What is OEE?
Overall Equipment Effectiveness (OEE) is a powerful manufacturing metric that reveals how effectively your equipment operates. Developed by Seiichi Nakajima while working with the Japan Institute of Plant Maintenance and Nippondenso (now Denso) in 1971, OEE provides visibility into a fundamental question: Of the time we planned to make parts, how much time did we successfully produce quality parts at the intended rate?
This multiplication reveals an important insight: improvements in any factor create meaningful impact on your total effectiveness. When operations achieve 90% in all three factors, the result is 72.9% OEE (0.9 × 0.9 × 0.9 = 0.729), highlighting opportunities for systematic improvement.
The Three Components
OEE combines three key factors that represent the most common causes of manufacturing productivity loss:
- Availability: Equipment uptime vs. planned production time. This accounts for all events that stop planned production long enough where it makes sense to track a reason for being down (typically several minutes).
- Performance: Actual production speed vs. ideal speed. This includes both minor stops (typically under 5 minutes) and reduced speed situations.
- Quality: Good parts produced vs. total parts produced. This accounts for manufactured parts that do not meet quality standards, including parts that can be reworked.
World-Class Performance
An OEE score of 85% or higher represents world-class manufacturing performance. It's important to recognize that 60% is a solid foundation for many successful operations, particularly those with:
- Complex changeovers or setup procedures
- High-mix, low-volume production
- Manual or semi-automated processes
- Stringent quality requirements
The key to success is understanding where opportunities exist and working together to capture systematic improvements over time. Every insight gained empowers better decisions.