you know the importance of keeping your equipment running as efficiently as possible. And if you’re looking for a way to measure your equipment’s efficiency, then you should know about overall equipment effectiveness (OEE). OEE is a metric that measures how effectively your equipment is being used and identifies opportunities for improvement.

What is Overall Equipment Effectiveness?

Overall equipment effectiveness is a continuous improvement resource that evaluates how efficiently you are using your equipment. Basically, OEE determines the amount of time that is productive in manufacturing. This allows you to identify what percentage of manufacturing time is truly productive, and fix the issues causing unproductive time. Additionally, OEE gives you a baseline to track your progress as you make changes. To systematically improve your manufacturing process, you must measure OEE and the underlying losses. It is the best indicator to eliminate production waste, identify losses, improve productivity, and benchmark your progress.

What Does Equipment Effectiveness Mean?

It is essential to define effectiveness when discussing overall equipment effectiveness. A production period’s effectiveness is measured as the difference between what you could theoretically produce and what you did produce. As an example, if your machinery is capable of producing 100 products an hour, but only produces 80, it is only 80% effective.

What Should Your OEE Goal Be?

While it is important to measure your overall equipment effectiveness, what is even more important is what you do with the information. It can be extremely effective at optimizing your production if calculated and interpreted correctly. You can use OEE to compare your production with industry standards, other in-house equipment, or other shifts on the same piece of equipment.

These are some of the standard OEE benchmarks:

  • 100% = Perfect production. This requires you to produce quality parts as quickly as possible without experiencing any downtime.
  • 85% = World-class. This is a common long-term goal for manufacturers.
  • 60% = Normal. Many manufacturers function at this level, which leaves room for significant improvement.
  • 40% = Low but not abnormal. This is a common rating for manufacturers just beginning their OEE tracking and improvements.

What Do You Need to Calculate Overall Equipment Effectiveness


Quality = Good Count / Total Count

Your Good Count is all of the parts that meet your quality-control standards. Total count includes all of the parts, including those that failed to meet quality control standards.


Performance = (Ideal Cycle Time x Total Count) / Run Time

This helps you understand how many slowdowns or stops you have in a production run. Ideal cycle time is the perfect time to manufacture one part. And, run time is the total amount of time your production line is up and running. A perfect performance score means your operation is running as quickly as possible.


Availability = Run Time / Planned Production Time

This measures your time spent on planned and unplanned stoppages. Planned production time is the total time you schedule your production to run. Having a perfect availability score means your production is always active during the planned production hours.

How to Calculate Overall Equipment Effectiveness

Simple Calculation

OEE = (Good Count x Ideal Cycle Time) / Planned Production Time

Preferred Calculation

OEE = Availability x Performance x Quality

This method uses the three factors mentioned earlier – availability, performance, and quality. Many manufacturers prefer this method because it provides more insight than just your overall equipment effectiveness. Availability, performance, and quality ratings give you the data necessary to determine the root cause of your losses.

The Benefits of Measuring OEE

Companies all over the world use overall equipment effectiveness for continuous improvement and for several additional benefits, including:

  • Improving return on investment in equipment
  • Remain competitive in their market
  • Get the best performance from the machinery
  • Increase process quality
  • Boost Equipment Efficiency
  • Reduce machinery costs
  • Optimize production for scalability
  • Increase workforce productivity

Having a well-designed overall equipment effectiveness strategy is an important step toward meeting production targets. The system allows you to take a proactive approach, which increases your efficiency, reduces downtime, increases capacity, reduces costs, improves quality, and reduces downtime in manufacturing processes.

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