KPIOperations & Supply Chain

Overall Equipment Effectiveness (OEE)

Measure of how effectively manufacturing equipment is utilised

What is Overall Equipment Effectiveness (OEE)?

Overall equipment effectiveness is a measure of how well manufacturing equipment is used. It combines availability, performance and quality into a single percentage.

It shows how much of the planned production time is truly productive, and helps find the biggest sources of loss.

How this KPI is measured

Function
Operations & Supply Chain
Sub-function
Asset Management
Industry
Manufacturing
Type
Leading
Impact
Efficiency
Unit
%
Measurement frequency
Daily / Weekly
Formula
Availability × Performance × Quality (each expressed as a %)

How to calculate it

Multiply availability, performance and quality, each expressed as a percentage.

For example, with availability of 90%, performance of 95% and quality of 98%, OEE is 0.90 x 0.95 x 0.98 = 83.8%.

Availability covers stops, performance covers running slower than ideal, and quality covers defective output. Looking at each part shows where the loss is.

Where it is used

  • Finding hidden capacity

    See lost productive time.

  • Prioritising improvements

    Target the largest loss.

  • Comparing lines

    Benchmark equipment.

How to improve it

Tips and common mistakes

  • Use consistent definitions of planned time.
  • Do not compare across very different processes.
  • OEE is a tool for finding problems, not a target to game.

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