{"id":10134,"date":"2022-04-06T08:42:35","date_gmt":"2022-04-06T15:42:35","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10134"},"modified":"2025-04-11T08:55:56","modified_gmt":"2025-04-11T15:55:56","slug":"what-is-overall-equipment-effectiveness","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2022\/04\/what-is-overall-equipment-effectiveness","title":{"rendered":"What is Overall Equipment Effectiveness?"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10135″ img_size=”full”][vc_column_text]Overall Equipment Effectiveness (OEE) is both a benchmark and a baseline that\u2019s valuable for manufacturers to know when it comes to measuring productivity. Below are the key benefits of this metric, how it works and how to calculate your operation\u2019s overall effectiveness.<\/span><\/p>\n

What is Overall Equipment Effectiveness?<\/span><\/h2>\n

Overall Equipment Effectiveness<\/span><\/a> is a metric that helps manufacturers identify the percentage of planned production time that is actually productive. An ideal OEE score would be 100%. This score would mean that an operation is manufacturing only good products as quickly as possible with no downtime. While 100% is ideal, a score of 85% or better is still considered world-class. Many manufacturers, however, score more in the 40% to 70% range, which is common, but shows that production can be improved. Manufacturers can use their OEE score as a benchmark to see how their operations compare to that of similar organizations, as well as a baseline to track progress over time.\u00a0<\/span><\/p>\n

You may have heard of OEE as one of the elements needed to calculate another meaningful metric: <\/span>asset utilization<\/span><\/a>. To calculate OEE itself, you only need to know three factors, which are asset availability, asset performance and production quality.<\/span><\/p>\n

What is the OEE Calculation?<\/span><\/h2>\n

The formula to remember to calculate OEE is: <\/span>A x P x Q = OEE<\/b><\/p>\n

The <\/span>A<\/b> stands for availability. Availability looks at all the events that interfere with planned production for long enough to be worth noting, which, for many manufacturers, would be several minutes or more. Availability is calculated as the ratio of Run Time to Planned Production Time: Availability = Run Time \/ Planned Production Time<\/span><\/p>\n

Run Time is Planned Production Time less Stop Time, with Stop Time being any time the manufacturing process should have been running but wasn\u2019t due to unplanned or planned stops. This can be calculated as: Run Time = Planned Production Time – Stop Time<\/span><\/p>\n

The <\/span>P<\/b> stands for performance. Performance refers to anything that causes the manufacturing process to run at less than the maximum possible speed. Performance is the ratio of Net Run Time to Run Time. That formula is: Performance = (Ideal Cycle Time x Total Count) \/ Run Time<\/span><\/p>\n

Ideal Cycle Time is the fastest cycle time your process can achieve in the best possible circumstances. If performance is calculated as more than 100%, this likely indicates that the Ideal Cycle Time is incorrectly set too high.\u00a0<\/span><\/p>\n

The <\/span>Q<\/b> stands for quality, which looks at all the manufactured products that do not meet quality standards, including parts that need to be reworked. Quality, in this case, refers to parts that successfully pass through the manufacturing process the first time without needing any tweaking.\u00a0<\/span><\/p>\n

Again, to calculate OEE, you\u2019ll multiply your asset availability by asset performance by production quality. That number will be your overall OEE score.<\/span><\/p>\n

Benefits of Overall Equipment Effectiveness<\/span><\/h2>\n

There are many valuable benefits to knowing your Overall Equipment Effectiveness score and using it as a motivational metric to improve upon. Below are some of the biggest benefits manufacturers can see from being aware of their OEE.\u00a0<\/span><\/p>\n

Stronger ROI<\/span><\/h3>\n

Manufacturers know that machinery is expensive. You want to see a worthwhile return on your investment. OEE helps ensure a strong return by raising the standard of productivity on all assets. You\u2019ll also get better performance out of new machinery sooner.<\/span><\/p>\n

Greater Competitiveness<\/span><\/h3>\n

Staying competitive is essential for any operation. Having the most accurate OEE insight helps organizations, for example, figure out why they\u2019re only producing 50 pieces per hour when they\u2019re capable of 80. By seeing where the production line is failing, you can correct inefficiencies.\u00a0<\/span><\/p>\n

Better Quality<\/span><\/h3>\n

Even the most financially sound operation can\u2019t afford too many defective products. The use of OEE and the right technology allows for better traceability to determine where the drop in <\/span>quality<\/span><\/a> is originating so it can be quickly corrected.\u00a0<\/span><\/p>\n

Usable Data<\/span><\/h3>\n

Many manufacturers don\u2019t realize that they\u2019re actually operating at a lower efficiency than they\u2019re capable of. OEE allows manufacturers to quantify their efficiencies. When you\u2019re able to measure and analyze your operations, you can more strategically improve them. And it\u2019s not just products and processes that can be improved. Having real-time insights helps plant personnel see how they’re working and where they can work smarter.<\/span><\/p>\n

Reduced Machinery Repair Costs<\/span><\/h3>\n

Because OEE helps you keep a closer eye on machine performance, you can better anticipate issues that will lead to needing repair. This foresight helps manufacturers to <\/span>preventively<\/span><\/a> maintain and address machinery in a predictable manner, which is typically more cost-effective than waiting until equipment fully breaks down and halts production.\u00a0<\/span><\/p>\n

Easy Scalability<\/span><\/h3>\n

Utilizing OEE is appropriate for any company size or plant type. You can begin by using an OEE system on one machine or process and then expand usage as you\u2019re ready.\u00a0<\/span><\/p>\n

Industries Utilizing Overall Equipment Effectiveness<\/span><\/h2>\n

OEE is a KPI used by many industries that utilize manufacturing equipment and machinery throughout their operational processes, such as:<\/span><\/p>\n