Overall equipment effectiveness (OEE) is a term used to evaluate how efficiently

a manufacturer's operation is being used. In other words, overall equipment

effectiveness helps you notice a problem in your operations, identify which
percentage of manufacturing time is actually productive and fix it while giving you
a standardized gauge for tracking progress. The goal for measuring your OEE is
continuous improvement.

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Overall equipment effectiveness is a powerful figure. It provides a lot of

information in one number, so there are multiple ways OEE is used to measure
manufacturing productivity. When calculated and interpreted correctly, it can
significantly maximize your production.

 An OEE score of 100 percent is considered perfect production, meaning

you're only manufacturing quality parts as quickly as possible with no
downtime.

 An OEE score of 85 percent is considered world class for discrete

manufacturers and is a sought-after long-term goal.

 An OEE score of 60 percent is typical for discrete manufacturers and

shows there is considerable room for improvement.

 An OEE score of 40 percent is considered low but not uncommon for

manufacturers just starting to track and improve performance. In most
cases, a low score can easily be improved through easy-to-apply
measures.

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 The three components - availability, performance, and quality - represent areas that
suffer the biggest losses. Poor product quality with many defects, a slow performance
rate, and lots of stopping and starting makes for an unproductive system. Each
component of the equation has its own definition and calculation as well:
 Availability (A)

 Availability = Run Time / Planned Production Time

 This component takes into account all of the events that prevent production from running. This can include
planned stops such as changeovers and setup time, or unplanned stops such as machine breakdowns.

 Performance (P)

 Performance (P) = (Ideal Cycle Time x Total Count) / Run Time

 This component takes into account all of the events that cause manufacturing to have a slower run rate than the
maximum possible run rate.

 Quality (Q)

 Quality (Q) = (Units Produced - Defects) / Units Produced

 This component accounts for all of the manufactured goods that don't meet the quality standards desired or are
in need of a rework.

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So you've calculated your Overall Equipment Effectiveness and you're getting a value
lower than 100%. What is causing this? For each component, there are a few factors that
could be worsening the effectiveness of your resources.

Available Losses

1. Equipment Failure: This is equipment that is not running when it is

scheduled for production, causing unplanned downtime. Machine
breakdowns, unplanned maintenance stops and tooling failure are
common examples.
 2. Setup and Adjustments: This is production downtime due to
changeovers, machine and tooling adjustments, planned maintenance,
inspections and setup/warmup time.

Performance Losses

1. Idling and Minor Stops: Sometimes called small stops, idling and minor
stops are when equipment stops for a short period of time. This can be
caused by jams, flow obstructions, wrong settings or cleaning. These
issues are usually resolved by the operator.

2. Reduced Speed: Sometimes referred to as slow cycles, reduced speed is

when equipment runs at speeds slower than the ideal cycle time (the
fastest possible time). Worn out or poorly maintained equipment due to
poor lubrication practices, substandard materials and bad environmental
conditions are common causes of reduced speed.

Quality Losses

1. Process Defects: This refers to any defective part manufactured during

stable production, including scrapped parts and parts that can be
reworked. Incorrect machine settings and operator or equipment errors are
common reasons for process defects.

2. Reduced Yield: Reduced yield refers to defective parts made from

startup until stable production is achieved. Like process defects, this can
mean scrapped parts and parts that can be reworked. Reduced yield most
commonly occurs after changeovers, incorrect settings and during
machine warmups.
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Implementing an overall equipment effectiveness strategy is a powerful

advantage in achieving your production targets. It allows you to take a proactive
approach by tweaking manufacturing processes in real time, reducing downtime,
increasing capacity, reducing costs, improving quality and increasing efficiency.

1. Return of Investment (ROI) for Equipment: Companies invest heavily in

machinery, so it's important to maximize the return on this investment. If
you can use an OEE strategy to produce 15 percent more product on the
same equipment in the same amount of time, it can greatly impact your
bottom line.

2. Increase Competitiveness: Manufacturers always strive to reduce losses

during production to achieve maximum competitiveness. Using data from
an OEE report helps you identify bottlenecks or weaknesses in production,
allowing you to take immediate action.

Quality and competitiveness go hand-in-hand, and OEE's quality metric

can help you identify problems in production causing scrap or rework parts.

3. Cutting Machinery Costs: An OEE strategy helps you understand your

equipment's actual performance so you know whether it is working
efficiently. It also alerts you to issues that may lead to future breakdowns
and repairs. Overall equipment effectiveness lets you anticipate potential
machine failure, reducing maintenance costs and downtime.

4. Maximize Workforce Productivity: Use OEE to see why you experience

operator downtime, reveal productivity data and pinpoint long changeovers
or setup times. Information like this helps you appropriately allot resources,
 identify where excess capacity is occurring and determine where you need
new hires.

5. Easily Visualize Performance: Overall equipment effectiveness

emphasizes visibility, letting you visualize production problems instead of
having to rely on your best guess. By highlighting the biggest sources of
productivity losses into one single percentage, everyone can see what's
working and where improvement is needed.