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. The goal of OEE is to reach a score of 100%, this means the facility is producing on quality products as fast as possible and with no stop time.
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. Availability can be calculated by taking run time and dividing that number by planned production time.
- Performance: The actual speed at which a machine operates. To calculate this figure, the product of ideal cycle time multiplied by the number of total produced parts is divided by run time.
- Quality: The number of saleable units vs. the total number of units produced; the number of parts or products free from defects is divided by the total produced parts.
The simplified equation is A x P x Q = OEE
Although the above equation is seen as a simple equation, one will need to perform a handful of other equations to determine the Availability, Performance, and Quality. Understanding the results of an OEE will help managers to visualize losses and build a strong foundation for making a plan to increase production. OEE is also a valuable tool to track improvements over time. Managers can regularly run through the equation on a weekly or monthly basis to record how the manufacturing process is progressing.
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.
To see this process and formula in action, please check out our article explaining OEE in the workplace.