We Love Questions

We love your questions – especially when we can help by providing practical solutions to real-world problems. If you have a question that we haven’t covered, or if you just would like to talk more about OEE, feel free to contact us. You can reach us by phone at +1.630.875.3600 or by email at [email protected].

Meanwhile – here are our most frequently asked questions about OEE. Enjoy!

What are the Biggest OEE Mistakes?

Focusing on the OEE score – not the underlying losses

Overall Equipment Effectiveness measures how close you are to perfect production (manufacturing only good parts, as fast as possible, with no down time). Monitoring your OEE score on its own is not all that helpful to improving production. The true value of OEE comes from understanding the underlying losses: Availability Loss, Performance Loss, and Quality Loss. By focusing on these losses, and more importantly, by taking action to reduce these losses, your OEE score will naturally improve.

Using ‘budget’ or ‘standard’ speeds for Ideal Cycle Time

If you want OEE to fully drive productivity improvement, make sure to use the “true” Ideal Cycle Time, which is the maximum theoretical speed of your process. Many companies have ‘budget’ or ‘standard’ speeds that are slower than this maximum. These numbers are useful for production planning, but if used in the OEE calculation they will hide the true capacity of your process. This will artificially raise your OEE score, while hiding loss and slowing improvement.

Excluding changeovers

Changeovers are an essential part of the production process for most manufacturers. Changeover time is lost production time – time that could be spent manufacturing parts. While excluding changeovers from your OEE calculation will increase Availability (and OEE), it will also hide the opportunity to increase output by reducing changeover time. To learn more about reducing changeover time read up on SMED (Single Minute Exchange of Dies).

Collecting too much data

Keep your OEE data collection as simple as possible. Many managers ask operators to select from a bewildering array of downtime reason codes. Other managers set downtime thresholds so low that operators spend as much time collecting data as running machines. The operator’s job is to run the machine. Asking them to collect large amounts of excessively detailed data will result in poor data or poor productivity. Collect less; do it well.

Using OEE to compare dissimilar processes

Many companies compare OEE scores across divisions, sites, assets, or products. The temptation to do so is overwhelming. Here is the problem. Such comparisons are only truly meaningful when comparing the same equipment running the same product under the same conditions. Let’s consider a few real-world examples:

Resist putting too much weight on comparisons of dissimilar processes. Yes, such comparisons can provide interesting insights – but they are as likely to provide as much misinformation as good information. Compare with care. Focus on OEE’s role as a tool for improvement. For example, measure improvement and manage progress by trending OEE over time for a given asset or product.

Overemphasizing OEE on the plant floor

Overall Equipment Effectiveness is a relatively abstract concept. As such, if it is going to be used on the plant floor, it is extremely important to provide in-depth training to operators and supervisors to help them understand how OEE affects their day-to-day work. One of the most effective ways to do this is to emphasize the underlying losses to OEE (i.e. Down Time, Changeover Time, Small Stops, Slow Cycles, Startup Rejects, and Production Rejects) and how OEE serves as a measure of these losses.

An interesting alternative to using OEE for the plant floor, especially for companies early in their improvement journey, is to focus on Efficiency (which is essentially comparing actual performance to target performance). The benefit of this approach is it enables operators to “win their shift” by achieving 100% of target. This can be a very powerful motivator – especially when operators see results in real time. On the other hand, it is essential to set targets that are meaningful; targets that will drive significant improvement. For example, it is rarely a good idea to drive target performance from “standard times”. They represent the status quo and are not likely to drive meaningful improvement.

Deciding Whether to Use OEE

Why should I implement OEE?

Overall Equipment Effectiveness is a universally accepted method for measuring the improvement potential of a production process – with one simple number. Measuring makes it easier to improve, and improving productivity (by eliminating waste) is the core objective of lean manufacturing. OEE also provides a critical link between measurement and improvement. It directly ties to the Six Big Losses, which provide a practical and actionable roadmap for improving manufacturing productivity.

Will OEE work with my process?

The short answer is “very likely yes”. OEE is most commonly applied to discrete manufacturing processes (i.e. processes that make individual parts). However, OEE can also be applied to continuous processes (e.g. refineries). The key thing to remember is that OEE identifies the ratio of Fully Productive Time (actual output) to Planned Production Time (theoretically possible output). The difference between the two is waste – lost time that could be used for manufacturing.

My manufacturing process is mostly manual. Can I use OEE?

Yes – but you may want to consider a variant known as OLE (Overall Labor Effectiveness). OEE is designed to measure equipment effectiveness. OLE is designed to measure labor (workforce) effectiveness. Another option is to simply measure labor productivity (parts per person hour).

Where to Measure OEE

I want an OEE score for my entire production line. Where should I measure this?

Overall Equipment Effectiveness should always be measured at the constraint step in your process. Whether you’re filling bottles, packing boxes, stamping metal, or assembling buses, there will always be a single step or machine that governs your throughput. This step is the constraint, and it is the point at which it is absolutely critical to capture all losses (internal and external):

On lines where all the equipment is balanced to run at identical speed, the best practice is to monitor OEE at the equipment that does the primary work. For example, on a balanced filling line, monitor the filler.

What if I don’t want OEE for a single machine? What if I want OEE for the line?

The performance of your constraint IS the performance of your line. If your constraint runs at one thousand units per hour and your palletizer runs at three thousand units per hour, how many units will you make? One thousand units per hour! Other equipment can stop and start, but if your constraint is running, you’re making money. This is the most important lesson from the Theory Of Constraints.

Many sites also closely track the number of pallets or boxes shipped to the customer. As a result they often believe that they should measure OEE at the end of the line. This is usually not necessary. Counts and OEE can be treated as independent metrics. Only measure OEE at the end of the line if this is your constraint.

What if I want OEE on the constraint AND on all other steps of the process?

Why? Creating an OEE score at multiple points will give you conflicting information and potentially lead you to focus on less critical aspects of your process. The best practice is to measure OEE at the constraint and to measure mechanical efficiency for other assets. This will give you a single OEE score for the line PLUS a benchmark number for every asset without complicating and confusing your OEE measurement.

What if the constraint moves because of improvements we made?

If the constraint moves because you’ve improved (elevated) the former constraint – grab a celebratory drink and say well done to the team! Then move your OEE measurement to the new constraint and start again. The key is to always measure OEE at one point in the process – your current constraint.

What if the constraint moves when we run different products?

If the constraint moves with different products, then in theory it’s correct to also move your measurement point. Join us in our common sense corner to ask; is it worth moving the OEE measurement for every product? If the cost or complexity of moving your OEE measurement is very high, the answer is probably no. If you can easily move the measurement point then the answer is most likely yes. Either way – keep things simple. In the real world, the best results usually come from doing simple things to a very high level.

Implementation Decisions

Should changeover time affect my OEE score?

Yes. Changeover time should be included in OEE (specifically, it should be included in Availability). In fact, changeover time is one of the Six Big Losses. It is lost production time and thus represents a valuable opportunity for improvement. Changeover times are most commonly improved (reduced) through the application of SMED (Single Minute Exchange of Dies).

Should preventative maintenance affect my OEE score?

Probably. If preventative maintenance takes away time that could otherwise be used for value-added production (i.e. manufacturing to meet customer needs as opposed to manufacturing for inventory) it should be included in OEE. Specifically, it should be included in the Availability calculation.

Should lunches and breaks affect my OEE score?

Probably. Including lunches and breaks as losses to OEE is generally considered a best practice. Consider this – a typical shift accumulates approximately 15 hours of lunches and breaks in a month. If this time is excluded from Availability (and thus OEE) it is hidden. Including this as a loss exposes it as an opportunity for improvement. For example, it may be possible to schedule relief operators to run through lunches and breaks. Or, it may be possible to extend material feeds so equipment can run through short breaks without operator intervention.

How should I count reworked pieces?

Reworked pieces should be counted as rejects. OEE Quality is similar to First Pass Yield, which defines good units as units that pass through the manufacturing process the first time without needing rework. Handling rework in any other way adds significant complexities to the OEE calculation and takes focus away from the very important goal of creating good parts the first time through.

Should I base OEE on units of parts or units of time?

That depends on the nature of your process. For discrete manufacturing (e.g. stamping, packaging) it is typical to measure in units of parts. For process manufacturing (e.g. refining, blending) it is typical to measure in units of time.

If I am basing OEE on parts should I use pieces, cases, or pallets?

Usually it’s best to use the most granular measure (i.e. prefer cans to cases). This is almost always where you will have the most accurate and detailed information about losses. Another consideration is to use the measure that is most easily understood and most meaningful for the team. Overall – make sure that your selected unit of measurement is easily captured, consistently applied, and broadly understood.

Should I use a manual or automated system?

Manually calculating OEE is a great way to start – we highly recommend it. You can start with pen and paper or a simple spreadsheet. Performing manual OEE calculations helps to reinforce underlying concepts and provides a richer understanding of OEE. And it’s not hard – only three pieces of data are needed to calculate OEE (Total Pieces, Ideal Cycle Time, and Planned Production Time). With two additional pieces of data (Operating Time and Good Pieces) you can also calculate Availability, Performance, and Quality. We strongly recommend calculating OEE with Availability, Performance, and Quality to get a complete picture of your losses.

Once you understand OEE, there are very strong benefits to moving to automated OEE data collection (e.g. using the Vorne XL Productivity Appliance™). These benefits include significantly improved down time accuracy, detailed information on slow cycles and minor stops, real-time metrics and analytics, easy access to historical data, real-time plant floor visual alerts, richer reporting, etc.

Calculating OEE

What period of time should I use for my OEE calculation?

Choose the time period that is most meaningful for your process or site. Typically this will be shift, job (part run), hour, or day.

How do I determine Ideal Cycle Time?

Ideal Cycle Time is the theoretical maximum throughput of the machine or process. This number should generally NOT be lowered due to factors such as machine age or material quality – these types of loss factors should be mitigated using Lean Manufacturing, Six Sigma, and other improvement tools. Loss factors are opportunities for improvement.

There are two approaches to determining Ideal Cycle Time:

Is it possible for OEE or any of its underlying metrics to exceed 100%?

No. An OEE score of 100% represents perfect production - manufacturing only good parts, as fast as possible, with no down time. How can you improve upon that? There is only one way – increasing the speed of the process (going faster). However, if the process is capable of going faster the Ideal Cycle Time must equally and proportionally be reduced.

Bottom line – if Availability, Performance or Quality is greater than 100%, then something is incorrectly defined or measured. Almost always when this occurs, the underlying problem is Performance. Specifically, an Ideal Cycle Time that is set too high, resulting in a Performance score greater than 100%.

How do I calculate OEE when I run products with different cycle times?

This is a difficult problem, especially when batch sizes are very small, and when calculations are being performed manually. Unfortunately, there are not any shortcuts if the goal is to generate an accurate OEE score.

A simple average of individual OEE scores is insufficient, as it does into take into account the production time of each product. A weighted average, where the weighting is the actual production time, is better, but it does not provide the detailed loss information that comes from Availability, Performance, and Quality.

The best option requires having the full set of underlying data for each product run: Operating Time, Planned Production Time, Ideal Cycle Time, Total Pieces, and Good Pieces. In that case you can use the following calculations:

Note that each sum is performed across the full set of products. For example, with two products:

How do I calculate OEE for my entire plant?

Calculating OEE for an entire plant can be useful for monitoring trends (such as whether a given plant is improving) or as a rough gauge of where a given plant lies in the OEE benchmarking spectrum. However, you should be very cautious when using OEE to compare different plants, products or assets. Unless you are running identical products on identical equipment under identical conditions, comparing OEE scores is somewhat like comparing apples to oranges.

One way to calculate OEE for an entire plant is with a weighted average. A weighted average “weights” the OEE score of each production asset. The weight can be any factor that assigns relative importance; however, we recommended assigning weights based on time (e.g. Planned Production Time) or value (e.g. value added by the asset). Weighting by production time has the advantage of being simple and transparent. Weighting by value has the advantage of emphasizing assets that add the most value.

In a plant with three production assets, the weighted average calculation would be:

Interpreting OEE

I’ve heard that world class OEE is 85%. Is this my target?

No. There are many references to world class OEE being 85% (including this website). It is a convenient, compelling and completely artificial benchmark.

For most discrete manufacturers achieving 85% OEE is absolutely a notable and noteworthy accomplishment. If you have achieved it – good job and congratulations! But do you really want to stop there – with 15% loss? At the other end of the spectrum, if you’re new to OEE, you may very well find yourself starting with an OEE score of less than 50%. That presents a daunting gap to 85%.

Here is the bottom line. Set OEE targets that will drive solid, incremental improvement. Each step should be a stretch target that is achievable, preferably within three to four months. Short enough to keep people engaged, long enough to achieve significant improvement.

Isn’t OEE data subject to misuse and misinterpretation?

Absolutely – and it happens every day! That’s one of the reasons we created this FAQ. To make it easier for you to drive effective and sustainable improvements with OEE.

One of the most common mistakes is to focus on improving OEE without context and without background knowledge. For example, it is very easy for a factory manager to improve OEE with the side effect of creating unneeded inventory. Or, to improve OEE by tackling the lowest performing line – even if that line is not a constraint or is not of strategic important to the business.

OEE data is only meaningful within the context of your business objectives and strategy. Blindly emphasizing OEE will almost certainly yield suboptimal results (and unintended consequences). This especially comes into play when site or line managers are “judged” by their OEE score. Judge someone by their OEE score and you are likely to get a higher score. But not necessarily the result you intended!

OEE is most effective when used for its original purpose – as a metric that gauges progress in improving the effectiveness and efficiency of a manufacturing process (e.g. as used in in TPM programs).

How do I explain OEE to operators?

Many companies find that the best way to explain OEE to operators is to discuss it in the context of underlying losses (i.e. down time, changeover time, small stops, slow cycles, and rejects). Better yet, connect that loss information to actions that can be taken to improve results.

Short Interval Control (SIC) is a great way to do exactly that. Short Interval Control is a structured and incremental process for identifying and acting on opportunities to improve production. It uses quick and focused reviews of performance data during the shift to enable mid-course corrections and immediate small-scale fixes that collectively result in significant improvements in OEE. It works. Try it!

Which of the three OEE factors is most important? What should I work on first?

None of the three OEE factors (Availability, Performance, and Quality) is inherently more important than the others. Therefore, the answer as to which should be worked on first depends on the specifics of your situation. One thing to always keep in mind is that the most important aspect of improving OEE is to focus on the underlying losses:

Many companies place additional emphasis on the Quality score and prioritize losses in this area over Availability or Performance losses. Typically this is because any rejects that make it through your process without discovery will have direct customer impact.

Rather than focusing on an entire loss category, another approach is to focus on individual losses. A great way to achieve this is to compile a top losses report, and select one loss at a time to improve. This technique can be used at an operational level or a strategic level (or both).

Focusing on losses will improve your OEE score in a very organic and natural way. Try it!

How do I compare OEE for different machines, departments, or plants?

With an abundance of caution! Unless you are running identical products on identical equipment under identical conditions, comparing their OEE scores is not really valid. Please refer to Using OEE to compare dissimilar processes for a more complete discussion.

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