A Step-by-Step Guide on How to Calculate OEE

In the world of manufacturing, it is crucial to be able to measure and assess the performance of production equipment. One widely used metric for evaluating this efficiency is Overall Equipment Effectiveness (OEE). OEE provides critical insights into the utilization of equipment and helps identify areas for improvement. This step-by-step guide will walk you through the process of calculating OEE to optimize your manufacturing operations.

Understanding the Basics of OEE

Before diving into the calculation process, let's establish a solid understanding of the fundamentals of OEE.

When it comes to manufacturing, efficiency is key. Maximizing the productivity of equipment and minimizing downtime are essential for success. This is where Overall Equipment Effectiveness (OEE) comes into play.

What is OEE?

OEE, or Overall Equipment Effectiveness, is a metric that measures the performance, availability, and quality aspects of manufacturing equipment. It quantifies the effectiveness of equipment utilization by considering its uptime, actual production rate, and the quality of output.

Let's break down the three components of OEE:

1. Availability: This factor measures the percentage of time that equipment is available for production. It takes into account unplanned downtime, such as maintenance, changeovers, and breakdowns.

2. Performance: Performance refers to the actual production rate of the equipment compared to its maximum potential. It considers factors like speed losses, minor stoppages, and idling time.

3. Quality: Quality measures the percentage of good output compared to the total output. It takes into account defects, rework, and scrap.

By combining these three factors, OEE provides a comprehensive assessment of how effectively equipment is being utilized in a manufacturing process.

Importance of OEE in Manufacturing

In the competitive landscape of manufacturing, it is crucial to constantly monitor and improve operational efficiency. OEE provides a comprehensive view of the effectiveness of your equipment by considering three vital factors: availability, performance, and quality.

By calculating and analyzing OEE, manufacturers can identify areas of improvement and implement strategies to enhance productivity, reduce downtime, and optimize resource allocation.

For example, if the availability component of OEE is low, it indicates that the equipment is experiencing frequent breakdowns or long changeover times. This insight prompts manufacturers to focus on preventive maintenance, reducing changeover time, and improving equipment reliability.

Similarly, if the performance component of OEE is low, it suggests that the equipment is not operating at its maximum potential. Manufacturers can then investigate the causes of speed losses, minor stoppages, or idling time and take corrective actions to increase performance.

Lastly, if the quality component of OEE is low, it highlights issues with defects, rework, or scrap. Manufacturers can implement quality control measures, improve training programs, or optimize processes to enhance the quality of output.

By continuously monitoring and improving OEE, manufacturers can achieve higher productivity, reduce costs, and gain a competitive edge in the market.

Components of OEE

In this section we go into more detail into the three components that make up OEE.

Availability

Availability measures the actual scheduled operating time of equipment (also known as the run time) compared to the planned production time. This metric takes into account factors such as equipment breakdowns and changeovers. A higher availability score indicates efficient utilization of equipment and minimization of downtime.

For example, let's say a manufacturing plant has a planned production time of 8 hours for a particular machine. However, due to unexpected breakdowns and maintenance, the machine is only able to operate for 6 hours. In this case, the availability score would be calculated as 6/8, or 75%. This indicates that the machine was available for 75% of the planned production time.

More broadly, availability is calculated as:

Availability = (Actual Operating Time [aka Run Time] / Planned Production Time) × 100%

Operating time (also known as run time) can be calculated as: 

Operating time [aka Run Time] = Planned Production Time - Stop Time

A key point here is that the Availability measure for OEE only considers scheduled time. If a machine is out for maintenance and is not scheduled for work, then this time should be ignored.

Performance

Performance is another important component of OEE. It assesses the speed at which equipment runs compared to its theoretical maximum output rate. This metric takes into consideration factors such as equipment speed, cycle time, and small stops during production. A higher performance score indicates optimal running speed and minimal time wastage.

For instance, let's consider a machine that has a theoretical maximum output rate of 100 units per hour. However, due to various factors such as equipment malfunctions or operator inefficiencies, the machine is only able to produce 80 units per hour. In this case, the performance score would be calculated as 80/100, or 80%. This indicates that the machine is operating at 80% of its maximum potential.

In practice, the theoretical maximum output rate is determined by the actual operating or run time of the process. To calculate the performance contribution to OEE, you can use the following formula:

Performance = (Ideal Cycle Time x Total Count) / Operating Time

Ideal Cycle Time is the fastest cycle time that your process can achieve in optimal circumstances. When multiplied by the total count of units, the outcome is net operating (or run) rate. This represents the fastest possible time to manufacture the parts.

Given that a rate measure is the reciprocal of time, an alternative measure of Performance is:

Performance = (Total Count  / Operating Time) / Ideal Operating Time

A word of caution! Performance should never be higher than 100%. If it is, this is usually indicative that the Ideal Cycle Time is set too high.

Quality

Quality is the third component of OEE. It evaluates the percentage of defect-free products produced by the equipment. For the purposes of OEE, the quality component is similar to First Pass Yield (FPY) - that is, the percentage of good units that pass through the manufacturing processed the first time without needing any rework. 

Losses due to defects and rework are respectively called quality losses and quality stops. Reworked units that have been corrected are accounted for via unschedule downtime. Scrapped units meanwhile affect both operation time and unit count.

A higher quality score indicates lower waste, better product consistency, and adherence to quality standards.

For example, let's say a machine produces 1000 units in a day, out of which 50 units are identified as defective. In this case, the quality score would be calculated as (1000-50)/1000, or 95%. This indicates that 95% of the products produced by the machine are defect-free.

To calculate the Quality rate, we can apply the formula:

Quality = (Number of Good Units Produced / Total Number of Units Produced) × 100%

where in this particular case:

Good Units Produced = Total Units Produced - Reworked Units - Scrapped Units

Applying the OEE Formula

Now that we have all of the core components, we can derive the OEE number:

OEE = Availability × Performance × Quality

Interpreting Your OEE Score

Understanding and interpreting your OEE score is crucial to identify areas of improvement and optimize production efficiency.

What a Good OEE Score Looks Like

A good OEE score depends on various factors such as industry benchmarks and specific manufacturing goals. However, a score close to 100% indicates optimal equipment utilization, minimal downtime, high production speed, and excellent product quality. It signifies that your operations are running efficiently and effectively.

In the case of discrete manufacturing, an OEE of 85% is considered best-in-class, and is usually set as a long-term goal. OEE scores of 60% are fairly typical for this type of manufacturing.

Improving Your OEE Score

If your OEE score is below expectations, don't fret. OEE provides valuable insights into areas where improvements can be made. Analyze the components individually to identify opportunities for enhancing availability, performance, and quality. Implement strategies like preventive maintenance, equipment optimization, and workforce training to increase overall equipment effectiveness and, subsequently, your OEE score.

By following this step-by-step guide, you can calculate OEE accurately and gain valuable insights into your manufacturing operations. Utilize this information to drive continuous improvement, enhance productivity, reduce downtime, and maximize your equipment's overall effectiveness. Remember, OEE is not just a metric but a powerful tool to optimize your manufacturing processes.