What is overall equipment effectiveness (OEE) and how to boost it?
In manufacturing, optimization of production is a neverending endeavor. But a worthy one. Single improvement at an assembly line can mean tens or hundreds of thousands of dollars in revenue. And it’s during optimization when you might come across the term overall equipment effectiveness – OEE.
What’s behind OEE and how does it help with evaluating productivity? Let’s take a look.
The definition of OEE
Overall equipment effectiveness marks how effectively a production line, equipment, or other assets work considering 3 main factors – availability, performance, and quality. Through OEE, manufacturers can calculate how productive they actually are (How much do we produce?) compared to the full potential of their resources (How much would we produce in an ideal scenario?).
Imagine an 8-hour production shift. In that time, there might occur situations when the assembly line doesn’t work at maximum performance. There’s downtime, equipment malfunctions, or issues that slow down production for a few minutes.
All this affects the actual time when the production is at maximum. In the ideal scenario, the shop floor would run all the scheduled time (the availability factor), at the highest speed (performance factor), producing only non-defective products (quality factor). Such line has an OEE ratio of 1.0 or 100%.
While the perfect result can be often too challenging and costly to achieve, there are important reasons to strive for improving your OEE.
Why is OEE important
There are 3 major benefits of analyzing production through overall equipment effectiveness:
- Increasing output capacity
OEE helps to identify bottlenecks occurring in processes. The key is the collection and thorough analysis of data in real-time. By predicting and eliminating equipment malfunctions, you can mitigate one of the biggest problems in manufacturing – downtime.
- Decreasing costs
Preventive maintenance based on the OEE data has another benefit. By successfully preventing expensive repairs and prolonged downtime, you can keep equipment-related costs in check.
- Improving productivity and revenue
The end goal of OEE optimization is simple. To produce more goods in the same amount of time. Combined with increased production quality, eventually, you will be able to serve more customers. And that helps in achieving the bigger goal – increased revenue.
How to calculate overall equipment effectiveness
When calculating OEE, we are taking the factors of availability, performance, and quality into consideration.
The general equation of overall equipment effectiveness is:
OEE = Availability x Performance x Quality
But first, you need to calculate each factor’s value.
The calculation of OEE availability:
Availability = Operating time / Planned production time
Operating time – The actual time when the line is producing goods
Planned production time – A scheduled time when the line should be running
Example of the availability equation: Imagine an 8-hour shift during which a manager scheduled a 7-hour production time. But there was an unexpected 1-hour downtime, lowering the actual operating time to 6 hours.
Availability = 6 / 7
Availability = 0,857 or 85,7%
The calculation of OEE performance
Performance = (Total count x Ideal cycle time) / Operating time
Total count – A number of products produced during a scheduled time
Ideal cycle time – A minimum time in which you can produce a single product
Example of the performance equation: Let’s say you are able to assemble one product in minimum of 5 minutes. During a 6-hour production time (360 minutes) the line was able to produce 65 items.
Performance = 65 x 5 / 360
Performance = 0,903 or 90,3%
The calculation of OEE quality
Quality = Good pieces / Total number of pieces
Good pieces – The number of produced products that meet quality standards
Total number of pieces – The number of produced products including defective pieces
Example of the quality equation: In our case, a manufacturer produced 65 products, five of which were defective.
Quality = 60 / 65
Quality = 0,923 or 92,3%
So what is the OEE score in our example?
OEE = Availability x Performance x Quality
OEE = 0,857 x 0,903 x 0,923
OEE = 0,714 or 71,4%
So the line works on 71,4% of its full potential. But is that number any good?
What is a good OEE?
As we already mentioned, the perfect score of 100% overall is an ultimate goal. But in real-life scenarios, consider a set of intervals when evaluating the level equipment effectiveness in manufacturing.
40% – 60% – You are probably at the beginning of evaluating production processes through OEE. There‘s a lot to improve, but if done right, the gains will be significant and quick.
60% – 80% – Your production processes are in decent shape with attractive potential for improvement.
80% – 100% – This is where things get serious and you are doing a world-class job in optimizing your production. At this level, further gains become more marginal, so make sure to consider costs when trying for perfection.
How to improve OEE
But it all starts with data collection. Real-time insights, reporting, and analysis are the backbone of improvements. Based on data, you are able to identify the bottlenecks, weak spots, and ineffective processes.
Asset maintenance also comes into place. By getting an overview of machines, equipment, or supply chain, managers can introduce upgrades like automated spare parts and work order scheduling.
What software do you need to collect OEE insights?
If you want to gather benchmark data for evaluating OEE, Resco offers free templates designed for manufacturing that will help you get going. You can easily track details about your products through various checklists, schedule preventive maintenance, or conduct quality audits.