What “OEE” means and how it can help you better run your business

In the past few months we’ve met with a lot of factory managers and owners, with very different backgrounds, in very different industries and productions.

We’re writing this blog post because, in those conversations, we’ve found that there are a lot of managers who don’t know what “OEE” stands for, what it means and the impact it has on their business. And sometimes they think they know but we end up having a broken conversation because we’re not talking about the same thing.

Then there’s also the ones who know all this, some even better than us. And when we tell them they can have their factories OEE updated in real-time based on actual data from the shop-floor and they can have that installed and working in their factory that same day they immediately decide to test our product and eventually buy it.

So, you see, we might want more people to know what “OEE “stands for, what it means and the impact it has on your business. It’s good for business. Yours and ours.

What does “OEE” stand for?

Overall Equipment Effectiveness, commonly known as “OEE” is a composite metric that quantifies how far away is your factory from its ideal performance – the performance your factory is designed to have.

OEE is an aggregate of three separate factors:

Availability – Represents the percentage of scheduled time that the operation is available to operate.
Operating Time = 450 Min Scheduled – 60 Min Unscheduled Downtime = 390 Minutes
Availability = Uptime / Available Time
Availability = 390 minutes / 450 minutes = 86,6%

Productivity – It is the speed at which the work center runs as a percentage of its designed speed.
Productivity = (Parts Produced * Ideal Cycle Time) / Operating time
Time to Produce Parts = 242 Units * 1,5 Minutes/Unit = 363 Minutes
Productivity = 363 Minutes / 390 Minutes = 93,0%

Quality – The good units produced as a percentage of the total units started.
Quality = (Units produced – defective units) / Units produced = (242 units produced – 21 defective units) = 221 units produced
Quality = 221 good units / 242 total units produced = 91,32%

So, in this example OEE = Availability * Productivity * Quality = 86,6% * 93,0% * 91,32% = 73,55%

This is what OEE is good for. Knowing, in a single metric how your factory’s operations are doing. Of course it doesn’t give you a full picture but that’s not the purpose. It’s a single metric to have a snapshot of current operations. If you check it regularly and do an information drill down every time your OEE goes down, to check what caused the dip, you might find it very useful.

But this is only truly useful if you have a fast and accurate way to know the numbers and look for causes. That’s where Prodsmart comes in. If you want a fast and accurate way to know your factory’s numbers, not only OEE, get in touch with us.

Productivity * Availability * Quality = OEE

This is the first post of several others we will be publishing in this blog where we’ll talk about basic industrial productivity concepts that we applied in our software and that you can use in your factory – even if you don’t use our system – and even in other non-industrial aspects of your business and your life.

You can keep up with the blog in your email inbox by subscribing to our newsletter. Hope you enjoy it!

Thank you and keep up the good work!