An Advanced Guide on How to Calculate OEE

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An Advanced Guide on How to Calculate OEE

OEE Power in Smart Factory​

Contact us today to learn more about OEE capabilities in Smart Factory and explore how OEE dashboards and statistics can help to improve production efficiency.
The journey of the intricate world of Overall Equipment Effectiveness calculation is where manufacturing meets data-driven precision. If you are ready to dive deep and sharpen your skills, learning about the OEE calculations is all you need. With the perfect guide, you scratch the surface and drill into the deeper aspects of OEE. It is for beginners and experts and helps you unravel the mysteries and embark on a seamless adventure of OEE’s inner workings. From uncovering hidden performance metrics to worthy strategies – this guide is all you need for OEE mastery. Grab your calculator, sharpen your analytical skills, and get ready to excel in OEE calculations!

Understanding OEE

Overall Equipment Effectiveness (OEE) is a key performance metric used in manufacturing. OEE calculations help to assess the efficiency of equipment or processes. It provides insights into how well a machine or production line performs. OEE is calculated by measuring three crucial factors:

Availability

It is the percentage of time that equipment is available and ready for production. It weighs downtime due to breakdowns, changeovers, and planned maintenance. The availability calculation formula is:
Availability Calculation

Performance

Performance evaluates the speed at which equipment operates compared to its maximum potential speed. It considers factors like machine slowdowns, idling, and minor stoppages. The performance calculation formula is:
Performance Formula

Quality

Quality measures the ratio of good quality output to total production output. It takes into account defects, rework, and scrap. The quality calculation formula is:
Quality Calculation
Once Availability, Performance, and Quality calculations are complete, they are multiplied together to obtain the Overall Equipment Effectiveness (OEE). OEE formula goes as follows:
OEE Formula
OEE provides a comprehensive view of equipment performance. It allows manufacturers to identify areas for improvement and implement targeted strategies to enhance efficiency, productivity, and grade. It helps you optimize manufacturing processes, reduce waste, and maximize profitability.

Top Mistakes When Calculating OEE

Some of the common mistakes that any manufacturing organization can make when calculating OEE are as follows:
Manual Data Collection

Manual Data Collection

Use of manual data collection leads to insufficient or poor data results. Employees carrying out manual data collection tasks are often likely to miss readings, overlook relevant changes or read incorrect numbers. This manual data collection method leads to insufficient data for accurate OEE calculation.

Inaccurate Equipment Run Speed

Inaccurate Equipment Run Speed

You may find managers or supervisors in a manufacturing organization using scheduled or average equipment speed instead of the rated speed for OEE calculation. Using the planned equipment speed makes the OEE score to increase but it in reality it hides the improvement opportunities.

Paying Less Attention to all Production Stops

Paying Less Attention to all Production Stops

A manufacturing organization should be able to evaluate accurately between the planned and unplanned stops to calculate OEE effectively. Considering most of the stops as “planned” may lead them to miss opportunity for improvement. It’s important to acknowledge unplanned stop and try to find the root cause to avoid such stops in future.

Inconsistent OEE Calculation

Inconsistent OEE Calculation

Standardization is essential when calculating OEE across plants in different geographies. Consistent usage of data, methods, and approach ensures accurate OEE calculation and leads to effective communication across the organization. It’s always the best practice to centralize the data collection that different plants and machines can refer to.

Short Time Period for Calculation

Short Time Period for Calculation

Choosing a short time period such as a single day shift for OEE calculation leads to inaccurate results that should not form the basis for analysis and improvement. It is important to gather sufficient data over a longer period of time, such as a month or 3 months to take into account the productivity peaks and downtime.

OEE Data Collection- The Building Blocks

Data collection is the cornerstone of Overall Equipment Effectiveness (OEE) analysis. Precise and accurate data collection are the essential building blocks for understanding equipment performance and identifying opportunities for improvement. It allows for perfect overall equipment efficiency calculation. Vital aspects of data collection include:
  • Capture essential production data such as start and stop times, downtime events, production counts, and any relevant parameters specific to the equipment or process.
  • Utilize real-time monitoring systems for continuous collection of data throughout the production process. It offers immediate detection of issues and empowers operators to take timely actions.
  • Accurately tracking downtime events is critical for assessing equipment availability. It allows for proper log creation for log time and ensures nothing goes missing.
  • Monitoring equipment performance involves tracking production rates, cycle times, and efficiency metrics. It allows for a quick detection of deviation from expected production rates.
  • Collecting quality data involves tracking the number of acceptable and defective units produced during a given period. This data enables accurate OEE calculation and improves insights.
  • Integrating data collection systems with OEE software platforms is effective. It automates data capture, consolidates information, and provides reports for performance monitoring and analysis.
Effective data collection practices help to gain actionable insights into equipment performance, drive continuous improvement initiatives, and maximize Overall Equipment Effectiveness (OEE) across the operations.

OEE Formulas to Calculate OEE Factors

Availability – Maximizing uptime for efficiency

In manufacturing, maximizing uptime is essential for achieving peak efficiency and productivity. Availability, a fundamental metric in Overall Equipment Effectiveness (OEE) analysis, measures the percentage of time that equipment is available and ready for production. Minimizing downtime and optimizing equipment availability allows you to unlock significant gains in operations. Learning to calculate Availability is essential before you understand how to calculate overall equipment effectiveness.
Formula:
Availability Formula
Where

Planned Production Time

This is the total time that the equipment is scheduled to be available for production. It represents the maximum possible time the equipment could be operating if there were no interruptions.
Planned Production Time = Potential production time – Planned stops

Actual Production Time

This is the actual time the equipment is producing goods, after subtracting any downtime due to planned maintenance and unplanned stops.
Actual Production Time = Planned production time − Unplanned Stops
or
Actual Production Time = (Potential Production Time − Planned Stops) − Unplanned Stops

Performance – Tuning speed and quality

Optimizing speed and quality is essential for operational excellence. Performance is a critical component of Overall Equipment Effectiveness (OEE). It measures how well equipment operates compared to its maximum potential speed. By fine-tuning performance, you can achieve higher production rates, reduce cycle times, accurately calculate OEE , and enhance product quality.
Performance Formula
Where:

Actual Output​

It is the sum of all the parts resulting from production (it can also be a volume or batches) and includes any type of production result (parts or volume: good, bad and under quality review).

Theoretical output​

It is the expected production based on the actual production time divided by the ideal cycle time. This calculation helps determine the expected number of units produced during the productive time. The formula is as follows:
Theoretical Output = Actual Production Time / Ideal Cycle Time
Where as well: 

Ideal Cycle Time​

The ideal cycle time, also known as the design cycle time, is generally considered to be the theoretical minimum time to produce a part defined as the design of the equipment. The inverse of the ideal execution rate. It is used to calculate OEE performance. A variation of the calculation uses the ideal execution speed instead.

Actual Production Time

Its considered as the current production time is the sum of all the production times recorded by a piece of equipment, i.e. the sum of all the production periods or processes executed.​
Performance = (Actual Output / Theoretical Output) * 100%
Performance = (650 units / 720 units) * 100% 
Performance = 90.28%
In this scenario, the performance of the manufacturing machine is approximately 90.28%.

Quality – Ensuring promised standards

Maintaining consistent quality is paramount for upholding promised standards and meeting customer expectations. Quality is essential while learning Overall Equipment Effectiveness (OEE) analysis. It measures the ratio of good parts produced to total output. By ensuring high quality, you can build trust, minimize waste, and enhance competitiveness in the marketplace. Explore calculating the quality score and get closer to understanding the calculation for OEE .
Quality Calculation
For example, during a production shift, a manufacturing line produces a total of 620 units. After inspection, it was found that 30 units were defective and declared as rejects.
From this information, we can identify:
Total Output during the shift: 650 units 
Good Unit Output: The actual number of good parts produced is 650 – 30, so 620 units
To calculate Quality:
Quality = Good Unit Output / Total Output * 100%
Quality = 620 units / 650 units * 100%
Quality = 94.67%
So, the quality of production in this scenario is approximately 94.67%.
Quality is essential for manufacturing excellence. Quality extends insights into product integrity and manufacturing effectiveness. By continuously striving for excellence, you can strengthen your brand reputation, drive customer satisfaction, and achieve sustained success in today’s competitive landscape.

OEE calculation – A step-by-step guide

Understanding the calculation of OEE is crucial for optimizing manufacturing operations and driving efficiency. You can calculate it by combining three key metrics: Availability, Performance, and Quality. In this walkthrough, you will understand the process of calculating OEE. It will ensure you have the tools to assess and improve your equipment’s effectiveness.
Availability measures the percentage of time equipment is available for production.
  • Formula: Availability = (Actual Production Time / Potential Production Time) * 100%
For example, Let’s say a manufacturing facility plans to run a production line for one full shift, which spans 10 hours or 600 minutes. Throughout, there are three instances of planned maintenance, each lasting 20 minutes, and a total of 70 minutes of unplanned downtime due to equipment breakdowns. From this scenario, we can identify the following variables:
  • Potential Production Time: 10 hours or 600 minutes
  • Planned Stops: 3 x 20 minutes, totaling 60 minutes
  • Unplanned Stops: 70 minutes
To calculate the Production Planned Run Time:
  • Actual Production Time = Potential Production Time − Planned Stops − Unplanned Stops
  • Production Planned Time: 600 minutes – 60 minutes – 70 minutes = 470 minutes
Now, to find the Availability:
  • Availability = (Actual/ Production Time / Potential Production Time) * 100%
  • Availability = (470 minutes / 600 minutes) * 100%
  • Availability = 78.33%
So, the Availability of the production line in this scenario is approximately 78.33%. Every minute of downtime can have a profound impact on productivity and profitability. By accurately measuring availability, you can identify opportunities to enhance equipment reliability, streamline maintenance processes, and minimize costly disruptions!
Performance evaluates how well equipment performs compared to its maximum potential speed.
  • Formula: Performance = (Actual Output / Theoretical Output) * 100%

For example, suppose a manufacturing machine has an Ideal Cycle Time of 20 seconds, allowing it to produce 3 units per minute. Over a production period of 240 minutes, the actual production time, the machine successfully manufactures 650 units.

Here are the variables:

  • Ideal Cycle Time: 20 seconds 
  • Actual Production Time: 240 minutes
  • Actual Output: 650 units

To calculate Theoretical Output:

  • Theoretical Output = Actual Production Time / Ideal Cycle Time
  • Theoretical Output = 240 minutes * 60 seconds / 20 seconds per unit = 720 units

Now, to find Performance:

  • Performance = (Actual Output / Theoretical Output) * 100%
  • Performance = (650 units / 720 units) * 100%
  • Performance = 90.28%

In this scenario, the performance of the manufacturing machine is approximately 90.28%.

Quality measures the ratio of good units produced to total output.
  • Formula: Quality = (Good Unit Output / Total Output) * 100%

For example, during a production shift, a manufacturing line produces a total of 620 units. After inspection, it was found that 30 units were defective and declared as rejects.

From this information, we can identify:

  • Total Output during the shift: 650 units
  • Good Unit Output: The actual number of good parts produced is 650 – 30, so 620 units

To calculate Quality:

  • Quality = Good Unit Output / Total Output * 100%
  • Quality = 620 units / 650 units * 100%
  • Quality = 94.67%

So, the quality of production in this scenario is approximately 94.67%.

Since we cannot multiply percentages directly, convert them to decimals.
  • Availability in decimal form: 0.7833
  • Performance in decimal form: 0.9028
  • Quality in decimal form: 0.9467
Multiply Availability, Performance, and Quality to obtain OEE.
Using the calculations for Availability, Performance, and Quality, we know,
  • OEE = Availability * Performance * Quality * 100%
  • OEE = 0.7833 * 0.9028 * 0.9467 * 100%
  • OEE = 66.70%

What Do The Results Say?

The calculations using the formula for OEE provide results that indicate and shed light on different aspects of equipment performance and production quality. A higher OEE percentage signifies better overall equipment effectiveness. It showcases that the equipment operates efficiently, with minimal downtime, optimal speed, and high-quality output.

The results and the interpretation vary in the context of industry standards and specific production goals. OEE can vary according to the equipment design, maintenance practices, and product complexity. You can analyze the calculation of OEE results over time and compare them to benchmarks. You can identify opportunities for improvement and implement strategies to enhance operational efficiency and productivity. Customizing the needs and wants of your industry is the finest way to achieve desirable results with the help of OEE.

Example Analysis

The Overall Equipment Effectiveness (OEE) in the examples used is Approximately 66.70%., The OEE Calculations step-by-step guide offers you valuable insights into understanding OEE. It allows you to identify areas for improvement, optimize production processes, and drive efficiency in your manufacturing operations. The knowledge comes in handy to make informed decisions to maximize productivity and achieve operational excellence.

In this example, the company has a significant gap from the target OEE. The most critical area of opportunity is availability, which is the lowest value and negatively impacts the OEE calculation. This low availability reduces the overall effectiveness, even though the other pillars (performance and quality) are above 90%, surpassing world-class industry targets.

OEE implementation strategies

Using an overall equipment effectiveness calculator is never enough. Implementing OEE strategies and absorbing its needs is essential for maximizing operational efficiency and driving continuous improvement in manufacturing processes. Here are some effective OEE implementation strategies:
Define Clear Objectives

Define Clear Objectives

Define the goals and objectives of implementing OEE within your organization. It includes reducing downtime and waste, increasing throughput and quality, and so on. Having clear objectives will guide your OEE implementation efforts.

Invest in Technology

Invest in Technology

Utilize advanced technology solutions such as OEE calculator software and real-time monitoring to collect, analyze, and visualize data.

They enable proactive decision-making and timely intervention to address issues.

Standardize Processes

Standardize Processes

Standardize operating procedures and maintenance practices to minimize variability and optimize equipment performance. It helps ensure consistency and reliability in production operations.

Provide Training and Education

Provide Training and Education

Ensure that employees understand the concept of OEE and its importance in improving efficiency. Provide training sessions and educational materials to empower staff with overall equipment effectiveness formula and strategies.

Implement Lean Manufacturing Principles

Implement Lean Manufacturing Principles

Incorporate lean manufacturing principles to eliminate waste, reduce setup times, and improve overall equipment effectiveness. They complement OEE by fostering a culture of continuous progress and efficiency.

Set Key Performance Indicators (KPIs)

Set Key Performance Indicators (KPIs)

Define key performance indicators aligned with OEE goals and regularly monitor progress. They provide valuable insights into equipment performance and help track improvements over time.

Encourage Cross-Functional Collaboration

Encourage Cross-Functional Collaboration

Foster collaboration between different departments to identify root causes of inefficiencies. Cross-functional teams can leverage their expertise to drive OEE improvements holistically across the organization.

Constant Monitoring and Improvement

Constant Monitoring and Improvement

Implement a culture of continuous monitoring and improvement. Regularly review, analyze, and act on changes. Encourage feedback and conduct brainstorming sessions for OEE optimization.

By implementing these strategies, organizations can unlock the full potential of Overall Equipment Effectiveness (OEE). It helps you drive sustainable improvements in operational efficiency, productivity, and profitability. With the knowledge of OEE calculations and strategies post-result analysis, you will always stay ahead on the road of improvement and industrial competition.
Congratulations! You just completed the expedition into the world of OEE calculation, where every number tells a tale and every insight paves the way for operational excellence. Before you proceed to learn new about OEE, remember that calculations need practice for excellence. Take a moment to savor the basics of OEE calculation and transform your skills. The skill to excelling OEE is a continuous evolution. Armed with knowledge and tools from this exploration, you can now confidently navigate the dynamic landscape of modern industry. Now that you know how to calculate OEE formula , go forth, unleash your potential, and let your OEE journey attain limitless possibilities. Use your skills and make the future of manufacturing extraordinary!

OEE Power in Smart Factory

Contact us today to learn more about OEE capabilities in Smart Factory and explore how OEE dashboards and statistics can help to improve production efficiency.