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What is Overall Equipment Effectiveness (OEE) ?

OEE (Overall Equipment Effectiveness) is the gold standard for measuring manufacturing productivity. Simply put – it identifies the percentage of manufacturing time that is truly productive. An OEE score of 100% means you are manufacturing only Good Parts, as fast as possible, with no Stop Time. In the language of OEE that means 100% Quality (only Good Parts), 100% Performance (as fast as possible), and 100% Availability (no Stop Time).

Measuring OEE is a manufacturing best practice. By measuring OEE and the underlying losses, you will gain important insights on how to systematically improve your manufacturing process. OEE is the single best metric for identifying losses, benchmarking progress, and improving the productivity of manufacturing equipment (i.e., eliminating waste).

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Where Do We Start?

Let’s start at the beginning – with All Time. This is also called 24/7 time (it includes every minute of every day).


From All Time, you subtract Schedule Loss, which includes all time that should be excluded from OEE analysis because there is no intention of running production during this time (e.g., plant shutdowns, breaks/lunches, or periods where there are no orders). Schedule Loss is part of TEEP (Total Effective Equipment Performance). It is not part of OEE.
The remaining time is your Planned Production Time. OEE begins with Planned Production Time and scrutinizes all efficiency and productivity losses that occur within that time, with the goal of reducing or eliminating these losses.


Now we will look at the three OEE factors, each of which takes into account a different type of loss. They are Availability, Performance and Quality.


Availability takes into account Availability Loss, which includes any events that stop planned production for an appreciable length of time (usually several minutes; long enough for an operator to log a reason).
Examples of things that create Availability Loss include Unplanned Stops (such as equipment failures and material shortages), and Planned Stops (such as changeover time). Changeover time is included in OEE analysis, since it is time that could otherwise be used for manufacturing. While it may not be possible to eliminate changeover time, in most cases it can be significantly reduced. Reducing changeover time is the goal of SMED (Single-Minute Exchange of Dies).

The remaining time after Availability Loss is subtracted is called Run Time.



Performance takes into account Performance Loss, which accounts for anything that causes the manufacturing process to run at less than the maximum possible speed when it is running (including both Slow Cycles and Small Stops).
Examples of things that create Performance Loss include machine wear, substandard materials, misfeeds, and jams.

The remaining time after Performance Loss is subtracted is called Net Run Time.



Quality takes into account Quality Loss, which accounts for manufactured parts that do not meet quality standards.
Examples of things that create Quality Loss include scrap and parts that need rework. OEE Quality is similar to First Pass Yield, in that it defines Good Parts as parts that successfully pass through the manufacturing process the first time without needing any rework.

The remaining time after Quality Loss is subtracted is called Fully Productive Time.


Quick Review

Now that you have taken a look at how the three OEE Factors are defined we can quickly review each type of loss and its relationship to the OEE factors.


As you can see, the core concepts of OEE are quite simple and the three OEE Factors really help to focus us on the underlying causes of productivity loss.

We can delve even deeper into productivity losses by understanding the Six Big Losses.

We can also extend OEE analysis a step further by taking into account a fourth factor – Utilization. This takes us into the realm of TEEP.




Equipment Failure

Equipment Failure accounts for any significant period of time in which equipment is scheduled for production but is not running due a failure of some sort. A more generalized way to think of equipment failure is as any unplanned stop or down time. Equipment failure is an Availability Loss.

Examples of common reasons for equipment failure include tooling failure, breakdowns, and unplanned maintenance. From the broader perspective of unplanned stops, other common reasons include no operators or materials, being starved by upstream equipment or being blocked by downstream equipment.

There is flexibility on where to set the threshold between equipment failure (an Availability Loss) and a minor stop (a Performance Loss). A good rule of thumb is to set that threshold based on your policy for tracking reasons. For example, your policy might be that any down time longer than two minutes should have a reason associated with it – and thus shall be considered equipment failure.

Setup and Adjustments

Setup and Adjustments accounts for any significant periods of time in which equipment is scheduled for production but is not running due to a changeover or other equipment adjustment. A more generalized way to think of Setups & Adjustments is as any planned stop. Setup and Adjustments is an Availability Loss.

Examples of common reasons for Setup and Adjustments include setup, changeovers, major adjustments, and tooling adjustments. From the broader perspective of planned stops, other common reasons include cleaning, warmup time, planned maintenance, and quality inspections.

The largest source of Setup and Adjustment time is typically changeovers (also referred to as make ready or setup), which can be addressed through a SMED (Single-Minute Exchange of Dies) program.

Idling and Minor Stops

Idling and Minor Stops accounts for time where the equipment stops for a short period of time (typically a minute or two) with the stop resolved by the operator. Another name for Idling and Minor Stops is small stops. Idling and Minor Stops is a Performance Loss.

Examples of common reasons for Idling and Minor Stops include misfeeds, material jams, obstructed product flow, incorrect settings, misaligned or blocked sensors, equipment design issues, and periodic quick cleaning.

This category usually includes stops that are well under five minutes and that do not require maintenance personnel. The underlying problems are often chronic (same problem/different day), which can make operators somewhat blind to their impact. Most companies do not accurately track Idling and Minor Stops.

Reduced Speed

Reduced Speed accounts for time where equipment runs slower than the Ideal Cycle Time (the theoretical fastest possible time to manufacture one part). Another name for reduced speed is slow cycles. Reduced speed is a Performance Loss.

Examples of common reasons for reduced speed include dirty or worn out equipment, poor lubrication, substandard materials, poor environmental conditions, operator inexperience, startup, and shutdown.

This category includes anything that keeps the process from running at its theoretical maximum speed (a.k.a. Ideal Run Rate or Nameplate Capacity) when the manufacturing process is actually running.

Process Defects

Process Defects account for defective parts produced during stable (steady-state) production. This includes scrapped parts as well as parts that can be reworked, since OEE measures quality from a First Pass Yield perspective. Process defects are a Quality Loss.

Examples of common reasons for process defects include incorrect equipment settings, operator or equipment handling errors, and lot expiration (e.g., in pharmaceutical plants).

Reduced Yield

Reduced Yield accounts for defective parts produced from startup until stable (steady-state) production is reached. This includes scrapped parts as well as parts that can be reworked, since OEE measures quality from a First Pass Yield perspective. Reduced Yield can occur after any equipment startup, however, it is most commonly tracked after changeovers. Reduced Yield is a Quality Loss.

Examples of common reasons for Reduced Yield include suboptimal changeovers, incorrect settings when a new part is run, equipment that needs warmup cycles, or equipment that inherently creates waste after startup (e.g., a web press).



Simple Calculation

The simplest way to calculate OEE is as the ratio of Fully Productive Time to Planned Production Time. Fully Productive Time is just another way of saying manufacturing only Good Parts as fast as possible (Ideal Cycle Time) with no Stop Time. Hence the calculation is:

OEE = (Good Count × Ideal Cycle Time) / Planned Production Time

Although this is an entirely valid calculation of OEE, it does not provide information about the three loss-related factors: Availability, Performance, and Quality. For that – we use the preferred calculation.

Freferred Calculation

The preferred OEE calculation is based on the three OEE Factors: Availability, Performance, and Quality.


OEE is calculated by multiplying the three OEE factors: Availability, Performance, and Quality.