How to calculate and improve the OEE of your production line

In manufacturing operations, Overall Equipment Effectiveness (OEE) is the ultimate benchmark for measuring productivity.

OEE is a straightforward yet powerful metric that has been used for decades, gaining significant popularity over the past decade. Since then, OEE has helped many teams and organizations visualize, monitor, and reduce equipment inefficiencies and waste.

However, there is still confusion surrounding the concept of OEE and the terms “effectiveness” and “efficiency.” This guide aims to clarify these concepts comprehensively.

In this guide on OEE, you will learn about :

What is Overall Equipment Effectiveness (OEE)?
OEE within the framework of Total Productive Maintenance (TPM).
Why is calculating OEE important for your business?
The three components of OEE: Availability (A), Performance (P), and Quality (Q).
How to calculate OEE for multiple machines (with examples).

And much more.

What is overall equipment effectiveness ?

To fully grasp OEE, it is essential to distinguish between “effectiveness” and “efficiency.”

These two terms are often used interchangeably, but while related, they are not identical. Both essentially mean “capable of producing the desired result,” but there is an important distinction :

Effectiveness : The degree to which something successfully achieves the desired outcome.
Efficiency : The ability to achieve the desired result with minimal time, resources, money, and effort.

For instance, suppose a piece of equipment can technically produce 1 000 items per hour but only produces 800 items per hour. In this case, the equipment is 80% effective.

However, if 200 of these 800 items (25%) are deemed defective, the equipment's effectiveness drops to 75%.

Thus, equipment can be 50% effective but 100% efficient, or vice versa: 100% effective but only 50% efficient.

When calculating OEE, it is critical to understand that the focus is on effectiveness, not efficiency.

OEE in the context of Total Productive Maintance (TPM)

OEE is a measurement tool used in Total Productive Maintenance (TPM) programs, a methodology designed to enhance workplace productivity by ensuring all processes are more reliable and energy-efficient.

The primary goal of TPM (Total Productive Maintenance) is to maintain equipment in optimal condition for as long as possible while minimizing issues and damage.

The primary goals of TPM are :

Zero product defects.
Zero unplanned equipment downtime.
Zero accidents.

Within TPM, OEE serves two key purposes:

As a baseline : OEE is used to establish a starting point for tracking improvements in efficiency and waste reduction over time.
As a benchmark : OEE is also useful as a benchmark for comparing the performance of one piece of equipment to another, to industry standards, or to the results of different shifts on the same equipment.

OEE : A pratical definition

OEE is a standardized methodology for measuring the effectiveness of equipment during its defined operational mode or period, where all activities are production-related.

OEE measurement helps organizations and management understand three critical aspects:

How often is the equipment available to operate? (Availability)
How quickly does it produce the desired quantity of products when running? (Performance)
How many products meet acceptable standards? (Quality)

The OEE formula considers these three elements as follows:

Overall Equipment Effectiveness = Availability x Performance x Quality

Why is OEE important and how is it calculated ?

OEE is the primary indicator of machine performance. For most manufacturing companies, knowing how to calculate OEE for multiple machines is beneficial for three key reasons:

Understand your production baseline : Knowing your actual OEE and the ideal OEE score allows you to determine the optimal equipment performance needed to maintain profitability. Establish a lower OEE threshold to ensure production remains cost-effective above this level.
Schedule maintenance proactively : A sudden and sustained drop in OEE below its usual level signals that the machine requires maintenance or repairs. A low OEE score helps identify potential problems, allowing you to restore optimal performance.
Identify underperforming machines : For companies with multiple machines, OEE calculation highlights which equipment is underperforming so the issue can be resolved to boost productivity.

Three key elements in OEE calculation : Availability, Performance and Quality

1. Availability (A)
Availability refers to the duration (in units of time) during which equipment is available to operate, divided by the total available operating time. Availability accounts for breakdowns, unexpected downtimes, and planned downtimes, such as meetings, lunch breaks, and other scheduled pauses.

Availability = B / A, where :
A = Total operating time
B = Operating time
A - B = Downtime

2. Performance (P)
Performance refers to the speed at which the equipment operates during its runtime.

A performance score of 100% means the process is running as quickly as the equipment is theoretically capable during the total available time.

Performance takes into account calculated speed losses, including human errors, hardware errors, jams, etc.

Performance = D / C, where :
C = Optimal operating speed
D = Actual operating speed
C - D = Speed loss

3. Quality (Q)
Quality refers to the number of products meeting specifications or requirements relative to the total number of products produced.

A quality score of 100% means there are no defects.

Quality = F / E, where:
E = Total number of products produced
F = Accepted products
E - F = Defective products

By considering these elements, the following formula can be used:
OEE = B/A × D/C × F/E

ORR score benchmarks

OEE Score Benchmarks

What is the highest OEE score? Here are the generally accepted benchmarks:

100% OEE represents, as you might have guessed, perfect production. The equipment is producing only good products as quickly as possible with no downtime.
85% OEE is considered world-class and is a sustainable long-term goal for most manufacturers.
60% OEE is typical for many manufacturers, but it indicates room for improvement.
40% OEE is considered low, yet it is common for many manufacturing companies. Such low scores can often be improved easily by addressing obvious issues and implementing simple improvements.

OEE calculation example

Suppose we have a machine with the following details :

Total operating time: 16 hours
Machine operates for only about 14 hours during a workday
Theoretical output: 2,500 products per hour (40 000 products per workday)
Actual output capacity: 30 000 products per day
Due to speed losses and minor stoppages: only 25 000 products were produced
Of the 25 000 products, 24 000 meet the desired specifications

Based on this data, we calculate :

Availability Score = Operating Time / Total Operating Time
= 14 / 16
= 87.5%

Performance Score = Actual Speed / Optimal Operating Speed
= 25 000 / 30 000
= 83.3%

Quality Score = Accepted Products / Total Products Produced
= 24 000 / 25 000
= 96%

Finally, the machine's OEE score is calculated as:
OEE = Availability × Performance × Quality
= 87.5% × 83.3% × 96%
= 70%

This equates to 33 600 / 48 000 = 70%, but now we have a breakdown of loss areas to address.

In this example, the equipment has a typical OEE score with considerable room for improvement.

Demande de renseignement

Best pratices for improving OEE and productivity

Once you have calculated the OEE for your machine or production line, how can you improve it?

OEE can be enhanced through various approaches: identifying and eliminating bottlenecks, optimizing maintenance schedules, streamlining workflows, and more. However, the specific actions will depend on the condition of each piece of equipment and its unique efficiency challenges.

Here are concrete strategies to improve OEE:

1. Prioritize critical equipment

Improving OEE across all assets simultaneously can be time-consuming and costly. Focus resources on the most mission-critical equipment, particularly those that influence other assets along the value chain. Concentrate your efforts on these key pieces to maximize overall impact.

2. Automate data collections

One effective strategy to improve OEE is automating production data collection and reporting using OEE tracking software.

Real-time access to production data allows quicker identification and resolution of bottlenecks. Manual data collection is prone to errors and inefficiencies, potentially lowering OEE scores. With IoT advancements, automating data collection, analysis, and reporting has become more affordable and accessible.

3. Use Root Cause Analysis (RCA)

Understanding the root causes of OEE scores is crucial.

Low OEE on a specific machine might originate from issues earlier in the production process. Employ Root Cause Analysis (RCA) to pinpoint the core problems behind OEE losses.

Key Steps in RCA:
1. Define the event.
2. Identify potential causes.
3. Determine the root cause.
4. Develop potential solutions.
5. Take action.
6. Evaluate and verify the solution’s effectiveness.

Addressing the root cause, rather than symptoms, ensures sustainable improvements and prevents recurrence.

4. Address production downtime

Track and investigate all instances of downtime to increase visibility into production issues.

A straightforward approach involves having supervisors log and comment on each downtime event, especially unplanned stoppages. Reviewing these logs at the end of each shift fosters a deeper understanding of downtime causes and how to prevent them in the future.

5. Optimize the work environment

Various negative conditions in the work environment can significantly impact an equipment's OEE. For example, excessive dust inside the machine can greatly affect its performance. Poor lighting conditions can also hinder factory workers' ability to operate the machines effectively, thereby reducing the OEE.

Identify potential issues in the machine's surrounding environment that could affect its OEE and address them accordingly.

Conclusion

Understanding Overall Equipment Effectiveness (OEE) and its calculation is the first step. Implementing strategies to address downtime, speed losses, and quality defects can significantly enhance OEE scores.

Manual tracking of OEE can be labor-intensive and error-prone. Leveraging software solutions allows real-time monitoring of machine downtime and OEE metrics, enabling faster and more accurate decisions.

Ultimately, consistent OEE tracking empowers businesses to improve both qualitative and quantitative performance, ensuring long-term success.