# The definition of OEE

OEE stands for Overall Equipment Effectiveness, which is a way of measuring the production efficiency. Read this blogpost and understand why an OEE calculation will benefit your manufacturing company.

## The definition of OEE

OEE stands for Overall Equipment Effectiveness, which is a way of measuring the production efficiency for a manufacturing unit by calculating the gap between actual and ideal performance.

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The term OEE was invented in the 1960s by the Japanese pioneer and creator of the Total Productive Maintenance system, Seiichi Nakajima.

OEE is expressed as a percentage from 0 to 100, where an OEE score of a 100 percent would equal the manufacturing unit operating at full capacity. This is in fact near to impossible, placing the OEE industry standard at 60%, while a score of 85% is considered as world class OEE.

## Understanding OEE

OEE refers more specifically to your manufacturing productivity, measuring how much of the time your manufacturing line is running at full capacity, meaning:

• Running as fast as possible (performance)

• Without any stop time (availability)

• Manufacturing only good parts that meets the manufacturing standards (quality)

By breaking OEE up into these underlining components, performance, availability and quality, you end up with the calculation formula for OEE:

OEE = Performance x Availability x Quality

Knowing these underlining components makes it easier to analyze your OEE, and since each of them describes very specific areas of your manufacturing process, they can be targeted for optimization, leading to an overall increase in your OEE.

### What is performance?

Performance is all about the speed of your manufacturing process. This metric is calculated by taking into account the speed with which your manufacturing unit was designed to be operating at, and then looking at the actual speed of manufacturing.

**OEE performance example:**

Let us use the production of Coca Cola bottles as an example. If our manufacturing unit in theory can produce a bottle per minute, and we need to produce a total number of 500 bottles per shift, each shift should in theory take 500 minutes.

If instead it takes 600 minutes to produce the 500 bottles, we would take the ideal production time of one bottle (1 minute) times the total number of bottles we needed to produce (500) and divide that number with the actual run time (600 minutes), ending up with a performance of 83,3%.

### What is availability?

Availability looks at the scheduled run time of a manufacturing unit, in other words the availability, and compares it to the actual production time, to figure out how much of the planned time the unit was in fact producing.

Any planned or unplanned stops during the timeframe that the manufacturing unit was available for production, would have a negative impact on the availability score (breaks are often subtracted from the scheduled run time).

Utilizing the full availability of a manufacturing unit’s availability, is often more challenging than not. Due to planned stops like the time it takes to change the people handling the unit, or unplanned stops like running low on materials or equipment failure, there will often be a loss of production.

**OEE availability example:**

Let us return to the example of producing Coca Cola bottles. Let us say that a shift at the Coca Cola bottle factory consist of 6 hours, during this period there is a half hour lunch break. After the lunch break the machine breaks down, and do not produce a single bottle for an hour.

In this scenario we find the scheduled run time by taking the 30 minutes break from the total shift time of 360 minutes (6 hours), which gives us a scheduled run time of 330 minutes.

To find the actual production time, we take the planned and unplanned stop time, in this case the 60 minutes breakdown, from the scheduled run time of 330 minutes, which gives us an actual production time of 270 minutes.

Finally we can calculate the availability by taking the actual production time of 270 minutes and dividing that with the scheduled run time of 330 minutes, which gives us an availability of 81,8%.

### What is quality?

Quality is all about producing products that live up to the quality standards. This metric is calculated by taking the actual number of products that meets the quality criterias (good count) and dividing that number with the total number of products, you could have produced in that same timeframe (total count), had there been no bad products.

Important to note, that these numbers should be calculated based entirely on fully productive time, meaning the manufacturing unit producing as fast as possible with no stop time.

**OEE quality example:**

Once again let us use the production of Coca Cola bottles as an example. As we talked about earlier, our manufacturing unit can in theory produce a bottle per minute, and we have an actual production time of 270 minutes, this would give us a total count of 270 bottles.

But let us say that 20 of the Coca Cola bottles did not meet the quality standards for some reason. In this case we would calculate the good count by taking the 20 Coca Cola bottles from the total count of 270 bottles, ending up with a good count of 250 bottles.

Finally we can calculate the quality by dividing the good count of 250 bottles with the total count of 270 bottles, giving us a quality score of 92,6%.