OEE (Overall Equipment Effectiveness) is a key metric used to evaluate the efficiency of manufacturing processes. It helps factories measure and improve the performance of their machinery, which is crucial in the era of Industry 4.0, where increasing productivity, reducing costs, and minimizing waste are top priorities.
How is OEE Measured?
OEE is calculated based on 3 main factors:
- Availability
- Measures the actual operating time of machinery compared to planned production time.
- Helps reduce unplanned downtime, such as unexpected maintenance.
- Performance
- Assesses the speed of machinery compared to its designed capacity.
- Helps minimize losses due to slow cycles or minor stops.
- Quality
- Calculates the percentage of defect-free products in production.
- Helps reduce waste and improve overall product quality.
The OEE formula is:
OEE = Availability × Performance × Quality
How to Calculate OEE and Apply It
Factory Data:
- Planned Production Time: 8 hours (480 minutes)
- Unplanned Downtime: 1 hour (60 minutes)
- Ideal Cycle Time per Unit: 1 minute
- Ideal Output per Hour: 100 units
- Actual Units Produced: 90 units per hour
- Total Units Produced: 90 × 7 hours = 630 units
- Defective Units: 35
- Good Units: 630 – 35 = 595
Step 1: Calculate Availability
Availability (%) = (Operating Time ÷ Planned Production Time) × 100
- Operating Time = 480 minutes – 60 minutes = 420 minutes
- Availability = (420 ÷ 480) × 100 = 87.5%
Step 2: Calculate Performance
Performance (%) = (Total Units Produced × Ideal Cycle Time) ÷ Operating Time × 100
- Performance = (630 × 1) ÷ 420 × 100 = 90%
Step 3: Calculate Quality
Quality (%) = (Good Units ÷ Total Units Produced) × 100
- Good Units = 630 – 35 = 595
- Quality = (595 ÷ 630) × 100 = 94.4%
Step 4: Calculate OEE
OEE = Availability × Performance × Quality
OEE = 87.5% × 90% × 94.4%
OEE = 74.3%
What Does an OEE of 74.3% Mean?
An OEE score of 74.3% indicates that the production process is utilizing only 74.3% of its full potential. There is still room for improvement by reducing downtime, increasing production speed, and minimizing defects.
By optimizing these factors, manufacturers can achieve a higher OEE and maximize efficiency, reduce costs, and improve overall production performance. 🚀
Why is OEE Crucial for Modern Manufacturing?
✅ Increases Productivity – OEE helps identify areas for improvement and boosts manufacturing efficiency.
✅ Reduces Costs – Minimizes losses from machine downtime, defects, and inefficient processes.
✅ Supports Digital Transformation – OEE is the foundation of Smart Factories, leveraging real-time data for optimization.
✅ Enhances Decision-Making – Provides valuable insights for managers to make data-driven decisions in production planning.
Conclusion
Based on real-world experience from Dentsu Soken Thailand, the OEE percentage typically ranges from 50% to 80%, depending on the industry type and the organization’s measurement standards. However, what we want to highlight is that simply measuring OEE provides visibility into improvement opportunities, which ultimately enhances long-term competitiveness.
OEE is a key performance indicator that helps factories systematically monitor and improve production efficiency. Increasing OEE can reduce costs, boost profitability, and drive the factory toward Smart Factory transformation effectively.
If you’re just starting, begin by measuring the OEE of your machines and use the data to optimize your production processes for better efficiency! 🚀
