Overall Equipment Effectiveness (OEE) is a KPI which reflects overall equipment or machine performance in a single number, expressed in %.
OEE compares the actual ok output to the total output achievable in perfect conditions. As perfect conditions are not likely to be permanently granted, OEE is a mere theoretical benchmark, nevertheless something operational staff should aim for.
Overall mean encompassing three other key metrics: Availability, Performance and Quality.
- Availability is the readiness of the machine / equipment to operate when required
- Performance is the actual run rate compared to the nominal run rate
- Quality is the number of good parts or quantity right first time compared to the global quantity (good and no good)
Everyone of these metrics is expressed in %, OEE = availability x performance x quality
As OEE is multiplying fractions, the result cannot be greater than the smallest value of Availability, Performance or Quality. That is why OEE is a severe KPI: if one of the intermediate KPI decreases, the OEE decreases faster.
OEE came with Total Productive Maintenance (TPM) and aimed primarily to maximize assets’ yield. OEE was designed to grasp the real performance and not being fooled by tracking assets’ utilization.
By utilization I mean the ratio machine time used / available time. A machine used for production 90% of the available time, seems good. But if this machine runs at 60% of its nominal speed and 15% of its output must be discarded, OEE will be 90% x 60% x 85% = 46 % which is not good at all, as more than half of its productive capacity is wasted.
The OEE performance is a snapshot of demonstrated capacity, e.g. what the machine / equipment / supplier can really achieve.
The capacity above demonstrated capacity up to nominal maximum capacity is wasted.
It is like a beaker (fig.) having a 100ml capacity but all the leaks limit the real capacity to 60%.
Changeovers are usually a major cause of machine downtime and account as “leaks”. Changeovers duration can be drastically reduced with SMED, thus fixing the leak and recovering some or the wasted capacity.
When breaking down all causes leading to waste of capacity, it soon becomes clear that maintenance issues account only for a (usually small) fraction. OEE therefore gained interest for itself, not only as a KPI within Total Productive Maintenance (TPM).