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How to Calculate Overall Equipment Effectiveness (OEE)

OEE is widely being used in manufacturing and service industries for calculating machine ad human efficiency. This is a metric quantity and can be calculated easily. OEE has become an integral part of lean manufacturing principles. In order to initiate any productivity improvement in any organization, it is recommended that OEE should be calculated to make it as a baseline for improvement efforts.

To calculate performance of organization in terms of OEE, we have to divide it into three measurable terms, quality, availability and performance. Each parameter from any manufacturing organization can be selected for improvement efforts. Also one benefit of it is that, it can be applied to whole plant, any single department or any workstation. In this effort 100% OEE is taken as ideal case and cannot be achieved, however 85% is targeted by many organizations.

The formula for calculation of OEE is

OEE = Availability x Performance x Quality

To calculate actual value of OEE, we take example of a manufacturing plant, where machine availability for manufacturing is 87% and performance level of that specific plant is 94% and the component being produced are of 90% good quality. So, the OEE of that plant is

OEE = 87 x 94 x 90 = 73.6 %

Now we look, how to calculate above mentioned three parameters for calculation of our desired values.

To calculate plant availability, we have to first look, how much time a plant is in operation and ready for manufacturing activities. From this time, we subtract planned maintenance and down time (Machine failure, lunch break, tea breaks and idle time). Ultimately we get full operation time. From this time, we again subtract other un-necessary time delays to get net time availability for production. This time delay can be due to unscheduled breakdown, electricity problem, tool and work piece change over time, non-availability of raw material and non-availability of proper tools.

Performance is the efficiency of machine and operator. Machine efficiency may not be up to rated values due to many causes like, wear & tear, misfeed and non-availability of proper tool. And operator efficiency can be less due to less skilled person. If we multiply both efficiencies, then we get performance of operator and machine.

Quality is measured by calculating total number of products produced and form them subtracting rejected and re-work pieces.

To calculate actual value of OEE, we take example of plant, which work on 8 hour sift basis. Rests of values are as follows:

Total time = 8 hour/480 minutes Production breaks = 1.5 hour/90 minutes Machine down time = 20 minutes Ideal production rate of machine = 55 pieces Total production = 17665 Total rejected = 430

Total planned production time = total time – production breaks =480 – 90 = 390 minutes

Total operating time = 390-20 = 370 minutes

Total good pieces produced = 17665 – 430 = 17235 pieces

Machine availability = Total operating time / Total planned production time = 370/390 = 0.9487 = 94.87 %

Performance = (Total production / Total operating time) / Ideal production rate of machine = (17665/370)/55 = 0.8680 = 86.8 %

Quality = Total good pieces produced / Total production = 17235 / 17665 = 0.9756 % = 97.56%

OEE = Machine availability x Performance x Quality

= 94.87 x 86.8 x 97.56

= 80.33 %

Hence the machine overall equipment effectiveness is 80.33%.

Source by Oskar Olofsson

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