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Understanding OEE - oee definition
What is OEE?
  • OEE or Overall Equipment Effectiveness is a system of measures that provide continuous visibility to manufacturing productivity and waste.
  • OEE provides a clear focus on utilization of facilities and equipment.
  • OEE is accepted worldwide as the standard for quantifying manufacturing success.
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Overview of the family of OEE Metrics
OEE, Overall Equipment Effectiveness, is a top-level metric, which is comprised of 3 underlying elements - Availability, Performance, and Quality. These three legs of the OEE metric are summarized as follows:
  • Availability reflects equipment and process uptime
  • Performance reports speed of production compared to design standards
  • Quality indicates the process yield
  • OEE = Availability X Performance X Quality
TEEP, or Total Effective Equipment Performance adds the Loading metric. TEEP, therefore, reports the 'bottom line' utilization of assets.

  • Loading the amount of calendar time that assets are actually scheduled to run
  • TEEP = Loading X Availability X Performance X Quality
  • Or… TEEP = Loading X OEE
The result is an information set that provides excellent ability to drill down and identify each issue that is impacting cost or restricting throughput. OEE has become recognized as the standard measure for Lean Manufacturing environments. Successful manufacturers tend to focus on driving their OEE to 85% - 95%, based on their particular processes.
Why measure your OEE?
  1. Favorable changes in OEE directly lead to gains in profitability. The linkage between OEE results and financial performance is a function of:
    1. Reduced Variable Manufacturing Cost (Direct Cost) resulting from…
      1. Increased Uptime (Availability)
      2. Higher Speed (Performance)
      3. Minimized material waste (Quality)
    2. Better Asset Utilization, leading to…
      1. Lower Overhead Cost (Fixed Cost)
      2. Additional Sales Capacity - at no cost
    3. Reduced Inventory as the Manufacturing Processes become more reliable
    4. Rational basis for more effective capital management and spending
  1. OEE should be viewed as a 'Continuous Improvement Engine' that provides a robust framework for the Lean Manufacturing journey:
    1. Triggers and monitors Six Sigma projects and Kaizen events
    2. Provides basis for Total Productive Maintenance (TPM)
  2. As far as global competition is concerned, OEE improvement strategies can offset labor cost disadvantages to provide a more level playing field.
  3. OEE is the universal yardstick allowing benchmarking of manufacturing effectiveness.
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