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Overall Equipment Effectiveness (OEE)

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Overall Equipment Effectiveness (OEE) is a lean metric to assess the actual performance of a production line compared to its maximum potential. It is represented in percentage terms.

OEE = Quality x Productivity x Availability.

Quality considers the good parts, Productivity considers the rate of production and Availability considers stoppage time.


An application-oriented question on the topic along with responses can be seen below. The best answer was provided by Sudhir Gayakwad and Raj Saxena

Applause for all the respondents - Sudhir Gayakwad, VS Rahul, Alpesh Gorasia, Ramanan, Ram Kumar Chaudhary, Premkumar T, Ibukun Onifade, Raj Saxena


Also review the answer provided by Mr Venugopal R, Benchmark Six Sigma's in-house expert.


Q 278. In a perfect world, a manufacturing unit will have an Overall Equipment Effectiveness (OEE) of 100%. What are the components of OEE and why is it not possible to achieve a perfect OEE of 100%?



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OEE – Overall Equipment Effectiveness is the net effective production on (or net Utility of) equipment. There are 24 hours or 1440 minutes in a day available for production. Ideally this complete time is to be used for production of the components or any commodity for which equipment is meant for.


Practically it is not possible as equipment also need some rest in the form of servicing, it also need to be dressed up for new type of setup or sometimes it falls sick by breakdown. It may also not work accurately due to minor misalignments and need small adjustments or may want to work at slower speed. Its health to be maintained at optimum level.


 Millions of Rupees investment is done in every organization and every entrepreneur want it back as early as possible and start earning profits for future investment in all resources. This is the cycle every industry runs.


So to have maximum return on investment every organization need to extract 100% utility of the equipment. In simple words every organization need to use the equipment 100% and not a single percentage of wastage or loss. This is the ideal scenario.


So we need to consider all losses on the equipment, reducing its effective use.

The net effective use of the equipment is the Overall Equipment Effectiveness or OEE.

For every organization OEE is very important so it is essential – What is OEE?


Overall equipment effectiveness is the measure of the production of right specification in available running time of the day.


OEE = Availability x Equipment Performance x Quality




A)     Availability = Run Time / Planned Production time.

Run time = Planned production time – Stop losses

( like breakdown, Planned Maintenance, Change over etc)


B) Equipment Performance = Net Run Time / Run time

Net Run time = the exact time available for production after reduction of small stops for adjustment, reduction of machine speed etc. = Ideal cycle time x Total number of product.


C)      Quality = Number of Good Products / Total number of products produced.

Number of Good Products = Total number of products produced – Rejected/reworked products


After Simplification

OEE = (Ideal Cycle time x Number of Good Products)/ Planned Production Time








100% OEE = 100% quality in 100% available time with 100% performance.

It is possible when there are no losses or minimum losses to have OEE close to 100%.


Different Losses and their elimination or reduction.


1.      Equipment Breakdown or Failure:- It is the most significant loss on equipment and major contributor in OEE. It has to be kept in control and practically no uncertain breakdown. It affects parameters Availability and Quality also. To reduce or eliminate it –

a.      All different type of breakdowns to be categorized and to be given a code. All instances to be neatly recorded.

b.      There has to be a Root cause analysis, 5 Why analysis for all reasons and effective actions after brainstorming to be initiated to arrest the repeat occurrence.

c.       Focused improvement projects, kaizen, OPL to be initiated and all solutions to be implemented for long term results.

d.      Effective Preventive, Scheduled and Autonomous maintenance gives big advantage in minimizing uncertain breakdown.


2.      Set up or Change over time:-  It is another major challenge affecting Availability of the equipment. It is essential before starting new product on the equipment. It may be from few minutes to many hours and hence one of the critical loss. To reduce it –

a.      SMED approach – Single minute exchange of Dies.

b.      There are number of activities done while setting the machine for new product after last good product of old batch and up to first good product of new batch.

c.       All Activities are neatly separated so that maximum activities are done offline while previous batch is running and it saves lots of productive time.

d.      The on job activities are done with the help of Jigs and Fixtures to reduce the time.

e.      While in running also components are unloaded and loaded in quick change manner in few seconds.


3.      Small Stops or Reduced Speed:- There are few adjustments on equipment to be done to run the equipment smoothly to produce accurate product. Sometimes machine speed may have to be reduced due to worn out spares, bearings, changing essentials like film, blades etc.

a.      To reduce small stops there has to be a perfect preventive maintenance plan and also timely lubrication and monitoring critical performance parameters.

b.      Generally there is a pattern for small stops and one has to monitor them and apply 5 why analysis and find Kaizen Blitz and implement. Effective OPL helps reduce small stops by proactive practices.

c.       Standardization of machine operating practices by effective training and coaching of operator helps reduce machine small stops.

d.      Effective Cycle Time – Machine has to be run on its maximum speed by maintaining its health to optimum level.


4.      Defects and Yield reduction:-  In some cases there is wastage of product at the start due to initial adjustments and settings. It directly affects the yield. Some times in stable process there may be defective parts (either complete reject or rework) due to variation in dimensions. It is the major contributor to affect the quality.

a.      Start up rejection is majorly reduced by standard machine setting before start up and standardization of material.

b.      Defects are the variation in the specifications of product. It mainly happens due deterioration in the machine setting over the time. To avoid this, monitoring the machine parameter is very essential. In modern age automation is there to monitor the settings and alarms to indicate the variation in setting. Auto corrections are also available to reduce the defect generation.

c.       Process Control:- There are statistical process control of the product and machine operators monitor critical parameters and keep doing fine tuning of the machine to keep the output as per specification. This improve quality and reduce the rejection to large scale.


5.      Total Productive Maintenance:- Planned maintenance affects total available time. With systematic implementation of TPM philosophy it can be streamlined and frequency of planned maintenance can be reduced.

a.      Autonomous maintenance by operator using the machine, increases the effectiveness of the machine to great extent as he always knows the critical points and always observing the machine very closely. The feeling of ownership makes him accountable.

b.      Preventive maintenance:- The frequency of the preventive maintenance need to match the life cycle of the spares and critical assembly. High frequency unnecessarily increase the stop time.

c.       5S:-The most simple tool but equally effective to identify the challenges on the machine for preventive maintenance. Control inventory of spares and loss of time to search spares for maintenance. Cleanliness and standardization boost moral of employees to motivate them to improve machine performance.

d.      Mistake Proofing helps in reducing defective production as well as facilitate in improving availability of equipment.


                     As highlighted earlier all above challenges are the integral part of every system of production lines and hence losses are there. Hence we can’t get 100% OEE in any situation.


   With implementation of above controls in place OEE can be increased and maintained for longer period. Visual management always keeps highlighting the Process parameters, performance indicators to catch the attraction of concerned employees. It allows timely actions taken on equipment which in turn save major losses to be happened. 

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OEE stands for Overall equipment efficiency and a technique developed in 1960 to evaluate how effectively an equipment is utilized.


Components of OEE

There are three component in OEE as explained below.


OEE = Availability * Performance Efficiency * Quality Efficiency



                Uptime                                 Good units produced (hrs)                           Good Units Produced (hrs)

OEE =  --------------------- *   ---------------------------------------------   * ---------------------------------------------

                Operation time                                 Uptime                                                 Good units processed (hrs)



                Good Units Produced (hrs)

OEE =  --------------------------------------

                Operations Time




Understand with example:-




Why is it not possible to achieve a perfect OEE of 100%?



There are multiple factors which makes 100% OEE as an impossible target for any organization. Will try to explain why its not possible to be at 100% OEE.

1.       Unscheduled downtime/Unplanned stops: - This occurs with the equipment failures for any significant period of time in which equipment is scheduled to run. This is also called unplanned stop or downtime. This something can be minimized with multiple maintenance activities but can’t be 100% cured. This factor majorly leads to OEE loss.

2.       Scheduled Downtime: - There are two methods which basically falls under scheduled downtime is Preventive Maintenance and Changeover time. Preventive maintenance is a activity which is planned in advance to minimize breakdown in equipment. Although this is scheduled activity but a loss in availability.

Changeover time – It’s an activity where equipment is planned to run but not running due to changeover or other setup like tool adjustment.

Planned stop can cover the frequent cleaning due to tool limitation, startup time/warm up time, specific quality inspection.

3.       Throughput delta: - There are products which run at lower UPH/speed due to certain factor defined by customers and also due to machine limitation for long term or short term. Machine limitation short term means example only 40 heads running out of 50 heads due to parts unavailable in factory. Long term means one complete assembly needs upgrade which require transportation of critical path and lead time is this part will be longer.

4.       Minor stop/Idle time: - Minor stops or idle time occurs when there is a delay in raw material availability on line. Or Frequent minor stop which is corrected by operator with small adjustment. Idle time also occurs if Operator is not available.

5.       Rejects: - All kinds of reject which leads to less good cards production and this results to low OEE.

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OEE has 3 components:

Availability Rate (measure of downtime)

Performance Rate (measure of output rate)

Quality Rate (measure of OOS product).

OEE is calculated as AR*PR*QR


To achieve 100% OEE all three need to be 100%. This is difficult to achieve in real scenarios since every equipment would have downtime due to shift changeover, breakdown, routine maintenance etc.


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In an idle conditions every organization aims to get 100% OEE but in practical scenario its not possible to get 100% OEE.

OEE consist of mainly three components which are Availability, Performance and Quality.


To get 100% OEE you required 100% of availability, 100% of Performance and 100% of Quality means good products / services.


In practical scenario When you design any product  , you have some standard design waste during creation of product which you cant omit. Further during actual execution of product  you might get some of the wastage's which you cant ignore it.

So you never get 100% Quality product.


In case of availability , It depends on your run time, down time & preventive maintenance of machine. Any machine required Preventive maintenance which you can not ignore to sustain your machines performance good and increase the life. So you can not able to achieve 100% availability.


In case of Performance May be you run your machine with full standard speed but for prevention you have to do machine PM then also some times its gives breakdown which is impacting on machine run speed & many times machine ramp up speed also impact on your performance. So you cant able to achieve 100% performance. 







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Benchmark Six Sigma Expert View by Venugopal R

Overall Equipment Effectiveness (OEE)
is a very common indicator used to assess the ‘Value Adding Time’ in manufacturing and other processes that involve usage of equipment. 'Value Adding Time' is defined as the time used by the process for which the customer is willing to pay, involves transformation on the product / service, and it should be time used to get the output ‘right the first time’.


Effective usage of equipment depends on:

  1. The extent to which the equipment is 'Available' as required.
  2. The 'Rate of production', as compared to a standard, while equipment is in use.
  3. The 'Quality' of the products / services generated.


The calculation for Overall Equipment Effectiveness is:

OEE = Availability X Efficiency X Quality


Calculation for of each factor is done as:

Availability = % of operating time within the Planned Production Time

Efficiency   = % of units produced / (Operating time X Capacity)

Quality        = % First pass rate / Total output (Product or service)


Now, if we want the OEE to be 100%, we must have each of the above factors at 100%. While 100% is an ideal value for OEE, benchmark data shows that an OEE of 85% is considered as excellent score for discrete manufacturing, though there is always room for further improvement. It is not uncommon to find OEEs in the order of 50 to 70 percent for organizations just embarking on Lean Management techniques. So, considering that even the best of the companies are not able to maintain OEE of 100%, let’s see the constraints that come in their way. The major reasons that impact the OEE are broadly consolidated as ‘6 big losses’ as follows:


Six Big Losses

AVAILABILITY related losses

1. Unplanned stoppages

2. Planned stoppages

EFFICIENCY (Performance) related losses

3. Small stoppages

4. Reduced speed

QUALITY related losses

5. Start-up rejects

6. Production rejects


1. Unplanned stoppages:

Loss of production time because the process or equipment that is scheduled for production is not run due to some fault. The equipment can start running only after the fault is fixed. Unplanned stoppages can happen due to Breakdown, Lack of resources / material, Tool failures, unscheduled maintenance etc.

2. Planned stoppages:

The process or the equipment is stopped for performing a setup, adjustment or changeover of tools. Planned stoppages also happen for Preventive Maintenance and change of input materials.

3. Small stops:

Stoppages for very short durations, also referred to as ‘Micro stops’ due to minor hiccups. Such stoppages are very short (< 5 minutes) and often not captured and monitored.

4. Reduced speed:

Time loss that occurs when the equipment / process delivers a rate of production that is lower than the recommended standard.

5. Start-up rejects:

The time spent for generating rejects that occur during the initial run after a changeover or adjustment.

6. Production rejects:

Time spend in generating rejects and attending to them during the regular production.


Now, let us think about why we cannot obtain and sustain an OEE of 100%

  • If we look at the above factors, all are quantifiable and hence can be taken up for improvement from their current levels. However, maintaining each one of them at 100% in a sustained manner may not be practically viable.
  • It may also be noted that since ‘Planned stoppages’ are also part of the big losses, and quite often the major contributor, it will never reach zero. There will always be need for planned maintenance, changeovers, adjustments and so on. At the same time this provides the highest opportunity for applying Lean Six Sigma tools like SMED, Predictive maintenance etc. for continual improvement.
  • Yet another reason for OEE not touching 100% is that the ‘Efficiencies’ are measures based on the set standards. Different organizations within the same industry can set different standards for through-put.  Further, it is expected that as part of continuous improvement, the standards will undergo upward revision periodically. This will increase the challenge for the Efficiency scores to catch up and sustain.


The OEE is a very powerful metric that tells us about the extent of value added time spent by the process or the equipment. For reasons explained, a perfect score of 100% is not the real objective, but this metric and it break-up details help to continuously point out the areas where losses are occurring and to continually improve such areas to increase the value added time.

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This topic is very close to my heart and been working years in this OEE factors at my early stage of career. Attached is my understanding on the various factors influencing the OEE. 

Normally we classify the losses in to Scheduled and unscheduled, but in order to improve or study, needs a deep dive factor classification.


Standby time  / Idle Time
No Material / No WIP time
Preventive maintenance time 
Engineering Time
Waiting for Set up
Set up time
Waiting for Repair
Repair Time
Waiting for Quality Buy off
QA Buy off time
Productive time


OEE will become 100% if your Waiting for Repair / Repair time / Waiting for QA / QA / Stand by time (LosOEE Factors.pptxses due to operator assistance) is “0” ; OEE starts decreasing once all these items increases.

To improve productivity need to reduce the DT / Waiting time / Stand by time


Thanks and regards,


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There are 3 main components of OEE 


1. Availability 

2. Performance

3. Quality 


OEE is computed as follows = Availability * Performance* Quality

There are sub arts to each of the above 3 components


Why is it not possible to achieve 100% OEE?


100% OEE implies - 100% availability , 100% performance and 100% quality


1. 100% availability means machines run as per planned scheduled without interruption (e.g., unplanned stoppages, changeovers). While unplanned stoppages can be minimized via preventive maintainace it can't be completely eliminated. There are multiple variables at play which can result in unplanned outage and not all of these factor's can be predicted/factored ahead. Also it's difficult to bring down the changeover to negligible, since market dynamics will require product variants and variants will need changeover.


2. 100% performance means machines will run at optimal level with ideal yield. This necessitates no deterioration/wear & tear of machine over its life time via application of TPM principles. It's a desired but not a practical state since performance is  bound to deteriorate with  time or organizations need to spend extra ordinary effort in TPM/Quick replacement of machines which is financially not viable


3. 100% Quality is first time yield which can be aimed or aspired for.  



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Overall Equipment Effectiveness

To understand why it’s not possible to achieve a perfect OEE of 100%, first its better understand what its constitutes?

OEE Constitutes of 3 Factors they are Availability, Performance Efficiency and Quality.

OEE = (Availability X Performance Efficiency X Quality)

Availability = Machine Hours Available for Production / Machine Planned Hours    for Production

              *Machine Hours Available for Production = Machine Planned Hours for Production – Losses

Performance Efficiency = Actual Output / Theoretical Output

Quality = Ok Quantity / Total Production

The losses under this 3 factors further identified under 16 Categories which related Man / Machine / Material, they are:

1.     Breakdown

2.     Setup & Adjustment

3.     Tool Change

4.     Start up

5.     Minor Stoppage and Idling

6.     Speed Loss

7.     Defect & Rework

8.     Shutdown

9.     Management Loss

10. Motion Loss

11.Line organization loss

12.Distribution loss

13.Measurement & Adjustment loss

14.Yield Loss

15.Energy Loss

16.Die, Jig and Tool Loss

In the above 16 Losses, most of them are not able to eliminate even at the stage of automation at 100%.

In short and for ease understanding lets divide the 16 losses under the category Man / Machine / Material.

In the above list 1 to 8 related to Machine

9 to 13 related to Man

And 14 to 16 related to Material.

First in the case of Machine, even at the case of advanced Predictive Maintenance it needs some time to restore for at its working condition.

The restoration is must due to common behaviour Wear & Tear in machine.

Therefore, in machine there is only one option to choose its reduce loss instead eliminate the loss.

Reduction of losses in Machine, in turn it will impact the Availability factor in OEE.

Moving to the next category Material, there is no such process designed without variation.  Where variation leads to out of specification at a specific time, in turn leads to defect & rework.

In case of a defect, it will affect the “Quality” in OEE.

Last Category Man, most of the losses related to Man able to eliminate through Automation and Line / Layout design.

But however, Man working at constant speed at its highest level is an imaginary.  In such condition, it affects the Performance Efficiency in OEE.

In summary, losses related to Availability, Performance Efficiency and Quality is un avoidable at a certain point.  Therefore 100% OEE is not possible at all scenarios.


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Overall equipment effectiveness is the most acceptable measure for the assessing the performance of any operation. There are 3 major components of OEE;

1.       Availability – Downtimes happen in the course of operations mostly when least expected. Downtimes could be as a result of equipment failure, material shortage, shift changeover, product changeover, etc. These downtimes result in a direct loss of output for their entire duration. Availability is calculated by subtracting the downtime from the total available time, then expressing it as a percentage of the total available time.

               Availability =  (Planned operation time-Downtime)/(Planned operation time)


2.       Performance – This represents how efficiently the machine is utilized during the uptime. This is normally derived by calculating the standard output of the operation based on standards set by the process designers (e.g machine manufacturers give standard speed at which a machine should run and how many parts it should produce per unit time). The actual output can then be expressed as a percentage of the standard output. Performance losses happen mainly because of 2 reasons;

a.       short stops in the process that are not tangible enough to be reported as downtime like jamming of parts, obstructions, etc.

b.       Running lower than standard speed, this would mean that output per unit time is no longer up to the set standard.

            Performance=  (Actual output)/(Standard output per unit time x uptime)


3.       Yield – Producing defects affects the effectiveness of an operation adversely. Defects happen due to machine malfunction, human errors, bad raw materials, etc. Defects can also be categorized based on time of occurrence, some defects happen at the start up of the process, while some happen during the course of the operation.

             Yield=  (Total output-Defects)/(Total output)


OEE is a obtained by multiplying the three major components;



It is practically impossible to get 100% OEE because there is no way we can completely eliminate the losses identified above. For example, we may reduce changeover time as much as possible, but we cannot completely eliminate it. Downtime also can be greatly reduced by proper preventive maintenance and close machine monitoring, but this also cannot give us zero downtime.

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