How to calculate oee?

With the advent of new technologies and consequently the introduction of Information and Communication Technologies (ICT) on the shop floor, which created what we know as Industry 4.0, it became possible for companies to have access to data that was not previously available. The Key Performance Indicators (KPI) used to evaluate the Performance of the production lines in the past are the same we use nowadays. However, their calculation was a complex task that required engineers and those responsible for the production process to spend many hours of their work analyzing parameters such as cycle time, defective products, etc. This approach was not only flawed because we only had access to a small sample of the entire universe but also because the measurements were not very accurate, resulting in poor approximations.

OEE (Overall Equipment Effectiveness) is probably the performance indicator that has the most expression. It is also one of the KPIs that most benefited from the fourth industrial revolution. Although it is a single indicator, it is possible to infer several things due to how it is calculated, using other relevant indicators.

In general, OEE aims to evaluate each production line taking into account the actual efficiency of the same compared to the ideal efficiency. Suppose a factory has an efficient system for extracting data and calculating the OEE for each line or even each machine. In that case, it will be possible to evaluate the Performance of the entire factory and analyze which of the lines has the best Performance or the ones that need improvements. The implementation of extracting these data and calculating these indicators is the responsibility of the Manufacturing Execution System (MES).

For the companies, the main factors to consider when evaluating the production system’s effectiveness are related to the number of parts produced with the desired quality and the Performance of the machines or line concerning the number of parts produced per unit of time. In general, the OEE can be represented as:


Where Availability is calculated as follows:

Availability = (Operating Time) / (Expected Operating Time)

Thus, Availability assesses the time the machine was operating compared to when it could have been operating.

Regarding Performance, it is calculated as follows:

Performance = ((Units Produced)/(Effective Production Time))/(Cycle Time Identified as Ideal)

This indicator initially analyzes the number of units being produced for each unit of time. It then makes a new division to see if this value is close to the Performance identified as ideal for that same line or machine.

Finally, the last factor to be used in the OEE calculation focuses on the number of compliant products compared to the total production volume, so for the Quality parameter, we have:

Quality = (Conforming Produced Units)/(Total Units Produced)

A brief review of this indicator makes it easy to see why it was quickly adopted. The OEE can be a simple indicator to calculate. Still, at the same time, it allows analyzing each of the lines, machines, or areas of the factories in a fast and effective way. As soon as one of the parameters is not within the expected, the value of the OEE will indicate this same problem, making it easy for the teams that monitor the lines to identify improvements that can be made to the processes at any time.


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