OEE part 1: Introduction

OEE (overall equipment effectiveness) is a key metric to measure process delivery and productivity (for more information about the different types of metrics, click here). The theory is simple: OEE compares “net operation time” with the “real time” to see how well things have gone. Let’s see an example:


The concept of Real Operation Time looks innocent, but it is very tricky. There are uncountable circumstances where some people will think that the process is in operation, while others will believe that it is not. Imagine you are tracking a batch and taking data. You have to decide if the following events should be part of the Real Operation Time (or not) to calculate OEE:

  1. The machine is running at maximum speed
  2. The machine is running but producing bad parts
  3. The machine is running slower than it could
  4. The machine is stopped (breakdown)
  5. The machine is stopped (no material)
  6. The machine is stopped (cleaning)
  7. The machine is stopped (operators training, meetings)
  8. The machine is stopped (shift not scheduled)
  9. The machine is stopped (weekend)

Everybody agrees that situations 1-4 are part of the ROT, but then the discussion begins. Typical questions are “Why should I be penalized if I’m training the operators? Or cleaning the equipment? Or if I decide not to use the equipment?”. These are fair questions. The answer is that there is no answer. Everything depends on what you want to use OEE for.

  • Do you want to improve machine downtime? Then ROT = 1+2+3+4
  • Do you want to improve scheduling? Then ROT = 1+2+3+4+5+6+7
  • Do you want to know if you have to buy extra equipment? Then ROT = 1+2+3+4+5+6+7+8+9

The lesson here is that OEE means nothing without a model. The number itself is meaningless. It is the trend (going up, going down) what matters. Everything depends on the model, and the model depends on your improvement goal. Use OEE calculations to help you understand the process and find the problems you need to solve to improve according to your goal. Don’t you have a goal? Then you don’t need OEE.

A typical OEE model look like this:

oee_2 revised

It’s your choice to decide how many of the seven blocks (NOT, QL, TL, UD, PD, UT, NPT) are part of your OEE. That is your model. All models are potentially valid; a model is good or bad just depending on how well it is aligned with your goal.

OEE is typically divided in 4 categories: Loading, Availability, Throughput and Quality:

  • Loading: Scheduled Time (TST) / Calendar Time (TCT)
  • Availability: Running Time (RT) / Scheduled Time (TST)
  • Throughput: (Total Parts * Max Cycle Time) / Running Time (RT)
  • Quality: Good parts / Total Parts

Many people consider that the “Loading” portion depends only on how you decide to schedule work and has nothing to do with equipment effectiveness. Therefore it is unfair to consider “Loading” as part of the OEE and should not be part of the calculation. To solve this philosophical problem, a new metric called TEEP (Total effective equipment performance) is born:

  • OEE = Availability x Throughput x Quality
  • TEEP = Loading x Availability x Throughput x Quality

The story of OEE has just begun! Don’t miss more information about OEE calculations, typical errors using OEE and an OEE guide in following posts!

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Trackbacks / Pingbacks

  1. OEE part 2: OEE calculations | lean voodoo - 31 October, 2015
  2. OEE part 3: The model | lean voodoo - 8 November, 2015

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