OVERALL EQUIPMENT EFFECTIVENESS (OEE)

What is OEE?

OEE = Availability X Performance Rate X Quality Rate

Availability - Percent of scheduled production

Note: measures the percent of time that the equipment can be used divided by the equipment uptime (actual production).

Performance Rate - Percent of parts produced per time frame, of maximum rate OEM rated production speed at. If OEM specification is not available, use best known production rate.

Note: Performance efficiency is the percentage of available time that the equipment is producing product at its theoretical speed for individual products. It measures speed losses. (e.g., inefficient batching, machine jams)

Quality Rate - Percent of good sellable parts out of total parts produced per time frame.

Note: Determining the percent of the total output that is good. (i.e. all products including production, engineering, rework and scrap.)

Example: 50% Availability (0.5) X 70% Performance Rate (0.7) X 20% Quality Reject Rate (results in 80%(0.8) acceptable) = 30%OEE



Why use OEE?
Overall Equipment Effectiveness (OEE) can be used to save companies from making inappropriate purchases, and help them focus on improving the performance of machinery and plant equipment they already own. OEE is used to find the greatest areas of improvement so you start with the area that will provide the greatest return on asset. The OEE formula will show how improvements in changeovers, quality, machine reliability improvements, working through breaks and more, will affect your bottom line.

As you strive towards World Class productivity in your facility, this simple formula will make an excellent benchmarking tool. The derived OEE percentage is easy to understand and displaying this single number where all facility personnel can view it, makes for a great motivational technique. By giving your employees an easy way to see how they are doing in overall equipment utilization, production speed, and quality, they will strive for a higher number!

I highly recommend using an automated equipment monitoring system with an LCD display for your OEE in each respective area of your facility so all can monitor. To the employee in each area, it will become as common to glance at, as the speedometer on a car. While showing machine speed with such a display helps, machine speed is only a small percentage of your overall equipment effectiveness - OEE.

How to use OEE?

Implementing the Overall Equipment Effectiveness formula in your facility can take on many different forms. It can be used as an analysis and benchmarking tool for either reliability, equipment utilization, or both. Don't let indecision on how to best use OEE become a barrier that prevents you from using it at all. Start out small if necessary, picking your bottleneck to collect the OEE metrics on.

Once you see first hand what a valuable tool it is, you can gradually take OEE measurements on other equipment in your facility. If you work in manufacturing , there is no substitute for going out to the shop floor and taking some rough measurements of OEE. You will be surprised by what you find!

While monitoring OEE per equipment brings focus on the equipment itself, it may not provide true cause of major costs, unless the cause is obvious. For example OEE can appear improved by actions such as purchasing oversize equipment, providing redundant supporting systems, and increasing the frequency of overhauls.

To improve your OEE percentage, you will need to use other tools and methodologies available to you, like TDC, RCA, FTA etc. TDC is a relatively new methodology that focuses on True Downtime Cost for justification and making better management decisions.





Calculating OEE

The Formulas

Availability
Availability takes into account Down Time Loss, and is calculated as:
Availability = Operating Time / Planned Production Time
Performance
Performance takes into account Speed Loss, and is calculated as:
Performance = Ideal Cycle Time / (Operating Time / Total Pieces)
Ideal Cycle Time is the minimum cycle time that your process can be expected to achieve in optimal circumstances. It is sometimes called Design Cycle Time, Theoretical Cycle Time or Nameplate Capacity.Since Run Rate is the reciprocal of Cycle Time, Performance can also be calculated as:
Performance = (Total Pieces / Operating Time) / Ideal Run Rate
Performance is capped at 100%, to ensure that if an error is made in specifying the Ideal Cycle Time or Ideal Run Rate the effect on OEE will be limited.
Quality
Quality takes into account Quality Loss, and is calculated as:
Quality = Good Pieces / Total Pieces
OEE
OEE takes into account all three OEE Factors, and is calculated as:
OEE = Availability x Performance x Quality
It is very important to recognize that improving OEE is not the only objective. Take a look at the following data for two production shifts.

OEE Factor
Shift 1
Shift 2
Availability
90.0%
95.0%
Performance
95.0%
95.0%
Quality
99.5%
96.0%
OEE
85.1%
86.6%

Superficially, it may appear that the second shift is performing better than the first, since its OEE is higher. Very few companies, however, would want to trade a 5.0% increase in Availability for a 3.5% decline in Quality!The beauty of OEE is not that it gives you one magic number; it's that it gives you three numbers, which are all useful individually as your situation changes from day to day. And it helps you visualize performance in simple terms - a very practical simplification.



Example OEE Calculation

Item
Data
Shift Length
8 hours = 480 min.
Short Breaks
2 @ 15 min. = 30 min.
Meal Break
1 @ 30 min. = 30 min.
Down Time
47 minutes
Ideal Run Rate
60 pieces per minute
Total Pieces
19,271 pieces
Reject Pieces
423 pieces

Planned Production Time= [Shift Length - Breaks]= [480 - 60]= 420 minutesOperating Time= [Planned Production Time - Down Time]= [420 - 47]= 373 minutesGood Pieces= [Total Pieces - Reject Pieces]= [19,271 - 423]= 18,848 pieces


Availability
=
Operating Time / Planned Production Time

=
373 minutes / 420 minutes
=
0.8881 (88.81%)

Performance
=
(Total Pieces / Operating Time) / Ideal Run Rate

=
(19,271 pieces / 373 minutes) / 60 pieces per minute
=
0.8611 (86.11%)

Quality
=
Good Pieces / Total Pieces

=
18,848 / 19,271 pieces
=
0.9780 (97.80%)

OEE
=
Availability x Performance x Quality

=
0.8881 x 0.8611 x 0.9780
=
0.7479 (74.79%)