What Is Overall Equipment Effectiveness (OEE)?

What is overall equipment effectiveness (OEE)?

Overall equipment effectiveness (OEE) is a common benchmark, and in many cases, the gold standard for manufacturing productivity. It identifies the percentage of manufacturing time that is truly productive by measuring availability, performance, and quality.

Are your operations using all available uptime? Are processes running at peak capacity? How much energy is wasted on producing unusable scrap? While OEE isn’t a new concept, it remains a moving target. Manufacturers are increasingly adopting innovative digital solutions to move closer to their ideal OEE goals and beyond.

Why is OEE important? What is OEE used for?

The primary purpose of OEE is to benchmark progress in improving manufacturing productivity. As a measurement of productivity in a factory, many strive for that perfect OEE score of 100%. OEE drives improvement by providing a better understanding of business losses and simplifying production issues. This helps you to make the right business decisions to increase efficiency and trim down operating expenses.

Key areas of OEE

Availability

Availability measures the ratio between the actual runtime and planned production time—a pure measurement of uptime. Any time equipment is not running when it was planned to is an inefficiency that is reflected in OEE availability.

Performance

Performance is the speed at which a factory or line runs as a percentage of its designed speed. OEE performance is not based on the number of units produced, but on what the line was designed to process over a given period of time. If equipment is running slower than its capabilities, then it is not as efficient as it could be, which is reflected in OEE performance.

Quality

Quality is the ratio between good units produced and the total units that were started. This is a measurement of process yield. The inefficiency of out-of-spec units that could have been good units is reflected in OEE quality.

The benefits of overall equipment effectiveness

Stronger ROI

Understand the importance of OEE improvement in calculating the ROI of your investments.

Greater Competitiveness

Understand and track the specific area where inefficiency exists to outperform the competition.

Higher-Quality Products

Optimize the number of quality parts created while reducing scrap and rework.

Usable Data

Utilize today’s technology systems to collect more and better data to identify gaps and issues that are holding back operations.

Reduced Machinery Repair Costs

Optimize machine uptime and prioritize downtime for maintenance.

Go beyond OEE

While OEE performance has historically been a common standard for measuring and improving productivity, and a good visibility tool for factory productivity assessment, it doesn’t tell you where the real bottlenecks are or where to focus if you want to improve overall throughput.

A digital performance management solution makes it possible to focus resources on the correct problem through accurate problem identification and prioritization—building on the OEE initiatives you already have in place to improve performance management.

OEE in manufacturing is a critical performance management measurement, however, manufacturers can go beyond OEE and improve their performance management even more. Take OEE improvement and performance to the next level.

Digital performance management differentiators vs. OEE

Many OEE tools are site-specific or even specific to an area or asset within a site—it’s very rare that they are enterprise initiatives. Digital performance management (DPM) is NOT an OEE tool, but it does build on the foundation of OEE and gives additional insight into production efficiency.

Closed-loop problem-solving

Bottleneck Analysis

Enterprise Scalability

The impact of improving OEE: By the numbers

With smart planning and the right technology—you can unlock a leaner, more agile factory. Build up workforce and machine efficiency by:

Remotely monitoring equipment condition and status.
Delivering predictive alerts to front-line maintenance experts.
Analyzing operations in-depth, across multiple facilities.
Empowering and protecting employees with digital work instruction.

What kind of impact can digital solutions really make on your machine efficiency? The following metrics are taken directly from manufacturing customers, reflecting how digital solutions are boosting productivity.

Minimize CAPEX

By using digital solutions to extend asset life, manufacturers can shed up to 15% of their CAPEX expenditures.

Prevent Downtime

Preventative maintenance, and empowering workers can cut up to 50% of unplanned downtime.

Boost Changeover

Accelerating worker efficiency and optimizing production lines can result in up to 70% faster changeover time.

Increase OEE

Changeover, downtime, and CAPEX changes can increase total overall equipment effectiveness by 50%.

Overall Equipment Effectiveness

Changeover, downtime, and CAPEX changes can increase total overall equipment effectiveness by 50%.

Overall equipment effectiveness (OEE) case studies

Watch How IIoT Increases OEE webcast replay

Moving from Paper to Glass for Real-Time Data Visibility

Discover how Ecolab used the ThingWorx IIoT Platform and Rockwell’s operational technology experience to uncover hidden issues in manufacturing plants, including downtime.

Read the Case Study

Driving Efficiency at Tofaş with ThingWorx and DVM

Discover how the implementation of ThingWorx and DVM has enabled Tofaş to experience a great increase in efficiency, safety, savings, and energy optimization.

Read the Case Study

How Industrial IoT Increases Overall Equipment Efficiency

Even for the world's largest manufacturer and distributor of food packaging and foodservice products—OEE was a huge area for improving operations and reducing unnecessary costs. In this webcast replay, Pactiv shares how Deloitte and PTC helped bring together people and processes using the IIoT and a connected manufacturing strategy.

Brembo races towards digital transformation with innovative IoT use cases

rembo is a global leader in braking systems. They are transforming their existing factory infrastructure with industrial connectivity and real-time visibility powered by the ThingWorx Industrial IoT Solutions Platform. Discover how Brembo is rolling out PTC solutions to put the brakes on scrap and unnecessary costs, while cruising towards OEE improvements across their North American factories.

Read Their Story

Future of OEE

While many manufacturing software vendors can offer OEE solutions, many of them still rely on homegrown OEE solutions or niche OEE tools. Without leveraging current OEE solutions with IoT, they are unable to extend visibility into the process, people, and products that bring value to an organization.

OEE has been a valuable indicator of real-time visibility into shop floor productivity, but it falls short of actually being able to pinpoint the root cause of productivity issues. To create an immediate impact on your plant’s P&L statement, you need to know the high-impact issues to focus on. Go beyond OEE and take your organization’s improvement and performance to the next level.

ThingWorx digital performance management

ThingWorx platform

Digital manufacturing

ThingWorx digital performance management Discover the Power of Digital Performance Management

ThingWorx platform Discover the flexibility and scalability of the ThingWorx platform.

Digital manufacturing Best-in-class practices can fuel production efficiencies of 85% or more. PTC’s digital manufacturing solutions can help you achieve this level of efficiency.

OEE resources

A practical guide to calculating OEE

In manufacturing, the ability to accurately measure machine uptime, efficiency, and effectiveness is critical for an effective IoT implementation.

Adding Value to OEE for Manufacturing

Discover the outcomes of different OEE techniques and learn how they impact your business.

Drive better results with improved efficiency measurements

Red flags catch our attention, but they don’t inform our next steps. Learn to capture accurate and actionable real-time measurements in this e-book.

Northrop Grumman eliminates bottlenecks

Learn how Northrop Grumman overcame the challenges of identifying and activating additional capacity opportunities.

Overall equipment effectiveness (OEE) frequently asked questions

How is OEE calculated?

OEE = Availability x Performance x Quality

What are the six big loses in OEE?

Availability Loss

Unplanned stops caused by equipment failure
Planned stops for set up and adjustments

Performance Loss

Small stops due to idling along with minor stops
Slow cycles due to reduced speed

Quality Loss

Production defects or scrap parts that need rework
Startup defects that result in scrapped or reworked parts

What are the benefits of improving OEE?

Improved OEE performance means that businesses can ship more products using the same resources, increasing capacity, reducing product cost, and improving competitiveness.

Which roles in manufacturing should be most concerned with calculating OEE?

Everyone from shop floor engineers to top-floor executives should be concerned with calculating OEE. For engineers, OEE helps determine whether day-to-day tasks are being accomplished. For leaders and plant managers, OEE helps determine whether equipment is being maintained and production goals are being met. For sales employees, OEE helps determine where sales support is required. Even for customers, OEE helps determine whether the product is meeting expectations.

How to get started with OEE

Start by identifying key improvement areas: understand machine failure modes, downtime, and potential roadblocks to efficient production. Once you have a sense of where machine performance can be improved, take the opportunity to reevaluate and potentially reset your goals. Are they addressing the most prevalent equipment issues?

Overall Equipment Effectiveness (OEE)