Overall equipment effectiveness (OEE) measures how much of a machine's or process's planned time actually produces good output. It was developed by Seiichi Nakajima as part of total productive maintenance (TPM) in Japan in the 1970s and 1980s. An OEE of 100% means making only good units, as fast as possible, with no stops.
OEE is useful because it combines three different kinds of loss into one figure and then lets you split that figure back out to see which loss is biggest.
OEE = availability × performance × quality.
A packaging machine is planned to run for one 450-minute shift:
| Measure | Figure | Calculation |
|---|---|---|
| Planned time | 450 min | — |
| Unplanned stops | 45 min | — |
| Run time | 405 min | 450 − 45 |
| Availability | 90.0% | 405 ÷ 450 |
| Ideal cycle time | 30 sec | — |
| Units made | 700 | — |
| Performance | 86.4% | (30 × 700 ÷ 60) ÷ 405 |
| Good units | 665 | — |
| Quality | 95.0% | 665 ÷ 700 |
| OEE | 73.9% | 0.900 × 0.864 × 0.950 |
No single factor looks bad, yet a quarter of the shift is lost. At 100% OEE, the machine could make 450 × 60 ÷ 30 = 900 good units. It made 665, so 235 units were lost.
Use one shift or one week of real figures. The ideal cycle time should be the fastest rate the process can sustain, not the average.
An OEE of 85% is often quoted as world class, a figure that comes from Nakajima's TPM work. Treat it with care: it is a rule of thumb, not a benchmark for your industry. A small job shop with frequent changeovers will rarely get near it. More important than the level is the trend. Measure it the same way every week and work to improve it.
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