Overall Equipment Effectiveness

Overall Equipment Effectiveness (OEE)

Overall equipment effectiveness is a software development metric used to diagnose a product or machinery's manufacturing productivity and effeteness.

The term OEE was introduced by Seiichi Nakajima San in the 1960s to evaluate the manufacturing operations (how effectively these operations are utilized).

OEE is not a measurement tool, but it is a diagnostic tool that monitors and improves the manufacturing process's effectiveness, including assembly lines, manufacturing cells, and machines.

OEE is used as a critical metric in Lean Manufacturing programs and total productive maintenance (TPM). It also helps reach "zero defect production," and provides essential input for continuous improvements.

Key factors of OEE

  • Availability
  • Performance
  • Quality
Overall Equipment effectiveness

Availability – Availability is the ratio of operating time to the planned production time. It tells about the actual availability of machines for the production out of total available.

Availability = Operating Time / Planned Production Time

Operating time = Planned production time – Downtime

Availability = Available time – Downtime / Available time

Downtime = Losses time, Breakdown, repairs, changeover and setup adjustments, etc.

For example, machine shift is of 12 hours and out of which 1 hour is planned stoppage and 1 hour is an unplanned stoppage, so actual production time is 10 hours, So

Availability : Actual runtime / total available time = 12/ 10 = 0.83                           

Performance:- Performance is the ratio of Net Operating time to the Operating time. Performance is all about the speed of the machine.

Performance = (Ideal cycle time * total pieces) / Operating time


Performance efficiency = running time- performance loss/ operating time.

Losses = idling or small stops and reduced speed

For example:- For actual production time of 10 hours machine can produce 1000 pieces as per standard cycle time, but it produces only 800 pcs, So

Performance: Actual production quantity / Planned production

                               800 / 1000 = 0.80

Quality:- Quality is the ratio of good pieces produced to the total pieces produced. It answers, "how much good quality of material produced during the production?”.

Quality = Good Unit Produced/ Total unit produced


Quality = productive time- quality loss time / productive time


Quality = Total qty. produced – defective quantity / total quantity produced

Losses- Start-up rejects, and production rejects

For example: Out of the Actual produced 800 pcs, 760 pcs are of good quality (acceptable to customer), 20 pieces rejected, and 20 reworked

               Quality = Okay pieces/ Total produced quantity

                  Quality = 760/ 800 = 0.95

Therefore, machine availability is 83%, performance is 80%, and quality is 95% but now what overall equipment effectiveness is? 

How to calculate OEE?

OEE = availability * performance * quality

Overall Equipment effectiveness

OEE = 0.83 * 0.80 * 0.95

OEE = 0.63 = 63%

Purpose and benefits of overall equipment effectiveness

  • Determine the six big losses

The main purpose or goal of OEE is to identify and reduce the six big losses of total productive maintenance (TPM)

The most common causes of equipment-based productivity loss in manufacturing are SSSMCB (6 Big Losses)

QualitySScrap Loss
QualitySStart-up Loss
PerformanceSSpeed Loss
PerformanceMMinor stoppages

With these six significant losses, we can find out about the current significant losses in our machine. These losses have a significant impact on machines; therefore, with this, we can measure them, control them, and down them very quickly.


  • It helps in reducing the quality costs
  • Improves plant productivity
  • Downtime costs are reduced
  • Being an efficient and most effective manufacturer in the market
  • Increase labor efficiency
  • The repair cost is reduced

Methods used to increase OEE

Data collection is a fundamental basis to increase OEE, and this has been divided into three phases.

  1. Collect data for all downtime and losses on the machine.

All the changes happening in the machine are collected in this:

  • Change due to repairs
  • Change over adjustment
  • Tool change
  •  Minor stoppages
  • Scrap, rework
  • Data analysis and visible measure

In this, data is analyzed and prioritized. The top contributed factor is identified, and action is initiated on the factor. We can also monitor the trend of overall equipment effectiveness.

  • Make improvement visible and implement

In this, actions are implemented and could be visible.  Actions can be like:-

  • Standardization
  • Kaizen
  • Standardize tooling
  • Changeover reduction
  • Preventive maintenance
  • Autonomous maintenance
  • Improved machine reliability