OEE: 5 Key Points for High Efficiency

What is OEE

OEE definition stands for Overall equipment effectiveness, simply what is that? When anyone comes into any production environment, he/she will notice that this word is commonly used. And if the OEE is used, the production teams do have a set target to achieve the daily OEE in each machine and separate OEE scores according to the machine types as well.

Before the introduction of many of the lean concepts, mainly, most of the companies did measure only the hourly output. The drawbacks of this method had hidden costs associated with it. When the OEE concepts came in the Janapnes production lines like Toyota. It played a significant role to save a substantial amount of money for large scale companies and did wonder in most of the KPIs

Therefore, let’s look at the concepts behind the OEE can be elaborate as below

The basic equation for OEE has three components

  1. Availability
  2. Performance
  3. Quality

And the equation comes as below;

OEE formula

The value of these equations generally gives in percentage. A slight impact on one of the components can lead to a decrease or increase in the OEE. It is essential to have to give attention to all three pillars without excluding any. The components definitions can elaborate as below

Availability factor

The availability factor is related to time, mainly. The availability factor defines as;

OEE-Availability Factor

As a company that focuses on maximizing the profit would like to minimize its downtime as much as possible.

When it comes to the planned production time, the mandatory intervals need to be excluded. As an example, if we take a company that works on a shift basis for 9 hours and has 2 hours for lunch, Dinner.. etc. The planned production time would be 7 hours. It does not always be intervals. Sometimes a compulsory fire drill, training can take into account.

Operating time is the time that excludes all the downtime of machinery. The machine downtime may vary, and a higher downtime will reduce the operating time.

Some identified Downtime can give as below;

  • Machine maintenance
  • Changeovers
  • Electrical failures
  • Raw material jamming

Performance factor

The Performance factor is all about the production quantities. The performance factory defined as;

OEE-Performance factor

Here the ideal run rate has to monitor before any calculation. When it comes to the calculation of the ideal run rate for machine two types of  calculations need to consider;

  1. A machine which has one unique product
  2. A machine which has multiple type products

When a machine has only one unique product, then it is easier to get the quantity of the Ideal pieces during that time. Merely taking the cycle time around 10 minutes on a particular day every 2 hours and getting the mean value is an ideal option to reduce any human error for time measuring.

Multiple product types are bit tides since it needs to calculate all the cycle times of products to get total ideal production quantity  to illustrate the below equation uses;

OEE- Ideal Production Quantity

As you can see that it requires a tides calculation. Hence, it has so much of changeovers the downtime will be high, and it will reduce the performance factor.

Quality factor

The quality factory is simple as that it is all about the quality;

OEE-Quality factor

The quality is depending on the product totally. From my personal experience, when I was in the plastic department of my company, a recycle (hospital) brought up to produce. The virgin PP and recycled PP did show a more significant impact on the quality. After that, as an OEE standard, the quality department has changed the rejection criteria, and it affected the OEE efficiency. As you can see, this is just one example, and it depends on the company’s decision to set, which is to select and neglect.

Why OEE is vital for the production

In a production line only getting the targets pcs per day or week may be achieved but if there is only the pcs/time factor considered

How organizations use OEE

When we considered some organizations at the start, they want to jump into a world-class OEE value. But in practice, it is not easy, and it needs not to have the 85% value to have a smoothly running plant. I have observed this error in most of the production factories 

When they fix the amount of 85% and try to achieve the world-class value in every day, the following issues will occur, if they machine does not have the capability to reach the amount of 85%

  1. Devices will start to breakdown
  2. Product quality goes down
  3. Planned production will not be able to deliver

Therefore, it is vital to understand the fact that every machine does not need to have 85% maybe 70% will just do fine. In order to come up to the 85% world-class OEE benchmark. The following can be done;

  1. IF the machine does have old, depreciated parts, the new replacement has to make to avoid breakdowns
  2. Setting up a quality management system to monitor and track down data. Then improvements can be made according to it
  3. Proper TPM of machines according to a cycle
  4. Have to take cycle times in lower performance machines, if a worker maneuvering issue is there take actions for that
  5. Have shift basis on the production requirements

World-class standard OEE

The general accepted world-class OEE value is 85/100. This figure is not standard in a factory environment where electricity failures, intermittent machines breakdowns occur.

In order to get a world-class value for OEE, it is required to have the following

Practical difficulties of using an OEE

The main key point here is an identical machine may work perfectly without even achieving the

If your factory does not use it. How to start and use OEE

 If any section of your organization does not use OEE, then The preparation of an OEE to a whole plant would take a lengthy period. This is mainly due to the below reasons;

  1. Lack of knowledge in OEE in production people
  2. The uncertainty of giving a target to all the machines
  3. The level of quality taking for calculation
  4. Time availability issues.

Here it has to mention that the time availability can differ according to the plant. Some organizations tend to give adjustment times for the OEE. Which increases the availability factor. In my opinion, I think 

Bonus trick New efficiency method  to get checked the real efficiency finically

This is a method we used in our manufacturing plant when we needed to uplift the efficiency. The issue was we were able to achieve the OEE, but our monthly accounts did have a high labour cost, especially for high overtime payment. 

OEE performance factor/man-day

Mainly in most of the companies, they do measure there OEEs but does the OEE only gives the efficiency factor. From my experience, I have found a new solution to this. Like the one who found this technique, I would like to name it as PE Method. Which performance efficiency method.

Let’s briefly go to the method here. First, I will describe what a man-day is Man-day is the total amount of minutes a production line works. As a company, you cannot have a continuous lengthy process since you will have to give breaks to the workers according to their fatigue. Generally, in most of the countries, 10 hours is known as the general production time, which includes the 1-hour lunch break and two separate 15-20 minutes breaks in the morning time as well as in the evening time.

Therefore, in terms of minutes, if we calculate a man-day for the above scenario, it will come as 480 minutes. Then if we divide it by four hundred and eighty minutes, it will be 1.

Now considering the overtime, we can calculate the man-day like the below.

Manday Calculation


It is important to note that if someone takes a half-day or short leave take to reduce those time to calculate the man-day.
As an example, if someone takes a short leave of 90 minutes from the general shift, the man-day must be calculated as well. As a practice, it is better to first calculate worker’s man-days, which

Applies leaves and then finally calculate the common man-days later.

As an example, if the factory has around 300 people on a day and if ten people take leaves and the rest of the 290 people work as in the normal way. First, calculate the man-days of the leave taken people and then calculate for the rest of the workers, IT would be a much easier way.

Performance Efficiency(PE)

By using the above info, I will introduce the new value PE value;

Performance efficiency equation

By using the above equation, the calculation can be processed. Now, after doing this, it is essential to know that you will not be able to set a PE value like world-class Overall equipment effectiveness. It would require to take at least initial values for a particular machine for around 30 days and get the PE values for each device accordingly.
Now set an average value for the PE, and from there, onward continue to continuous improvement techniques to improve the PE value to a particular value.

Why this PE value is better than the OEE

The thing in OEE is that even if a machine gives only the performance of the machine, but if we consider the number of people used for an operation, it will provide you with the hidden performance issues of the company.

In a sense, if the organization wants to reduce the overtime payment and optimize the production line, the PE value method is an excellent way because the labour cost is a burden for most of the organization in which can cause so many problems due to the rising of it.


The OEE is a great way to measure the factory performance. The OEE does not have to be at the world-class level every time. Cause during sometimes the OEE differs, but still, the machine will be able to produce the results. To monitor that look into the above PE value where it would do wonders for your company in the longer run.

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