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Technical Guide

Understanding OEE: Complete Formula Breakdown

Overall Equipment Effectiveness calculation and optimization strategies

What is OEE?

OEE (Overall Equipment Effectiveness) is a gold-standard KPI that measures manufacturing productivity. It identifies the percentage of manufacturing time that is truly productive.

OEE = Availability × Performance × Quality

An OEE score of 100% means you're manufacturing only good parts, as fast as possible, with no stop time. This is perfect production—rarely achieved but always the goal.

OEE Components at a Glance

88.6%

Availability

×
92.3%

Performance

×
95.0%

Quality

=
77.6%

Overall OEE

("Good" Range)

Availability

Percentage of scheduled time that operation is available to operate.

Formula:

Availability =
Operating Time /
Planned Production Time

Losses:

  • • Breakdowns
  • • Setup/changeover
  • • Material shortages
  • • Operator absence

Performance

Percentage of maximum possible speed achieved.

Formula:

Performance =
(Ideal Cycle Time × Total Count) /
Operating Time

Losses:

  • • Minor stops
  • • Reduced speed
  • • Warm-up time
  • • Operator inefficiency

Quality

Percentage of good parts produced (first-pass yield).

Formula:

Quality =
Good Count /
Total Count

Losses:

  • • Scrap parts
  • • Rework required
  • • Startup rejects
  • • Process defects

Real-World OEE Calculation Example

Scenario: CNC Machining Center - 8-Hour Shift

Shift Details:

  • • Shift Length: 480 minutes (8 hours)
  • • Breaks: 40 minutes
  • • Planned Production Time: 440 minutes

Production Data:

  • • Downtime (breakdown): 50 minutes
  • • Operating Time: 390 minutes
  • • Ideal Cycle Time: 2 minutes/part

Output:

  • • Total Parts Produced: 180
  • • Good Parts: 171
  • • Rejected Parts: 9

Step 1: Calculate Availability

Availability = Operating Time / Planned Production Time

Availability = 390 minutes / 440 minutes

Availability = 88.6%

Step 2: Calculate Performance

Performance = (Ideal Cycle Time × Total Count) / Operating Time

Performance = (2 min × 180 parts) / 390 minutes

Performance = 360 / 390

Performance = 92.3%

Step 3: Calculate Quality

Quality = Good Count / Total Count

Quality = 171 good parts / 180 total parts

Quality = 95.0%

Final OEE Calculation

OEE = Availability × Performance × Quality

OEE = 88.6% × 92.3% × 95.0%

OEE = 77.6%

This is considered good for discrete manufacturing.

OEE Loss Waterfall: From Theoretical to Actual

100%
Theoretical
Start
-11.4%
88.6%
After
Availability
-6.9%
81.7%
After
Performance
-4.1%
77.6%
Final
OEE

Total Loss: 22.4% — Equipment is only 77.6% as productive as theoretically possible

Industry Benchmarks

OEE ScoreRatingDescription
< 60%PoorSignificant improvement needed. Review all three factors.
60-75%FairRoom for improvement. Typical for many manufacturers.
75-85%GoodCompetitive performance. Continue incremental gains.
85-95%ExcellentWorld-class manufacturing. Focus on sustaining.
> 95%OutstandingExceptional. Verify data accuracy; share best practices.

OEE Improvement Strategies

Improving Availability

  • Preventive Maintenance: Schedule maintenance during non-production hours
  • SMED (Single-Minute Exchange of Dies): Reduce changeover time by 50-70%
  • Spare Parts Inventory: Keep critical spares on hand
  • Operator Training: Cross-train to prevent delays from absence

Improving Performance

  • Optimize Feeds and Speeds: Run at maximum safe speeds
  • Reduce Minor Stops: Identify and eliminate recurring micro-stops
  • Tool Path Optimization: Use CAM software efficiently
  • Automation: Implement auto-loading where feasible

Improving Quality

  • Statistical Process Control (SPC): Monitor and control variation
  • First Article Inspection: Validate setup before production run
  • Tool Life Management: Replace tools before wear causes defects
  • Poka-Yoke (Error-Proofing): Design fixtures to prevent errors

Quick Wins: 30-Day OEE Improvement Plan

Week 1-2: Measure

  • • Start tracking OEE daily
  • • Identify biggest loss
  • • Document baseline

Week 3: Analyze

  • • Pareto analysis of losses
  • • Root cause investigation
  • • Team brainstorming

Week 4: Improve

  • • Implement #1 improvement
  • • Measure results
  • • Set new baseline

Expected gain: 5-10% OEE improvement in first month by addressing low-hanging fruit.

Related Calculators

Use our calculators to analyze the financial impact of OEE improvements:

ROI & Capacity CalculatorBottleneck Analysis