Measuring Overall Equipment Effectiveness (OEE) is critical to maximizing factory efficiency, which is why we tend to discuss it frequently. OEE reveals the financial impact of improvements, on top of evaluating production performance.
How to calculate OEE
OEE = Availability x Performance (efficiency) x Quality
Looking at a formula is one thing, applying it is another. The best way to really understand how to calculate OEE is to take an example and break it down. The following OEE calculation example will help you understand how to apply it to your situation.
Which factors to consider
We know that OEE is expressed as a percentage and is the product of multiplying three factors: the availability rate, the efficiency rate, and the quality rate.
OEE = Availability rate x Efficiency rate (performance) x Quality rate
These three OEE factors are calculated from another set of ratios:
- Availability rate is the ratio between gross operating time and planned production time;
- Efficiency rate is the ratio between actual cycle time and ideal cycle time;
- Quality rate is the ratio between the number of good products and the total number of products manufactured.
Now that we know these concepts and their components, let's see how they are used in a factory through the following concrete example.
Calculating OEE for an electronics production plant
For the purposes of this calculation, the electronics manufacturing company's production plant operates on the following schedule:
- The company is open 14 hours a day;
- Its production plant operates 10 hours a day, 20 days a month.
Availability: Calculate planned production time
Planned production time is 200 hours per month, which corresponds to the number of hours the machines will be operating according to the production schedule.
However, each workday, operators take a half-hour lunch break. Each month, 2 hours are allocated to maintenance and setup adjustments, with that work spread across two days. On top of that, machines break down on average 3 hours per month.
There are a total of 15 hours of downtime per month accounting for the following statistics:
- 10 hours of meal breaks per month;
- 2 hours of maintenance;
- 3 hours of equipment breakdown.
15 hours / 200 hours = 7.5% → 100% - 7.5% = 92.5% availability = 185 hours of actual operating time
Performance: cycle time calculation
Our equipment could ideally run 60 cycles per minute. However, it only ran 52 cycles per minute over the past month.
52 cpm / 60 cpm = 86.6% efficiency (performance)
Quality: accounting for rejects
It takes 50 cycles to produce any electronic device; therefore, our production plant produces approximately 62 electronic devices per hour.
52 cpm × 60 minutes = 3,120 cycles per hour
3,120 cycles / 50 cycles per device = 62 devices/hour
Multiplying this by 185 hours of operation per month, we get a total production of 11,470 electronic devices per month. However, only 10,950 of these devices are good.
That means we have a quality rate of 95.5% (10,950 / 11,470).
In summary, the equipment is:
- available 92.5% of the time;
- its performance is 86.6% efficient;
- and the product quality is 95.5%.
Let's calculate OEE
Using the numbers above, the plant's OEE is 76.5%:
OEE = 92.5% x 86.6% x 95.5% = 76.5%
Despite the fact that each factor scored a relatively high percentage, when calculating OEE we realize just how much each one can drag down the overall plant performance.
The question we then need to ask ourselves is: is an OEE score of 76.5% good or bad? For many manufacturers, that could be sufficient, or at least a good benchmark. The general industry standards for OEE are as follows:
- 100%: perfect;
- 85%: world-class level, and often a target for discrete manufacturers;
- 60%: typical, but with clear room for improvement;
- 40%: low, but typical of plants measuring OEE for the first time.
Using smart factory technology and OEE software to improve productivity
Smart factory technologies are essential for those who want to calculate accurate OEE and know whether each process is fully productive. With smart factory capabilities such as automated data collection, real-time dashboards, and analytics reporting, managers can determine things like:
• Whether micro-stops are becoming a significant issue;
• What causes slow cycles and speed loss;
• To what extent workers follow processes;
• What planned and unplanned downtime looks like.
Find out how to calculate your plant's OEE
Take control of your plant's efficiency with Worximity's smart factory technologies. Empower yourself and your team to improve performance by uncovering hidden capacity and increasing output.
Not sure where to start? Try our OEE calculator.
