What Is overall equipment effectiveness – OEE?

In manufacturing, optimization of production is a never ending 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.
Resco Inspections offers solutions for production with a focus on digital maintenance and process streamlining, which helps to better understand and improve 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 6 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.

Greater competitiveness

Being competitive is essential to stay in the market. Having the most efficient OEE helps you understand why you’re not getting used to your full potential and where you are lagging. And by getting insights into your production line, you can correct the inefficiencies.

Usable data

Not utilizing your full potential is the worst a business can do. But, with the help of OEE, manufacturers identify their potential, and they know what they are capable of. It allows them to measure their productivity and improve their performance.

Easy scalability

OEE is scalable, and you can use it for any business. It can be used on any machinery or process, and you can also expand its usage whenever you want.

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.

The big availability losses

1. Equipment breakdowns (Unplanned downtime)

For your unplanned stops and idling, equipment breakdowns serve a significant role. If your operating time is dragged down by unplanned downtime, you need to start working on it.

In this regard, a solid prevention maintenance plan comes in handy. You can use sensors on your crucial equipment to maintain and keep it from breaking down.

Moreover, you can also implement CMMS to maximize your equipment performance. The CMMS solutions have got modules to track the shutdowns and the reasons behind them.

It will not only help you identify the issues but will also assist you in getting over them in time.

2. Setup and adjustments (Planned downtime)

When you’re setting up equipment or making adjustments in it, it requires a lot of your time. If you don’t do it at the right time, it may cause production losses.

If you don’t want this to happen, closely predict the total number of units you require. Then, plan your production accordingly.

Besides, you can also implement the Single-Minute Exchange of Die (SMED) technique that closely observes what happens all the way through your planned stops. Making stops swiftly and eliminating steps will save you from big losses.

3. Product scrap

The deterioration in your equipment is behind most of the defects. It can be eliminated by tracking what kind of defect it is along with monitoring the equipment closely.

This can be efficiently done by a highly skilled maintenance team as they can keep the equipment working.

But, if the asset has lost its efficiency and the number of defects has increased, replacing it makes more sense.

4. Start-up scrap

Reduction in startup production is another major loss that you can face. Replacing the old equipment with the new one makes you excited, but from getting old to new, you might have lost most of the time, and you try to cope with it.

But the new gear takes time and few productions to meet the quality. So, sticking to smaller ones can save you instead of making massive batches. It will let you find solutions for the problems before running full steam, saving both of your time and materials.

Furthermore, do not fall prey to the notion that your new equipment will work the same all the way through the production process. You need to keep a check so that you can resolve any issue earlier.

How to calculate overall equipment effectiveness

The effectiveness of OEE is:

• Making the thing right – manufacturing up to the mark product at the right speed. (Performance)
• Making the thing in the right manner – zero wastage, zero defects, zero rework. (Quality)
• Making the thing at the right time – making production as a planner, maintaining the equipment and reducing the losses. (Availability)

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

– 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:

If we track down the daily day activity. For a standard shift, it requires 480 minutes. For our operation, breaks of 10+30+10 minutes are taken, along with 2 changeovers of 35 minutes each. And during the shift, there is a loss of 60 minutes of machine downtime. The machine was in running mode the rest of the time.

Breaks = 10 minutes morning + 30 minutes lunch + 10 minutes afternoon = 50 minutes

Changeovers = 2 x 35 minutes = 70 minutes

Machine downtime = 60 minutes per shift

Total = 180 minutes lost time

The above calculation shows that 180 minutes are lost, and only 300 minutes of effectiveness are left. If we run the machine for the rest of the time at full potential, we’ll only have 62.5%  effectiveness, that’s called ‘Availability’.

Another example is:

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.

Therefore:

Availability = 6 / 7

Availability = 0,857 or 85,7%

The calculation of OEE performance

Performance = (Total count x Ideal cycle time) / Operating time

– 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

– 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.

OEE Score For Entire Production Line

For getting OEE score for the entire production, the best way is to measure OEE at the piece of equipment that handles the majority of work. If there are non-balanced production lines, it is better to measure OEE at the point of constraint.

How to improve OEE

The importance of data collection for OEE improvement cannot be overstated. Real-time insights, comprehensive reporting, and thorough analysis form the backbone of any successful optimization strategy. In this context, Resco offers free, ready-to-use templates specifically designed for the manufacturing industry. 

These templates empower manufacturers to efficiently track details about their products through customizable checklists, proactively schedule preventive maintenance to minimize downtime, and systematically perform quality audits to ensure consistent performance of production standards.

If you’re looking to make improvements in OEE, you need to implement the best practices.

Many elements influence the overall OEE score. Implementing best practices like preventive maintenance, lean manufacturing, Six Sigma, Theory of Constraints or automation can dramatically improve manufacturing procedures.

These methodologies play a vital role in improving the manufacturing processes but they aren’t easy to deal with.

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.

In addition, there is another effective methodology to improve the OEE, which is IDA (Information, Decision, Action) method. It is considered a highly effective method for improving the OEE. It highlights of 3 factors:

Information: Information is the key facet of IDA. The information must be accurate, relevant, and easily understandable because it is necessary for effective decision-making.

Decision: Decisions play the role of a hinge between Information and Action. It is the point when information is analyzed, and action is then decided accordingly.

Action: It is the final step when decisions are practically performed and outcomes are obtained.

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.

For even more advanced manufacturing insights, try Resco Inspections for free or book a demo to see how we can help with your specific use case.

Serving as a field data collection tool with dynamic forms, Resco Resco Forms is also a relevant power solution for OEE monitoring. It allows you to create customizable forms to record information about equipment performance, production quality, and availability.