OEE is an abbreviation of Overall Equipment Effectiveness. It is a measure of the effectiveness of a machine or a line. Here, effectiveness means ‘efficiency + quality’.
OEE is one of the key driving metrics of Total Productive Maintenance.
Why is OEE important?
Imagine that an organisation has invested ‘x’ amount of money in its infrastructure and facility – out of which a significant portion say ‘y’ would be consumed by the machinery and equipment. If the equipment is maintained well, it will have its full life, contributing to manufacturing.
In this case, the amount ‘y’ would yield maximum returns and become a profitable investment. On the other hand, if the equipment is not maintained well, then it will deteriorate faster (accelerated deterioration). Then the investment on the machine would not produce the expected returns making the investment a loss.
This is the basic concept of TPM.
Avoid acceletated deterioration (faster death) of machines; try to extend its life more than the expected (deigned) lifetime.
This is called Asset Utilisation in manufacturing.
OEE is a measure of
- machine availability – hours in a day, the machine was available for utilisation,
- machine performance – has it run in the designed speed
- output quality – how many pieces of produce got rejected (because of malfunction of the machine).
OEE is the product of Availability Rate, Performance Rate and Quality Rate. Hence, it gives a uniform and numerical metric for measuring the asset utilisation in a company.
How to Calculate OEE?
1. Availability or Availability Rate
It is the ratio of how many hours a machine was available for production versus the actually planned run hours of that machine.
For example, we have 8 hours in a shift. Then the planned hour could be considered as 8 hours = 480 minutes (in stringent norms, no breaks or changeover time is deducted from the total available hours in a shift).
Consider, the machine had undergone a stoppage for 50 minutes due to a component failure.
Here, 30 minutes is the downtime and (480 – 50 minutes) = 430 minutes is the uptime of that machine.
Availability rate = Machine Available Time (uptime) / Total Planned time x 100%
In our case, 430 / 480 x 100%= 89.58%
2. Performance Rate
Every machine is designed to operate at a certain optimum speed. This is called designed speed. Generally, the speed is measured in terms of the number of pieces produced/processed in a given time. For example, 100 pieces per hour, 10 kg per minute, etc.
If we fail to produce the planned output based on the availability and designed speed, then we can say that the machine had performed poorly.
Slowing down of the machine, minor stoppages in between the process, non-availability of material or manpower could be attributed for this low performance.
In our example, consider that our machine speed is 1 piece per minute; and we produced 400 pieces in that shift.
Performance rate = No. of pieces produced / (designed speed x available time) x 100%
= 400 /(1 piece per minute x 430 minutes) x 100% = 93.0%
It is the measure of ‘effectiveness’. In some places, OEE is described as Overall Equipment Efficiency. Whenever we measure, Quality – we are measuring the effectiveness of the process.
Up to Availability Rate and Performance Rate, we can say that we are calculating efficiency. But, when we come to the third component, OEE becomes an effectiveness measure.
Here, we measure the percentage of product accepted by the customer or the quality inspection.
Consider, in our sample case, that 5 pieces got rejected after final inspection. In that case,
Quality Rate = No. of pieces accepted after quality checking / Total number of pieces produced x 100%
= (425 – 5)/425X100 = 98.8%
OEE = Availability Rate x Performance Rate x Quality Rate x 100%
= 89.58% x 93.0% x 98.8% x 100% = 82.3%
75% – 85% – World Class company
65% – 75% – Good
55% – 65% – Needs improvement