A number of requests have been received recently that point to a lack of clarity in the definition of Overall Equipment Effectiveness (OEE).  One of the questions we were recently asked is:

How do you calculate OEE for Overtime hours?

Overtime and OEE

Our first response is quite simple.  OEE doesn’t care whether you are working overtime or straight time.  The basic OEE definition pertains to equipment effectiveness.  If the machine is scheduled to run production, the same basic calculations apply regardless of the day or hours worked.

If your machine is running two shifts and customer requirements increase to the point where you no longer have capacity to meet demand , two choices exist:  either work overtime or add an additional shift to make up for the shortfall.  In both cases, the production time would be scheduled.

If capacity should be available but simply isn’t because of extenuating circumstances such as poor quality (material or process) or equipment condition, the same rules still apply.  Production is scheduled, therefore machines must run to meet customer demand.  The difference in this case is not increased customer demand but rather the inability to produce parts due to extenuating equipment or process conditions.

While appropriate action should be taken to address the reason(s) for working overtime, the fact that you are working it should not change the method used to calculate OEE.

This question, like many others we receive, reinforce our recommendation to clearly state what is being measured and why.  We also stated in previous posts that OEE is relative for your organization – a standard industry wide definition for OEE exists only by way of calculation.  The elements and how they are to be considered for calculation purposes are subject to company policy.

We appreciate the feedback and look forward to hearing from our readers.  To submit your questions, comments, or suggest a topic for a future post, send an e-mail to LeanExecution@gmail.com

Until next time – stay LEAN.

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