OEE – Overall Equipment Efficiency Definition

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KPI Wiki LogoOEE Description

OEE stands for Overall Equipment Effectiveness. It is a very commonly used efficiency measure.

What do we mean by efficiency? Put simply, it is “How much did we make, compared with how much we could have made.”

OEE Calculation

OEE splits our efficiency down into three categories. The idea here is that we can get some understanding of which types of losses are bringing our efficiency down.

Performance Rate (sometimes called Speed or just Rate)
Quality Rate

Here’s a bit more explanation of each:

Availability: How much of the available time were we running for? If we planned to run a machine for 10 hours, but it was only working for 5 hours, then our Availability would be 50%. This measure might show stoppages caused by problems, lack of materials or process problems. This is sometimes referred to as “downtime” – although downtime is the % of time we are not running, whereas availability is the % of time we are running.

Availability=(Actual run hours/Target run hours)

Performance Rate: You can “lose” output by machines or lines running slower than they should. So a machine set to make 100 widgets a minutes that was set to only run at 70 widgets per minute would be running at 70% speed/rate/performance (sorry, all these names are used – it’s a bit confusing). This measure would show us problems that caused lost output but were not serious enough to completely stop production.

Performance Rate= (Actual bottleneck speed/Ideal bottleneck speed)

Quality Rate: We may manage to make some product that is not good enough to sell. The ratio of bad to good produce is a called the “quality rate”. If we make 350 widgets, but only 280 of them are good enough to sell then our quality rate would be 80%

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