What is Overall Equipment

Effectiveness (OEE)?
In an ideal factory, equipment would operate 100% of
the time at 100% capacity, with an output of 100%
good quality.

In real life, however, this situation is rare.

The difference between the ideal and the actual

situation is due to losses. Calculating the overall
equipment effectiveness (OEE) rate is a crucial
element in any serious commitment to reducing
equipment & process related wastes.
The key strategy towards improving
performance is reducing equipment &
process related losses.
These losses are known as - “THE SIX BIG LOSSES”

Breakdowns

1. Downtime Losses
(Availability rate) Changeovers
There are 3 Minor stoppages
Major 2. Speed Losses
categories (Performance rate) Reduced speed
Rework
3. Defect Losses
(Quality rate) Rejects
Breakdowns
“ Sudden and unexpected equipment or process
failures. Could be a machine breakdown or perhaps a
material failure or incorrect S.O.P.”

Changeovers
“ The time between the last pack of the old job and
the first good pack of the new. This includes all the
time spent adjusting and setting up the line to run.”
Minor stops
“ Small niggly problems taking no longer than
10minutes to resolve. For example a minor tweek to a
machine, a brief stop whilst advice is sought.”

Reduced speed
“ Line running slower than budgeted speed, for
example, or perhaps inspection rate reduced
following a quality issue.”
Rework
“ Production that doesn’t immediately meet quality
specifications even if it can be reworked to correct
the problem.”

Rejects
“ Production that is a total loss due to failure to
meet quality standards. Particularly those
substandard units produced while setting up a job”
Most industries have some means of measurement of
production outputs. These are appropriate things to
look at if the focus is purely on what’s coming out of
the cubicle.

Using OEE is different - besides what is coming out

of the cubicle, we also measure what could have
come out of the cubicle. And more importantly,
where we’re loosing that effectiveness.
OEE gives daily information about
how effectively the cubicle is
running and which of the “THE
SIX BIG LOSSES” we need to
improve upon.
The 3 major categories of equipment related losses
are also the main ingredients for determining the
OEE of the cubicle.

OEE is calculated by combining all 3 factors.

Availability rate, Performance rate & Quality rate

Availability rate.
“The time the equipment or process is really running,
versus the time it could have been running.”

Performance rate.

“The quantity produced during the running time,

versus the potential quantity, given the designed
speed of the machine or process”
Quality rate.

“The amount of good products versus the total

amount of products produced.”
To calculate OEE

Availability rate x Performance rate x Quality rate

(Expressed as a percentage.)
 Total Operating Time

•Planned
A
AVAILABILITY

Net Operating Time Downtime

•Breakdowns
B Running Time
•Changeovers HOW DO WE
CALCULATE
PERFORMANCE

C Target
Output

OVERALL
•Minor Stops
D Actual
Output •Running Slow
EQUIPMENT
E
EFFECTIVENESS
Actual
QUALITY

Output

•Rework
F Good
Output •Rejects

OEE = B/A x D/C x F/E

AVAILABILITY PERFORMANCE QUALITY
 Total Operating Time

•Planned
A •Planned
AVAILABILITY

Net Operating Time Downtime

Downtime

•Breakdowns
•Breakdowns
B Running Time
•Changeovers
•Changeovers HOW DO WE
CALCULATE
PERFORMANCE

C Target
Output

OVERALL
•Minor Stops
D Actual •Minor Stops
Output •Running Slow
•Running
EQUIPMENT
E LOST EFFECTIVENESS
Actual
QUALITY

Output
EFFECTIVENESS
•Rework
•Rework
F Good
Output •Rejects
•Rejects

OEE = B/A x D/C x F/E

AVAILABILITY PERFORMANCE QUALITY