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Management

OEE: The 3 Pillars of Efficiency

If your machine is running, are you making money? Not necessarily. OEE tells you the truth about your shop's performance.

The OEE Formula

OEE = Availability × Performance × Quality

It is a multiplication of three percentages. If any one of them is low, the total score drops significantly.

1. Availability (A)

Definition: Is the machine running when it is scheduled to run?

Run Time / Planned Production Time

Losses: Setups, Breakdowns, Waiting for material.

2. Performance (P)

Definition: Is the machine running at full speed?

(Ideal Cycle Time × Total Count) / Run Time

Losses: Feed rate overrides (running at 80%), Small stops, Slow cycles.

3. Quality (Q)

Definition: Are the parts good?

Good Count / Total Count

Losses: Scrap, Rework.

Example Calculation

  • Shift Length: 480 mins
  • Breaks (Planned): 60 mins -> Planned Time: 420 mins
  • Downtime (Breakdown): 42 mins -> Run Time: 378 mins
  • Total Parts: 300 units
  • Scrap: 6 units -> Good Parts: 294 units
  • Ideal Cycle Time: 1.0 min/part
Availability
378 / 420 = 90%
Performance
(1.0 * 300) / 378 = 79%
Quality
294 / 300 = 98%
Overall OEE0.90 × 0.79 × 0.98 = 69.6%

World Class Benchmarks

  • Typical Job Shop~60%
  • Typical Production~75%
  • World Class85%

*Note: 100% OEE is theoretically impossible in a sustainable environment.

Why OEE Matters

Most shops think they have a "capacity" problem (buy more machines) when they actually have an Availability problem (machines sitting idle). Increasing OEE from 60% to 70% is like getting free machine time.