What Is OEE? Overall Equipment Effectiveness in Manufacturing

what is oee

In industrial manufacturing and production, the efficiency and performance of equipment play a fundamental role in determining overall productivity and operational success. Poorly performing machinery can lead to significant setbacks, including increased operational costs, reduced output, and compromised product quality.

Under such circumstances, the Overall Equipment Effectiveness or OEE serves as a critical metric. It is a key performance indicator that helps manufacturers assess the effectiveness of their machinery and identifies areas needing improvement, ultimately fostering better resource utilization and enhancing operational efficiency. This article explores the concept of overall equipment effectiveness, particularly its role in enhancing manufacturing productivity and efficiency in industrial facilities.

 

What Is Overall Equipment Effectiveness?

Overall Equipment Effectiveness (OEE) is a comprehensive metric used in manufacturing to gauge the effectiveness of a production process. It combines three essential elements: Availability, Performance, and Quality, to provide a single figure that reflects the percentage of manufacturing time that is truly productive. An OEE score of 100% means that only good parts are produced (100% Quality), at the maximum speed (100% Performance), and without interruption (100% Availability).

OEE Benchmark Scores

overall equipment effectiveness benchmark rating

OEE benchmarks are critical for manufacturers to understand how well their manufacturing equipment is performing relative to industry standards. These benchmarks help in setting realistic performance goals, identifying potential areas for improvement, and measuring progress over time. Here's a more detailed look at the different levels of OEE scores and what they typically represent:

  • World-Class OEE (85% and above) - Achieving an OEE score of 85% or higher is considered world-class and indicative of an exceptionally efficient and effective manufacturing process. At this level, the equipment is producing near its maximum capacity with minimal defects and downtime. Only a small fraction of industries achieve this level, reflecting a highly optimized process with excellent maintenance practices and streamlined production operations.
  • Good OEE (65% - 84%) - An OEE score within this range is generally regarded as good and suggests that the manufacturing process is relatively efficient but there is still room for improvement. This might involve fine-tuning equipment settings, improving operator training, or implementing better maintenance schedules to push the score closer to world-class standards.
  • Average OEE (40% - 64%) - This range is considered average and is often a wake-up call for many facilities that there are significant inefficiencies that need to be addressed. It may indicate problems such as frequent machine breakdowns, slow cycles due to improper settings, or a high rate of defective parts being produced. Facilities with an average OEE should investigate the underlying causes of these issues and consider strategic investments in equipment or process improvements.
  • Poor OEE (Below 40%) - An OEE score below 40% is considered poor and suggests that the equipment or processes are severely underperforming. This level of performance typically results from multiple factors, including outdated or poorly maintained machinery, inadequate training of personnel, or a flawed production process. It necessitates immediate attention and action to overhaul the processes and equipment used in production to avoid substantial losses in productivity and profitability.

 

Why Is OEE Important?

Understanding and measuring Overall Equipment Effectiveness (OEE) is crucial for manufacturing facilities striving to achieve optimal productivity. By focusing on OEE, manufacturers can pinpoint inefficiencies, streamline operations, and ultimately enhance the profitability and sustainability of their production processes.

One of the key objectives of measuring manufacturing productivity through OEE is to identify performance gaps within the manufacturing system. It helps detect productivity losses including breakdowns, slowdowns, and production defects. OEE can also track the effectiveness of improvement efforts over time. This form of monitoring can provide a clear picture of whether changes are yielding the desired results. By addressing the quality losses that affect OEE, manufacturers can ensure that more products meet quality standards right off the production line. Furthermore, the regular analysis of OEE data encourages proactive maintenance and upgrades that reduce downtime and increase machine availability.

Benefits of Measuring OEE Performance

Measuring OEE provides several tangible benefits that can transform manufacturing processes by making them more efficient and responsive:

  • Increased Transparency: OEE offers a clear and concise overview of how well equipment is performing, which is crucial for decision-making and strategic planning.
  • Cost Efficiency: Improvements driven by OEE analysis can significantly reduce waste and operational costs by ensuring equipment operates within optimal parameters.
  • Boosted Productivity: By systematically addressing the factors that lead to equipment inefficiencies, OEE helps in maximizing the productive use of manufacturing resources.
  • Employee Engagement: OEE measurement involves operators and maintenance teams, fostering a culture of continuous improvement and accountability.

Standards and Regulations on OEE

While there are no specific regulatory standards governing OEE, several industry guidelines and best practices influence its application in manufacturing.

Standard/Regulation Description
ISO 9001:2015 Provides a framework for quality management across various industries. Encourages organizations to adopt continuous improvement processes and performance measurements, which are central to OEE methodology
ISO 55000:2014 Focuses on the optimal management of physical assets and the enhancement of the reliability and availability of equipment, key factors in improving OEE scores.
Automotive Industry Action Group Provides guidelines that are particularly relevant to automotive manufacturers and encourages the use of OEE measurements to optimize production processes and improve quality control.
Society of Manufacturing Engineers Offers resources and training that include best practices for implementing OEE. Provides guidelines for manufacturers to understand how to effectively measure and interpret OEE data to drive production efficiency.

 

3 Key Components of OEE

The concept of overall equipment effectiveness (OEE) focuses on three main elements of production - availability, performance, and quality. Each component focuses on a different dimension of process efficiency and when combined, they provide a comprehensive view of how effectively equipment is being utilized.

Availability

Availability measures the amount of time that equipment is ready and available for production versus the planned production time. It takes into account all events that halt production long enough that it can be tracked, including both planned and unplanned stops. This component is crucial because it helps identify issues related to equipment downtime, which can be due to maintenance, breakdowns, or adjustments needed for setup changes. Increasing the availability of equipment typically involves strategies like preventive maintenance, rapid setup procedures, and reducing equipment failures.

Performance

Performance reflects the speed at which the machinery operates compared to its designed speed during the times it is running. It is calculated by comparing the actual cycle time of the equipment to its ideal cycle time. Factors that commonly affect performance include minor stops, idling, and reduced speed operation, often due to worn-out equipment or suboptimal process configurations. To improve performance, manufacturers might focus on enhancing equipment settings, fine-tuning production processes, or training operators to better handle machinery.

Quality

Quality measures the proportion of good parts manufactured versus the total parts produced during the available time. This component captures the impact of manufacturing defects and rework, providing insight into the effectiveness of the production process in delivering products that meet quality standards. Improving quality within the context of OEE involves tightening process controls, enhancing training for operators, implementing more robust quality checks, and possibly redesigning product or process specifications to minimize the likelihood of defects.

 

OEE Manufacturing and Productivity Losses

Overall Equipment Effectiveness (OEE) not only measures efficiency but also helps identify specific areas where productivity is lost. These losses are typically categorized into six groups, each representing a different type of inefficiency that can affect the total OEE score.

  • Unplanned Stops - considered the most significant contributors to productivity losses. These occur when equipment breaks down unexpectedly or when there are failures that require immediate attention and cause the production process to halt.
  • Planned Stops - include any stoppage that is anticipated and scheduled, such as for maintenance, cleaning, or setup changes. While these stops are necessary for maintaining long-term production efficiency, they still contribute to productivity losses by reducing the available production time.
  • Small Stops - refer to brief and often minor stoppages that occur during production, typically lasting only a few minutes each but can add up over time. These might be caused by sensor blocks, misfeeds, or small jams that are quickly rectified by the operator.
  • Slow Cycles - occur when equipment operates at a speed slower than its ideal capacity. This can be due to suboptimal machine settings, operator inefficiency, or wear and tear on machinery. Slow cycles are often not immediately obvious but can significantly reduce overall throughput.
  • Production Rejects - refer to products that do not meet quality standards and must be scrapped or reworked. This loss directly affects the Quality component of OEE and is indicative of issues in the production process or material defects.
  • Startup Rejects - focuses on defects produced at the beginning of a production run, when machines are just starting up and conditions are not yet stabilized. These rejects can be particularly high after setup changes or maintenance activities.

 

How To Calculate Overall Equipment Effectiveness

Calculating Overall Equipment Effectiveness (OEE) is a crucial step for any manufacturing organization aiming to improve its operational efficiency. Understanding how to compute and interpret OEE can help identify key areas of waste and inefficiency within the production process, enabling targeted improvements.

For the OEE calculation, it is important to understand how to document equipment performance. This will provide a quantitative measurement of the equipment’s effectiveness that is used in computing for its OEE rating. Here’s how:

  1. Define Planned Production Time: Clearly outline the periods when the production is scheduled to run, excluding any planned maintenance or breaks.
  2. Measure Running Time: Track the actual operating time, noting when the production is halted due to unplanned stops or breakdowns.
  3. Record Performance Data: Capture the number of units produced and compare it against what could have been produced at optimal speed during the Running Time.
  4. Assess Quality: Count the number of good units versus the total units produced, identifying any units that don’t meet quality standards.
  5. Calculate OEE Components: Use the data gathered to calculate the Availability, Performance, and Quality percentages.
  6. Compute Overall OEE: Multiply the three percentages together to get the OEE.

The formula for calculating OEE utilizes the three critical components - availability, performance, and quality. Availability is calculated as the ratio of Running Time to Planned Production Time. Performance is the ratio of the total count of units produced to the performance standard (the speed at which the process should operate). Quality is calculated as the ratio of Good Units to Total Units Produced during the Running Time. Using these data, the Overall Equipment Effectiveness formula is calculated as:

Overall Equipment Effectiveness = (Availability) x (Performance) x (Quality)

overall equipment effectiveness formula

How to Improve Overall Equipment Effectiveness?

Improving OEE requires a holistic approach that addresses the three key components that contribute to equipment efficiency. These strategies are also designed to address the identified productivity losses in manufacturing processes.

  • Predictive and Preventive Maintenance: Regularly scheduled maintenance is crucial, but incorporating predictive maintenance using data analytics and IoT devices can forecast potential equipment failures before they occur. This approach reduces unplanned downtime significantly.
  • Rapid Changeover Techniques: Implementing methods such as SMED (Single-Minute Exchange of Dies) can drastically reduce the time it takes to switch from one production setup to another. Training staff to perform quick changeovers and standardizing procedures can help minimize planned stops.
  • Improved Workflow and Layout: Analyzing the workflow to identify bottlenecks that cause equipment to sit idle can lead to significant improvements in availability. Sometimes, rearranging the layout of the production floor to reduce movement can also reduce stoppage time.
  • Equipment Upgrades and Automation: Investing in newer, more efficient technology or automating certain aspects of the production process can increase the speed and consistency of production. Automation reduces human error and increases the operational speed.
  • Operator Training and Incentivization: Regular training sessions for operators can help them run machines at optimal speeds and detect minor issues before they lead to significant downtime. Incentive programs can motivate operators to achieve performance targets.
  • Standardizing Work Methods: Develop and implement standard operating procedures (SOPs) for tasks. This standardization helps maintain performance score levels and reduces variability in production, which can slow down the manufacturing process.
  • Strengthening Quality Control Processes: Implementing robust quality control at various stages of the production process helps catch defects earlier rather than at the end of the line, which reduces the cost and time of rework.
  • Advanced Inspection Technologies: Utilizing advanced technologies such as automated optical inspection (AOI) machines can help in detecting defects that are not easily visible to the naked eye, improving the overall quality of products.
  • Continuous Training and Education: Regular training and education programs for employees can raise awareness about quality standards and their impact on company success. A well-informed workforce is less likely to make mistakes that lead to quality issues.

What is OEE Software?

An Overall Equipment Effectiveness software is a specialized tool designed to facilitate the measurement and improvement of equipment effectiveness within manufacturing environments. The OEE software automates the collection and analysis of data related to the three critical components of OEE. It aims to provide real-time insights and actionable analytics that help optimize production processes. With this in mind, OEE software offer these advantages:

  • Real-Time Monitoring and Alerts: OEE software provides continuous monitoring of production lines and sends alerts when the manufacturing performance deviates from set thresholds. This enables immediate response to issues, minimizing downtime and potential defects.
  • Data Accuracy and Accessibility: By automating data collection and calculation, OEE software reduces the likelihood of human error and ensures that data is consistently accurate and easily accessible. This leads to better decision-making based on reliable metrics.
  • Trend Analysis and Reporting: Advanced analytics tools within OEE software can identify trends and patterns over time, helping to forecast potential issues before they occur and track the effectiveness of improvement initiatives.
  • Enhanced Productivity: With all performance metrics visualized through dashboards and reports, teams can quickly identify areas for improvement and implement strategies that boost overall productivity.
  • Cost Reduction: By pinpointing inefficiencies and reducing downtime and waste, OEE software helps lower production costs and improve the bottom line.

For the best possible results, it is important to choose the right OEE software for your needs. Here are some factors to consider when choosing an OEE software:

Integration Capabilities

Choosing an OEE software that integrates seamlessly with existing enterprise resource planning (ERP) systems, manufacturing execution systems (MES), and other operational technologies is critical. This integration facilitates automated data transfers, reduces redundancy, and ensures consistency across all platforms.

Scalability

The OEE software should be capable of scaling not only in terms of handling more extensive data sets and additional production lines but also in accommodating new functionalities as the business evolves. This could include expanding to additional facilities or incorporating advanced analytics and artificial intelligence capabilities. Scalability ensures the software remains useful as the company grows or as manufacturing processes become more complex.

User-Friendly Interface

A user-friendly interface is crucial for ensuring that all users, regardless of their technical expertise, can effectively utilize the OEE software. This includes intuitive navigation, clear labeling, and accessible reporting features.

Customization Options

This includes setting specific parameters for data collection, customizing reports to focus on key metrics relevant to particular production goals, and adjusting the analytics to highlight specific improvement opportunities. Customization ensures that the software provides relevant insights that directly contribute to operational efficiencies.

Cost

Consider the total cost of ownership, which includes initial licensing fees, implementation costs, ongoing operation and maintenance expenses, and any costs associated with upgrades or additional features. It’s also beneficial to consider the software’s potential return on investment through its impact on reducing waste, improving productivity, and other cost-saving measures.

Security Features

Ensure the software has strong encryption methods, secure user authentication processes, and data backup solutions. Additionally, compliance with relevant data protection regulations is crucial to protect sensitive information and avoid legal issues.

 

Overall Equipment Effectiveness FAQs

Is OEE a KPI?

Yes, OEE (Overall Equipment Effectiveness) is a key performance indicator (KPI) used in manufacturing to assess the efficiency and effectiveness of equipment. It measures how well a manufacturing unit performs relative to its designed capacity, during the periods when it is scheduled to run.

How to make an OEE report?

To create an OEE report, start by collecting data on the three key components: Availability, Performance, and Quality. Multiply these three percentages to obtain the OEE score and use software like a digital dashboard or spreadsheet to compile and analyze these metrics over time, allowing you to track progress and identify trends.

What is the difference between OEE and efficiency?

OEE measures three critical elements of production efficiency—Availability, Performance, and Quality—providing a comprehensive metric that considers not just how fast machines are running (efficiency), but also whether they are running at the right times and producing quality output. Efficiency, more generally, often refers only to the speed or throughput of a process without considering availability or quality.

What is considered good OEE?

An exceptional OEE score is typically 85% or above, which is considered world-class and indicates that the manufacturing process is highly productive and minimally wasteful. However, the range considered as a good OEE score across different industries is about 65%. Any score below 65% is seen as an opportunity for substantial improvement.

What is the difference between TPM and OEE?

TPM (Total Productive Maintenance) is a holistic approach to maintenance that seeks to achieve perfect production (no breakdowns, no small stops or slow running, no defects, and no accidents). OEE is a metric used within the truly productive manufacturing time to measure the effectiveness of the equipment and to identify areas for improvement. In essence, TPM is a broad maintenance philosophy, whereas OEE is a specific measurement tool used to gauge the success of TPM initiatives among other production aspects.

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The material provided in this article is for general information purposes only. It is not intended to replace professional/legal advice or substitute government regulations, industry standards, or other requirements specific to any business/activity. While we made sure to provide accurate and reliable information, we make no representation that the details or sources are up-to-date, complete or remain available. Readers should consult with an industrial safety expert, qualified professional, or attorney for any specific concerns and questions.

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Author: Herbert Post

Born in the Philadelphia area and raised in Houston by a family who was predominately employed in heavy manufacturing. Herb took a liking to factory processes and later safety compliance where he has spent the last 13 years facilitating best practices and teaching updated regulations. He is married with two children and a St Bernard named Jose. Herb is a self-described compliance geek. When he isn’t studying safety reports and regulatory interpretations he enjoys racquetball and watching his favorite football team, the Dallas Cowboys.