Understanding and Applying Overall Equipment Effectiveness (OEE)

A properly managed facility that tracks overall equipment effectiveness.

Overall equipment effectiveness (OEE) is a benchmark and a baseline that manufacturers should be aware of when measuring operations productivity. This important metric should be used to measure the efficiency and effectiveness of production equipment, identify areas for improvement, and track progress over time.

Today we will define overall equipment effectiveness and explain why manufacturers should calculate (and work to improve) this ratio; and then introduce LLumin’s computerized maintenance management systems software (CMMS+) as the best solution to help support optimal production levels. 

What Is Overall Equipment Effectiveness?

Overall equipment effectiveness is a metric that measures how efficiently a manufacturing operation operates and uses its resources. This metric combines availability, performance, and quality into a single percentage score, which can help manufacturers focus their efforts on specific areas for improvement.

OEE is the most commonly used manufacturing metric for understanding and improving current performance levels. OEE will reveal how much of your planned production time is truly productive, helping you identify potential losses and understand where your operations fall short.

Why Is OEE Important?

OEE is important because it allows manufacturers to identify and track the specific areas where inefficiencies exist. Understanding where inefficiencies exist will enable manufacturers to take targeted actions to improve performance and, ultimately, profitability.

The OEE calculation can help manufacturers measure and manage efficiency and productivity in their daily operations, aiming to achieve optimal productivity levels to maintain contribution margins and competitive advantage. OEE can also be used to track the effectiveness of specific equipment and predict when maintenance is needed.

A illustration of overall equipment effectiveness

How to Calculate Your OEE

There are several methods for calculating overall equipment effectiveness, but one of the most common is: OEE = (availability x performance x quality)

OEE is calculated by taking availability, performance, and quality into account. When calculating the OEE availability variable, divide your asset’s operating time by its total planned production time, accounting for all unplanned and planned stops.

OEE = Availability x Performance x Quality
Availability (%) = Run Time / Planned Production Time 
Performance (%) = (Ideal Cycle Time x Total Count) / Run Time
Quality (%) = Good Count / Total Count

Your run time can be calculated by taking your planned production time minus stop time, where stop time is defined as all time that the manufacturing process was supposed to run but was not due to unplanned or planned downtime (typically anything over a few minutes). 

To expand on the above-listed variables, we’ve included some essential information below:

  • Availability: The amount of the planned production time the machinery can actually operate is known as availability. It accounts for both planned and unplanned downtime.
  • Performance: Performance is the speed at which a piece of machinery operates in relation to its intended maximum speed.
  • Quality: This accounts for all manufacturing output that do not meet quality standards.

OEE Calculation Example

It’s important to recognize that the OEE metric needs to be tailored to the particular industry and equipment being assessed. The calculation may also need to take changeover time into account depending on the industry or equipment. Using accurate and reliable data when calculating your values is also important.

Now, let’s go over a complete example of calculating OEE. The data for the first example shift is listed below.

Item Data
Shift Length  12 hours (720 minutes)
Breaks (1) 30 minute break
Downtime 37 minutes
Ideal Cycle Time 1.0 seconds
Total Count 21,230 units
Reject Count 347 units

Calculating OEE begins with Planned Production Time. Consider the following example:

Formula: Shift Length – Breaks
720 minutes – 30 minutes = 690 minutes

Your next step will involve calculating your Run Time, which is the amount of time production was actually running and not stopped. It’s important to note that stop time includes both planned and unplanned stops. 

Formula: Planned Production Time – Stop Time
690 minutes – 37 minutes = 653 minutes

Next, we will calculate your Good Count, which is demonstrated in the following table:

Formula: Total Count – Reject Count
21,230 units – 347 units = 20,883 units

Now, we will move into calculating OEE, when OEE = (availability x performance x quality):

Availability (A) A = Run Time / Planned Production Time
653 minutes / 690 minutes =0.9463 (94.63 %) 
Performance (P) P = (Ideal Cycle Time × Total Count) / Run Time;
(1.0 seconds x 21,230 units) / (653 minutes x 60 seconds) 
= 0.5418 (54.18%)
Quality (Q) Q = Good Count / Total Count;
20,883 units / 21,230 units = 0.9836 (98.36%)

Finally, in this example, OEE can be calculated by multiplying these values together:

Formula: Availability x Performance x Quality
0.9463 x 0.5418 x 0.9863 = 0.5042 or (50.42%)

Improving OEE and The Six Big Losses

When analyzing your OEE metric, there are six big losses that you can look at improving. These areas are listed below.

Availability Loss
  • Equipment failure
  • Setup and adjustments
Performance Loss
  • Idling and minor stops
  • Reduced speed
Quality Loss
  • Process defects
  • Reduced yield

In the aforementioned calculation, it was evident from the sample data that the performance levels were low (about 54.18%) of their maximum potential. 

In this situation, a business would need to assess the causes of equipment performance losses, such as slow cycles, idle time, minor stops, and other elements that can lower performance levels. When the root of the problem is found, the chance for improvement arises.

Partner With LLumin to Maximize Productivity

Manufacturers who want to accurately assess and increase their production and efficiency levels should understand and use the OEE metric. And LLumin can help if you’re considering measuring and monitoring OEE. LLumin’s cutting-edge CMMS+ can track every machine and asset across multiple locations. 

The software enables users to track large KPI data sets with advanced analytics and artificial intelligence (AI) technology to predict failure before it occurs, maximizing uptime

The CMMS+ cloud-based software can collect and analyze data across your entire organization without having to re-engineer new systems in order to do so. And, when LLumin’s CMMS+ software identifies signs of a potential failure, on parameters and variables such as temperature, flow, current, noise, or even calculated values that reflect efficiency, it will automatically execute actions to address the issue in real time. 

By partnering with LLumin, you can achieve complete control over your maintenance, repair, and asset management schedules to keep your operations moving optimally.
So if you are looking for a cutting-edge CMMS+ accompanied by a seamless implementation process and an expert customer support staff, then LLumin is a perfect fit.

Getting Started With LLumin

LLumin develops advanced CMMS software to manage and track assets for industrial plants, municipalities, utilities, fleets, and facilities. If you’d like to learn more about how CMMS software can help improve your predictive maintenance strategy, we encourage you to schedule a free demo or contact the experts at LLumin to see how our CMMS+ software can help you reach your performance goals.