Making sense of OEE: What it is and why it matters (Improve OEE)

Making sense of maintenance metrics: Overall equipment effectiveness

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Welcome to our series of blog posts about maintenance metrics. This post outlines everything you need to know about overall equipment effectiveness (OEE), the benefits of OEE, and how to improve OEE. Click here to see the rest of the series.

Table of contents

What is overall equipment effectiveness?

If you’ve had a job, you’ve likely had a performance review. Maybe it was a harsh critique at the hands of your boss. Or maybe it was a helpful experience where you learned something and moved your career forward.

Whatever your encounter, the goal of a performance review is straightforward — to help managers understand if employees are doing a good job and where they can do better.

Overall equipment effectiveness (OEE) is like a performance review for assets. It measures how well an asset is doing its job. In a manufacturing facility, an asset’s job is to make things, and OEE is a tool for determining how well an asset makes those things. In doing so, it tells you a lot about the efficiency of your manufacturing process and where it can be improved.

The OEE formula

The most common way to calculate OEE is by multiplying three factors: asset availability, asset performance, and production quality. Each one measures a different part of an asset’s job and how well it’s doing in that area.

Availability – How often does the asset function when needed?
Performance – How much does the asset produce?
Quality – How many high-quality items does the asset produce?

Let’s break down the formula for OEE by each factor:

Availability = Total run time of an asset ÷ Total planned production time of an asset
Performance = Actual system throughput ÷ Maximum possible throughput
Quality = Number of usable units produced ÷ Number of total units started

We took a more in-depth look at each of these calculations here. When crunching the numbers, remember to exclude planned shutdowns, such as preventive maintenance, holiday shutdowns, and similar periods.

When you have these three numbers, you can use them to figure out OEE.

OEE = Availability x Performance x Quality

Making an effort to analyze and improve OEE can help you make a simple change in your maintenance practices. . .and lead to big improvements on the production floor.

Here’s one quick example. If availability is 92% (0.92), performance is 89% (0.89) and quality is 97% (0.97), your OEE calculation would look like this:

OEE = 0.92 x 0.89 x 0.97
OEE = 0.794 (79.4%)

In order to get 100% OEE, your facility would have to produce perfect products, as quickly as possible, with no unscheduled downtime. This is near-impossible to achieve. World-class OEE is considered to be 85% or better, and the average OEE score is around 60%.

World-class Average
Availability 90% 79%
Performance 95% 80%
Quality 99.9% 95%
OEE 85% 60%

What are the benefits of OEE?

Availability, performance, and quality are all tied to maintenance, which makes OEE an extremely useful tool for improving your operation. Conducting an OEE analysis and finding ways to improve OEE helps you uncover areas ripe with opportunity by connecting the dots between machine performance and maintenance performance.

Give your preventive maintenance program a boost

Tracking OEE allows you to see when and where poor maintenance practices are creating a disastrous domino effect. Relying too heavily on reactive maintenance leads to more equipment breakdowns (availability), which stops them from making goods (performance), and increases the chances of defects (quality). When you know where the weaknesses lie in your preventive maintenance program, it’s a lot easier to take action, improve OEE, and solve the problems.

In order to get 100% OEE, your facility would have to produce perfect products, as quickly as possible, with no unscheduled downtime…World-class OEE is 85% or better, and the average is around 60%.

Target inefficiencies and eliminate them

Preventive maintenance alone doesn’t guarantee better asset performance. You can be doing all the PMs you want, but it won’t matter if they aren’t the right tasks, done by trained technicians, with the right tools and a proper timeline. Measuring OEE uncovers if any of these elements are out of whack so you can fix them. If availability, quality, or performance are suffering on an asset, it’s probably time to audit your PMs on that machine and make changes where necessary. This ensures work is done faster and done right.

Reduce common causes of equipment failure

OEE can help you eliminate issues that wreak havoc on your organization. These issues are generally grouped into what are called the big six losses: Equipment failure, setup/adjustment time, idling or minor stoppages, reduced speed, production defects, and startup defects. You may know that you have production problems, but aren’t sure what they are, how bad they are, or how to fix them. Looking at the three elements of OEE allows you to identify which of the big six are affecting your operation the most, and the steps necessary to address them.

How to improve OEE and your maintenance operation

OEE is just a number until you can turn it into insights, decisions, and action. Making an effort to analyze and improve OEE can help you make a simple change in your maintenance practices, like the way you order inventory or complete work orders, and lead to big improvements on the production floor.

Availability

What brings it down: Breakdowns, machine idle time, machine adjustment time, and machine stoppages.

How maintenance can improve it: Maintenance can target the causes of low availability with three main strategies — preventive maintenance, improved inventory management, and better access to information. A fine-tuned preventive maintenance schedule will lead to fewer failures and stoppages as problems can be spotted ahead of time. Tracking spare parts usage makes repairs quicker, cutting downtime, idle time and minor stoppages. Lastly, having manuals, work order histories, and other resources at your fingertips reduces repair time and gives technicians exact specs for adjustments, so they are quick and accurate.

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Performance

What brings it down: Poorly operating equipment, inefficient work processes, material variations, lack of lubrication, and aging assets.

How maintenance can improve it: The key to boosting asset performance lies in optimizing planned maintenance and increasing standardization. Low performance usually points to an issue with a specific part or PM task, such as bearings that aren’t lubricated or a belt that isn’t serviced regularly. Refining your preventive maintenance triggers or adopting a condition-based maintenance approach catches these problems before they impact performance. Once PM tasks are scheduled, standardizing them is crucial. Take it one step at a time with little changes, like attaching task lists to work orders, to ensure things are done properly and efficiently.

Quality

What brings it down: Poorly maintained equipment, system misalignment, inconsistent raw materials, and haphazard troubleshooting.

How maintenance can improve it: Poor product quality can be addressed by improving maintenance processes and making consistency a top priority. Process failures are at the root cause of many defects. For example, if gauges are set differently between shifts or if every technician aligns a system differently, it could lead to a rise in subpar products. Building policies, workflows, knowledge hubs, and training programs improve processes, establish consistency, and create a culture of total productive maintenance. A better culture and superior processes lead to less chaos, standard results and higher-quality goods.

The bottom line: Build a foundation for success with OEE

Overall equipment effectiveness is one of the best tools for identifying production issues, solutions for those problems, and where maintenance fits into your strategy. OEE allows you to follow the trail of breadcrumbs from failure, inefficiency and lost production to the root cause of all these headaches, making long-term fixes possible and helping the entire organization succeed.

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