Overall Equipment Effectiveness: What is OEE and How is it Calculated?

What is OEE?

Overall Equipment Effectiveness (OEE) is a critical maintenance Key Performance Indicator (KPI) that evaluates an asset’s level of productivity in the manufacturing maintenance process. The OEE metric takes into account three fundamental factors: asset availability, performance, and production quality, which provide essential insights into an asset’s operating efficiency.

1. Availability: Asset availability measures how frequently an asset is functional when required. It evaluates how much time an asset can operate without experiencing unplanned downtime or breakdowns. A higher availability score indicates that an asset has minimal downtime and can function at full capacity, leading to increased productivity.
2. Performance: Performance measures how much an asset produces in a given period. It examines how efficiently an asset operates and how much output it generates. A higher performance score indicates that an asset produces more in a shorter time, leading to increased throughput and output.
3. Quality: Production quality measures the number of high-quality items produced by an asset. It evaluates how many defective products an asset produces in a given period, affecting overall product quality. A higher quality score indicates that an asset produces fewer defective products, which results in increased customer satisfaction and reduced waste.

When an asset has an OEE score of 100%, it means that it produces high-quality items without defects, operates at maximum speed, and has no unplanned downtime or breakdowns. Achieving a 100% OEE score is the ultimate goal for asset owners as it indicates optimal efficiency and productivity, resulting in increased profitability and customer satisfaction.

How to calculate OEE

The OEE calculation formula is Availability x Performance x Quality.

1. Availability Calculation: The first step in finding an asset’s OEE is to measure its availability. This is calculated by dividing the total run time of the asset by the total planned production time, excluding planned shutdowns for maintenance, holidays, or other similar scenarios. For example, if an asset was supposed to run for 12 hours but only ran for 11 hours due to a breakdown, the availability score would be 91.7%.
   Availability = Run Time / Planned Production Time
2. Performance Calculation: The next step is to measure an asset’s performance, which is calculated by dividing the actual system throughput by its maximum possible throughput. For instance, if an asset runs for 12 hours with a maximum production rate of 1,000 units per hour but only produces 11,500 units in that time, the performance score would be 95.8%.
   Performance = (Ideal Cycle Time × Total Count) / Run Time
   
3. Quality Calculation: The quality of the goods produced by the asset must also be measured to determine the final OEE score. Quality is calculated by dividing the number of usable units produced by the total units started. For example, if an asset produces 12,000 units in a 12-hour production timeframe, but 300 of them have defects, then the number of usable units is 11,700, resulting in a quality score of 97.5%.
   Quality = Good Count / Total Count

Once all three components have been measured, the OEE score can be calculated by multiplying them. For instance, if availability is 91.7%, performance is 95.8%, and quality is 97.5%, the OEE measurement would be 85.7%. An OEE score of 100% indicates that the asset is operating at maximum efficiency, producing high-quality products, and experiencing no downtime or delays.

How is OEE Used?

The overall equipment effectiveness (OEE) serves as a valuable metric to gauge the efficiency of the manufacturing process. By analyzing the OEE, manufacturers can easily identify underperforming assets and trace the root cause of the poor performance to one or more of the three primary factors – availability, performance, and quality. With this knowledge, manufacturers can investigate and address the underlying issues to improve their manufacturing process.

What are OEE-related plant floor metrics?

OEE is a useful tool for managers to measure the efficiency of the manufacturing process, but it may not be easily understood or motivating for plant floor employees. To encourage optimal performance from plant floor employees, it is important to provide them with real-time goals that are straightforward and highly motivating. One effective set of metrics for the plant floor is known as TAED, which includes:

• Target: Target refers to the planned rate of production that a company aims to achieve in real time. It is a predetermined goal that helps the organization to stay on track and assess its performance.
• Actual: Actual production count is the number of units that a company has produced in real-time. It reflects the current progress of production and helps to measure the effectiveness of the manufacturing process.
• Efficiency: Efficiency is a percentage ratio of the target production rate to the actual production count. It shows how much progress has been made towards achieving the production goal. If the efficiency is high, it means that the production is on track, but if it is low, it indicates that there are problems in the manufacturing process.
• Downtime: Downtime refers to the unplanned stop time in production that occurs due to various reasons such as equipment breakdowns, power outages, or maintenance issues. It is a critical area for improvement as it can lead to delays in production and increased costs. The downtime is updated in real-time to help the company keep track of the time lost and take corrective actions to minimize it.

By utilizing these metrics, plant floor employees can better understand their goals and how they are performing in real-time, leading to improved motivation and performance.

Why OEE calculation is important

OEE scores are an incredibly useful tool for manufacturers as they provide a clear indication of how effectively their manufacturing process is operating. These scores can be used to monitor progress over time and identify areas where improvements are needed. However, it’s important to note that OEE scores alone do not provide insights into the underlying causes of lost productivity.

To gain a better understanding of the root causes of inefficiencies, manufacturers can also track Availability, Performance, and Quality metrics. These three key factors can help to pinpoint the source of any productivity losses and provide valuable information for process improvements.

By combining both OEE scores and Availability, Performance, and Quality metrics, manufacturers can gain a more comprehensive view of their manufacturing process. They will have a single number that provides an overview of how well they are doing (OEE) as well as three additional metrics that capture the fundamental nature of their losses. This information can be used to drive continuous improvement efforts and achieve better outcomes over time.

Consider the following example, which highlights the importance of analyzing OEE data in-depth. Over the course of two sequential weeks, OEE appears to have improved. However, upon closer examination, the situation becomes less straightforward. While it may be tempting to celebrate a 5.0% increase in Availability, it should be noted that this came at the expense of a 4.5% decrease in quality.

In reality, most companies would not view sacrificing quality for availability as a desirable trade-off. This example illustrates the need to thoroughly analyze OEE data and look beyond the surface-level improvements to identify potential issues or trade-offs that may exist.

What does OEE mean for maintenance?

Conducting an OEE analysis can be an excellent way to gain valuable insights into how you schedule, organize, and perform maintenance tasks. By understanding the underlying causes of low OEE scores, you can take proactive measures to avoid common and critical issues with assets, saving your organization valuable time and money.

For instance, low asset availability can indicate that a machine is frequently breaking down or experiencing long periods of downtime. This may be due to inadequate preventive maintenance or a lack of critical spare parts required for quick repairs.

Low performance metrics could be indicative of problems with specific parts or insufficient attention to preventive maintenance tasks. For example, a lack of sufficient lubrication for bearings or using an old, worn-out belt could result in lower performance scores.

A poor quality score may be a result of process failures and inconsistencies. This could be due to factors such as inaccurate gauge settings between shifts or a lack of alignment in the system during every use, leading to a higher number of defects.

By using OEE metrics to identify and address these issues, you can enhance the reliability and efficiency of your assets and reduce the overall cost of maintenance.

Final Thoughts

Overall equipment effectiveness (OEE) is a valuable tool for assessing the efficiency of assets in the manufacturing process. However, OEE analysis can also provide insights into the factors that affect asset performance, including people, processes, and tools.

By combining the insights gleaned from OEE analysis with other maintenance metrics, organizations can obtain a comprehensive view of their operations. This information can be used to identify areas that require improvement and establish measurable goals to track progress.

When used in conjunction with other maintenance metrics, OEE offers a quantifiable means of assessing the effectiveness of changes made to an operation. This allows organizations to better understand the impact of their efforts to improve asset management and performance, enabling them to fine-tune their operations and realize greater efficiencies.

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FAQs

1. What is a good OEE score?

   The OEE score of 100% is the ultimate goal for businesses to achieve in their production processes. However, it’s rare for most companies to reach a perfect score in all areas. Therefore, it’s essential to set realistic benchmarks to measure progress.

   For discrete manufacturers, an OEE score of 85% is considered world-class and an achievable long-term target for most companies.

   On the other hand, any score below 65% is deemed unacceptable, and scores ranging from 65% to 75% are considered typical.

   Although average scores don’t necessarily indicate a significant issue, they do highlight the need for improvement. To drive continuous progress, businesses should strive to achieve a world-class OEE score of 85% or higher. By setting challenging targets, companies can motivate themselves to improve and enhance their production processes.

2. Is OEE a KPI?

   Measuring OEE (Overall Equipment Effectiveness) is a crucial KPI for manufacturing businesses to monitor closely. It enables businesses to evaluate the efficiency of their assets in any manufacturing process. OEE can help identify areas of improvement by investigating the processes, tools and people that contribute to how assets operate.

   By combining OEE indicators with other maintenance metrics, businesses can gain insights into areas that require improvement, which can be measured when evaluating operational progress.

   A good OEE score is not just nice to have; it helps businesses visualize equipment losses and develop processes to eliminate waste and identify quality losses.

   While OEE scores may not provide insights into the exact causes of quality loss, poor performance, or productivity drops, the three key factors of availability, performance, and quality can help pinpoint specific issues. The OEE score, combined with these three factors, can provide a good general insight into the entire production process by capturing how well the production process is performing and indicating the nature of any losses.

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