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what is oee?

What is OEE?

OEE (Overall Equipment Effectiveness) is the standard for measuring manufacturing productivity and analyzing the equipment performance. It identifies the percentage of manufacturing time that creates a product that can be delivered to the customer. Evaluates how efficiently a machine, your work force and the process is being used or performed. By optimizing OEE, you can improve quality and increase efficiency in your production lines. It helps to increase the capacity of your shop floor.

Why OEE is important?

Machine Utilization, quality of the produced goods & performance of the Machine / Operator are the core of any production industry. OEE is one common metric that defines all the three put together. The higher the OEE, the shop floor produces higher number of shippable products and lower will be the cost used to produce a part that can be sold to customers. This is especially true for the long term, but often for the short and medium term as well. These include adding new transitions, increasing overtime, purchasing new piece of equipment, outsourcing production or opening a new facility. Currently, the OEE score of 85 percent is considered exceptional. The truth is, many manufacturing facilities are falling behind this rate ( around 40%), in need of making continuous improvement. There is a lot of scope for improving the productivity and eliminating waste with OEE metric on a day to day, month on month & year over year.

Best Practices in Tracking OEE

You can never compare Apple with Oranges . All shop floors or production process is not the same. Every process is different in some way or the other based on the process and the person involved.

oee tracking


  • Don’t compare your OEE with a different process
  • Compare yourself with yesterday, last month and more. A growing trend is important.
  • Use the right OEE measurement tools and right calculations specific to your process.
  • Measure the shop floor data on the Availability, performance and quality.

OEE Benchmarks (World-class OEE)

OEE is the ratio of the total production time to the planned production time. It is calculated as a product of its three component factors:




oee metrics

OEE = Availability * Performance * Quality

The nature of this calculation makes it very challenging to achieve a high OEE score. For example, if all three factors were 90%, the resulting OEE would be only 73%.

In practice, the generally accepted world-class goals / industry standards for each factor are completely different from each other.

OEE Factors

Utilizing the preferred OEE calculation makes it easier to require action against the underlying causes of lost productivity.


Utilizing the preferred OEE calculation makes it easier to require action against the underlying causes of lost productivity.

Availability is calculated as a ratio of Run Time (operating time) to Planned Production Time:

Availability = Run Time / Planned Production Time

Runtime is simply the Planned Production Time where the stop time is limited to all times during which the production process is running, but not due to unplanned stops (e.g., breakdowns) or scheduled stops (e.g., change).

Run time = Planned Production Time – Stop Time


Performance takes into account anything that runs at a speed lower than the maximum possible speed when the production process is running (including both slow cycles and short stops).

Performance score is the ratio between net run time to runtime. It is calculated as :

Performance = (Ideal cycle time * Total time) / Run time

The Ideal cycle time is the fastest rotation time that your process can achieve under optimal conditions. Therefore, when multiplied by the total count, it is the net runtime (the fastest time to manufacture the components).

Since the ratio is a reciprocal of time, the performance can also be calculated as follows:

Performance = (Total count / Run time) / Ideal run rate

Efficiency should not exceed 100%. If it is, it usually indicates that the ideal cycle time is set incorrectly.


Quality takes into consideration manufactured parts that don’t meet quality standards, as well as parts that need reworking. Remember, the OEE standard is similar to the first pass yield, in that the good parts define the parts that pass the manufacturing process successfully for the first time without the need for any rework.

Quality score is calculated as follows:

Quality = Good count / Total count

This is equivalent to taking the ratio of full production time (only good parts produced as quickly as possible without stop time) to net run time (all parts produced as quickly as possible without stop time)

OEE Calculation

OEE takes into account all losses and measures the actual production time as a result. It is calculated as :

OEE = Availability X Performance X Quality

If the equations for availability, performance and quality are changed to the above and reduced to their simplest terms, the result is:

OEE = (Good count × Ideal cycle time) / Planned production time

This is the “simple” OEE calculation described earlier. Also, multiplying a good count by the ideal cycle time, as described earlier, results in a full production time (producing only good parts, as quickly as possible, without stopping time).

Six big losses

Three OEE Factors map for six big losses provides a robust and manageable framework for categorizing your losses. This makes it easier to see where your progress efforts will have the biggest impact. Common causes of equipment-based production losses in production.

First, let’s characterize the six big losses

Availability loss

  • Unplanned Stops – Machine / Equipment failures
  • Planned Stops – Setup and Adjustments

Performance loss

  • Small Stops – Idling and minor stops
  • Slow Cycles – Reduced speed

Quality loss

  • Production Rejects – Process defects
  • Startup Rejects – Reduce yield

Overall, Six Big Loss is the name and categorizes the problems that manufacturers face every day. Continuing to work within this framework to take action, one loss at a time, will constantly improve the OEE score.

Shop floor metrics (TAED)

OEE is a great tool for managers, but it can be a bit brief for shop floor employees. The shop floor employees will perform better when delivering real-time, easy-to-understand and highly motivating goals. The best example of an effective set of plant floor measurements is TAED:

  • Target : Real-time production target driven by the planned production rate
  • Actual : Actual production number
  • Efficiency : Goal ratio and actuality; How far forward or backward the production is based on a percentage
  • Downtime : Accumulated unplanned stop time for real-time updated change; It has a strong focus on a key action development area


Get started with your OEE implementation!