What is OEE short for and how do you define OEE?

OEE, which stands for Overall Equipment Effectiveness is used to assess how efficient a manufacturing operation is. OEE is a commenly used KPI to support productivity improvements. Expressed as a percentage, it describes the amount of manufacturing time in which the machine, line or cell is truly effective. The value is calculated based on the three factors Availability, Performance and Quality.

OEE = Availability x Performance x Quality

An OEE value of 100% indicates that the operation is producing perfect products (100% Quality) as fast as possible (100% Performance) and without any downtime (100% Availability).

The components of OEE

Availability depicts the share of planned production time in which the machine or cell is available for production. Mechanical failures, material shortages or mismanagement of the operator can cause the manufacturing machine to stand still and thus causing costs without yielding any value. The availability part of OEE identifies these production losses by comparing the planned manufacturing time to the actual run time.

Performance refers to the loss that occurs when a machine or cell is not running at optimal speed. A decrease in speed can be caused by slow cycles and small stops. The performance value is computed by matching the ideal cycle time to the actual cycle time.

Quality describes the wasted time stemming from the production of defective products that are below quality standards. This metric also includes parts that will meet quality standard after rework. The quality value is calculated by comparing the number of above quality standard parts to the number of below quality standard parts. The outcome is a percentage of time in which value is added through the production of good products.

Why is OEE important in 2018 and what are the benefits of OEE?

The manufacturing of products is a highly complex task, involving many steps and often several machines, lines and cells. As a manufacturer it is easy to lose oversight if there are no detailed metrics and guidelines in place. Therefore, identifying and monitoring OEE is common practice in manufacturing for several reasons.

First of all, measuring OEE helps gaining an important overview of the manufacturing operations by combining several business functions in one simple metric. Regardless of the position within a manufacturing team OEE can be easily be read and used. Both an assembly technician or a financial manager can use the metric to assess the current state of the manufacturing process.

Secondly. OEE offers the possibility to easily spot operational inefficiencies and resulting losses, which can then be turned around by eliminating waste and increasing the utilization of production machinery. In addition, OEE is the single best metric for benchmarking progress in manufacturing. Combined with lean manufacturing programs or as part of TPM systems, OEE can help companies reap significant benefits.

OEE can be divided into Six Major Losses

A high OEE value means that the equipment’s full capacity is utilized to a large extent. To optimize the OEE value eliminating all kinds of losses that may arise in production is a necessity. Historically, it’s mainly the visible losses such as breakdowns, scrap, and downtime that companies have focused on to minimize.

Most companies have been ineffective in visualizing and resolving less visible losses, such as shorter stops and speed loss. A ”shortstop” is short, but frequent stops, which are difficult to identify, and therefore sometimes seen as a part of the production flow. There is often a big unused potential with these shortstops, by resolving these recurring stops your OEE numbers will increase.

Speed loss means that the machine does not manufacture products at the rate that it is designed for. More about these losses can read about below.

1. Equipment Failure and interruptions

Any downtime that occurs in the machine is covered in this category. When stops like these occur losses such as lower production volumes and increased process time will develop. The cause of machine disturbances and interruptions can be both temporary and recurring in nature.

Temporary disturbances are commonly known as a breakdown and can, for example, mean that the control system or central components of the machine breaks down and needs to be repaired or replaced. These events often mean that the machine must be stationary for a long time. Recurring disturbances may include problems with the software, or that the pressure suddenly falls in the lubrication system. This means that the machine must be temporarily turned off. To reduce these losses, it is important to break the problem down into small pieces, especially when it comes to recurring problems.

When coding stop causes manually in logbooks, you usually only record the larger obvious stops. This leads to that the smaller, recurrent disturbances being left out without a permanent solution.

2. Set-up and adjustments

Set-up time and adjustments cause loss of production and at the same time is often the cause for defective products being manufactured before the change and adjustment has taken place.

Set-up time is the time it takes to prepare the machine from producing one product to another. You may have also have to do some adjustments after the set time, and in some cases it takes time for adjustments beyond the actual change. To reduce losses, it is important to take into account the disturbance of different parts; the mechanical adjustment and alignment of the machine separately.

3. Idling and shortstops

The loss during short stops occur for example when a product is caught in a feeding machine or debris get stuck or get in the way. The problems are easily solved but the time loss may be significant in the long run if it occurs often, and if the errors are not noticed by the operator quickly enough.

The difference between these shortstops and chronic disruptions is that the shortstops do not depend on the machine itself, but the material or other equipment. However, they are equally difficult to detect and analyze because the operator usually does not record these small disturbances. Idling losses means that the machine is not operating even though could, due to lack of material.

4. Reduced speed

The loss arises in that the machine runs at a slower speed than it is designed for. It can be difficult to see with the naked eye and therefore a loss that is rarely perceived as a loss because the machine actually still produces articles.

It is extra difficult to discover the loss if the machine produces multiple types of articles, where there is a large variation of the target cycle time for each article. In these cases, it is particularly important with a Product Monitoring System that can handle the stop times on order and article level.

5. Defects in the process

This definition covers losses like scrap and lost production. Defects can arise, for example, due to incorrect processing, which might be due to temporary and intermittent interference.

When a part has to be discarded it is not only the raw material that is a loss, but also the wasted production time.

The parts that can be revised should also be considered a loss. Partly because they take up time for the operator, but mainly because of the machine time used for a value-adding process.

6. Reduced yield and startup losses

This is a quality loss that arise while starting up a machine that is unstable which lead to a number of faulty articles being produced before the process becomes stable.

Such loss occurs mainly after a new set up, or if the machine has been turned off.


Keeping a steady eye on OEE?

Follow up on your stop times, stop causes, downtime, scrap and other key performance indicators in production. It’s hard to improve and streamline unless you continually measure your production. To measure is to know!

OEE monitoring, the key to improvement

In order to effectively improve your OEE value it requires that you know your current situation. By installing a system that automatically records the OEE value in your production it will tell in black and white how well your production is optimized.


OEE is a Production Monitoring System that simplifies the operators’ work. Forget all the handwritten logbooks and Excel files. It is easy, quick and reliable to collect OEE data from the machines with AXXOS OEE.