Understanding OEE Calculations

What is OEE?

• Introduced in 1989 by Seiichi Nakajima in his book TPM Development Program.
• Before OEE, People monitored equipment performance through availability or down time only.
• OEE is a "best practices" metric that identifies the percentage of planned production time that is truly productive. An OEE score of 100% represents perfect production: manufacturing only good parts, as fast as possible, with no downtime.
• It's not a goal, it's a problem solving and improvement driver tool, it's just a number tells how much waste in any factory, identify full cpacity, weaknesses, bottlenecks, improvement areas, and benchmark progress. 

OEE Benefits

• Eleminate downtime, bottlenecks, and reduce energy
• Improve process control and quality
• Increase efficiency, productivity, and profit
• Enhance predictive maintenance
• More OEE means More Capacity, shorter lead time, less overtime, more time for preventive maintenance, more stable and capable process
• Improving OEE must have a tangible impact on profit otherwise it’s numerical excersise

The OEE Formula

OEE= Availability × Performance × Quality

The most accurate OEE calculation is based on the three OEE factors: 

• Availability, 
• Performance, and 
• Quality. 

Calculating Availability

Availability measures the percentage of scheduled time that the equipment is available to operate. It takes into account all events that stop planned production long enough to track a reason for being down.

Availability = Run Time / Planned Production Time

• Planned Production Time: The total time the equipment is scheduled to operate.
• Run Time: The actual time the equipment is running, calculated as Planned Production Time minus Stop Time (both unplanned and planned stops).

Calculating Performance

Performance measures how well the equipment is running compared to its maximum potential speed. It accounts for anything that causes the manufacturing process to run at less than the maximum possible speed.

Performance = Ideal Cycle Time × Total Count / Run Time

• Ideal Cycle Time: The fastest cycle time that the process can achieve in optimal circumstances.
• Total Count: The total number of units produced during the Run Time.

Calculating Quality

Quality measures the proportion of good units produced versus the total units produced. It accounts for manufactured parts that do not meet quality standards, including parts that need rework.

Quality=Good Count / Total Count

• Good Count: The number of units that meet quality standards.
• Total Count: The total number of units produced.

Example Calculation

Let's consider an example to illustrate the OEE calculation:

• Planned Production Time: 480 minutes (8 hours)
• Stop Time: 60 minutes (1 hour)
• Ideal Cycle Time: 1 minute per unit
• Total Count: 400 units
• Good Count: 380 units

Step-by-Step Calculation:

1. Availability:
   Availability = [480−60] / 480 = 420 / 480 = 0.875 or 87.5%
2. Performance:
   Performance = 1 × 400 / 420 = 400 / 420 = 0.952 or 95.2%
3. Quality:
   Quality= 380 / 400 = 0.95 or 95%
4. OEE:
   OEE= 0.875 × 0.952 × 0.95 = 0.791 or 79.1%

In this example, the OEE score is 79.1%, indicating that 79.1% of the planned production time is truly productive.

Best Practices for OEE Calculation

1. Accurate Data Collection: Ensure accurate and consistent data collection for Availability, Performance, and Quality. Use automated systems to minimize human error.
2. Regular Monitoring: Continuously monitor OEE metrics to identify trends and areas for improvement.
3. Root Cause Analysis: Perform root cause analysis on downtime, slow cycles, and quality issues to address underlying problems.
4. Benchmarking: Compare OEE scores against industry standards and similar in-house assets to identify performance gaps.
5. Continuous Improvement: Implement continuous improvement initiatives based on OEE data to enhance productivity and efficiency.

OEE in Different Industries

Different industries apply OEE calculations to optimize their operations. Here are some examples:

1. Automotive Industry:
   • Focus: High-speed production lines and stringent quality standards.
   • Best Practices: Use OEE to monitor assembly line performance, reduce downtime, and improve quality control.
2. Food and Beverage Industry:
   • Focus: Hygiene standards and rapid production cycles.
   • Best Practices: Apply OEE to track equipment cleanliness, minimize changeover times, and ensure consistent product quality.
3. Pharmaceutical Industry:
   • Focus: Regulatory compliance and precision manufacturing.
   • Best Practices: Utilize OEE to monitor batch production, reduce equipment downtime, and maintain high-quality standards.
4. Textile Industry:
   • Focus: High-volume production and material handling.
   • Best Practices: Implement OEE to optimize machine performance, reduce material waste, and improve production efficiency.
5. Electronics Industry:
   • Focus: Complex assembly processes and rapid technological changes.
   • Best Practices: Use OEE to monitor equipment performance, reduce cycle times, and ensure product quality.

Related Production KPIs 

• Utilization: Planned Production Time / Total Time
• TEEP [Total Effective Equipment Performance]:  OEE x Utilization
• OOE: OEE * ( Planned Production Time  / Operating time)
• Cycle Time: Total Production Time / Total Production
• Scrap Rate: Rejected Pieces / Total Production
• Production Rate: Total Production / Run time
• Throughput: Total Production / Planned Production Time
• Takt Time: Planned Production Time / Customer Demand
• Number of operators needed: Total cycle time / TAKT time

Related Maintenance KPIs 

Conclusion

• OEE is a powerful tool for identifying areas of improvement in manufacturing processes. By understanding and calculating OEE, manufacturers can drive operational excellence and achieve higher productivity and efficiency in their production processes. Implementing best practices and tailoring OEE calculations to specific industry needs can lead to significant improvements in performance and quality.
• If OEE measurements didn't make a direct impact in Sales and Profit, it's just a number.
• If you have any questions or need further assistance with OEE calculations, feel free to ask!

References

• OEE Calculation: Definitions, Formulas, and Examples 
• Understanding OEE in Lean Manufacturing 
• A Simplified Guide to OEE Calculation: Methods and Examples
• Understanding, Measuring, and Improving Overall Equipment Effectiveness, By Ross Kenneth Kennedy
• Nakajima, Seiichi. Introduction to TPM: Total Productive Maintenance. Cambridge, Massachusetts: Productivity Press, 1988.
• A Powerful Production I Maintenance Tool for Increased Profits, ByRobert C,Hansen
• The OEE Prime, by D.H. Stamatis