Tag Archive | OEE

OEE part 3: The model

Once we have seen a OEE introduction (link here) and the most frequent OEE calculations (link here), let’s review a model for OEE. The following graph shows:

  • the basic time blocks that impact OEE
  • typical problems that affect the time blocks
  • how to divide time to calculate typical OEE components

OEE ModelEach component helps flag certain problems:

  • A high “loading” component indicates low demand. The work center is idle most of the time. Unfortunately, there is not much to do from an engineering point of view to improve this number.
  • A high “planned downtime” component reveals:
    • the need of many scheduled corrective and preventive actions. This is a potential issue if problems are recurrent.
    • a high number of projects and updates. This is not necessarily a problem if projects are originated by new products or technologies.
  • A high “availability loss” component shows breakdowns, large adjustments, or lack of personnel, materials or systems when they are needed. The equipment definitely needs reliability improvement work, standardization and / or better scheduling to avoid starving the machines.
  • A high “performance loss” component proves low speed. Standardization and training are typical good next steps.
  • A high “quality loss” component obviously indicates that improvement must focus in getting first time quality, reducing scrap and reprocessing.

This analysis is the most important part of applying OEE to our processes. OEE is a means, not a goal. It must drive action and improve the effectiveness of our operations.

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!

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!