Overall equipment effectiveness (OEE) is a measure of how well a manufacturing operation is utilized (facilities, time and material) compared to its full potential, during the periods when it is scheduled to run. It identifies the percentage of manufacturing time that is truly productive. An OEE of 100% means that only good parts are produced (100% quality), at the maximum speed (100% performance), and without interruption (100% availability).
Measuring OEE is a manufacturing best practice. By measuring OEE and the underlying losses, you will gain important insights on how to systematically improve your manufacturing process. OEE is the single best metric for identifying losses, bench-marking progress, and improving the productivity of manufacturing equipment (i.e., eliminating waste).
Each of the three components of the OEE points to an aspect of the process that can be targeted for improvement. OEE may be applied to any individual Work Center, or rolled up to Department or Plant levels. This tool also allows for drilling down for very specific analysis, such as a particular Part Number, Shift, or any of several other parameters. It is unlikely that any manufacturing process can run at 100% OEE. Many manufacturers benchmark their industry to set a challenging target; 85% is not uncommon.
OEE is calculated with the formula (Availability)*(Performance)*(Quality)
Using the examples given below:
(Availability= 86.6%)*(Performance=93%)*(Quality=91.3%)= (OEE=73.6%)
Alternatively, and often easier, OEE is calculated by dividing the minimum time needed to produce the parts under optimal conditions by the actual time needed to produce the parts. For example:
Total Time: 8 hour shift or 28,800 seconds, producing 14,400 parts, or one part every 2 seconds.
Fastest possible cycle time is 1.5 seconds, hence only 21,600 seconds would have been needed to produce the 14,400 parts. The remaining 7,200 seconds or 2 hours were lost.
The OEE is now the 21,600 seconds divided by 28,800 seconds (same as minimal 1.5 seconds per part divided by 2 actual seconds per part), or 75%.
Credit: Wikipedia