OEE, or Overall Equipment Effectiveness, is a KPI for the overall efficiency of machinery used in production. It’s a globally accepted standard for measuring the efficiency of a company’s production process. OEE is expressed as a percentage indicator that strives for a value of 100%. This means, an increased OEE value translates into greater production efficiency of a given production outlet.
This indicator consists of the following factors:
- Quality of manufactured products
- Production efficiency
- Downtime of machines/production nests
Let’s say we get an OEE score of 100%. Thus, the production is perfectly functioning. If we break it down, it shows that:
- All manufactured products meet quality standards
- The production has full availability of production nests. In this case, we use 100% of available resources including machines.
- The planned production does not generate failures, changeovers, or other work stoppages.
These three measures are the metrics that we use to calculate the OEE value.
Why is it important to know your OEE?
OEE provides information about the state of production. You can calculate the production efficiency KPI for the entire shop floor, organization, or for a single production nest or station/machine, etc.
Effective management of this indicator translates into the reduction of downtime or production losses, including quality losses. This falls right into the lean manufacturing philosophy, which centres on reducing losses and increasing process efficiency.
Once we know the OEE value, we can define areas for optimisation of a specific production nest or machine, or the entire enterprise. A change in the Overall Equipment Effectiveness signals the production manager a change in quality of the production process. The three metrics, availability, productivity, and quality that OEE is based on, provide detailed information about bottlenecks in the process, and about possible areas for optimisation.
The knowledge about bottlenecks of a given production nest gives us an opportunity to proceed with further process optimisation. With the OEE indicator, we are able to check the impact of implemented changes on the Overall Equipment Effectiveness and tool use.
How to calculate OEE
In order to calculate OEE it’s necessary to collect the required information about the state of machinery within the organization.
Let’s elaborate the three variables mentioned above :
- Availability = (time of scheduled orders – changeover time) / time of scheduled orders
- Productivity = (ideal production cycle time * quantity produced) / (time of scheduled orders – changeover time)
- Quality = (quantity of good products) / (quantity produced)
Once you have obtained the values, it allows us to calculate the Overall Equipment Effectiveness index:
OEE = Availability * Productivity * Quality
Key factors for your OEE
When interpreting the factors that have the greatest impact on OEE, keep in mind that we are operating in three areas:
- The number and quality of products produced
- Losses related to downtime and planned changeovers
- Losses in process efficiency associated with unplanned interruptions or process slowdowns
Let’s take a closer look at the image below for clarification.
How to improve OEE in your production
One way to improve OEE values in lean manufacturing and reduce machine-related losses is to optimise processes. Going further, we can say that in general, this KPI will be an assessment of the holistic process of improving production and maintenance described by Total Productive Maintenance (TPM).
Among other things, the process of continuously optimising production is defined in:
- Lean Manufacturing
- Six Sigma
- Theory of Constraints
We are building our manufacturing software solutions with the lean manufacturing concept as foundation. This way, we provide custom software that helps in loss reduction by improving processes and productivity.
In addition, our MES engine uses quality assurance (QA) modules and IIOT sensors. It shows the OEE value almost in real-time and helps you to increase efficiency of your production. This means that you continuously monitor the quality of your products. VirtusLab’s additional functional engines, such as MRP, APS, WMS, and more, become a ready-made solution that we can adjust to your needs. They help you improve the utilization of your company’s resources.
If you want to hear more about our custom solution, drop us a line.