Understanding overall equipment effectiveness

In the industrial world today, organizations perform better than each other because of their level of overall equipment effectiveness. Overall equipment effectiveness is the gold standard for measuring manufacturing productivity by simply putting the percentage of manufacturing time that is truly productive. Today you’ll get to know the definition, use, and how to calculate overall equipment effectiveness in an organization.

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What is overall equipment effectiveness?

Overall equipment effectiveness OEE is a maintenance KPI that measures an asset’s level of productivity. It can be seen as the gold standard in which an organization employs to measure manufacturing productivity. When an OEE scores 100%, it means good parts are manufactured, as fast as possible, with no downtime. OEE is a combination of three factors that can tell you how efficient an asset is during the manufacturing process: asset availability, asset performance, and production quality. They all tell something different about how an asset operates.

Availability – shows how often the asset function when needed.

Performance – how much can the asset produce.

Quality – the number of high-quality items the asset produces.

A 100% OEE calculate tells you that 100% availability (no downtime), 100% quality (only good parts), and 100% performance (as fast as possible).

Uses of overall equipment effectiveness OEE

The use and Measuring OEE is the best practice for organization manufacturing. When properly done, one will gain important insights on how to systematically improve your production process. OEE is the single best metric for loss identification, benchmarking progress, and improving the productivity of manufacturing equipment such as eliminating waste.

Furthermore, overall equipment effectiveness is an indicator of how efficient the manufacturing process is doing. It is used to identify underperforming assets and connect poor performance with one or more of the three factors (availability, performance, and quality). Identifying the source of the problem, the underlying issues can be investigated and improved.

The OEE scores provide very valuable insight; an accurate picture of how effective the manufacturing process is running. It also makes it easy to track improvement in the process over time. Although the OEE score will not provide any insights as to the underlying causes of lost productivity. It can be seen in the role of availability, performance, and quality.

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Calculating overall equipment effectiveness OEE

The simplest method of calculating OEE is the ratio of fully productive time to planned production time. Fully productive time is the time spent manufacturing good parts as fast as possible (ideal cycle time) with no stop time. It can be calculated as follows:

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

This is an entirely valid calculation of OEE, it does not provide information about the three loss-related factors. So, we use the preferred calculation which is achieved by multiplying the three OEE factors: availability, performance, and quality.

Availability

This factor takes into account all events that stop planned production long enough where it makes sense to track a reason for being down (normally several minutes). Availability is calculated as the ratio of Run Time to Planned Production Time:

Availability = Run Time / Planned Production Time

The Run Time is simply Planned Production Timeless Stop Time, whereas Stop Time is defined as all-time where the manufacturing process was intended to be running but was not due to unplanned stops such as breakdowns, or planned stops such as changeover or equipment maintenance time.

Run Time = Planned Production Time − Stop Time

Performance

Performance records anything that causes the manufacturing process to run at less than the maximum possible speed when it is running. This includes slow cycles and small stops. So, performance is the ratio of Net Run Time to Run Time. It can be calculated as:

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

The Ideal Cycle Time is the fastest cycle time that the process can achieve in optimal circumstances. So, when it is multiplied by the Total count the result is Net Run Time (the fastest possible time to manufacture the parts). Because the rate is the reciprocal of time, Performance can be calculated as:

Performance = (Total Count / Run Time) / Ideal Run Rate

Quality

Quality takes into account the manufactured parts that do not meet quality standards, including parts that need rework. OEE Quality is similar to First Pass Yield, that is, it defines Good Parts as parts that successfully pass through the manufacturing process the first time without needing any rework. Quality is calculated as:

Quality = Good Count / Total Count

This is the same way of taking the ratio of Fully Production Time (only Good Parts manufactured as fast as possible with no Stop Time) to Net Run Time (all parts manufactured as fast as possible with no stop time).

OEE

OEE takes into account all losses, resulting in a measure of truly productive manufacturing time. It is calculated as:

OEE = Availability × Performance × Quality

If the equations for Availability, Performance, and Quality are substituted in the above and reduced to their simplest terms the result is:

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

This is the “simplest” OEE calculation described earlier. And, as described earlier, multiplying Good Count by Ideal Cycle Time results in Fully Productive Time (manufacturing only Good Parts, as fast as possible, with no Stop Time).

Read more: Understanding plant maintenance

OEE calculation

Finding the OEE of an asset starts with measuring availability, which is calculated by dividing the total run time of an asset by the total planned production time of an asset. It excludes planned shutdowns for preventive maintenance, holidays, or similar scenarios.

For example, if a machine was supposed to run for 12 hours, but suffered a breakdown and only ran for 11 hours, the availability would be 0.917 or 91.7%.

Next, measure the performance of an asset by dividing the actual system throughput by its maximum possible throughput.

Let’s say that you have an asset that runs for 12 hours with a maximum production rate of 1,000 units per hour. The maximum throughput would be 12,000. But if that asset only produces 11,500 units in that time, the performance score would be 0.958 or 95.8%.

Finally, the quality of the goods produced by the asset must be determined. Quality is calculated by dividing the number of usable units produced by the total units started.

If an asset produces 12,000 units in a 12-hour production time frame, but 300 of them have defects that make them unusable, then the number of usable units is 11,700. Therefore, the quality score would be 0.975 or 97.5%.

Now that you have your three components, you can calculate OEE by multiplying them.

For example, if availability is 0.917, performance is 0.958, and quality is 0.975, the OEE measurement would be 0.857 or 85.7%.

Read more: Understanding Total productive maintenance (TPM)

Conclusion

Overall equipment effectiveness OEE is a maintenance KPI that measures an asset’s level of productivity. It can be seen as the gold standard in which an organization employs to measure manufacturing productivity. The use and Measuring OEE is the best practice for organization manufacturing. It is the single best metric for loss identification, benchmarking progress, and improving the productivity of manufacturing equipment such as eliminating waste. That is all for this article, where the definition, use, and how to calculate overall equipment effectiveness in an organization are being discussed.

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