OEE part 2: OEE calculations

OEE is an industrial standard metric used to track performance and find improvement opportunities (click here to read the OEE part 1 post for an introduction to OEE). OEE is basically a comparison between the Net Operation Time (ideal time needed to do a task) and the Real Operation Time (real time needed to do a task). In other words:


However, OEE is not normally calculated as NOT / ROT, but using the more familiar formula:

OEE = (Loading) x Availability x Throughput x Quality.

Here is a short description of each term:

  • (Loading): Scheduled Time (TST) / Calendar Time (TCT). Not always included in the OEE calculation. It is sometimes included as part of the availability component.
  • Availability: Running Time (RT) / Scheduled Time (TST)
  • Throughput: Total Parts / (Running Time (RT) * Cycle Time)
  • Quality: Good parts / Total Parts

OEE part2_1If we look at the formula carefully, we can see that OEE only depends on 3 terms:

  • Good parts: How many good parts have been produced
  • Available time: How long the equipment has been ready to use
  • Cycle time: The maximum possible manufacturing speed

This means that there are only 3 ways to increase equipment efficiency: a) Do more good parts in the same time, b) Use less time to do the same amount of good parts or c) Increase machine speed. The following picture shows why:

OEE2-1We still divide OEE in the 3 typical components (A x T x Q) because it helps analyze where we are having the most important problems. Let’s see those terms in detail.

The availability component shows effectiveness losses related with equipment downtime. This includes non productive time (e.g. weekends), unscheduled time (e.g. unassigned shifts), planned downtime (e.g. preventive maintenance, training, cleaning, change over and set-ups) and unplanned downtime (e.g. breakdowns)

OEE2-3The throughput component shows effectiveness losses related with low speed. This includes running at a lower-than-the-standard speed (e.g we need to run at low speed due to problems with one of the raw materials), short breakdowns (typically less than 5 minutes) and speed limitations due to regulations or machine specifications.

OEE2-4The quality component shows effectiveness losses related with defects. This includes irreparable bad parts and reprocessing time.

OEE2-5Does it make sense to use any type of aggregated OEE number? It depends. It is tempting to have a general number that shows how the site is performing, but in many cases an aggregated OEE loses the physical meaning of the metric and, consequently, it loses its primary function: be a metric that finds problems and drives action. In case you decide to use an aggregated OEE, please keep this in mind:

  • Never use standard averages with OEE. Use weighted averages based on time instead.
  • Always aggregate similar work centers. Never lose the physical meaning of OEE
  • Use OEE to show problems and find improvement actions, not to compare sites and make rankings

The aggregated OEE can be calculated this way:

OEE2-2OEE calculations may look complicated, but they are easy to master with some time and practice. We’ll see an example in the following post!

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2 responses to “OEE part 2: OEE calculations”

  1. Jaidyn Moore says :

    Worth reading. OEE is not a bad metric, but one should know how to use it. One can also use “Thrive” a very effective tool for OEE calculation professionals are recommending it. Thanks!!

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

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