Complete Guide to Overall Equipment Effectiveness (OEE)


Table of Contents

Introduction: What is OEE?

Overall Equipment Effectiveness (OEE) measures the productivity of a machine. OEE takes the performance of a machine and multiplies it with its relative capacity and the quality of its output. The result is a score represented as a percentage for a specific scheduled run.

How to calculate OEE

The formula for calculating the OEE of a machine is simple:

OEE = A x Q x P

OEE = Availability * Quality * Performance

Availability is the measured amount of uptime of a machine during the scheduled manufacturing run. 

Availability = Uptime / Scheduled Run Time

Quality is the number of units produced in a scheduled run time that meet the quality control levels and do not possess defects, divided by the total number of units that are produced in that scheduled run time.

Quality = Acceptable Units / Total Units

Performance is measured as a percentage of throughput of the machine, compared to its actual overall capacity.

Performance = Throughput / Ideal cycle time

Different methods of calculating OEE

The definition of OEE above is a widely used industry standard definition. However, OEE can be calculated in different ways, to fit the needs of specific operations in an organization. A common way OEE is changed involves simplifying the variables involved:

Simple OEE = (Ideal Cycle Time x Good Parts) / Planned Production

Utilizing the more traditional OEE formula of OEE = A X Q X P gives more insight than the simple formula, allowing you to better implement changes.

Another way OEE can be changed is by adjusting the way you calculate variables:

For example, if your shop is running a training for an operator, you may not want to calculate it in your overall OEE until the operator is fully trained. So you may calculate:

OEE = ([Uptime / Scheduled Run Time] – Training Time) x Performance x Quality

Changing the basic OEE calculation can add complexity, but may provide insight into specific data that your organization is interested in.

However you chose to calculate your OEE, capturing it with a digital tool that allows configurability is essential to effectively managing OEE.

Chapter One: Why Measure OEE?

Making informed, data-driven decisions is key to the success of any organization. Measuring OEE is a valuable metric to help you make set and test hypotheses and make good decisions. OEE allows you to get ahead of maintenance or bottlenecks, and reduce the amount of non-value-added time in your process. 

OEE as a diagnostic metric

OEE is ultimately a diagnostic metric. In other words, your OEE score alone doesn’t tell you much by itself. But because OEE provides you with an overview of the factors that make up operational efficiency, it gives you an opportunity to drill-down deeper into the common causes of production problems. 

Benefits of tracking OEE

Some of the core benefits of measuring OEE include: 

  • Improved quality
  • Higher first pass yield
  • Less unplanned downtime
  • Higher machine utilization
  • More accurate cycle times

Chapter Two: OEE vs OPE

While OEE captures a picture of machine performance, Overall Process Effectiveness, or OPE, adds a missing element: humans.

OPE includes a wider range of variables, including all steps of an operation, making it an end-to-end measurement of your entire process stream.

Most importantly, OPE includes the humans working around the machines, and accounts for human activity for a holistic picture of machine performance.

This value stream illustrates the human processes that OEE can’t always account for in a production operation.

Here are some questions to help you understand why OPE is important: 

  • Are changeovers occurring efficiently?
  • Are the right tools available to workers?
  • Are humans working efficiently between machine processes? 
  • Is there non-value-added time slowing production?
  • Are materials available when they’re needed?

All of these are factors that can impact operational efficiency that have nothing to do with machine performance. All of these can lead to bottlenecks in production. By monitoring just OEE, you won’t be able to account for these human factors.

Chapter Three: Automating your measurement with an OEE Calculator

Keeping track of OEE on paper or with a spreadsheet can be resource intensive. It can result in subpar data.

By using an OEE calculator, you can quickly calculate OEE on the fly with an industry standard definition, or a definition calibrated to your specific needs. With Tulip, you can build configurable OEE calculators that reflect the metrics most important to you.

OEE calculator apps can simplify your data collection

Here’s an example of an OEE calculator application built in Tulip. It breaks down into four simple steps. 

The steps:

  1. Select your machine
  2. Select a job
  3. Record your production data
  4. Calculate and submit your OEE

1) Select your machine

This OEE calculator app’s first step is to select your machine

Beginning your OEE calculation, the first step is to select the machine(s) (or process) that you would like to track. In the image above, you can see the machines available in a list. These machines are stored in a table, and can be configured or linked with machine monitoring capabilities.

2) Select a job

This section shows information related to your machine’s job

To add context to the OEE information you are tracking, the next step in the calculator app will be to select a job. This provides specifics about the operations, and allows you to log work orders or other information. Adding a job will not impact the equation or OEE, but can help when triaging issues that arise.

3) Record your production data

Here an operator can log data manually or automatically with machine monitoring

This step prompts operators to enter the information needed to calculate OEE. Setting the stage for the calculation is important, and there is room for operators to enter any notes as well that they see fit. With machine monitoring, the production data can populate automatically.

4) Calculate and submit data

With all of the information input, you can calculate your OEE score and submit it

Here operators have two options by default: the ability to calculate and display OEE, or calculate and submit OEE to be logged for a record. This allows operators to check to see if their OEE calculations are inline with the information they input. Once the data is submitted, it can be analyzed in an OEE dashboard.

With a calculator application, recording OEE at any point in your production becomes a simple task.

Chapter Four: Tracking OEE with an OEE Dashboard

An OEE Dashboard is a tool for visualizing production. OEE dashboards display real-time OEE metrics in an easy-to-understand, visual format. The nature of the dashboard makes it easy to display in a public place, and can be run alongside other forms of visual management.

An OEE dashboard example, visualizing metrics for machines on a shop floor

OEE is usually measured at a few levels.

  • Individual machine level
  • Department level
  • Shop level

With a dashboard, you can choose a granular or holistic view – looking at a single machine’s performance, or the performance of a full machine shop. 

A dashboard view of a single machine’s OEE

Looking at OEE holistically for a shop level gives you a summary of your entire operation. This single value is useful for looking at a shop’s overall productivity in a specific timeframe.

Dashboards can show real-time, daily, quarterly or other cadence of data. This lets you track problem areas, and monitor improvements. For example, viewing OEE by machine type, and time can provide you with a detailed view of a certain aspect of your production.

Dashboards can show OEE data when you need it, how you need it

The insight brought by OEE analytics is configurable to your needs. Pareto charts can be used to show common downtime reasons, defects and more. You can also track OEE against performance metrics, which can inform decision-making and empower your workforce.

Conclusion: The Final Takeaways

With this guide, we’ve gone over:

  • What Overall Equipment Effectiveness (OEE) is and how to calculate it
  • Why you should measure OEE
  • OEE vs. OPE
  • How to automate OEE with a calculator app
  • Tracking OEE in an OEE dashboard

It may seem like a lot, but with applications designed specifically for tracking OEE in your workflow, it is easy to take this vital step towards digitizing your operations.

If you don’t already track OEE, it can help you unlock vital performance information. 

If you do track OEE, embracing digital technology can reduce the workload around tracking OEE and other metrics.

This simple step can have a huge improvement in the efficiency of a manufacturing operation, and is a first step towards transforming your operations with machine monitoring and powerful analytics.

We can help you get started with tracking OEE today. Get in touch.

Tulip’s flexible and intuitive manufacturing app platform helps manufacturers thrive during Industry 4.0. Using Tulip, engineers can create applications that guide operators and collect data from the people, machines, and processes involved in production. With Tulip, companies can digitally transform their shop floors and gain real-time visibility of their production in days. Get a free demo to learn more!


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