GlossaryKind of term: Manufacturing termOEE (overall equipment effectiveness)
What is OEE?
OEE is a measure of how effectively a machine uses its planned production time: availability times performance times quality.
OEE stands for overall equipment effectiveness and applies to a single machine or a whole line. The three factors trace the path from planned production time to good parts, each as its own ratio. Availability is run time divided by planned production time. Performance is ideal cycle time multiplied by the number of parts made, divided by run time. Quality is good parts divided by all parts made. For example, 0.90 × 0.90 × 0.95 gives about 0.77. Each factor points to a different kind of loss; the overall figure alone does not show where the loss lies.
What does OEE depend on?
The result depends heavily on the conventions behind the factors: which stoppages you take out of planned time (breaks, planned maintenance, hours without orders), whether changeovers count as an availability loss or as planned downtime, which ideal cycle time you use (the program time, the best measured time or the estimated time) and whether a part that is good after rework counts as good. In the usual definition only a part that is right first time counts as good, and the ideal cycle time is the shortest achievable time; a more generous ideal time flatters performance. In the usual breakdown a changeover is an availability loss. Measured against calendar time instead of planned time, the figure is usually called TEEP. ISO 22400-2 describes OEE as a key performance indicator for manufacturing operations management, but many companies work to their own definition.
How does OEE work in practice?
OEE is most useful for following the same machine over time under a fixed definition. Comparing machines or shops says little when the conventions differ. In a shop with many small batches, changeovers pull availability down; that follows from the order mix and need not be a fault, although it shows where shorter changeovers pay. In the estimate, each factor feeds a different number. If the estimate uses ideal cycle times while the machine consistently runs slower, actual hours per part come out above the estimate. Scrap calls for extra parts or rework. Breakdowns reduce the productive hours over which you spread the machine cost. If you already charge changeovers as setup time per order, do not also deduct them from the productive hours behind the rate.
What is OEE often confused with?
OEE is not utilisation. Utilisation says what share of available time was spent on orders; OEE says how effectively planned time was used. A machine can be fully booked and still score a low OEE through breakdowns, changeovers, slow running or scrap. Nor is OEE the same as productive hours: those hours feed the hourly rate, while OEE explains where hours are lost.
Frequently asked questions
How do you calculate OEE?
Multiply availability, performance and quality. Availability is run time over planned production time, performance is ideal cycle time times parts made over run time, and quality is good parts over all parts made. Agree which stoppages come out of planned time.
What is a good OEE?
There is no general threshold. The value depends on your definition, your order mix and the number of changeovers. Compare a machine mainly with itself over time, under the same conventions, and look at which factor explains most of the loss.
What does OEE have to do with my machine hour rate?
Indirectly. The rate spreads machine cost over productive hours. Breakdowns reduce those hours; slow running and scrap raise the hours per good part. OEE shows which loss is at work, so you can check the hours and cycle times in your estimate.