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OEE is the common abbreviation used for the manufacturing metric – Overall Equipment Effectiveness. A tightly-controlled and profitable manufacturing strategy will examine a number of process variables that can give a snapshot view of current production, a historic view of production improvements or declines over time, or analyze valuable ‘what if’ scenarios that can project production efficiency when plant floor variables are changed. We’ve previously talked about how to win with OEE software and the top 6 features your OEE software should have. In this post, we’ll dive deeper into how to calculate OEE.

The Overall Equipment Effectiveness metric can be used to examine the efficiency of manufacturing process sub-components such as a specific machine, a single production line, or a stand-alone manufacturing cell. It is particularly useful in discrete manufacturing and must be evaluated in context with the overall manufacturing system – alone, it does not provide enough context and can be misleading.  The OEE Performance Calculation is defined as follows and is further explained below:

OEE = Availability x Performance x Quality

• Availability is the percentage of scheduled time the machine is operating, as referred to as Machine Uptime
• Performance indicates the percentage of a machine’s designed speed at which it has been (or is) operating
• Quality is indicated by the percentage of the Good Units produced to Total Units

Another performance metric derived from OEE is the TEEP or Total Effective Equipment Performance, which is OEE multiplied by a fourth component, utilization:

• Utilization is the percentage of the total time that the equipment is actually used versus what is available in a calendar year.

While OEE can measure the percentage of your factory’s Planned Production Time that is truly productive, TEEP measures the percentage of All Available Time that is truly productive.

The Need for Accurate OEE Calculations

While OEE calculations are not very complicated, they must be carefully considered in order to be valid, especially when aggregated beyond the equipment part number level to include multiple machine processes or manufacturing cell operations. Once the OEE score has been calculated, it is critically important to put it in context and understand what is affecting the score. By doing this, losses can be identified and eradicated.

OEE is a management tool that addresses multiple issues with production by gathering data points that can provide critical information about your manufacturing process. The key to quality process data lies in correctly analyzing and calculating your OEE performance results to glean specific process information that is then used to make continuous process improvement decisions.

Accurate OEE performance calculations can be used as a framework to understand and improve machine availability, machine performance, and production quality by uncovering the root causes and issues that lead to machine downtime, the source of low machine performance, or the discovery of factory floor inefficiencies. Continue reading to discover how to calculate OEE, and which method of OEE calculation is preferred.

The Benefits of OEE Performance Calculations

OEE calculations alone will only provide you with data about your manufacturing equipment or process. The number must be considered in context and used as a means to dig into the “why.” It is best to use OEE as a metric in combination with lean manufacturing strategies and as part of TPM (Total Productive Maintenance) program. When using OEE with these systems, your in-house manufacturing can realize the following benefits which can contribute to increased margins through improved production that results in fewer equipment breakdowns, production line stops, and product defects.

• Reduce the time to investigate the root cause of machine breakdown or production bottlenecks
• Expect a shorter equipment ROI due to increased machine utilization
• A decrease in manufacturing costs due to the elimination of wasted time and activities
• Improvement in product quality resulting in increased customer satisfaction

When OEE calculations are correctly analyzed, and placed in the context of the entire system, it allows companies to create a thriving, continuous improvement environment.

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How To Calculate OEE Performance?

While measuring your equipment performance and manufacturing process will give you valuable data that can be used for continuous improvement, it is important to look at the flip side of this information. Specifically, the production losses that can be viewed from 3 different perspectives.

• The Number of Part Units Lost or scrap in comparison to potential production
• The Number of Time Units Lost through downtime or inefficient production
• The Percentage of Lost Units compared to Planned Production Yields and Time

All three of these metrics can be used to develop strategies for improvement. When you view your Overall Equipment Effectiveness in conjunction with your continuous improvement program, you can create a powerful roadmap to optimizing production and eliminating production waste and equipment loss.

How effective your manufacturing processes are is the relationship between what you could theoretically be producing on a piece of equipment and what you actually are producing on a piece of equipment. Here is the process for completing an OEE calculation on a piece of equipment:

Simple Calculation

Your basic OEE calculation is an indication of your equipment effectiveness and is defined as the ratio between Fully Productive Time to Planned Production Time. Your Fully Productive Time is your Ideal Cycle Time. This is equivalent to how much time your company manufactured only Good Parts, and did so in as fast a time as possible (Ideal Cycle Time) without any Stop Time (or downtime). The simple calculation is:

OEE = (Good Count × Ideal Cycle Time) / Planned Production Time

Example OEE Simple Calc:

1 shift = 8 hours = 480 minutes

Maximum production speed = 75 products per minute

480 x 75 = 36,000 units

But, if there were only 18,000 good products on the pallet your effectiveness was only 50%.

Although this is an entirely valid calculation of OEE, it does not provide information about the three loss-related factors in manufacturing: Availability, Performance, and Quality. For that, you would need to use the preferred calculation.

Preferred Calculation for OEE

The preferred way to calculate OEE is based on the three OEE Factors that are Availability, Performance, and Quality.

• Availability – takes into account all the manufacturing events that can interrupt your planned production long enough where you can determine a reason for being down (typically over several minutes of downtime). Availability is calculated as the ratio of Run Time to Planned Production Time:
• Availability = Run Time / Planned Production Time

Your Production Run Time is how much time you had expected to produce or Planned Production Time less Stop Time. Your Stop Time is all the time when your manufacturing process was intended to be running but was not due to Unplanned Stops (machine breakdowns) or Planned Stops (tooling changeovers).

Run Time = Planned Production Time − Stop Time

• Performance – accounts for anything that caused your manufacturing process to run at less than the maximum possible speed while it is running. Performance is calculated as a ratio between Net Run Time to Run Time, and is calculated as:
• Performance = (Ideal Cycle Time × Total Count) / Run Time

Ideal Cycle Time is the fastest cycle time that your process can achieve in optimal circumstances. Therefore, when it is multiplied by Total Count the result is Net Run Time (the fastest possible time to manufacture the parts).

Since the rate is the reciprocal of time, Performance can also be calculated as:

Time Performance = (Total Count / Run Time) / Ideal Run Rate

If your Time Performance calc is greater than 100%, that usually means that Ideal Cycle Time is set incorrectly (such as being too high).

• Quality – is a measure of the manufactured parts that do not meet quality standards, including parts that are scrapped or those that require rework. OEE Quality is similar to First Pass Yield, as it defines Good Parts as parts that successfully pass through the manufacturing process the first time without needing any rework. Quality is calculated as:
  Quality = Good Count / Total Count

Consider your production Effectiveness as:

The ability to manufacture the right product – the right product or SKU at the right speed (Performance)

The ability to make that product in the right way – no rework, no defects, no waste (Quality)

The ability to make that product at the right time – producing as planned, keeping the machine up and running, minimizing time losses (Availability)

Libre can do OEE and more! Its a zero cost tool, designed for manufacturing operations.

Why The Preferred OEE Calculation?

The preferred OEE calculation should help you create an awareness of significant manufacturing problems. Every part of your manufacturing operations should add value to your manufacturing processes. OEE calculations provide a common score to benchmark against best practices. This score can then be used to help understand and identify your losses that can lead to effective and efficient improvements.

The Preferred Calculations can help your productions overcome the 6 Big Losses in manufacturing:

1. Availability Losses such as unplanned stops due to equipment failure
2. Availability Losses from planned stops such equipment set-up and machine adjustments
3. Performance Loss including small stops such as idling machinery and minor equipment stops
4. Performance Loss including slow cycles resulting from reduced speed of equipment
5. Quality Loss in production rejects dues to process defects
6. Quality Loss in startup rejects resulting in reduced yield

With the preferred calculation you get the best-operating equipment insight from how effectively your manufacturing process is running and insights into the underlying causes of lost productivity. Your single OEE numbers help you understand how well your production equipment is doing, while the three OEE numbers of Availability, Performance, and Quality will capture the crucial nature of your losses.

For instance, as your OEE numbers are improving, you don’t want an increase in Availability to be at the expense of decreasing Quality.

First, you must calculate your Availability, which accounts for when the equipment or process is not running (both Unplanned Stops and Planned Stops). Then, you want to look at Performance to determine when a process is running slower than its theoretical top speed (both Small Stops and Slow Cycles). Then you will access the Quality of your operations which accounts for manufactured parts that do not meet quality standards.

Finally, OEE is calculated by multiplying the three OEE factors.

OEE Formula: Availability × Performance × Quality

By comparing the Preferred OEE calculations on one piece of equipment or tool on a monthly basis, you can determine if that machine is getting better or not. More importantly, you can identify where your losses are and eliminate them. By looking at the three different components you can also understand the trend of the machine. From here, you can make asset valuations on how to improve your overall equipment effectiveness for continuous production improvement.

Contact us to learn how Libre can offer valuable insight into your equipment and production performance. Libre provides real-time performance metrics that can help guide decisions for continuous improvement. Zero software licensing costs and it’s completely scalable.