What is Overall Equipment Efficiency (OEE)?
OEE is a tool that combines multiple manufacturing issues and data points to provide information about the process. It is an all-inclusive benchmarking tool that serves to gauge the various sub-components of the manufacturing process (I.e., availability, performance and quality) – and used to measure actual improvements on 5S, WCM, Lean Manufacturing, TPM, KAIZEN™ and six sigma. When using OEE with these management systems the benefits become tangible and noteworthy.
After all factors are taken into account, the OEE result is converted (transmuted) in percentage. The results (in %), therefore, can be regarded as a preview of the existing production efficiency of a particular line, cell or machine.
As we all know, manufactured goods are a result of a complex production process- and without the proper measuring tools and formula, expect your business to run blindly even in the light of day. Having the right metrics, OEE provides you a window to analyze out-of-the-ordinary issues and gives you an established framework for improving the whole manufacturing process.
There are dozens of formulas, systems and metrics being used to improve the whole manufacturing process, but only OEE correctly reduces complex production problems into simple, easy-to-follow steps in handling data and information. The OEE tool helps you to methodically improve the process using basic measurements.
The good thing about using OEE is that this particular measuring tool cannot be manipulated.
OEE is a very simple metric that immediately indicates the current status of a manufacturing process. Somehow it also becomes a multifaceted tool allowing you to understand the effect of the various issues in the manufacturing process and how they affect the entire process.
The biggest advantage of OEE is that it allows companies to have separate business functions by applying/using a single, easy-to-understand formula.
OEE is by far the most effective benchmarking tool in making sound management decisions.
OEE = Actual output/ Theoretical maximum output
OEE = Availability Ratio * performance Ratio * Quality Ratio
- Availability ratio – The share of the actual production time and the planned production time. All planned stops and breakdowns will reduce the availability ratio, including set-up times, preventive maintenance, breakdowns and lack of operators. The only time that you may choose to deduct from the availability ratio is lack of orders.
- Performance Ratio – Loss of production due to under-utilization of the machinery. In other words, losses are incurred when the equipment is not run with full speed. Short, Unregistered, stops may affect the performance ratio as well.
- Quality Ratio – The amount of the production that has to be discharged or scrapped.