OEE definition, factors and calculation with examples

In our blog article, we provide you with the basic OEE know-how, introduce you to the OEE key figure and OEE factors using examples and show you which strategies you can use to optimize OEE and increase productivity.

• OEE Definition
  
  
• OEE factors explained in detail
  • Availability factor
  • Performance factor
  • Quality factor
• OEE formula - calculation of the key figure
• Conclusion

OEE (overall equipment effectiveness) Definition 

The OEE key figure is a measure of how well a segment of production (e.g. plant, machine, production cell, production line) is utilized compared to its full potential during the planned production times. It is expressed as a percentage (range: 0% to 100%) and helps to identify and quantify losses in the areas of availability, performance and quality (overall equipment effectiveness).

In manufacturing companies, the focus is on the OEE key figure as a generally recognized benchmark and reference for the productivity of an industrial plant.

Three factors must be considered separately when calculating OEE:

1. Availability factor

   The ratio of actual operating time to planned operating time. This factor takes into account downtimes caused by malfunctions, repairs, maintenance or conversions.

2. Performance factor

   The ratio of the actual production rate to the theoretically possible production rate under optimum conditions. Losses due to slower production speeds and small stoppages are recorded here.

3. Quality factor

   The ratio of the number of good units to the total number of units produced, including those that were reworked or declared as rejects.. 

OEE factors explained in detail 

1. OEE - availability factor

Definition and formula as well as the determination of availability factors in practice

Availability is the time your machine is actually working as a percentage of the planned working time.
To calculate the availability, the actual working time is divided by the total planned working time to determine the percentage and multiplied by 100 to obtain the value in percent:

You know the planned working time of a plant from the production plan. But how do you determine the actual working time? To do this, you record all downtimes and subtract them from all planned working times.

By analyzing the downtime data, you can identify not only the cause but also the potential for improvement. In principle, a distinction can be made between technical and organizational reasons for downtime. 

Example of calculating the OEE availability factor

In practice, increasing availability is often the first and most effective measure to quickly improve Overall Equipment Effectiveness (OEE). By automatically measuring availability or downtimes, you will quickly recognize the extent to which the operating time and production time of a system differ. 

Strategy for optimizing availability

In practice, you can only determine the total impact of the large number of micro shutdowns distributed throughout the day as part of automatic shutdown detection. The influence of set-up times on the overall availability of a system also quickly becomes apparent. This can be tracked in your production planning and then better taken into account in future.

Automatically determine the actual status of the availability or downtimes of your systems and machines as well as the causes that have led to this and have this visualized in a production KPI dashboard for OEE, downtimes etc.. You can do this quickly, easily and cost-effectively by using a Software-as-a-Service (SaaS) tool that specializes in OEE and other production KPIs.

As a rule, the majority of downtimes occur for a handful of reasons. These can vary greatly depending on the system and process, but evaluations usually reveal a few “main culprits”. As is so often the case, the Pareto principle usually applies here too: 20% of the reasons lead to 80% of the downtimes.

Pay attention to the simplicity of connectivity when connecting systems and machines. Ideally, your maintenance/electricians should be able to do this themselves within an hour for each system. You can also use modern IoT edge devices with mobile communications to avoid unnecessarily burdening your internal IT department, rule out disruptions to your IT network and avoid cyber security risks.

2. OEE - performance factor

Definition and formula as well as the determination of the OEE performance factor in practice

The performance factor is a measure of the production speed of a machine compared to the ideal production speed. It evaluates how effectively the machine works in a given operating period by comparing the actual production rate achieved with the theoretically possible maximum production rate.

An optimal OEE performance factor means that the machine works as quickly as possible without any loss of quality or unexpected interruptions. The formula for calculating the performance factor is as follows:

The performance level variables have the following meaning:

• Ideal cycle time

  The ideal cycle time is the minimum time required to produce a part under optimum conditions.

• Number of parts produced

  The number of parts produced is the actual number of parts produced during the operating time.

• Operating time

  The number of parts produced is the actual number of parts produced during the operating time.

An OEE performance factor of 100% indicates that the machine is working at its maximum possible speed. Values below 100% indicate efficiency losses, which can be caused by various factors such as suboptimal processes, machine problems or operating errors.

However, an OEE performance factor above 100% should be critically reviewed to ensure that the ideal cycle time is correctly defined and that the actual conditions of the production process are realistic and sustainable. Otherwise, such a value could create false expectations and potentially indicate hidden problems or miscalculations.

What to consider with an OEE performance factor of over 100%! 

1. Unrealistically conservative cycle time
2. Optimization and improvements
3. Deviation in the recording of the cycle time
4. Short production runs or special conditions 

How do you determine your maximum production output (target output)?

As a rule, the manufacturer of a system should provide this information as the “ideal cycle time”, from which you can then derive the target performance.
 Example: if two parts are processed in one cycle and the ideal cycle time is 5 seconds, then 24 parts should be processed within one minute or 1440 parts should be processed within one hour.

If this information is not available, you can determine the fastest recorded time by looking at the historical performance and then calculating how many products you would produce if your machines were constantly running at this speed. 

Strategy for optimizing OEE performance

As with the availability of a plant, the same applies to the performance factor: you should automatically record the current status of the performance of your plants and machines. In this case too, this can be done quickly, easily and cost-effectively by using a Software-as-a-Service (SaaS) tool that specializes in production indicators.

As a reminder: Make sure that the connectivity of the plant and machine connection is simple. Ideally, your maintenance/electricians should even do this themselves. This can usually be done within one hour per system.

The procedure is analogous to the determination and analysis of availability, so we will only briefly discuss the

Measures to improve the OEE performance factor

Improving the performance factor usually requires a combination of technical maintenance, targeted staff training and process optimization. Preventive and predictive maintenance strategies ensure that the machines are always operational and efficient. Continuous staff training ensures that operators are able to use the machines optimally. Finally, process optimization ensures that production processes run smoothly and without delays. All of these measures together help to improve the performance factor and increase overall productivity. 

With a SaaS tool specializing in Overall Equipment Effectiveness (OEE) and other “production metrics”, companies can quickly, easily and cost-effectively gain detailed insights into the availability, performance and quality output of their plants and machines. The resulting key figures are used for systematic and continuous optimization. The benefits and cost savings of each measure are immediately visible. 

3. OEE - quality factor

Definition, formula and determination of the OEE quality factor in practice

The quality factor is the third main component of Overall Equipment Effectiveness (OEE). It measures the proportion of units produced that meet quality standards in relation to the total number of units produced.

The OEE quality factor indicates how efficiently a plant operates in relation to the production of flawless products. The formula for calculating the quality factor is::

• Number of good units

• Total number of units produced
  The total number of units produced, including defective units.

In practice, companies strive to achieve as high a quality factor as possible, ideally close to 100%, which means that almost all units produced meet quality standards.

A typical quality factor in a well-controlled and stable production environment could be between 90% and 99%. However, in less optimized environments or with very complex production processes, the quality factor can be significantly lower.

Example of OEE calculation of the quality factor

In practice, the number of good parts is often determined by simply subtracting the number of scrap and rework parts from the known number of parts produced in the period under consideration.

Total parts produced = good parts + scrap parts + rework parts 

Strategy for OEE optimization of quality

As with the availability and performance of a plant, you should also automatically and systematically record the current status of the quality of your plants and machines when it comes to quality. As already mentioned several times, this can be done quickly, easily and cost-effectively by using a Software-as-a-Service (SaaS) tool that specializes in key production figures.

It is obvious that faulty parts have a major impact on costs and on-time production. The earlier production errors are detected in the value creation process, the less damage is caused.

Professional monitoring of the key performance indicator “quality” helps you to focus on the most important quality problems and eliminate them first.

OEE formula - calculation of the key figure

Now that we know all the Overall Equipment Effectiveness (OEE) factors, we can calculate the OEE key figure quite easily and correctly: 

If you multiply all the OEE factors together, you get the OEE value of the overall equipment effectiveness! The following graphic illustrates the relationships at a glance. 

OEE observation period

• planned non-production
• planned downtimes

These “losses” are taken into account in the key figure “Total Effective Equipment Performance” (TEEP), but not in the OEE key figure. Only the losses during the planned production time are considered here! 

Planned production time

The planned production time is the sum of all periods in which your systems are scheduled and available for actual production, minus the planned non-production times. When calculating the OEE (Overall Equipment Effectiveness), only the losses that occur during this planned production time, such as unplanned downtimes, reduced speeds or quality problems, are considered.

The planned production time is a realistic representation of the actual availability of your equipment for production, taking into account all necessary and planned interruptions. This enables a more accurate and relevant assessment of the actual efficiency and productivity of your production.

OEE Conclusion

Increasing manufacturing productivity

In the modern manufacturing industry, increasing productivity is key to remaining competitive. By implementing advanced manufacturing technologies and automation solutions, companies can optimize their production processes and significantly increase efficiency.

Get started today - quickly, easily and cost-effectively

SYMESTIC is one of the world's leading providers of cloud-native systems that focus on OEE and other key production indicators. Book a 4-week evaluation without obligation and see for yourself how quickly, easily and cost-effectively you can automatically determine data for OEE key figures in your company using a modern Software-as-a-Service (SaaS). Have the OEE and associated availability, performance, quality and other key figures continuously calculated and analyzed. Use objective, trustworthy key figures, dashboards, reports and notifications in all production-related departments in your company! 

OEE - Further information

Discover our selected articles on OEE and how it can revolutionize your production processes below:

• Six Big Losses - The most important causes of OEE losses - A detailed explanation of the 'Six Big Losses' that can occur in production and their impact on the OEE factors.
  
  
• The Benefits of automated OEE measurement - Automated OEE measurement assures you of high accuracy, consistent data, reliable real-time monitoring and much more.
  
  
• Why improving OEE lowers your production costs - Eliminating your sources of loss leads to cost savings and higher profits in addition to a higher OEE value.
  
  
• How to improve the OEE in your production - Learn how to increase the OEE value with your production team using an exemplary improvement process.
  
  
• The 6 most common OEE mistakes and how to avoid them - The most common mistakes in OEE measurement and how to avoid them to effectively reach your productivity target.
  
  
• Why OEE is one of the most important production metrics! - If your goal is to achieve more profitable production, then you should definitely know to what extent the OEE key figure can help you achieve this.
  
  
• What characterizes a good OEE score? - The determined OEE value can be a warning signal, an indication of average levels or an award.

OEE is a decisive factor for Lean Production, Continuous Improvement (CIP), Kaizen, Six Sigma and Shopfloor Management. It plays a central role in the identification and utilization of improvement potentials in production. OEE solutions enable efficient communication and coordination at the production level, which is essential for the rapid identification and elimination of problems.