What is OEE?
OEE (Overall Equipment Effectiveness) is one of the fundamental principles of Lean Manufacturing and serves as a key performance indicator (KPI) for every production floor, assembly line, and integration process.
The OEE metric aims to focus and help us improve in three main categories that constitute the most critical and common reasons for efficiency loss. These categories are availability, performance, and quality:
Availability
The first category in the OEE metric is availability. This category describes the ratio between the amount of time the machine was planned to operate and the actual amount of time the machine was operating.
Performance
The second category in the OEE metric is performance. This category compares the standard time to produce a unit with the actual operating time to produce that same unit. The standard time is sometimes referred to as MDR (Maximum Demonstrated Rate), or ideal cycle time.
Quality
The third category of the OEE metric measures quality. This category is the percentage of FTY (First Time Yield) products that meet customer requirements without rework, out of the actual production output.
OEE – “The Six Big Losses”
The principle of “The Six Big Losses” provides a perspective on the loss of production time by examining equipment effectiveness. The TPM (Total Productive Maintenance) principle connects the employee to the machine, creates a sense of ownership of the equipment, a desire to maintain its proper function, and thereby creates an environment with minimal breakdowns.
Recognizing and understanding the six big losses allows us to identify losses in real-time on the production floor. Subsequently, we can minimize the resulting effect and sometimes even eliminate them entirely.
Availability
Planned Downtime – The ratio between the planned running time of the machine and the actual running time. This category includes planned stoppages, for example:
Due to shift changes / product changes / calibration / adjustment / cleaning / periodic maintenance / quality inspection.
This category may also include employee breaks, meetings, overlaps, and more.
Unplanned Downtime – The ratio between the planned running time of the machine and the actual running time. This category includes only unplanned stoppages, for example: equipment failure (defect or wear) / unplanned maintenance / shortage of material or qualified personnel.
Performance
Minor Stops – The time when the machine stopped working for a very short period (sometimes a minute or less). Usually, the operator solves the problem, so sometimes the existence of these stops goes unnoticed. The stoppages can be repetitive (the same problem on another day). For example: incorrect settings and blocked sensors.
Reduced Speed – The time when the machine is producing at a cycle time longer than the ideal cycle time. This category may occur due to poor machine lubrication / dust and dirt / incorrect settings / human errors (such as inexperience, training), and more.
Quality
Production Defects – Defects created in the product during normal machine operation, including those that underwent rework. For example: excess or insufficient weight / problems in product marking / defective packaging, and more.
Reduced Yield (from the initial stage to stable production) –
These defects are usually created after the initial startup of the machine. Nevertheless, production workers tend to notice them only after a product change. For example: a machine that requires “warm-up” cycles or a machine that does not produce properly after initial startup.
Example of OEE Calculation
In the following example, we will refer to a drip irrigation factory.
The factory operates in 3 shifts per day (8 hours each shift).
The duration of work in each shift includes a 50-minute break and 2 product changes (the duration of each change is 35 minutes). For the remaining time, the machine is active.
%OEE = %Availability x %Performance x %Quality
Availability
In other words, 120 minutes out of a 480-minute shift are “wasted”. During this time, the machine is not active and not producing.
This means that the factory has 360 minutes left for efficient work.
Even if the machines work at the fastest pace for the remaining time and produce the products without any quality issues at all, the factory will never reach more than 75% efficiency per shift.
Performance
Let’s assume that the ideal production cycle time (MDR) is 2 seconds per dripper (30 drippers per minute).
In the remaining 360 minutes of the shift, the machine will produce 360*30 drippers = 10,800 drippers.
If at the end of the shift the machine produced 10,800 units, we can attest that it performed at a speed of 100%. If the production speed was lower, for example: the cycle time is 3 seconds per dripper (a slowdown of ⅔ in speed), we can attest that its performance level is 66.7%.
Running at a performance level of 66.7% in this case is equivalent to a time loss of 120 minutes (360 *33.3%), and equivalent to ⅔ * 30 = 20 units per minute).
7,212 units = 66.7% * 10,800
So what is our OEE so far?
If out of 480 minutes we lost 120 minutes when the machine was not working at all (availability), and 120 minutes due to a cycle time lower than the ideal cycle time (performance):
50% efficiency (OEE) = (480 – (120 + 120) ÷ 480)
Quality
Let’s assume that out of the 7,212 dripper units produced by the factory, 1,803 were rejected. In this case, the quality rate will be 77%.
77% quality = (7,212 – 1,803 rejects) ÷ 7,212
Let’s convert the loss to time:
60 minutes of quality loss = 1,803 rejected units ÷ 30 units per minute
So what is the OEE percentage of our factory?
So far, we lost 120 minutes when the machine was not operating, out of the remaining 360 minutes we lost 120 minutes due to slow output, and out of the remaining 240 minutes we lost 60 minutes in producing non-quality output. As a result, the shift worked only 180 minutes in the most effective way according to the three categories – availability, performance, and quality.
If in the ideal situation we could produce 14,400 units, in practice 5,409 proper units were produced. Therefore, our OEE score is 37.3%.
37.3% = 5,409 ÷ 14,400
37.3% = Availability (75%) * Performance (66.7%) * Quality (77%)
