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Understanding the Importance of Overall Equipment Effectiveness (OEE) in Manufacturing

By Ruth Hughes, CMRP, Founder & CEO & Bill Mountjoy, CMRP, VP of Reliability Engineering

What is OEE?

Overall Equipment Effectiveness (OEE) is a production performance metric that helps identify productivity losses (stop times, lost speed, and scrap) so that improvement opportunities can be defined and addressed.

How to Calculate OEE?

OEE = Availability x Performance x Quality

Availability: Total Actual Run Time / Total Scheduled Operating Time

  • Total Scheduled Operating Time = Total Actual Run Time + Total Actual Stop Time

Performance: Actual Speed / Designed Speed

  • Designed Speed = Actual Speed + Lost Speed

Quality: Total “Good” Parts Produced / Total Parts Produced

  • Total Parts Produced = Total “Good” Parts + Total Scrap Parts

Best-in-Class OEE Numbers

OEE (85%) = Availability (90%) x Performance (95%) x Quality (99%)

Why is OEE Important?

OEE gives a detailed perspective on production line performance and:

  • Categorizes major losses and reasons for poor performance.
  • Identifies areas of opportunity for improving asset performance and reliability.
  • Improves collaboration between asset operations (including Maintenance, Quality, Upstream and Downstream Internal Customers) to jointly identify and eliminate the major causes of poor performance.
  • Initiates Root Cause Failure Analysis (RCFA).
  • Points to hidden capacity.
  • Tracks performance improvements / declines over time.

When these items have been analyzed and addressed, the following results are typical:


  • Bottom Line Profits
  • Capacity
  • Changeover Efficiency
  • Equipment Reliability
  • Operator/Crew Performance
  • Throughput


  • Quality Losses
  • Downtime

Who Uses OEE?

  • Corporate VPs
  • Division Heads
  • Operations Managers
  • Plant Managers
  • Quality Managers

A Common OEE Goal

A common goal of OEE is to minimize minor stops. Many times, manufacturing plants don’t realize the magnitude of minor stops or that 20% of their production line issues cause 80% of their production line loss.

OEE is not only about comparing the total number of “good” parts produced vs. total scheduled operating time. This generalizes OEE. When OEE is generalized, the power of the calculation is never unleashed. The cause and impact (number of events and duration) by failure mode are never identified or understood, hence, the opportunities for continuous improvement are also never identified or understood. Unfortunately, most manufacturing companies generalize the measurement.

Properly Track OEE

When manufacturing plants begin to properly track OEE, a minimum OEE gain of a 5% is very typical. What would a 5% OEE gain mean to your operations?

No More Finger Pointing

OEE provides a comprehensive view of how Maintenance and Production are impacting production line performance, enabling them to work together to increase capacity and improve asset performance and plant profitability. At a minimum, Production uses OEE data to determine if performance objectives and training needs are being met while Maintenance uses it to optimize equipment PM strategies.

OEE Challenges

Detailed line event data tracks when a line goes up or down and specifies downtime event reasons and durations. Without this data, accurate Availability is unknown. Once true Availability is known, then the Performance metric can be determined to define potential throughput losses while running.

Another challenge exists when OEE data (production downtime events) and CMMS data (maintenance repair work, parts usage history, etc.) are not integrated. This makes reporting difficult.

To overcome these challenges, OEE software is needed.

Benefits of OEE Software & Automation

Real-Time Data

OEE software automatically captures detailed line event data (via PLCs, sensors, etc.), enables operators to enter failure modes quickly and easily, and delivers precise, real-time OEE calculations.

The software takes advantage of the Hawthorne Effect by giving operators real-time, visual feedback by product line. As soon as a line stops, failure modes are displayed and the downtime counter starts, creating a sense of urgency for operators to get the line back up and running as soon as possible.


OEE software also makes operators accountable. Once operators become accountable, productivity increases because each operator wants to be better than the next. This collective, competitive energy flows over to shifts because each shift wants to be better than the last.

CMMS Integration

OEE software integrates OEE data and CMMS data, resulting not only in powerful reporting, but also instantaneous work orders and alerts, automatically tracked production losses, accurate MTBFs and MTTRs, and provides data for the following continuous improvement strategies:

  • Failure Modes Effects & Criticality Analysis (FMECA)
  • Total Productive Maintenance (TPM)
  • PM Optimization

Best of Breed OEE Solution

Right out of the box, MVP OEE software integrates OEE with CMMS* data and instantly captures and shares detailed line event data. This data enables not only Production and Maintenance, but also the entire organization, to work together to increase capacity and improve asset performance and plant profitability.

*MVP OEE can be used as a stand-alone, state-of-the-art OEE or it can be integrated with other CMMS software packages.

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