Tag: OEE Calculator

OEE For Manufacturing

We are often asked what companies (or types of companies) are using OEE as part of their daily operations.  While our focus has been primarily in the automotive industry, we are highly encouraged by the level of integration deployed in the Semiconductor Industry.  We have found an excellent article that describes how OEE among other metrics is being used to sustain and improve performance in the semiconductor industry.

Somehow it is not surprising to learn the semiconductor industry has established a high level of OEE integration in their operations.  Perhaps this is the reason why electronics continue to improve at such a rapid pace in both technology and price.

To get a better understanding of how the semiconductor industry has integrated OEE and other related metrics into their operational strategy, click here.

The article clearly presents a concise hierarchy of metrics (including OEE) typically used in operations and includes their interactions and dependencies.  The semiconductor industry serves as a great benchmark for OEE integration and how it is used as powerful tool to improve operations.

While we have reviewed some articles that describe OEE as an over rated metric, we believe that the proof of wisdom is in the result.  The semiconductor industry is exemplary in this regard.  It is clear that electronics industry “gets it”.

As we have mentioned in many of our previous posts, OEE should not be an isolated metric.  While it can be assessed and reviewed independently, it is important to understand the effect on the system and organization as a whole.

We appreciate your feedback.  Please feel free to leave us a comment or send us an e-mail with your suggestions to leanexecution@gmail.com

Until Next Time – STAY lean!

Benchmarking OEE

Benchmarking Systems:

We have learned that an industry standard or definition for Overall Equipment Effectiveness (OEE) has been adopted by the Semi Conductor Industry and also confirms our approach to calculating and using OEE and other related metrics.

The SEMI standards of interest are as follows:

  • SEMI E10:  Definition and Measurement of Equipment Reliability, Availability, and Maintainability.
  • SEMI E35:  Guide to Calculate Cost of Ownership Metrics.
  • SEMI E58:  Reliability, Availability, and Maintainability Data Collection.
  • SEMI E79:  Definition and Measurement of Equipment Productivity – OEE Metrics.
  • SEMI E116:  Equipment Performance Tracking.
  • SEMI E124:  Definition and Calculation of Overall Factory Efficiency and other Factory-Level Productivity Metrics.

It is important to continually learn and improve our understanding regarding the development and application of metrics used in industry.  It is often said that you can’t believe everything you read (especially – on the internet).  As such, we recommend researching these standards to determine their applicability for your business as well.

Benchmarking Processes:

Best practices and methods used within and outside of your specific industry may bring a fresh perspective into the definition and policies that are already be in place in your organization.  Just as processes are subject to continual improvement, so are the systems that control them.  Although many companies use benchmarking data to establish their own performance metrics, we strongly encourage benchmarking of best practices or methods – this is where the real learning begins.

World Class OEE is typically defined as 85% or better.  Additionally, to achieve this level of “World Class Peformance” the factors for Availability, Performance, and Quality must be at least 90%, 95%, and 99.5% respectively.  While this data may present your team with a challenge, it does little to inspire real action.

Understanding the policies and methods used to measure performance coupled with an awareness of current best practices to achieve the desired levels of  performance will certainly provide a foundation for innovation and improvement.  It is significant to note that today’s most efficient and successful companies have all achieved levels of performance above and beyond their competition by understanding and benchmarking their competitors best practices.  With this data, the same companies went on to develop innovative best practices to outperform them.

A Practical Example

Availablity is typically presented as the greatest opportunity for improvement.  This is even suggested by the “World Class” levels stated above.  Further investigation usually points us to setup / adjustment or change over as one of the primary improvement opportunities.  Many articles and books have been written on Single Minute Exchange of Dies and other Quick Tool Change strategy, so it is not our intent to present them here.  The point here is that industry has identified this specific topic as a significant opportunity and in turn has provided significant documentation and varied approaches to improve setup time.

In the case of improving die changes a variety of techniques are used including:

  • Quick Locator Pins
  • Pre-Staged Tools
  • Rolling Bolsters
  • Sub-Plates
  • Programmable Controllers
  • Standard Pass Heights
  • Standard Shut Heights
  • Quarter Turn Clamps
  • Hydraulic Clamps
  • Magnetic Bolsters
  • Pre-Staged Material
  • Dual Coil De-Reelers
  • Scheduling Sequences
  • Change Over Teams versus Individual Effort
  • Standardized Changeover Procedures

As change over time becomes less of a factor for determining what parts to run and for how long, we can strive reduced inventories and improved preventive maintenance activities.

Today’s Challenge

The manufacturing community has been devastated by the recent economic downturn.  We are challenged to bring out the best of what we have while continuing to strive for process excellence in all facets of our business.

Remember to get your free Excel Templates by visiting our FREE Downloads page.  We appreciate your feedback.  Please leave a comment an email to leanexecution@gmail.com or vergence.consultin@gmail.com

Until Next Time – STAY Lean!

OEE Topics for 2009

We changed our theme!

Today was another day to do a little maintenance. We spent a little time revamping our look and feel. We hope you enjoy the changes and find our site a little easier to navigate.  We updated our Free Downloads page to present another easier and more direct venue to get your files instantly using Box.Net. If you’re already familiar with WordPress, you know how great this widget is. Downloads could never be faster or easier.

We also took some time to update some of our pages. We would suggest, however, that the best detailed content appears in the individual articles that we have posted.

Upcoming Topics for 2009

  1. Tracking OEE Improvements:  We have noticed an increase in the number of requests to discuss tracking OEE improvements.  We have been working on a few different approaches even for our own consulting practice and look forward to sharing some thoughts and ideas here.
  2. How OEE can improve your Cost of Non-Quality.  It’s more than yield.
  3. What OEE can do for your Inventory.  Improvements should be cascading to other areas of your operation – including the warehouse.
  4. Innovation – Defining your future with OEE
  5. OEE and Agile – Going beyond lean with OEE.
  6. Best Practices – OEE in real life, in real time

If you would like to suggest a topic for a future post, ask a question, or make a suggestion, please leave a comment or simply send an e-mail to LeanExecution@gmail.com or vergence.consulting@gmail.com.  We do appreciate your feedback.

Until Next Time – STAY lean!

Vergence Business Associates

We respect your privacy, your information will not be shared, sold, or distributed to any third parties.  We will only use your e-mail to communicate with you at your request.  You will not be subject to any advertising or marketing campaigns.

Cost Weighted OEE and other free OEE Spreadsheet Templates

OEE Spreadsheet Templates – One Click Closer:

As the days of summer are upon us, we thought it would be good idea to make it easier for you to access our free downloads so you can spend more time doing the things you want to do.  We have updated our site and we are pleased to offer you four ways to download our OEE spreadsheet templates:

  1. We added a new page titled “Downloads
  2. We also added a new Link List to the sidebar titled “Download Files”
  3. We made the FREE DOWNLOADS orange Box file a little larger and easier to read.
  4. We will include direct access links in the content of our posts.

Your OEE templates are literally a click away – saving you time and effort.

Cost Weighted OEE – Advanced OEE Template

We have received numerous requests for our “Cost Weighted OEE” template.  Many people are starting to realize that the OEE factors for availability, performance, and quality are not directly correlated.  Of course, we have also discussed our concerns in this regard on several occasions and will state again that OEE is not a stand alone metric.  As a vantage point metric, it can provide a valuable perspective on operations in real time, however, it is only one part of the overall equation.

Rex Gallaher wrote an excellent article titled “OEE Oxymoron; Are all factors truly equal?” that was published by ReliablePlant.com on February 18, 2009.  This article also conveys the premise that the OEE factors are not equal.  Understanding the financial impact of each of the OEE factors will assure that efforts and energy are focused on activities that will provide the greatest return on investment for your company.

To celebrate our site updates, we thought we would give you at least one more reason to see how our download venues work.  A copy of the Cost Weighted OEE Template is now available through all three of our download venues or you can Click HERE to get immediate access to the file.

For a detailed discussion of OEE and how it can (and should not) be used to identify opportunities to eliminate waste and reduce costs, click on one of the links below:

  1. OEE and Cost Control – Published in December, 2008
  2. 6 Things OEE is NOT! – Published in April, 2009
  3. Make or Break with OEE – Published in May, 2009

In light of the current economy, many companies have been forced to look inward to find “new” money.  OEE is one of the few lean metrics available that can help your organization to focus on the greatest opportunities with measurable returns.  We trust the templates and spreadsheet solutions that we offer here will help you in your quest.

For more information, click on the Categories section of the sidebar to search for other articles on our Blog that may be of interest to you.  They can provide significant insight into the many aspects of operations and OEE and may serve as part of your ongoing training efforts.

We appreciate your feedback.  Please feel free to leave a comment or send an e-mail with your suggestions for a future topic, comments, questions, or concerns to leanexecution@gmail.com or versalytics@gmail.com

Until next time – STAY lean!

How OEE can improve your Inventory

Once you have established a robust OEE system, you should also be reaping benefits in other areas of your organization.

We will be offering some insights into the other performance metrics such as inventory over the next few weeks. Improved availability, performance, and quality will all have an impact on your inventory and materials management processes. Inventory turns is one metric that should be improving as your OEE improves. If not, perhaps there is an opportunity to integrate OEE even deeper into your organization.

In a truly lean organization, other vantage point metrics will provide evidence of a well integrated OEE system. Metrics such as delivery, quality (ppm), labour efficiency, lead time, mean time between failures, mean response times, down time, turn over, and financial performance indicators are all directly or indirectly affected by improvements to your operation and OEE.

We will discuss the impact of OEE on these “other” metrics over the next few posts. Remember, we also offer excel templates at no cost to you. Click on the “BOX” files on the sidebar to get your free templates today! Our templates offer more than a simple OEE calculator – they can be used immediately with little or no modifications to suit your processes.

Until next time, STAY lean!

Vergence – Lean Execution Team.

OEE Training – Online

Getting Started

Online Training is more rampant now than ever.  If you want to learn about OEE and how to calculate it correctly then we have all the information you need right here.  Simply click on the categories of interest to you and research your specific topic or Click Here to get started.  This is the first article that got us started in November of 2008.  All of our online content is presently available at no charge.

Free Spreadsheet Templates

We offer several OEE Spreadhseet Templates that are available at no cost to our visitors and clients. Feel free to click on the “Free Downloads” template on the sidebar.  This is a new feature and trust that you will find this a much easier solution that provides immediate access to our documents.  If you can’t find what you are looking for, contact us by e-mail (leanexecution@gmail.com) or leave a comment with your suggestions for other templates that you would like to see available on our site.

Advanced Visitors

We trust that the content presented here is of interest to you as well.  We have provided many articles of interest related to OEE and Lean.  Simply review the categories and posts available or visit our pages for more information.  Our articles present detailed discussions and best practices applicable to the featured topic.

If you have any questions, comments, or suggestions for a future topic, simply leave a comment or send an e-mail to leanexecution@gmail.com or vergence.consulting@gmail.com.  We respect your privacy.  We will not share, disclose, sell, or distribute your e-mail or personal information with any third parties.  Your e-mail will only be used to contact you at your request.  You will not be subject to any advertising or marketing campaigns.  See our privacy policy for more details.

Until Next Time – STAY lean!

Vergence Business Associates

How to Reduce Costs with OEE: Cost Control

OEE is a great metric to help identify where you may be incurring losses in your processes or operation.  As one of the goals of implementing a Lean strategy is to reduce costs, it only seems natural that we should be able to determine what processes to focus on that are driving the greatest losses.

From the example developed in our previous posts we determined that the OEE and related factors for our three processes were as follows:

Machine Availability Performance Quality OEE
A 92.97% 88.26% 97.77%  80.22%
B 96.04% 77.23% 94.44% 70.05%
C 95.16% 61.70% 95.20% 55.90%

Based on the OEE results, one would be inclined to take a look at Machine C as it has the lowest OEE.  Is this really the greatest opportunity?  The only way to answer the question is to understand what factors are driving costs and ultimately affecting profitability.

The performance factor for machine C is definitely pulling down the OEE for this process.  What would you think if the machine is 100% automated (no labour) and the cycle time, although it may be less than standard, is still meeting the takt time to meet customer demand?  Is there really a cost?  Of course there is, but the impact to your business may be minimal in terms of cost when compared to the other machines.

It is clear that we need to develop a model to understand what losses and ultimately costs are associated with each of the factors.  In turn, we will be able to better understand the overall OEE.

What costs do we consider?  We recommend keeping the model simple.  There are typically three cost components associated with any given process or product:  Material, Labour, and Overhead.  Burden is another term used for Overhead and we will use these terms interchangeably.

Our goal over the next few posts will be to develop a simple cost model for each process and, in turn, determine which one may be the process of choice for improvement.  For now, we will provide a general discussion of some of the potential cost considerations.

Improving quality typically yields the greatest return on investment because all of the cost elements stated above are impacted by the Quality factor.  Raw material, Labour, and Burden are all expended to produce a part scrap part.

The costs associated with Quality losses are further challenged when considering the number of parts that would have to be produced in order to recover these lost costs.  If you are lucky enough to enjoy a 10% profit margin (clear), then, at a minimum, 10 parts would have to be produced for every part scrapped.  Of course, more parts would have to be produced to recover other infrastructure costs incurred including documentation, record keeping, and scrapping of the actual parts.

Performance losses typically affect labour and overhead.  Labour losses are easy enough to understand.  If a machine is operator dependent, then we will have to pay a person to stand at the machine to run it.  If it is running slowly, more costs are incurred to cover the additional labour time.

In many cases, direct losses related to overhead are sometimes difficult to assess unless a truly activity based costing system is in place.  The reason for the complexity arises because some of the costs are “fixed”.  Because the equipment exists, expenses such as depreciation or property taxes are incurred whether or not the equipment or, for that matter, the plant is running.  The performance of the machine or any of the other factors for that matter won’t change this fact.

Availability then becomes somewhat more obscure when it comes to calculating hard costs.  If the labour can be redeployed to another process when a machine goes down, perhaps some of the labour losses can be avoided.  If not, then waiting for a machine to be repaired or material to be delivered is a real loss that should be addressed.

Intangible costs are also difficult to quantify but we should be aware of their existence.  The costs associated or related to poor OEE may include overtime, expedited freight, and infrastructure costs related to extra handling of material or management of non-conforming material (containment, extra inspection, rework, and scrap).  Although this is a relatively short list, it addresses the most obvious potential losses.  With a little more thought, the list could easily grow longer.

Other key metrics in your facility such as customer delivery or quality performance indicators may also point to problems that can be traced directly to poor OEE performance.  Although difficult to measure, a company’s competitive position is compromised when efficiencies are low and eventually the costs of poor performance make their way into the “burden” costs required to manage the operation.

While OEE is an effective metric for operations, on its own, it does not provide a direct indicator of real financial losses.  As Lean Practitioners we are challenged to provide an analysis that not only improves the metrics of the business but also translate into real financial improvements on the balance sheet and ultimately – the bottom line.  We would suggest that OEE is a time driven metric (asset time management strategy) versus our proposed COEE which is Finance or “Value” driven (cost management strategy).   We are presently developing a model that will allow your OEE data to be sensitized with cost data as demonstrated by the table below.

We have coined the term COEE or Cost of Overall Equipment Effectiveness.  Consider the following OEE results converted to Cost based drivers using standard costs as our baseline.  The sample data and spreadsheet used to calculate this data will be available as a download soon.  The overall spreadsheet is quite large and based on a fully detailed three shift operation.

Cost driven OEE model - Summary
Cost driven OEE model - Summary

Our OEE cost model clearly presents the real costs or “losses” incurred per part.  Our Weighted OEE Cost Model will change the way you view OEE data, enabling you to set priorities and identify real, quantifiable, opportunities for improvement.  The above snapshot represents the goal of our COEE project – a clean, clear, summary of the losses incurred correlated directly to your OEE index.  Another advantage is that the Availability, Performance, and Quality factors are recalculated based on cost and presents a realistic breakdown of losses for each of these factors from a financial perspective.  Our spreadsheet presents an advanced OEE example that will bring real value to your OEE implementation strategy.

NOTE:  The fully developed spreadsheet is available from our FREE Downloads page or from the FREE Downloads box on the sidebar.

A well implemented OEE strategy should become evident on the balance sheet through improved material utilization, reduced labour variance (straight and overtime reductions), reduced scrap costs, reduced rework costs, and other burden account reductions.

Take quick, effective, and efficient action to solve the problems having the greatest financial impact to your business.  Last but not least, don’t confuse activity with action.  Decisions are not actions and talking about a problem or even writing about it could be construed as activity.  Real actions produce real, measurable, results.

Change requires Change.  Profit is to business as oxygen is to humans – you need it to survive. 

We have created a number of Excel spreadsheets that are immediately available for download from our FREE Downloads page or from the Free Downloads widget on the side bar.  These spreadsheets can be modified as required for your application.  There are no hidden files, formulas, or macros and no obligations for the services provided here.

If you have any questions or comments, feel free to send an email to LeanExecution@gmail.com

Until Next Time – STAY Lean!


Measuring Effectiveness – Getting started with OEE

Getting Started with Overall Equipment Effectiveness (OEE) – Your definitive guide to Overall Equipment Effectiveness

The “internet” is a powerful tool that can provide information in a matter of seconds.  Use Google to search for Overall Equipment Effectiveness or OEE and you will quickly receive an overwhelming number of “hits” leading you to the latest promotion selling you on the latest data collection technology or a ream of books that will provide wisdom and guidance to implement OEE.  We’re here because … you’re at your desk, not the book store.  Nor are you waiting for some sales professional to call you after submitting your information on line.

Although we have nothing against these venues, we are here to help you get started now.  While the information presented here is based on our experience with lean manufacturing and OEE integration, we do recommend some key reading that can serve as valuable references for anyone looking to implement OEE.  If you are looking for on line references, click here to access the most up to date books available on the market today or visit our “References – Books” page for a quick review of our top selections.

We provide numerous examples to demonstrate the concepts presented here so you can see for yourself how to calculate OEE and immediately put it to good use as a key performance metric to help you manage your business.  If you are looking for on line OEE training, all the information you need is here.

OEE Spreadsheet Templates

We are currently offering our OEE Spreadsheet Templates and example files at no charge.  You can download our files from the ORANGE BOX on the sidebar titled “FREE DOWNLOADS”, click on the Free OEE Templates page, or simply click on the name of the file you need from the Download Files link list on the sidebar.  These files can be used as is and can be easily modified to suit many different manufacturing processes.  There are no hidden files, formulas, or macros and no obligations for the services provided here.  So let’s get started …

What is OEE?

OEE measures how effectively time is utilized to manufacture a product, or products, using a piece of equipment.  It can also be expanded to measure how effectively time is utilized in your entire operation.

OEE is comprised of three (3) basic factors expressed as a percentage:  Availability, Performance, and Quality.  We will discuss how these factors are measured a little later in this post.

  • OEE = Availability X Performance X Quality

Availability:  measures the uptime of the machine during the course of the production run.

Performance:  measures the cycle time of the machine or process against the ideal or standard cycle time.

Quality:  measures the time required to make good parts against the time required to make all parts.

Note that most texts indicate that Quality is the yield of good parts made (Good Parts / Total Parts).  While this may be true for an individual part or production process, you will learn that this can be misleading when attempting to determine the true weighted OEE for an entire department or operation.  More on this later.


Comparing OEE between departments, divisions, or even companies can be very misleading unless a standard definition for OEE and its related factors has been determined.  We’ll discuss this in more detail later.  For now, be advised that, unless everyone is following the same definition, the results cannot be used for comparison purposes.


Availability measures the actual equipment up time over the planned production time.  In other words, the amount of time that the machine was available to make parts when the machine was scheduled to make them.  The easiest way to measure uptime is to measure the down time and subtract that from the time the equipment is available.  We need to determine the available time and understand what actually qualifies as down time.

A typical shift is usually 8 hours or 480 minutes.  Each shift is provided with two 10 minute paid breaks and a 30 minute unpaid meal break.

  • Net Available Time:  480 minutes – Break Times (20 minutes) = 460 minutes.
Shift Time Break Time Calculations Net Available
Hours Minutes Break Frequency Meals Total Time
8 480 10 2 0 20 460

Down time events include machine change over or setup, material changes, adjustments, break downs, or other events that take away from the production of parts.

Availability = (Net Available Time – Event Down Times) / Net Available Time

Example, a full shift of production was scheduled to run on machine A.  Production was stopped for 20 minutes due to a machine failure, 10 minutes for a bin change, 30 minutes for a quality concern requiring a tool repair.

Assuming the net available shift time is 460 from our example above, the availability is calculated as follows:

  • Availability = (460 – (20 + 10 + 30)) / 460 = 400 / 460 = 86.96%
Availability Factor Net Operating
Down Time Event Time (Up) Time
Machine Failure   20 440
Bin / Container Change   10 430
Quality Concern     30 400
Total     60 400
Availability = 400 / 460 86.96%


Performance measures the actual cycle time against the ideal or standard cycle time established for the process.  From our example above, the net operating time for the process is 400 minutes.  The next step is to determine how effectively this net operating time used to produce parts.  In OEE terminology this is known as the process Performance.

Continuing with the above example, let’s assume that a total of 1200 parts were produced.  The actual cycle time is 1200 parts /400 minutes = 3 parts / minute.  If the ideal cycle time established by engineering or the equipment manufacturer is 4 parts / minute, the performance for the process is calculated as follows:

  • Performance = Actual Rate / Ideal Rate = 3 / 4 = 75%
  • Performance = Ideal Cycle Time / Actual Cycle Time = 15 seconds / 20 seconds.
Performance Factor      
Ideal Cycle Time (seconds) 15
Total Quantity Produced 1200
Ideal Operating Time (Total Quantity x Cycle Time) 300 minutes
Actual Operating Time (Net Operating Time) 400 minutes
Performance = 300 minutes / 400 minutes 75.00%

So far so good!  Now all we need to do is calculate the Quality Factor.


Almost everyone in the industry assumes that Quality is a measure of yield (good parts / total parts made).  This simple definition of the Quality factor is misleading if we recall that OEE is a measure of overall equipment effectiveness and this in turn is based on how well that time was used to make good parts.  More on this later.

Moving on with our original example, 6 parts were scrapped during the course of the production run due to various quality defects.  This means that only 1194 of the 1200 parts produced were acceptable.  The simple yield calculation is as follows:

  • Quality = Good / Total = 1194 / 1200 = 99.50%

Since OEE measures how effectively an asset is used, we should be basing our calculation on how much TIME was lost to produce the 6 parts.  From a capacity planning and utilization perspective, the lost time is the real concern.

The ideal production rate is 4 parts per minute.  Therefore, the lost time can be calculated as follows:

  • Lost Time = Lost Parts / Ideal Rate = 6 / 4 = 1.5 minutes OR,
  • Lost Time = Lost Parts * Ideal Cycle Time = 6 * 15 = 90 seconds (1.5 minutes)

To put this into proper perspective, we should calculate the time required to make GOOD or Acceptable parts only.  From our example, this is the time required to make 1194 parts.  The calculations are as follows:

  • Time to Produce Good Parts = 1194 / 4 parts per minute = 298.5 minutes
  • Time to Produce Good Parts = 1194 * 15 seconds = 17,910 seconds = 298.5 minutes

The quality factor can now be calculated correctly as follows:

  • Quality % = Time to Produce GOOD Parts / Time to Produce Total Parts = 298.5 / 300 = 99.50%
Quality Factor      
Ideal Cycle Time (seconds) 15
Quantity Scrap / Defective 6
Total ACCEPTABLE Quantity 1194
NET Ideal Operating Time (Quantity Accepted * Cycle Time) 298.5 minutes
Ideal Operating Time (Total Quantity x Cycle Time) 300 minutes
Quality = 298.5 minutes / 300 minutes 99.50%

Again, OEE is a measure of how effectively a machines time was used to make good parts.  The time element will become clearer when we pursue department, and company wide OEE calculations.

OEE:  Overall Equipment Efficiency

We finally get to put it all together.  Now that we have calculated the Availability, Performance, and Quality factors we can calculate the Overall Equipment Efficiency (OEE) using the basic formula:

  • OEE = Availability * Performance * Quality = 86.96% * 75.00% * 99.50% = 64.89%
OEE Calculations        
Availability 86.96%
Performance 75.00%
Quality 99.50%
OEE = 86.96% x 75.00% x 99.50% 64.89%

OEE Quick Check:

If you recall earlier, we said that the definition of OEE is how effectively the machine time was used to produce a quality part.  Now for the proof and yet another simple quick way to verify or calculate your OEE.

From our example above, Net Available Time = 460 minutes and the Net Ideal Operating Time =  298.5 minutes.  We could have calculated our total OEE as follows:

  • OEE = Net Ideal Operating Time / Net Available Time = 298.5 / 460 = 64.89%
OEE Quick Check      
NET Ideal Operating Time 298.5 minutes
Net Available Time 460 minutes
OEE = 298.5 minutes / 460 minutes 64.89%

Other considerations:  Weighted OEE

Although we discuss weighted OEE in depth in another post, some people just can’t wait to get started and don’t return to find out how to do the weighted OEE calculations.  For starters, it is not a simple arithmetic average of the results.  The following example provides a solid basis for calculating the weighted quality factor for multiple processes.

Process A has a cycle time of 1 minute and process B has a cycle time of 2 minute.  Let’s assume that processes A and B made a total of 50 and 100 parts respectively.  Let’s also assume also that 10 parts were scrapped at each process.  The quality factor for each process should be calculated as follows:  Time to make good parts / Time to make total parts.

  • Process A = (40 * 1) / (50 * 1) = 40 / 50 = 80%
  • Process B = (90 * 2) / (100 *2) = 180 / 200 = 90%

First, does it make sense to use a simple average between the two processes knowing that one process ran 4 times longer than the other?  We would say no.  The simple arithmetic average in this case is (80% + 90%) / 2 = 85%.

Second, does it make sense to base the quality factor on the total yield?  Again, we would say no.  A total of 130 good parts were produced from a total of 150.  In this case the simple yield would be 130 / 150 = 86.7%.

Third, does it make sense to base the quality factor on the time required to make good parts versus all parts?  We would say yes.  Most people conclude that the cycle times “cancel” and are irrelevant but they do not consider what happens when two or more processes are viewed together.

The Quality factor looks quite different when the Processing Time is considered.  The total time to make GOOD parts for processes A and B is 40 and 180 minutes respectively for a grand total of 220 minutes.  The total time to make ALL parts processes A and B is 50 and 200 minutes respectively for a grand total of 250 minutes.  The Quality factor is calculated as 220 / 250 = 88.0 %

The point of the example presented here is that we have three (3) uniquely different numbers that theoretically represent the same data.  While the differences may seem small, it becomes even more relevant when determining the overall OEE for a department or plant where machines are used to manufacture products having substantially different cycle times and quality yields.  The effect could be contrasted further when comparing automated and manual production operations, or high speed equipment (stamping presses) and low speed assembly operations.

The secret to calculating line item and weighted OEE is simple:  The calculations applied to each line item process also apply to the sum of the whole.  You will see this at work in our post specifically written to address weighted OEE calculations.

Now that you know the “quick” OEE calculation, you can easily calculate the OEE for any process simply by knowing the cycle time, the good and total part quantities, and the total Net Available Time.

This introduction provides the basics to calculating OEE correctly.  In the next post we will teach you how to calculate the weighted OEE so you can determine the overall performance of your plant, department, or company.  As easy as it is to do, most people just don’t seem to “get it”.  Unfortunately, too many heated discussions in the boardroom have erupted as a result.

If you would like a copy of our free fully functional spreadsheet with detailed explanations – no strings attached – please visit our Downloads page or select the files from the Orange Download Widget in the sidebar.

Until Next Time – STAY lean!


Vergence Analytics

Twitter:  @Versalytics
Originally Published:  19-Nov-2008 @ 00:49