What is OEE and how is it calculated?
Overall equipment effectiveness (OEE) shows, as a single percentage, how much of its planned time a machine spends creating value. We cover its three components and common shop floor mistakes.
OEE (overall equipment effectiveness) is a ratio that shows how much of your line’s planned production time is actually spent making good product. Because it is a single number, management reports love it; its real value, however, shows up once you break it into its components.
Three components
OEE is the product of three factors:
| Component | Question | Calculation |
|---|---|---|
| Availability | How much of the planned time did the machine run? | Run time / Planned production time |
| Performance | While running, was it at target speed? | (Ideal cycle time × Total count) / Run time |
| Quality | How much of the output is good product? | Good count / Total count |
OEE = Availability × Performance × QualityExample: in an 8-hour shift with 1 hour of unplanned downtime, 90% of target speed and a 98% quality rate, OEE comes out at about 77% (0.875 × 0.90 × 0.98).
Common mistakes on the shop floor
- Mixing up planned and unplanned downtime. In standard OEE, lunch breaks and planned maintenance are deducted from planned production time; if you count them as losses, you are no longer calculating OEE but some other figure, and comparisons between lines and shifts break down. But do not ignore planned downtime either: tracking items that can easily hide behind a “planned” label, such as setup and die changes, as losses often gives a more honest picture. To see what you would gain by recovering that time too, look at TEEP below.
- Taking the ideal cycle time from the actual average. Performance then always looks close to 100% and speed losses stay hidden. The reference should be the machine’s design capacity.
- Collecting data by hand. The stops an operator remembers at the end of the shift are half the truth. Collecting data directly from automation (PLC, SCADA) improves both accuracy and trust in the numbers.
OEE vs. TEEP
OEE measures how well you run during the time you planned to run. TEEP (total effective equipment performance) puts calendar time, the 168 hours of the week, in the denominator instead. That brings breaks, planned maintenance, idle shifts and weekends into the picture as well:
Utilization = Planned production time / Calendar time
TEEP = OEE × UtilizationExample: if the line above runs one shift a day, 5 days a week (40 hours), utilization is 40 / 168 ≈ 24% and TEEP is about 18% (0.77 × 0.24). The gap between OEE and TEEP is hidden capacity: the machine is there, but you are not using it.
The two answer different questions. Track OEE for day-to-day improvement, because it shows the losses that operators and the maintenance team can influence. Before buying a new machine or building a new line, look at TEEP: an extra shift, staggered breaks or a shorter maintenance window is often a cheaper source of capacity than an investment.
OEE with MES
Etzel MES and İldiko MES collect downtime reasons from automation and link them to SAP production orders. OEE then stops being just a report and becomes an improvement tool that shows on which line, in which shift and for what reason losses occur. For details, see the SAP MII and Etzel MES page.
If you want to try it with your own line’s figures, the loss cost calculator works out the annual loss in dollars from ideal and actual cycle time, downtime and scrap.