A Complete Guide to Calculate and Improve your OEE (Overall Equipement Effectiveness)

Table of content

Introduction
Understanding the OEE (Overall Equipement Effectiveness)
Improve the OEE (Overall Equipement Effectiveness)
Understanding the Overall Production Effectiveness
Understanding the Economic Efficiency

Introduction

Production monitoring and measuring and optimizing performance is crucial to ensure the competitiveness and profitability of industries 4.0. Among the key indicators used for this purpose, the OEE (Overall Equipement Effectiveness , the TRG (Overall Production Effectiveness) , and the TRE (Economic Efficiency) occupy a preponderant place. These indicators provide a comprehensive view of the efficiency of production processes, resource management and the economic impact of operations. This article aims to explore OEE and TRG in detail, highlighting their differences, their calculation methods, and the importance of their monitoring for continuous performance improvement. By providing real-world examples and practical advice, we aim to equip professionals and policymakers with the knowledge needed to use these indicators to their full potential.

Understanding the OEE (Overall Equipement Effectiveness)

The OEE (Overall Equipement Effectiveness) is a key performance indicator which measures the efficiency with which a production resource (machine, production line, workshop) is used in relation to its maximum potential . OEE is expressed as a percentage and is calculated by multiplying equipment availability, operational performance, and the quality of the products obtained. The benefits of using OEE are multiple. It not only allows for the identification of production losses and opportunities for improvement, but also for benchmarking and monitoring progress over time. A high OEE is synonymous with efficient use of resources , good maintenance management and quality production.

To find out more about the OEE, discover our complete guide “Everything you need to know about the OEE (Overall Equipement Effectiveness)”

Calculation of OEE

To relate our formula to more general terms, we can represent OEE as the product of TP (Performance Rate) , TQ (Quality Rate) and DO (Operational Availability) :

OEE = TP × TQ × DO

Or :

Performance Rate (P): $TP = \frac{Actual production time}{Production time available}$

Quality Rate (Q): $T.Q. = \frac{Good quality quantity}{Quantity produced}$

Operational Availability (D): $DO = \frac{Quantity produced}{Maximum theoretical quantity}$

The simplified OEE formula can be expressed as follows:

OEE = Tu/Tr

Or

Tu : Fully Productive Time is the time during which actual production takes place and good quality products are produced.
Tr : Planned Production Time represents the total time that production could theoretically take place.

Diagram illustrating the calculation of OEE (Overall Equipment Effectiveness) with associated formulas, organized by different downtime categories.

So, to clarify:

Tu is the time during which the machines are actually in operation and produce parts that pass quality control.

Tr corresponds to the total time available for production, i.e. the time during which the equipment could operate if no unplanned downtime took place.

Thus, the OEE formula highlights the percentage of truly productive time compared to the total time when production was possible.

Example of OEE calculation

To illustrate how OEE is calculated, consider the example of a manufacturing plant with the following data:

Available production time : 600 hours (time during which production could theoretically have operated without interruption excluding planned shutdowns).

Actual production time : 480 hours (time actually used for production, after deduction of interruptions).

Maximum theoretical quantity : 10,000 units (quantity that could be produced if the installation operated at full capacity during the available time).

Quantity produced : 8,000 units (quantity actually produced).

Quantity of good quality : 7,200 units (quantity of products that meet quality standards).

By applying these figures to our OEE formula, we obtain:

Disponibility = 480 / 600 = 80%

Performance = 8 000 / 10 000 = 80%

Quality = 7 200 / 8 000 = 90%

OEE = 80% × 80% × 90% = 57.6%

This calculation indicates that the factory is operating at 57.6% of its total theoretical efficiency, taking into account production time, production volume and quality of finished products.

Online OEE calculator

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Download an OEE Excel template

Improve the OEE (Overall Equipement Effectiveness)

Improving the OEE (Overall Equipement Effectiveness) is a fundamental objective for any manufacturing company wishing to optimize its production processes and being part of a TPM (Total Productive Maintenance) approach, an essential pillar of industrial performance management . Here are some key strategies to achieve this :

Loss Measurement

Measuring losses involves either setting up a production film to manually collect data by the operator on the causes of downtime and durations, or connecting machine data to dedicated analysis software via tools such as an API, ERP software, MES or an add-on module integrated on the machine. A real-time monitoring system is crucial to effectively react to performance gaps.

(Download a Template for Collecting OEE data)

Loss Analysis

Identifying Root Causes : Use methods such as the “5 Whys” or Pareto analysis to identify the main sources of time and quality loss.
Continuous Monitoring : Implement a real-time monitoring system to quickly detect and respond to performance gaps.

Process Optimization

Preventive Maintenance : Develop a regular maintenance program to reduce breakdowns and unplanned downtime.
Operator Training : Ensure that staff are well trained to use equipment optimally and to respond adequately to problems.

Continuous improvement

Lean Manufacturing : Implement Lean principles to eliminate waste and streamline operations.
Kaizen : Encourage continuous improvement initiatives that involve employees at all levels.

Quality management

Rigorous Quality Control : Strengthen control procedures to minimize defects and rejects.
Standardization : Develop standard procedures to ensure production consistency and repeatability.

Use of Data

Advanced Analytics : Use production data to understand trends, predict problems and adapt processes.
Feedback and Corrections : Set up rapid feedback loops to make timely adjustments.

Example of a dashboard created in Power BI to improve OEE, featuring machine trend tracking by team

Dashboard showing monitoring of the OEE of several machines.

Corporate culture

Employee Engagement : Actively involve employees in performance goals and finding solutions.
Transparent Communication : Ensure clear communication of objectives, expectations and results achieved.

Digital Transformation and Technological Tools

Automation and Robotics : Introduce automation solutions to perform repetitive tasks, reduce human errors and increase production speed.
Integrated Information Systems : Implement ERP (Enterprise Resource Planning) and MES (Manufacturing Execution Systems) for better resource planning and real-time monitoring of production operations.
IoT and Smart Sensors : Use the Internet of Things (IoT) to collect accurate data on machine operation and predict maintenance needs before breakdowns occur.
Big Data and Artificial Intelligence : Leverage big data technologies and AI to analyze complex trends and proactively optimize production processes.

Adopting a digital transformation strategy and leveraging new technology tools can significantly improve OEE by providing deep insights into performance and enabling faster responsiveness to issues. By integrating these technologies, companies can move from corrective to predictive maintenance, refine quality control and increase operational efficiency.

By following these guidelines, a company can significantly improve its OEE, which results in increased productivity, improved quality and, ultimately, better profitability. Each change must be measured and evaluated to ensure that it contributes positively to the overall OEE.

To start tracking your OEE today and deepen your understanding of tracking this essential metric, check out our range of plug-and-play tools . In addition, discover how our digital transformation support can help you improve your OEE thanks to tailor-made solutions by visiting our “ OEE software ” page.

Understanding the Overall Production Effectiveness

OEE (Overall Equipement Effectiveness) is a performance indicator that measures the overall efficiency of a production facility, taking into account all downtime, whether planned or unplanned. The main difference between OEE and OEE is the inclusion of unplanned downtime in the OEE calculation, which provides a more realistic perspective of actual equipment utilization.

Calculation of OEE

The Overall Production Effectiveness is calculated according to the formula:

Overall Production Effectiveness = Tu/To

Or

Tu (Fully Productive Time) represents the time during which products meeting quality standards were actually manufactured.
To (Opening Time) is the total time the facility is open and available for production, which includes Tr and scheduled shutdowns.

Diagram illustrating the calculation of TRG (Global Efficiency Rate) with associated formulas, organized by different downtime categories.

In this formula, Tu is influenced by the net run time (Tn), which is the operating time ( Tf ) corrected for minor stoppages and rate deviations. Losses linked to non-compliant products are also subtracted to obtain the Tu .

Example of OEE calculation

Let's take a concrete example to illustrate the calculation of the OEE with an Opening Time (To) adjusted to 44 hours, which includes scheduled shutdown hours.

Suppose that :

Opening Time (To) = 44 hours
Planned Downtime = 2 hours
Unplanned Downtime = 4 hours
Non-Quality Production Time (non-compliant products) = 1 hour

The Planned Production Time (Tr), which is the time during which the production is planned to operate, would be:

Calculation of Tr:

Tr = To - Planned Downtime = 44h - 2h = 42h

Calculation of Tf:

Tf = Tr - Unplanned Downtime = 42h - 4h = 38h

Calculation of Tu:

Tu = Tf - Non-Quality Production Time = 38h - 1h = 37h

Calculation of the OEE:

Overall Production Effectiveness = Tu / To = 37h / 44h ≈ 0.84

This result indicates that the facility is operating at 84% of its potential during operating time, after adjusting for planned shutdowns, unplanned shutdowns, and production quality.

Understanding the Economic Efficiency

The Economic Efficiency evaluates the efficiency of production time from an economic angle, thus differentiating from the OEE and the Overall Production Effectiveness Unlike OEE, which measures efficiency in relation to planned production time, and OEE, which takes into account planned and unplanned downtime, Economic Efficiency considers Usable Time in relation to Total Available Time, providing an integral perspective of the economic exploitation of time in production operations.

Calculation of the Economic Efficiency

The Economic Efficiency is calculated using the following formula:

Economic Efficiency= Tu/Tt

Or

Tu (Fully Productive Time) is the time during which quality products are actually produced.
Tt (Total Time) is the total time available, including scheduled downtime and other non-productive time.

Example of Economic Efficiency calculation

To give a concrete example, let's imagine a factory that normally operates 24 hours a day, 7 days a week, which represents a Total Time (Tt) of 168 hours per week. Suppose this factory has scheduled maintenance shutdowns, breakdowns, and production changes that reduce the Fully Productive Time (Tu) to 140 hours for the week.

TRE = 140/ 168 ≈ 0.83

This means that the factory uses approximately 83% of its Total Time efficiently to produce quality products. This figure allows managers to identify how much time is wasted or unused and to look for ways to optimize the use of Total Time to improve overall economic performance.

How to improve the Overall Production Effectiveness and the Economic Efficiency ?

To improve Overall Production Effectiveness, it is essential to target unplanned downtime by implementing predictive maintenance strategies and optimizing production processes. The focus should be on preventing breakdowns and reducing downtime through regular maintenance and thorough incident analysis. At the same time, increasing the Economic Efficiency implies optimizing the overall use of available time to maximize economic value. This may involve adjustments in production planning and cost-benefit analysis to balance production time against operational costs.

However, before embarking on initiatives to improve Overall Production Effectiveness and Economic Efficiency, it is wise to focus on improving OEE first. OEE serves as a foundation for other indicators, as it targets operational efficiency which is often the most direct to influence. Improving OEE creates a positive knock-on effect on Overall Production Effectiveness and potentially Economic Efficiency , as operational efficiency leads to better use of time and resources, which feeds back into economic performance. Improvement initiatives should be prioritized starting with OEE to establish a solid foundation before tackling the more complex and strategic aspects of Overall Production Effectiveness and Economic Efficiency.

FAQs

What is a OEE?

Overall Equipement Effectiveness (OEE) is a performance indicator widely used in industry to measure the efficiency of machines and production lines. It calculates the percentage of actually productive production time compared to available time, taking into account losses linked to breakdowns, adjustments, and unplanned stoppages.

How is OEE calculated?

OEE is calculated by multiplying three key factors: Availability, Performance and Quality. The formula is: OEE = (Availability) x (Performance) x (Quality), where each component is a percentage representing a different aspect of production efficiency.

Why is OEE important for improving industrial performance?

OEE allows companies to detect inefficiencies and bottlenecks in production processes. By identifying and quantifying losses, companies can target specific improvements, increase productivity, reduce costs and improve the quality of finished products.

What are the main causes of the reduction in OEE?

The main causes include machine downtime (breakdowns and maintenance), small stoppages and slowdowns in production (e.g. related to raw material issues or machine adjustments), and production defects that affect product quality .

How can we improve OEE?

To improve OEE, it is essential to carry out regular audits of the production line, implement preventive maintenance programs, train operators in optimal use of equipment, and adopt continuous improvement methods such as as Lean Manufacturing and Six Sigma.

Can OEE be applied to all types of industries?

Although OEE is primarily used in the manufacturing industry, it can be adapted and applied in other industries where measuring process efficiency is critical. It may require adjustments to take into account the specificities of each type of industry.

What is the difference between OEE and Overall Production Effectiveness?

OEE and Overall Production Effectiveness are two performance indicators used in the manufacturing industry, but they mainly differ in the inclusion of production stoppages. OEE measures production efficiency by considering only unplanned downtime, which reflects the actual utilization of equipment during the periods it is scheduled to be in operation. In contrast, Overall Production Effectiveness includes both planned and unplanned shutdowns in its calculation, providing a more comprehensive and realistic perspective of the total efficiency of a production facility. In doing so, OEE enables a more comprehensive assessment of resource utilization and operational performance.

Is there software or tools to calculate OEE?

Many production management systems (MES, ERP) integrate modules for monitoring and calculating OEE in real time. These tools not only help calculate OEE but also analyze data to identify trends and opportunities for continuous improvement.
To find out more, consult the list of OEE software referenced on our platform.

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