What is Overall Equipment Effectiveness (OEE)?
Overall Equipment Effectiveness (OEE) is a leading metric for measuring manufacturing productivity. It identifies the percentage of manufacturing time that is genuinely productive, with a score of 100% representing ideal production, which is achievable under optimal conditions known as the ideal cycle time. While achieving a perfect OEE score is unlikely due to inevitable downtime and minor errors, improving OEE remains critical for optimizing asset performance.
An OEE calculator is a critical tool for measuring overall effectiveness, assessing quality by comparing good parts produced to the total output and performance by evaluating equipment against its potential capacity.
Why is OEE valuable?
OEE acts as both a baseline to track progress and a benchmark for comparing performance against industry standards or similar assets. Beyond a high-level assessment, it reveals where and how to make meaningful improvements by breaking down efficiency into three quantifiable components: availability, performance, and quality, each taking into account specific factors that influence production processes. These metrics simplify bottleneck identification and make problem-solving actionable.
What's your true OEE potential?
To improve production performance and stay competitive, it's essential to use OEE as both a measurement tool and a foundation for setting improvement goals.
Download our overall equipment effectiveness cheat sheet to get a better understanding of the components of OEE. The sheet includes OEE calculation examples.
Benefits of Using Overall Equipment Effectiveness (OEE)
Put simply, overall equipment effectiveness (OEE) is valuable as both a baseline and a benchmark for manufacturing productivity. Used as a baseline, OEE tracks progress for process or equipment efficiency. OEE as a benchmark, however, lets organizations see how their manufacturing processes compare to industry standards, or how a piece of equipment performs compared to a similar asset. It's incorrect to assume OEE only provides a high-level assessment of manufacturing efficiency. The real benefit of OEE is knowing where and how to make improvements. Because OEE breaks down efficiency into hard numbers based on quantifiable components – availability, performance, quality – it makes discovering and addressing bottlenecks more easily identifiable.
Five Tips to Improve OEE
To achieve measurable improvements in productivity, consider these five practical strategies.
Tip 1: Use overall equipment effectiveness to improve collaboration
Overall Equipment Effectiveness is an excellent tool for measuring how productive you truly are based on planned production time and production line performance. It will also give you insight into the actual production count efficiency. Equipment failure significantly impacts production efficiency, leading to lost production time and revenue. Predictive maintenance is crucial to prevent these failures and minimize unplanned downtime.
Identifying and monitoring machine downtime is essential to mitigate operational losses and improve overall production efficiency.
An OEE calculation segments the performance of a manufacturing asset or process into three measurable elements:
- availability
- performance
- quality
Each of these elements ties into a specific aspect of the process improvement recommendations for OEE gains, which can then be evaluated. The result is a better understanding of where and why a piece of equipment fails or is experiencing a performance loss, which leads to more efficient maintenance processes and reduced downtime.
How to perform OEE calculation
The formula for OEE is
OEE = Availability × Performance × Quality
Notice the interdisciplinary and collaborative nature of the formula. To be to calculate your OEE and work on improving your effectiveness you need people, processes, and systems from departments such as Production, Maintenance, Engineering, Warehouse and Quality Assurance working together.
To calculate performance, it is important to consider the total parts produced, including any scrap or rejected parts. This ensures a comprehensive assessment of your production capacity.
Methodologies like Lean Manufacturing and Six Sigma are some examples of methods to use when improving OEE. These frameworks provide actionable strategies such as establishing baselines, monitoring production trends, and adopting preventive maintenance to effectively enhance operational efficiency.
According to research by Reliable Plant, an OEE score of 85 percent is considered "world class OEE" and the average industry benchmark is approximately 50 percent. Whatever your actual score, OEE is only a valuable KPI if you use it to achieve realistic goals.
Tip 2: Set realistic OEE objectives
Know what your APM challenges are and figure out your own objectives, so you know what to aim for. Assess and calculate your true OEE potential based on the design, asset condition and current performance.
You may want to achieve the gold standard of an 85 percent OEE, but it will be challenging to achieve if your current OEE is closer 50 percent. It would be more practical and realistic to set a more incremental goal and gradually work your way up to approach the world-class standard.
Industry benchmarks for OEE vary between sources, industries and organizations mentioning averages as far apart as 30 percent to 70 percent.
Quick reference for OEE benchmarks: 30-60% – 60% – 50-70%
Once you have scoped your improvement potential, you can benchmark your performance score against other sites within your organization or benchmark results of different production lines or even shifts working on the same production line. Whichever approach you decide on, make your goals SMART (specific, measurable, assignable, realistic, and time-related).
Tip 3: Use data to your advantage
Ideally, you would gather production data from all your IT/ OT systems and make them available in one dashboard or KPI overview, so everyone uses the same data in the same way. The roles that usually oversee this, such as Asset Managers or Maintenance Managers quickly realize that this is an enormous task. Manually collecting data is time-consuming and prone to errors, whereas real-time data collection using the Industrial Internet of Things (IIoT) allows for immediate insights directly from machines and equipment, leading to improved availability and quality.
Real-time data collection enhances operational efficiency and supports OEE improvement by providing immediate insights and streamlined data gathering.
Do not panic, you do not transform into an Industry 4.0 or Digital Transformation expert overnight. Start by connecting a few systems, preferably the ones that are most valuable for your OEE KPI. Keep in mind which data indicates what, whether the data is clean and usable, and focus on the data capture that should support the OEE KPIs in a dashboard.
Before you implement any changes, measure the impact of those changes. If you want to change something, first try to find out if there is anything else that needs to be changed before making the new change. This allows you to avoid unnecessary rework and delays.
Tip 4: Prioritize and focus
Which assets are critical for reliable performance and quality standards? What would be the impact if one of these experiences unplanned downtime?
You should prioritize 20-30 percent of your assets as good production and performance depend on them. There are many practical ways of prioritizing your assets based on the production performance dependency. Focus on these assets, particularly critical assets, and start to optimize their performance and their maintenance activities.
Automating data collection and reporting can enhance equipment efficiency and streamline the production process by replacing manual methods and ensuring accurate data capture.
Close the loop – keep track of the performance of your priority equipment and keep improving the maintenance program based on feedback of your data and your maintenance team.
Tip 5: Give preventive maintenance a boost
Preventing failure of your assets (especially your critical ones) is of course essential. A maintenance program increases the lifetime and availability of an asset, which leads to a higher performance rate. It also reduces the risk of equipment failures and process defects.
Usual methods used for preventive maintenance goals are Total Productive Maintenance (TPM), Failure Mode Effects Cause Analysis (FMECA), and Reliability Centered Maintenance (RCM). But do not go into these blindly. Start with the most suitable maintenance program based on your own knowledge and ability, OEM advice, or libraries from an external provider.
- Use the risk based FMECA or RCM methodologies to analyze and optimize your existing routine maintenance process and find a smart way to apply the results to similar assets in your plant for continuous improvement.
- Track how the well the maintenance program can find opportunities for improvement and act on, particularly those that affect the manufacturing process and manufacturing operating productivity.
- Keep in mind that the implementation of the preventive maintenance strategies takes at least as much time as the determination of the strategy. This includes creating work instructions, planning maintenance tasks in your EAM, attaching the right materials, scheduling the tasks and instructing the technicians.
Bonus: Interpreting OEE Results
Interpreting OEE results requires a deep understanding of the three OEE factors and how they impact overall equipment effectiveness. A high OEE score indicates that a manufacturing process is running efficiently, with minimal waste and downtime. A low OEE score, on the other hand, indicates areas for improvement, such as reducing unplanned downtime, increasing performance, or improving quality. By analyzing OEE results, manufacturers can identify trends, patterns, and correlations between the three OEE factors and take data-driven decisions to optimize their production line. Additionally, OEE results can be used to benchmark performance against industry standards or similar productions within the system, providing a baseline for continuous improvement.
Conclusion: Invest to reap the benefits
What's the importance of OEE for your organization? Consider these improvement activities to be a starting point. Measure the OEE results of your efforts, and you will realize that it really pays off to invest in improving PM. However, keep the bigger picture in mind. It is important to improve your OEE tools, systems, maintenance and APM continuously. Is your team up for it? Are they capable of making this big step forward?
The road map of improving your OEE sustainably should include the ability of your organization to take the next step. Define your OEE implementation steps and include getting internal support and seek the advice of maintenance reliability experts to drive change within your APM framework.
Finally, remember that to realize your improvement potential you will have to invest effort, time, and money to reap the benefits later.
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