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The Importance of Overall Equipment Effectiveness (OEE) in Manufacturing Productivity

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As the manufacturing industry becomes increasingly competitive, it is crucial for manufacturers to optimize their operations and maximize productivity. One key metric that helps achieve this is Overall Equipment Effectiveness (OEE). OEE is a benchmark that measures how efficiently a manufacturing operation utilizes its resources and identifies areas for improvement. By calculating and improving OEE, manufacturers can enhance their production processes, minimize downtime, and increase profitability.

What is Overall Equipment Effectiveness (OEE)?

OEE is a metric that evaluates the efficiency of a manufacturing operation by combining three factors: availability, performance, and quality. These factors provide insight into how effectively an asset operates during the production process.

  • Availability refers to how often the asset functions when needed. It takes into account planned and unplanned downtime, such as breakdowns or maintenance.
  • Performance measures how much the asset produces in relation to its maximum possible throughput. It considers factors like speed and cycle time.
  • Quality assesses the number of high-quality items produced by the asset compared to the total units started. It takes into account defects or process failures.

When an asset operates with an OEE score of 100%, it means that it produces items without defects, operates at maximum speed, and experiences no unplanned downtime.

How to Calculate OEE

Calculating OEE involves measuring availability, performance, and quality, and then multiplying these factors together. Let's break down the OEE calculation:


Availability is the percentage of scheduled time that the operation is available to operate. In simpler terms, it's the ratio of Run Time to Planned Production Time. If your production was scheduled for 10 hours and it ran for 9 hours, the Availability is 90%.


Performance is the speed at which the Work Center runs as a percentage of its designed speed. It is calculated as the ratio of Net Run Time to Run Time. If your machine is designed to produce 100 units per hour and it produces 95 units in one hour, the performance is 95%.


Quality is the Good Count as a percentage of the Total Count. If you produce 100 units and 95 are of good quality (without any defects), the Quality percentage is 95%.


After calculating the three elements above, you can then calculate OEE. It is the product of Availability, Performance, and Quality.

The OEE formula takes the three percentages (which are in decimal form), multiplies them together, and then multiplies by 100 to get a percentage. The division by 10,000 in the formula is to account for the multiplication of the three percentages (since percentages are already numbers divided by 100).

For example, if Availability is 90% (or 0.9), Performance is 95% (or 0.95), and Quality is 95% (or 0.95), then:

Remember, this doesn't mean you are losing 18.8% of your products. Instead, it shows you are operating at 81.2% of your full potential, considering the factors of availability, performance, and quality.

It is also important to note that OEE is not a measure of output. It is a measure of the effectiveness of your production process. Therefore, it's a helpful indicator to understand where the production process can improve, not an absolute indication of failed output.

Utilizing OEE for Productivity Improvement

OEE is a powerful tool for identifying areas of improvement in manufacturing operations. It helps manufacturers pinpoint underperforming assets and connect poor performance with one or more of the three main factors: availability, performance, and quality. By understanding the root causes of low OEE scores, manufacturers can investigate and improve the underlying issues.

Impact on Maintenance

Conducting an OEE analysis provides valuable insights into how maintenance tasks are scheduled, organized, and conducted. By measuring asset availability, OEE can reveal if a machine is breaking down too often or experiencing long downtimes. This information helps maintenance teams optimize preventive maintenance schedules and ensure critical spare parts are readily available, reducing unplanned downtime.

Additionally, low-performance scores may indicate issues with specific parts or preventive maintenance tasks. For example, inadequate lubrication of bearings or worn-out belts can contribute to reduced performance. By addressing these issues promptly, maintenance teams can improve asset performance and overall OEE.

Poor quality scores often stem from process failures and a lack of standardization. Inconsistent gauge settings or misalignment can lead to a higher number of defects. By implementing standardized processes and ensuring consistent alignment, maintenance teams can improve quality and increase OEE.

Benefits of OEE for Manufacturing Operations

Implementing an OEE strategy offers several benefits for manufacturing operations. Let's explore some of these advantages:

  • Enhanced Productivity and Efficiency: OEE provides a comprehensive view of how efficiently an operation is utilizing its resources. By identifying areas of inefficiency and targeting improvements, manufacturers can optimize their production processes and increase overall productivity. OEE helps reduce downtime, maximize equipment utilization, and streamline operations.
  • Improved Quality Control: Quality is a critical aspect of manufacturing. OEE helps manufacturers monitor and improve the quality of their products by identifying process defects and reducing the number of defective units. By consistently producing high-quality items, manufacturers can enhance customer satisfaction and maintain a competitive edge.
  • Cost Reduction: Optimizing OEE can lead to cost savings in multiple areas. By minimizing downtime and improving asset performance, manufacturers can reduce maintenance and repair costs. Additionally, increasing overall equipment effectiveness helps optimize resource utilization, reducing waste and lowering production costs.
  • Real-Time Decision Making: OEE provides real-time visibility into manufacturing operations, allowing managers to make informed decisions promptly. By monitoring OEE metrics, managers can identify bottlenecks, address issues, and allocate resources effectively. This enables proactive decision-making, resulting in improved productivity and reduced downtime.
  • Continuous Improvement: OEE serves as a benchmark for measuring performance and progress over time. By regularly monitoring OEE scores and implementing improvement initiatives, manufacturers can strive for continuous improvement. OEE creates a culture of optimization and efficiency within the organization, driving long-term success.

The Six Big Losses in OEE

To further understand the factors that contribute to low OEE scores, it is essential to recognize the six big losses commonly associated with manufacturing productivity. These losses fall into the three main categories of OEE: availability, performance, and quality.

    Availability Losses
  1. Equipment Failure: Unplanned downtime caused by machine breakdowns, tooling failure, or maintenance issues.
  2. Setup and Adjustments: Production stoppages during changeovers, adjustments, inspections, or planned maintenance.
  3. Performance Losses
  4. Idling and Minor Stops: Brief equipment stoppages due to jams, obstructions, or incorrect settings that can be resolved by the operator.
  5. Reduced Speed: Equipment running at speeds slower than ideal due to poor maintenance, substandard materials, or environmental conditions.
  6. Quality Losses
  7. Process Defects: Defective parts produced during stable production, including scrapped parts and those that require rework. Process defects can result from incorrect machine settings or operator errors.
  8. Reduced Yield: Defective parts produced from startup until stable production is achieved. Reduced yield commonly occurs during changeovers, incorrect settings, or machine warm-ups.

Identifying and addressing these six big losses is crucial for improving overall equipment effectiveness and maximizing productivity.


Overall Equipment Effectiveness (OEE) is a vital metric for evaluating manufacturing productivity. By measuring availability, performance, and quality, manufacturers can identify areas for improvement and optimize their production processes. Implementing an OEE strategy leads to enhanced productivity, improved quality control, reduced costs, and real-time decision-making. By addressing the six big losses associated with OEE, manufacturers can further enhance overall equipment effectiveness. Partnering with LLumin and leveraging their CMMS+ software empowers manufacturers to manage assets efficiently and maximize OEE. Embracing OEE and continuous improvement fosters a culture of optimization and sets manufacturers on a path to long-term success in today's competitive market.


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