How to Calculate OEE – The Real OEE Formula with Examples
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A lot of time and effort can be wasted collecting data and analyzing the results. Fortunately, Overall Equipment Effectiveness, or OEE, is one of those metrics that is easily calculated and can be applied to any process, department, or the entire organization.
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OEE is comprised of three factors: Availability, Performance, and Quality. While calculating these factors is fairly straightforward, it is important to recognize that a standard industry definition for OEE does not exist. It is important to understand the assumptions you are making to make sure that you understand the final OEE result. This is increasingly more important when attempting to compare the results of one department or plant against the performance of another.
OEE measures how effectively TIME is used to produce a quality product. We have established the following definitions of TIME to be used to calculate OEE:
- Scheduled Production Time or Planned Production Time
- Planned Down Time: Scheduled down time events
- Unplanned Down Time: Unscheduled down time events
- NAT = Net Available Time (Scheduled Production Time – Planned Down Time)
- NOT = Net Operating Time (Net Available Time – Unplanned Down Time)
- IOT = Ideal Operating Time (Time to Produce All Parts at Rate)
- LOT = Lost Operating Time Due to Production of Scrap or Non-Saleable Product.
Although we will provide examples of these calculations, the following formulas are used to calculate each of the OEE factors and overall OEE:
- Availability % = NOT / NAT * 100
- Performance % = IOT / NOT * 100
- Quality = (IOT – LOT) / IOT * 100
- OEE = Availability * Performance * Quality
You will notice that a quick way to check your OEE result is to calculate the time required to make good parts divided by the Net Available Time:
OEE = (IOT – LOT) / NAT
A word on Availability:
Availability is based on the actual “scheduled production time”. Assuming a production process is scheduled to run over an 8 hour shift or 480 minutes (60 * 8), the following definitions are applied for planned and unplanned downtime.
Planned Downtime:
- Scheduled break times.
- Scheduled clean up at the end of the shift.
- Scheduled Preventive Maintenance.
Unplanned (Process/Equipment) Downtime:
- Setup / Tool Changes
- Material Changes
- Material Handling
- Quality Concerns
- Process Downtime
- Equipment Failures
- Personnel Relief
While it could be argued that setup or tool changes are planned events, they are considered part of the overall production process. If tool change or set up events affect equipment or capacity utilization, then an effort to reduce these times will reflected by improved availability and an increase in available capacity. It also makes capacity utilization much easier to calculate. Again, knowing what is in the definition is important. The purpose of establishing OEE is to drive improvement in your organization. For example, Quick Die Change, or SMED, programs are specifically geared to improve the change over process. If a separate program is used to manage the change over process, then you may so choose to leave this activity as a separate entity.
A word of caution! OEE is a metric, not a program. Use existing systems and processes wherever possible to manage or support your OEE activities at launch. New initiatives often fail because they are introduced in isolation and are often accompanied by “new ways” of doing business and tend to disrupt other existing work flows. A true improvement or initiative that saves the company time and money will stand on its own merits. This same initiative can be acted upon regardless of whether an “OEE Improvement Plan” exists.
I highly recommend reading Velocity: Combining Lean, Six Sigma and the Theory of Constraints to Achieve Breakthrough Performance – A Business Novel. This engaging story exemplifies the challenges of integrating new initiatives into a company and how to overcome them. This book ranks among the best with other books like The Goal.
Calculating OEE: A real life example
An 8 hour shift is scheduled to produce three parts as shown in the schedule below. The shift has two 10 minute breaks and a 5 minute clean up period.
Production Schedule:
- M/C: A Part #: A123, Cycle: 10 (seconds), Produced: 2240, SCRAP: 50, Unplanned Downtime: 32 minutes
- M/C: B Part #: B456, Cycle: 45 (seconds), Produced: 450, SCRAP: 25, Unplanned Downtime: 18 minutes
- M/C: C Part #: C789, Cycle: 70 (seconds), Produced: 229, SCRAP: 11, Unplanned Downtime: 22 minutes
Lets start by calculating our time factors for each machine:
Net Available Time: Since each machine is scheduled to run for the full 8 hour shift, the Net Available Time for each machine is calculated as follows:
- Scheduled Time = 8 hours = 480 Minutes (8 * 60)
- Planned Down Time = 2 breaks * 10 minutes + clean up 5 minutes = 25 minutes
- Net Available Time (NAT) = 480 – 25 = 455 minutes
Machine A
- Unplanned Downtime = 32 minutes
- Net Operating Time (NOT) = Net Available Time – Unplanned Downtime
- NOT = 455 – 32 = 423 minutes
- Ideal Operating Time (IOT): 2240 total parts * 10 seconds = 22400 / 60 = 373.33 minutes
- Lost Operating Time (LOT): 50 scrap parts * 10 seconds = 500 / 60 = 8.33 minutes
Machine A: OEE Factors are calculated as follows:
- Availability: NOT / NAT = (423 / 455) * 100 = 92.97 %
- Performance: IOT / NOT = (373.33 / 423 ) * 100 = 88.26%
- Quality: (IOT – LOT) / IOT = (373.33 – 8.33) / 373.33 * 100 = 97.77%
- OEE = A * P * Q = 92.97% * 88.26% * 97.77% = 80.22%
We could also have calculated OEE using the Quick Check as shown below:
Time to produce good parts ONLY: 373.33 – 8.33 = 365
OEE = (IOT – LOT) / NAT = (373.33 – 8.33) / 455 * 100 = 80.22%
Using the same formulas as above the time factors for Machines B and C follow.
Machine B
- Unplanned Downtime = 18 minutes
- Net Operating Time (NOT) = Net Available Time – Unplanned Downtime
- NOT = 455 – 18 = 437 minutes
- Ideal Operating Time (IOT): 450 total parts * 45 seconds = 20250 / 60 = 337.5 minutes
- Lost Operating Time (LOT): 25 scrap parts * 45 seconds = 1125 / 60 = 18.75 minutes
Machine B: OEE Factors are calculated as follows:
- Availability: NOT / NAT = (437 / 455) * 100 = 96.04 %
- Performance: IOT / NOT = (337.5 / 437 ) * 100 = 77.23%
- Quality: (IOT – LOT) / IOT = (337.5 – 18.75) / 337.5 * 100 = 94.44%
- OEE = A * P * Q = 96.04% * 77.23% * 94.44% = 70.05%
We could also have calculated OEE using the Quick Check as shown below:
Time to produce good parts ONLY: 337.5 – 18.75 = 318.75
OEE = (IOT – LOT) / NAT = (337.5 – 18.75) / 455 * 100 = 70.05%
Machine C
- Unplanned Downtime = 22 minutes
- Net Operating Time (NOT) = Net Available Time – Unplanned Downtime
- NOT = 455 – 22 = 433 minutes
- Ideal Operating Time (IOT): 229 total parts * 70 seconds = 16030 / 60 = 267.17 minutes
- Lost Operating Time (LOT): 11 scrap parts * 70 seconds = 770 / 60 = 12.83 minutes
Machine C: OEE Factors are calculated as follows:
- Availability: NOT / NAT = (433 / 455) * 100 = 95.16 %
- Performance: IOT / NOT = (267.17 / 433 ) * 100 = 61.70%
- Quality: (IOT – LOT) / IOT = (267.17 – 12.83) / 267.17 * 100 = 95.20%
- OEE = A * P * Q = 95.16% * 61.70% * 95.20% = 55.90%
We could also have calculated OEE using the Quick Check as shown below:
Time to produce good parts ONLY = 267.17 – 12.83 = 254.34
OEE = (IOT – LOT) / NAT = (337.5 – 18.75) / 455 * 100 = 55.90%
Our next post will show you how to calculate a truly weighted OEE based on the examples given here.
Until Next Time – STAY Lean!
If you have any questions regarding this post or simply want more information, please feel free to send an email to leanexecution@gmail.com
Twitter: @Versalytics
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Very helpful !!!
I like very much this site because the comments are based in pratical applications and help a lot of users.
I have a doubt.
The performance efficiency is a factor in the calculation of OEE. It is a function of cycle time (theoretical time to produce a unit of product):
Performance Efficiency = (Ideal Cycle Time x Total Prod Qt) / Net Operating Time) x 100
Total Prod Qt: total quantity of products
Cycle time is easily measured in continuous production lines.
However, I am calculating the OEE for a batch process equipment.
It is a tablet coating equipment. We fill the machine with the entire batch of tablets, the process is carried out and then we discharge the batch of coated tablets. I was thinking of dividing the batch production time by the total number of tablets processed to determine the cycle time of each batch, but I don`t know if it is correct to call it cycle time? Is there another formula to calculate the performance for batch processes?
Another question. I would like to calculate the capacity of this equipment using OEE, but I need an academic reference of it. Do you know any? As I am attending a master´s degree program and my project will be about the application of OEE in the pharmaceutical industry, I need to reference this calculation.
Thanks in advance
hello sir…,
this is bhagath singh, i use zonal centrifuse… how i will get OEE
OEE does not depend on the type of equipment you are using, only the cycle time for your process.
Hi Sir i would to know hould can i get the “cycle time” for production of goods or per scheduled production. please answer me as soon as you read this comment. thank you so much
Hi Mark, thank you for your comment. I trust the following will help to answer your question.
The cycle time is the ideal amount of time required to produce a part or product. In my experience, one machine or process may be used to run a variety of parts, each requiring a different cycle time due to size, shape, complexity, or other factors directly attributed to the product itself.
As such, I recommend performing a time study to determine the cycle time for each part or product that is produced in a given machine. As improvements are introduced, additional time studies will be required to maintain your standards.
For automated processes, such as automated assembly lines or robotic welding operations, the cycle time is typically stated or shown on the PLC or machine controller and can also be confirmed through a simple time study.
Processes that are driven by human effort (manual operations) are typically measured using the “button to button” time. The cycle time begins when the operator starts the machine and ends when the operator starts the machine again to produce the next part. This assures that all loading and unloading activities are captured in the total cycle time.
Note that some companies use the “machine capacity rate” or “plate” rate. For example, a press may be rated to run up to 60 strokes per minute yielding a cycle time of 1 second while the tooling may only be capable of running at 30 strokes per minute yielding a cycle time of 2 seconds.
I recommend using the part specific cycle time, however, your plant policy may state that the “machine capacity rate” is the goal.
To establish your cycle time, I recommend performing a time study over a reasonable period of time and sufficient quantity of parts (suitable for your process) to capture any slight variances that may occur during the machine cycle and over the course of the run.
For processes that rely on human effort alone, it is important to consider factors such as fatigue. This is one of the many reasons that job rotation is becoming common place in many plants.
As a final note, the Performance factor for your OEE should not exceed 100% as this implies that the process was running faster than the ideal cycle time you already established. If this is the case, understand what changed, document, and perform another time study to update your standard.
I trust this meets with your immediate requirements and thank you for your question.
Really this help me alot in improving OEE, If you could provide me the downtime calculation like MTTr, MTBF Etc……
Thank you for your comment Mohammed, I’m glad to hear that we have helped to make improvements in your OEE. MTTR and MTBF are based on data collected over time and are summarized as follows:
MTTR – Mean Time To Repair = Total Corrective Maintenance Time / Total Number of Corrective Maintenance Actions.
Note that some companies distinguish between response time and actual repair time. For example, it may take someone 15 minutes to respond to a 5 minute repair. The objective is to both minimize the response time and the repair time.
MTBF – Mean Time Between Failures = Total Operating Time / Total Failures
Where, Total Operating Time is the actual machine UP Time
A good application for MTTR and MTBF can be found in spot welding operations where tip changes are quite frequent. Data can be collected over a relatively short period of time to determine the real life of a weld tip before it must be “dressed” or replaced altogether.
Thank you for visiting with us.
Does Tool change / Tool index downtime come under availability or Performance ?
If the Tool change or Tool index time is incurred during the cycle time required to produce a part, the “down time” falls under Performance.
The time required to complete one full production cycle (“button to button” or “start to start”) is the cycle time. Operations or sequences that occur during the cycle are all inclusive in the cycle time.
If the tool change is required to produce a different part, the down time falls under Availability.
Thank you for visiting!
Sir, Please explain how to calculate performance in more detail.
…Thank you Sir …
Manoj, thank you for visiting our site.
Our “How to Calculate OEE – Tutorial” is available for download free of charge and thoroughly explains how to calculate all of the factors for OEE.
OEE has fascinated maintenance world for quite some time and dominated the discussion space also in a significant way. But I feel while it may have served the purpose of integrating some factors affecting the performance of a plant related to maintenance it has limited us also. It is time for critical analysis of this term and its validity also.
I am not going to repeat some of the limitations of OEE which has been spoken about in the past such as treating 20%*80%*90% equal to 40%*60%*60% whereas they are not and not acknowledging the relative weightage of the three factors or the cost associated with them etc.
Instead I am going to speak of two aspects of it:
1. How do we make use of information on OEE? Obviously we break it into the three components and analyse each of them separately and make an action plan on each of them. What is the additional value derived by it in such a case?
2. The value of OEE may be in fact giving wrong indication. Look at the following example:
Let us take a plant suppose to produce 1 component per hour under normal circumstances and let us consider a 30 days month.
It is shutdown for maintenance for 12 hrs in a month and has a breakdown for 6 hrs. Hence the availability is = (720-12-6)/720*100 = 97.5%
(loss of production= 18 components)
Let us assume it had problem in one of the machines foe which they had to run it at reduced rate (75%) for 12days. Though the machine did not stop producing but correcting the vibration problem took long. Hence the speed factor is =(18+0.75*12/30*100 = 90%
(loss of production= 72 components)
Let us further assume there was a fault in one of the machines which started generating 6defects per day and it took 3 days to diagnose and rectify it. Hence the quality factor is = (30*24-6*3)/(30*24)*100 = 97.5%
(loss of production= 18components)
Let us look at OEE. OEE = (0.975*0.90*0.975)*100 = 85.6%
If we calculate loss of production by this it is = 720*14.4/100 = 103.7
Whereas the loss of production actually is = 18+72+18 = 108 which will be reflected by the actual availability figure of 100-2.5-10-2.5 = 85.
In this example the difference is only 0.6% but one can take more extreme value and find out that it is in fact much more.
Hence while I fully agree that being aware of, measuring, keeping track of and making action plan against all the three factors is absolutely essential, the more meaningful way is the conventional way. All aware organisations measure all three convert them into equivalent and make action plan for improvement against all of them. If at all there is meaning full way of combining them it is addition. We may give it a name, let’s say Overall Performance for simplicity.
Thank you for your comment. I trust the following will clarify our perspective and also address our concerns regarding your application of the OEE formulas as described in the scenario presented. You will find that the correct application of the formulas for OEE will yield the identical result.
1. The objective of OEE is not necessarily to create 3 separate action plans, 1 for each of the factors. Rather all factors should be considered as a whole to determine whether correlations between factors exists. The factors serve to isolate 3 aspects of the process that may be contributing to reduced OEE.
A poorly maintained process can result in excessive cumulative downtime for “band aid” fixes, reduced cycle times (lower performance), and increased quality defects. From this perspective, a single and proper process fix resolves three “correlating” factors.
In other words, the factors serve to identify both correlating and individual incidents or conditions that may affect them.
2. Regarding your calculations of OEE, you are attempting to calculate TEEP (Total Equipment Effectiveness Performance), not OEE. As a result, it appears that there is some confusion with the application of the formulas to calculate OEE as well.
Planned maintenance is not considered as available operating time and therefore is not a factor in the OEE calculation, however, it is required for TEEP.
Total Time Available = 30 days * 24 hours = 720 hours
Net Available Time = Total Time Available – Planned Downtime
Net Available Time = 720 – 12 = 708 hours
Planned Availability = Net Available Time / Total Time Available = 708 / 720 = 98.33%
OEE Availability as presented by your “scenario” should be as follows:
Net Available Time = 720 – 12 hours = 708
Net Operating Time = 708 – 6 = 702 hours
OEE Availability = Net Operating Time / Net Available Time = 702 / 708 = 99.43%
The cumulative (TEEP Availability * OEE Availability) factor is (98.33% * 99.43%) = 97.77%
Performance as presented by your “scenario” is also incorrect. Your formula assumes 30 days of net operating time when in fact only 702 hours are available after accounting for lost availability. The resulting performance calculation should be as follows:
If the machine was operating at 75% for 12 days, the performance loss for 12 days = 25%. Therefore, the Ideal Operating Time is calculated as follows:
Ideal Operating Time = Net Operating Time – Performance Lost Time
Ideal Operating Time = 702 – 25%*(12*24) = 702 – 72 = 630 hours
Performance = Ideal Operating Time / Net Operating Time = 630 / 702 = 89.74%
Finally, the Quality factor is Net Value Added Time / Ideal Operating Time
Value Added Time = Ideal Operating Time – Quality Losses
Value Added Time = 630 – (6 * 3) = 612
Quality = Value Added Time / Ideal Operating Time = 612 / 630 = 97.14%
OEE = Availability * Performance * Quality
OEE = 99.43 * 89.74 * 97.14 = 87.2%
TEEP = 98.33% * OEE = 98.33 * 86.67%
TEEP = 85.23%
Calculation variance is the result of rounding only. Not error introduced as a result of the formulas themselves.
In summary,
Multiplying each of the factors together, Availability * Performance * Quality, should yield the same result as the following formula:
OEE = Ideal Time * Total Good Parts Produced / Net Available Time
OEE = 612 / 702 = 87.2%
TEEP = 612 / 720 = 85.0%
This formula easily confirms whether the resulting OEE calculation is correct and eliminates the need to determine each individual factor.
3. Regarding the significance of each factor, we have also written (and made available on our downloads page) a copy of our cost based OEE spreadsheet that uses cost drivers to determine which factor has the most significant effect from a cost perspective.
Dear sir, We are chemical industry in which we want to implement OEE concept. Can you please help how to implement OEE concept in chemical industry maintenance. Also in chemical industries, Quality of product is depend upon many parameters like raw material quality, process steps, adding times. Then how we calculate quality ? What will be formula for quality of equipment in our industry which is batch type. Please guide.
Thank you for your request for assistance. I have reviewed your website and I am encouraged to note that your quality system is ISO-9001 registered. This suggests that an operating system exists where a frame work for implementing OEE can be established.
As you may appreciate, OEE is premised on three key factors: Time, Rate, and First Time Through Quality. Regardless of the commodity type, the ideal rate of production through your process is a pre-requisite for OEE.
The nature of your integration / implementation is best served offline to address your specific needs. I can be reached by e-mail at Redge@Versalytics.com
Thank you and we look forward to working with you.