How to Calculate Overall Equipment Effectiveness (OEE)

Learn about Overall Equipment Effectiveness, a KPI measuring how effectively resources operate in a manufacturing business

Ιn the world of manufacturing, optimizing operational efficiency is a key goal for businesses seeking to maximize productivity and profitability. One important metric that plays a crucial role in measuring and improving efficiency is Overall Equipment Effectiveness (OEE). OEE provides insights into how effectively equipment is being utilized, helping manufacturers identify areas for improvement and drive continuous operational excellence. In this article, we will delve into the concept of OEE, explore its calculation formula, and discuss its significance in manufacturing. Furthermore, we will highlight how Epoptia MES, a comprehensive manufacturing execution system, can enhance OEE and empower businesses to achieve their production goals.

What is Overall Equipment Effectiveness (OEE)?

OEE is a comprehensive metric that measures the performance of manufacturing equipment by evaluating three things:

1. Availability

2. Performance

3. Quality

More specifically, it provides a holistic view of how effectively a resource or process operates. It does that by taking into account both planned and unplanned downtime, production speed and product quality. OEE is commonly used to identify areas of inefficiency, track improvements over time and optimize production processes.

How to Calculate Overall Equipment Effectiveness

As mentioned above, Overall Equipment Effectiveness consists of three underlying measures: Availability, Performance and Quality. The formula to calculate OEE is as follows:

OEE = Availability x Performance x Quality

Now, let’s break down and analyze each component of the formula.

Availability: Availability measures the actual production time of equipment compared to the planned production time. It considers factors such as equipment breakdowns, changeovers and scheduled maintenance. The formula for availability is:

Availability = (Operating Time Downtime) / Operating Time

For instance, let’s consider a production schedule that allocates 6.5 hours for a specific resource. However, due to an unexpected breakdown, the resource was non-operational for 1 hour. Additionally, there were two changeovers during the production run, each

taking 15 minutes. In this case, the real operating time would be 4.5 hours. The availability rate can be calculated as:

5 / 6.5 = 0.769 = 76.9%

This indicates that the resource was available for production 76.9% of the scheduled time.

Performance: Performance evaluates the speed and efficiency of the equipment by comparing the actual production rate to the ideal production rate. It considers factors such as equipment speed losses, minor stops and idling time. The formula for performance is:

Performance = (Ideal Cycle Time x Total Count) / Operating Time

Now, let’s consider another example where a resource had a real run time of 6.5 hours during an 8-hour shift. The ideal cycle time per unit is 2 minutes (0.0333 hours), and the resource processed a total of 400 units in that time. The performance rate can be calculated as follows:

Performance = (400 units x 0.0333 hours) / 6.5 hours

Performance ≈ 2.04 or 204%

In this case, the performance rate is 204%, indicating that the resource operated at a faster pace compared to the ideal cycle time, resulting in higher productivity.

Quality: Quality measures the percentage of products that meet the required quality standards. It considers factors such as defects, rework and scrap. Rework is an important aspect of quality measurement within OEE. It refers to correcting products that don’t meet quality standards and it impacts overall quality performance and production costs. Also, analyzing rework helps identify root causes and implement improvements. The formula for quality is:

Quality = (Good Count / Total Count) * [(Net Runtime-Rework time) / Net Runtime]

Continuing with the example of the resource operating for 6.5 hours and processing 400 units (with Good Count: 380 units, 20 defects and 1 hour Rework Time), let’s calculate the quality rate using the above formula:

Quality = (380 units / 400 units) * [(6.5 hours – 1 hour) / 6.5 hours] = (0.95) * (5.5 hours / 6.5 hours) = 0.95 * 0.846

Quality ≈ 0.805 or 80.5%

Therefore, the quality rate for this example is approximately 80.5%. This indicates that 80.5% of the units processed were without defects, considering the adjustments for net runtime and rework time.

By multiplying the availability, performance and quality percentages together, you can obtain the OEE score, which represents the overall effectiveness of the equipment or process.

With numbers from the previous examples, we get an OEE of:

OEE = 76.9% x 204% x 80.5%

OEE ≈ 1.257, or 125.7%

Significance of Overall Equipment Efficiency in Manufacturing

Calculating OEE provides manufacturers with valuable insights and benefits, including:

1. Identifying bottlenecks and areas for improvement: OEE analysis helps pinpoint specific areas where equipment performance, availability, or quality can be enhanced, allowing manufacturers to prioritize improvements and optimize their production processes.

2. Enabling data-driven decision-making: OEE provides real-time and historical data on equipment performance, enabling manufacturers to make informed decisions about resource allocation, maintenance schedules, and process optimizations.

3. Driving continuous improvement: OEE serves as a benchmark for measuring improvement efforts over time. By monitoring OEE regularly and implementing targeted improvement initiatives, manufacturers can achieve incremental progress and drive continuous improvement.

4. Enhancing productivity and profitability: By increasing equipment efficiency, reducing downtime and improving product quality, OEE optimization directly impacts productivity and profitability. It allows manufacturers to maximize their output and reduce waste, ultimately boosting the bottom line.

Epoptia, offers Real-time OEE monitoring, allowing manufacturers to identify performance issues promptly and take proactive measures. Moreover, its historical data analysis enables manufacturers to analyze trends, identify patterns and make data-driven decisions for process improvements. Additionally, automated data collection eliminates manual entry errors and ensures accurate and reliable OEE calculations. What is more, Epoptia MES provides tools to track, analyze and manage rework instances. Reducing rework improves product quality, reduces costs and enhances operational efficiency. Ultimately, its proactive alerts and notifications help address OEE deviations quickly, minimizing downtime and maximizing efficiency.

Don’t hesitate to reach out and request a presentation to explore how Epoptia MES can empower your manufacturing operations and drive continuous improvement and operational excellence.

For more information, check

Share This Post

Subscribe To Our Newsletter

Get updates and stay connected

More To Explore

7 Wastes of Lean Manufacturing

7 Wastes of Lean Manufacturing

Learn which are the 7 wastes of lean manufacturing and how you can work towards eliminating them The concept of the 7 wastes of lean


Top ISO Certifications in Manufacturing

Learn about ISO Certifications and which are the top ones used in manufacturing ISO (International Organization for Standardization) certifications play a crucial role in shaping

automation and workforce

Balancing Automation and Workforce Skills

Learn how to strike a balance between automation and upskilling your workforce to remain competitive The landscape of manufacturing is undergoing a transformative shift with

Why Leading Manufacturers Choose Epoptia

Why Leading Manufacturers Choose Epoptia MES

Learn about the reasons why leading manufacturing groups choose Epoptia MES In today’s fast-paced and competitive manufacturing landscape, leading manufacturers are continuously seeking ways to

push vs pull system

Push vs Pull System in Job Shop Manufacturing

Learn about push and pull supply chain management systems in job shop manufacturing In the dynamic landscape of manufacturing management, two prominent approaches stand out:

Traceability in Manufacturing

Traceability: What is it and How to Achieve it

Learn about traceability and how it can help you transform your manufacturing business In the fast-paced and complex world of manufacturing, ensuring product quality, compliance


A crucial guide to Production Optimization

Learn about production optimization and unlock the full potential of your manufacturing operations In the fast-paced world of manufacturing a great deal of enterprises often

Root Cause Analysis in Manufacturing

Eliminating Bottlenecks in Manufacturing

Learn about eliminating bottlenecks and increase the overall efficiency of your manufacturing business Manufacturing is a complex process that involves various stages and processes. From