OEE In Simple Terms

The more we know, the more complicated things get.  The same is true for OEE.  When the training is over and the data collection starts, it’s easy to get overwhelmed with information.  It gets even worse when the results are published – especially if the OEE is less than anyone ever expected it to be.  A word of warning – OEE is always less than anyone expected it to be.

That can’t be right

More often than not, “That can’t be right” is the first statement you’ll hear.  This is typically followed by a request to review all of the input data to make sure there are no entry errors.  Chasing errors soon becomes the daily ritual as you try to make sense of the results.

Why this happens …

The greatest source of confusion begins with the very formula that’s being used to calculate OEE. A quick search of the web will yield the formula for OEE as Availability x Performance x Quality, where the result is expressed as a percentage.

Though this formula apears to be simple enough, the reporting mechanisms to support this formula require an exceptional level of rigor and integrity. Is the downtime precise or estimated? Do we attribute the unaccounted downtime to the Performance factor? If so, was the machine really running at the ideal rate? How many minor “machine faults” occurred? Were they really minor faults or simply unreported downtime events of unknown duration? And there begins the source of errors and confusion.

While the formula is correct, the reporting methods are error prone and become the underlying source of so much confusion. There is a much easier way to calculate OEE that eliminates the “overhead” required to support the traditional formula and does not require significant investment in advanced hardware or software technologies to better track downtime events, machine faults, or machine cycle times.

We suggest …

By definition, OEE can be calculated using a very simple formula:

OEE = (Good Parts Produced x Ideal Cycle Time) / Net Operating Time

OEE = Ideal Operating Time / Net Operating Time

  • Remember, the units of measure for the cycle time and operating time must be the same

This is also known as the “Back of the Envelope calculation” and anyone on the shop floor can do the math at any time. Just remember to use the same base unit of measure for time; if the cycle time is stated in “minutes per part”, then the Net Operating Time must be expressed in minutes as well.

Simple OEE – Example

A CNC machine is scheduled to run for 1 complete shift from 6:00 am to 2:30 pm. There are three breaks over the course of the shift: two (2) 10 minute breaks and one (1) 30 minute break. The ideal cycle time for each part is 75 seconds or 1.25 minutes.

For quick shift calculations, we first determine our Net Operating Time as follows:

  • Shift Time: 6:00 am – 2:30 pm = 8.5 hours = 510 minutes
  • Scheduled Breaks: (2 x 10) + (1 x 30) = 50 minutes
  • Net Operating Time = 510 – 50 = 460 minutes

If 340 good parts were produced on the machine over the complete shift, we can easily calculate our OEE as follows:

Calculate the Ideal Operating Time based on the quantity of good parts produced:

  • Ideal Operating Time = Quantity of Good Parts Produced x Ideal Cycle Time per Part
  • Ideal Operating Time = 340 parts x 1.25 minutes / part = 425 minutes

OEE = Ideal Operating Time / Net Operating Time

OEE = 425 / 460 = 92.39%

Short and Simple

Lost Time

We can quickly determine the total time lost during the shift with the following formula:

  • Lost Time = Net Operating Time – Ideal Operating Time

From our example above, the total lost time is  460 minutes – 425 minutes = 35 minutes.

Where did the time go?

Now that we’ve established how much time was lost over the course of the shift, we can review our production reports to determine when the lost time event occurred and how much downtime was incurred.  The reasons may be many but they are typically classified as follows:

  • Availability
    1. Setup and Adjustments
    2. Breakdowns
  • Performance
    1. Minor Stops
    2. Speed Losses – Running at less than Ideal Rate
  • Quality
    1. Start up / setup defects
    2. Production defects

These categories form the baseline for the more familiar OEE formula:

OEE = Availability x Performance x Quality

While this formula “works”, it is seldom possible for any given event to timed to the precision required to provide a truly accurate OEE result.  No matter what formula you choose to calculate OEE, the simple formula given earlier allows the real downtime to be determined.  How the downtime is allocated to each of the categories (Availability, Performance, or Quality) may not be so simple or easily monitored and managed.

In Conclusion …

The objective of OEE is to help direct your efforts and focus on those opportunities where the greatest improvements can be realized.  Unfortunately, many plants seem to think of OEE as a means of measuring “How good we are!” as opposed to “How much better can we get?”

We strongly suggest using the simple formula to calculate OEE, then drill down through the  various reports available to better understand the results  and inherent downtime losses.  This approach will enable you to “reverse engineer” your reporting infrastructure to identify the real opportunities for improvement. 

Your Feedback Matters

Thank you for reading and as always, we appreciate your feedback.  Please feel free to leave a comment or suggestions for future topics.

Until next time – STAY lean!


7 thoughts on “OEE Short and Simple

  1. It’s very help full for me…

    Thanks & Regards

    Ketan d bhavsar

    Manager ( Production )

    Kalapataru power trans. ltd.


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