Overall Equipment Effectiveness (OEE): An Overview

In the implementation of Total Productive Maintenance (TPM), many businesses focus on the evaluation of the Overall Equipment Effectiveness (OEE) index. With OEE, companies can identify problems in asset usage and maintenance to develop appropriate improvement strategies.

For manufacturing companies, OEE plays an important role in improving the productivity. When applying OEE, not only large-scale improvements but also small improvements can still significantly boost the bottom line of a business. Thus, it can be said that the goal and the identification of OEE is to help businesses improve continuously.

Overall Equipment Effectiveness

Key Takeaways

    1. What is Overall Equipment Effectiveness?
    2. How to calculate Overall Equipment Effectiveness?
    3. 6 big losses of Overall Equipment Effectiveness

What is Overall Equipment Effectiveness?

OEE – Overall Equipment Effectiveness, is a measure of the performance and productivity of manufacturing operations. In other words, the OEE index identifies what percentage of production time that is truly productive.

OEE helps businesses identify problems in the operations and maintenance of assets, and track progress in fixing these problems. By measuring OEE, businesses will gain important insights into how to systematically improve their manufacturing processes. Thus, OEE is the best metric for determining loss, benchmarking progress and improving productivity of production equipment.

How to Calculate Overall Equipment Effectiveness?

OEE is a combination of three factors that represent how efficient an asset is in the production process: Availability, Performance and Quality.

Overall Equipment Effectiveness (OEE)


Availability is the amount of time that equipment can perform its function. It includes all factors that affect planned production over a substantial period of time such as unplanned and planned stops.


Performance is the amount of time it takes to complete a process relative to its ideal cycle time. It includes all factors that cause production equipment to operate at less than the maximum possible speed when running.


Quality refers to the “right first-time” output of equipment, providing insight into lost time due to repairs and rejections.

OEE Benchmarks: What is a Good Overall Equipment Effectiveness Score?

When reaching 100%, you achieve a perfect OEE metrics. But this number is not easy to achieve. Depending on the level based on percentage, we will have the following evaluations:

  • 100%: Perfect production efficiency, no downtime, smooth production, quality products.
  • 85%: Compared to 100% difficult to achieve, businesses still try to reach this level.
  • 60%: When it is only at 60%, it means that businesses need to improve at some point to achieve better performance.
  • 40%: This is an alarm bell for businesses to timely monitor and improve to bring higher performance.

OEE is useful as both a benchmark and a baseline:

  • As a benchmark, OEE is used to compare the performance of a given production asset to industry standards, or to results for different shifts working.
  • As a baseline, OEE is a metric to track progress over time in eliminating waste from a given production asset.

The Benefits of an Overall Equipment Effectiveness

When it comes to efficiency and productivity, the implementation of OEE solutions can help businesses maximize asset utilization. By optimizing OEE, businesses can take proactive approaches to operational processes, resulting in reduced costs, improved quality and increased efficiency.

Overall Equipment Effectiveness (OEE)

Better monitor machine operations to understand where real problems exist and how to solve them.

Boost equipment efficiency when pieces of equipment are maintained on time and downtime is reduced.

Reduce machine maintenance and repair costs by putting proper plans and schedules in place.

Delivers significant return on investment as reducing waste or loss in equipment production will help businesses gain more profits.

6 Big Losses of Overall Equipment Effectiveness

Developed along with TPM, the “6 Big Losses” concept is considered as the 6 main causes of performance loss in businesses. Therefore, the implementation of OEE measurement has the primary goal of eliminating and minimizing these 6 types of losses.

OEE - 6 Big Losses

Unplanned stops: a period when equipment is planned for production but was not running due to accident or failure.

Planned stops: a period when equipment is set up and adjusted for production as the scheduled plan.

Small stops: caused by short interruptions such as machine breakdown (1-2 minutes or less than 5 minutes) during production.

Slow cycles: when the equipment is operated at a lower speed than the standard speed.

Startup defects: defective parts produced from start-up operation.

Production defects: defective parts produced during stable production.

Best Practices to Improve Overall Equipment Effectiveness and Productivity

As one of the main standards and basis for measuring efficiency and productivity, OEE helps manufacturing businesses achieve their product quality goals. For obvious reasons, such as being more time-efficient and cost-saving, it is necessary to keep track of and improve OEE.

  • Focus on improving key machinery systems to have a maintenance plan to ensure smooth operation.
  • Automate data collection and reporting of equipment to monitor and improve OEE index.
  • • Record all machine downtime to find better solutions based on classifying the causes of downtime.
  • Assess and analyze 6 major losses to plan maintenance, upgrade machinery or operating procedures.

As the primary standard for measuring efficiency and productivity, Overall Equipment Effectiveness helps manufacturing industries achieve their output and product quality goals. With OEE metrics, manufacturing enterprises can determine the efficiency of using and maintaining equipment assets of the current business. At the same time, identify remaining limitations to devise appropriate maintenance improvement strategies.

Furthermore, OEE is also an important basis for the implementation of TPM as well as the application of CMMS (Computerized Maintenance Management System). Based on these programs, businesses have more opportunities to increase their competitiveness and better meet market demands.

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