Overall Equipment Effectiveness (OEE)

A metric that is commonly used in Lean Six Sigma is Overall Equipment Effectiveness, or OEE. OEE can be used to help target key areas for improvement. It is a way to measure equipment performance in three major areas where losses or waste may occur. Although OEE is most commonly applied in manufacturing, it can be used whenever equipment of any sort is used in a process.

The first area of performance is Availability. Here we measure the impact of losses due to equipment being unavailable due to breakdowns, or being unavailable while being adjusted or while being changed from one product to another.  The second area of performance is Efficiency. Here we measure the impact of losses due to minor stoppages or due to reduced speed of operation due to equipment deterioration or other causes.  The third area of performance is Quality. Here we measure the impact of losses due to defects or reduced yield.

Overall Equipment Effectiveness is expressed as a ratio or percentage of time that equipment is scheduled to be available. The goal should be that equipment is available at least 85% of the scheduled time, with a higher percentage being better. In practice, OEE is often 60% or less.

We begin by determining the total operating time for the equipment that is being measured. Some operations run 24 hours a day, seven days a week but most do not. For the purposes of this discussion we will assume that operations are planned for eight hours per day, five days per week. This results in a total operating time of 40 hours.

Next, we deduct any scheduled downtime. Say that we plan for 12 minutes each day, or sixty minutes each week, for planned downtime for scheduled maintenance of our equipment. That leaves 39 hours of scheduled operating time.

Availability is calculated by first determining actual Running Time as follows:

Running time = Scheduled Operating Time – Downtime due to breakdowns or changeovers.

Availability (A) is then calculated as follows:

A = Running Time/Scheduled Operating Time.

In our example, say that we experience two hours of breakdowns and changeovers during the week. Availability (A) = (39 hours -2 hours)/39 hours = 37 hours/39 hours = .95

Efficiency (E) is calculated as follows:

E = (Ideal cycle time per unit x number of units produced during running time)/Running Time.

Say that our ideal cycle time is .1 hrs. /unit and we produce 340 units during the week. Efficiency (E) will = (.1 hours/unit x 340 units)/37 hours = 34 hours/37 hours = .92

Quality (Q) is calculated as follows:

Q = (processed units – defective units)/processed units.

Say that out of the 340 units produced, 20 were defective. Quality (Q) = (340 units -20 units)/340 units = 320 units/340 units = .94

OEE is then as follows: OEE = A x E x Q = .95 x .92 x .94 = .82 or 82%.

OEE may be improved in several ways. We can work on reducing breakdowns by performing predictive and preventative maintenance. We can reduce the amount of time require to change from one product to another. We can work on reducing the actual time required to produce a unit to be equal to the ideal cycle time by restoring equipment to its original condition and by eliminating minor stoppages. Finally, we can work on eliminating the root causes of defects. In practice we should work to raise OEE to as close to 100% as possible.

Your comments or questions about this article are welcome, as are suggestions for future articles. Feel free to contact me by email at roger@keyperformance.com.

About the author: Mr. Roger C. Ellis is an industrial engineer by training and profession. He is a Six Sigma Master Black Belt with over 48 years of business experience in a wide range of fields. Mr. Ellis develops and instructs Six Sigma professional certification courses for Key Performance LLC.   For a more detailed biography, please refer to www.keyperformance.com.