Overall Equipment Effectiveness (OEE) Explained
OEE is an acronym which stands for Overall Equipment Effectiveness. It is a metric widely used in many manufacturing/process industries alongside other techniques such as Failure Mode & Effect Analysis (FMEA), Layer of Protection Analysis (LOPA), Hazard Analysis & Operability (HAZOP) study, Bow Tie Analysis (BTA) and many others. While LOPA, HAZOP & BTA are specifically used in process safety engineering, and FMEA used in product management or say, product development, OEE is used in process improvement. It is an important metric which helps to determine how often equipment is available for work, how well the equipment does when it’s running, and how many quality products the equipment produce per cycle.
OEE is measured in percentage (%), calculated as the product of availability, performance, and quality. It is a model having its root in total productive maintenance (TPM), and serving as a useful framework for improving process operations and achieving greater efficiency on the shop floor. An OEE score of 100% means you are producing or manufacturing only Good Parts (quality), as fast as possible (performance), with no Stop Time (availability). What that means is 100% Quality (only Good Parts), 100% Performance (as fast as possible), and 100% Availability (no Stop Time).
Benefits of Overall Equipment Effectiveness (OEE)
Overall Equipment Effectiveness (OEE) is an important technique for:
- Discovering losses in manufacturing processes such as in process startup, minor stoppages or idling and others,
- Benchmarking progress by comparing your company’s operational successes/progress against that of your competitor’s to see if there is a gap in performance that can be closed through process improvement in order to gain a competitive advantage. As a benchmark, OEE score of 100% indicates perfect operation, 85% indicates world-class operation, 60% OEE is fairly typical for discrete manufacturers and indicates that there is much room for improvement in the process.
- Improving the productivity of process equipment through waste elimination such as in setup & adjustment, equipment breakdowns or failures etc.
Elements of Overall Equipment Effectiveness (OEE)
The OEE score shows the overall health of your process, but doesn’t necessarily tell you where you should focus your improvement efforts. The three elements of OEE which are Availability, Performance, and Quality are what indicate where your process improvement efforts should be focused on.
- Availability: Availability is measured in percentage and, it represents the scheduled time that the process is available to run. It takes into account ‘Availability Loss’, which includes events that stop planned production for a significant period of time such as breakdowns and setup & adjustments. Availability score of 100% means that your process is running without any stop during the time it has been scheduled to run.
- Performance: Performance refers to the speed at which the process is actually running compared to its designed speed. It is measured in percentage. Performance takes into account ‘Performance Loss’, which includes anything that causes the process to run at less than the speed it was designed and capable of running when it is in operation. Examples include idling and minor stops and reduced speed. Performance score of 100% means that when your process is running, it is running as fast as possible.
- Quality: This refers to the quantity of good units produced as a percentage of the total units for production. OEE Quality takes into account ‘Quality Loss’, which includes parts that do not meet quality standards such as production rejects, start-up rejects etc. 100% Quality means that your process is yielding only good units.
OEE Analysis
- All Time: This is the 24/7 time which includes every minute of the day.
- Schedule Loss: This is time that with which we have no intention of running production such as plant shutdowns, breaks/lunches, or periods where there are no orders. This time should be excluded from OEE analysis.
- Planned Production Time: The remaining time after the schedule loss has been subtracted is the Planned Production Time. OEE analysis starts with Planned Production Time putting into consideration all losses in productivity that occurs during this period.
- Run Time: This is the remaining time when events that stop planned production for an appreciable length of time (usually several minutes; long enough for an operator to log a reason) is subtracted.
- Net Run Time: This is the remaining time when events that causes the process to run at less than the maximum possible speed when it is running (including both Slow Cycles and Small Stops is subtracted. It is the fastest possible time to manufacture a part.
- Ideal Cycle Time: This is the fastest cycle time that your process can achieve in optimal condition.
- Fully Productive Time: This is the remaining time when parts that do not meet acceptable quality standards is subtracted.
- Availability: Availability is calculated as the ratio of Run Time to Planned Production Time, that is, Availability = Run Time / Planned Production Time, where is Run Time = Planned Production Time − Stop Time.
- Performance: Performance is the ratio of Net Run Time to Run Time. It is expressed as: Performance = (Ideal Cycle Time × Total Count) / Run Time.
- Quality: Quality is calculated as the ratio of Good Count to Total Count that is, Good Count / Total Count. This is the same as the ratio of Fully Productive Time to Net Run Time that is, Fully Productive Time / Net Run Time.
Combining points 8 – 10, results in
OEE = Availability × Performance × Quality (i)
If the equations for Availability, Performance, and Quality are substituted in the above and reduced to their simplest terms, the result is:
OEE = (Good Count × Ideal Cycle Time) / Planned Production Time (ii)
Equation (i) requires values for Availability, Performance and Quality for calculation which can be gotten from point 8 – 10 accordingly, while equation (ii) can be calculated directly given values for each of the parameters (i.e. good count, ideal cycle time and planned production time). Equation (i) is the preferred method of calculating OEE because it captures how well your process is running (OEE) and provides insight into the three values that capture the fundamental nature of the losses associated with your process - Availability, Performance and Quality.
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About the Author
Olanrewaju, Adebayo Bamidele is a Lead Auditor of ISO 9001, FSSC 22000 / ISO 22000, 14001 & 45001 Management Systems, Certified Six Sigma Master Black Belt (CSSMBB), process engineer, and quality management professional with strong working experience and proven skills in manufacturing excellence, ISO management systems implementation, lean / digital manufacturing, and project management.
Adebayo is a Corporate Member of American Institute of Chemical Engineers (AIChE), Associate Member, the Institution of Chemical Engineers (IChemE), Corporate Member, Nigerian Society of Engineers (NSE), Corporate Member, Nigerian Society of Chemical Engineers (NSChE), Associate Member, Nigerian Institute of Management (NIM), and Associate Member, Institute of Strategic Management of Nigeria (ISMN).
He is an author of over 15 books and has published over 45 online courses on various e-learning platforms including Udemy, Alison, Learnformula & Study Plex.
You can reach him, here.
