Overall Equipment Effectiveness

An explanation of Overall Equipment Effectiveness (OEE)

Many organisations can appear to generate performance statistics in excess of 100%!

This impossible situation can be as a consequence of misguided targets/standards, incorrect measurements, inappropriate measurement systems and/or bonus systems that encourage misrepresentation. Whatever the reason, the true performance of capital equipment and the effectiveness of improvement activity will be impossible to evaluate. Therefore the return on capital employed will not be optimised.

OEE is an unforgiving, and rigorous measure of the true effectiveness of organisations equipment.

Overall Equipment Effectiveness is the Availability of Equipment, The Output of the Equipment, and the Quality rate, all compounded together.

OEE = Availability% x Performance% x Quality%

All measurement should be conducted with an objective of seeking performance improvement, if we measure performance simply for its own sake, and take no improvement action then why bother at all.

Overall Equipment Effectiveness pinpoints specific losses, and directs limited improvement resources to where they can reap most benefit. The objectiveness of OEE as a measure often dispels the rumours and hearsay that surround poor performance.

Availability: The time that equipment is available for use.

From the 24 hours in a day, seven days a week, we need to remove planned downtime, such as weekends, nights, breaks, planned maintenance time. Set-up, Start-up, and other unplanned losses, such as breakdowns, etc. are recorded by category.

Performance Losses: The difference between theoretical output of a piece of equipment and what is actually generated. Failures in this category include, minor stoppages,machine idling, jams, mis-feeds and reduced operating speeds. Often these failures are dismissed as insignificant but the discipline of OEE, ensures that their true and significant cost is exposed.

Quality Losses: This includes all quality related issues whether they were planned or not, rejects, rework, yield loss, samples, start-up losses etc. If:

Availability is 75%
Performance is 70%
Quality is 98%

Overall Equipment Effectiveness is 75% x 70% x 98% = 51.5%

Organisation operating in different market segments can expect to achieve different levels of OEE, however to achieve success it is imperative that businesses maximise the return on their capital equipment. By having an objective measure in place, organisations can understand the performance of their key equipment, and will also have a firm foundation for their own improvement activities.