The definition and use of Overall Equipment Effectiveness over the years has been widely debated.

Many practitioners have found that OEE has several uses and definitions which have led to
considerable confusion when comparing machine-to-machine, plant-to-plant, or company-tocompany.
Unfortunately, OEE was not designed to make comparisons from machine-to-machine,
plant-to-plant, or company-to-company, but it has evolved to these common levels of misuse. OEE is not a statistically valid metric, but it has been used as such for years.

The purpose of this article is to discuss the original intent of Overall Equipment Effectiveness as a metric and a measure. I initially learned OEE from Seiichi Nakajima, the

Objectives of OEE
Overall equipment effectiveness data (information) is used to identify a single asset (machine or
equipment) and/or single stream process related losses for the purpose of improving total asset
performance and reliability.
Overall equipment effectiveness data (information) is used to identify and categorize major losses or
reasons for poor performance. OEE provides the basis for setting improvement priorities and
beginning root cause analysis. Typical major losses are listed in Table 1, based on OEE timeline
elements in Figure 1.
OEE percentage is used to track and trend the improvement, or decline, in equipment effectiveness
over a period of time.
OEE percentages can point to hidden or untapped capacity in a manufacturing process and lead to
balanced flow.
The use of OEE is also intended to develop and improve collaboration between asset operations,
maintenance, purchasing, and equipment engineering to jointly identify and eliminate (or reduce) the major causes of poor performance since “maintenance” alone cannot improve OEE. (See 14 Major
Losses – Table 1)
Cautions for Using OEE
Based on the wide spread and diverse understanding and use of OEE, there are several cautions
regarding its use:
1. The calculated OEE (OEE percentage) is not intended for use as a corporate or plant level
measure. OEE percentage is a rough measure of selected equipment effectiveness only.
2. Calculated OEE is not valid for comparing or benchmarking different assets, equipment, or
processes. OEE is a relative indicator of a specific single asset effectiveness compared to itself
over a period of time. However, OEE can be used to compare like equipment in like situations
producing like products or output.
3. OEE does not measure maintenance effectiveness because most of the loss factors are outside
the direct control of the maintainers.
4. There appears to be no valid specification of “world-class OEE.” However, 85 percent OEE has
been cited frequently. Also, “maximizing OEE” may not be justifiable. Optimum levels of OEE
largely depend on the capability or capacity of the asset, the business demands, and whether it is
a constraint in the process flow.
5. OEE percentage calculations are not statistically valid. A calculated OEE percentage assumes
that all equipment-related losses are equally important and that any improvement in OEE is a
positive improvement for the business. This is generally not the case. For example, the
calculated OEE percentage does not consider that a one percent improvement in quality may
have a bigger impact on the business than does a one percent improvement in availability. Also,
in the OEE calculation, three different units of measure are falsely considered as the same –
chronological time, units per time, and counts of units produced – and are converted to
percentages for comparison. OEE percentages can actually improve while actual quality
losses increase significantly. OEE percentages can actually decline while output improves –
efficiency and quality losses are reduced and the same planned output is generated in less time
thereby lowering the “availability” percentage – three shifts of output in two shifts.
OEE Percentage Formula
OEE percentages are useful when tracking and trending the performance effectiveness (reliability) of
a single piece of equipment or single-stream process over a period of time. Using OEE for multiple
aggregated assets is not a valid application of the formula. The following is a basic example of OEE
percentage calculation.
OEE % = Availability % x Performance efficiency % x Quality rate %
Availability % = (Actual operating time ÷ Gross available time) x 100
Performance efficiency % = (Actual production rate ÷ Design production rate) x 100

Quality rate % = ((Total units produced – Defective units produced) ÷ Total units
produced)) x 100
Using OEE Data and Calculation to Improve Equipment Effectiveness
An example OEE data (14 Major Losses) and OEE percentage calculations for one day (24 hours) of
“Machine D” operation are shown below in Table 1. Note how the loss data is listed along with
comments on the reasons for the loss.
Major Equipment Losses Data Comments & Calculations
A. Planned shutdown losses: (Hours) Gross Time: 24 hours (or
minutes)
1. No production, breaks, shift
change...
2.66 Meeting & shift change
2. Planned maintenance 2.00 Monthly PM
B. Downtime losses: (Hours) (or minutes)
3. Waiting for operator 1.66
4. Failure or breakdowns 1.33 Mechanical drive coupling
5. Setups & changeover 1.16 2 size changes
6. Tooling or part Changes 0.83 Screw station bits
7. Startup & adjustment 1.00 1st shift Monday
8. Material Flow: Input (No material) 0 Waiting for raw materials
9. Material Flow: Output (Kanban
full)
0 Output not needed; no room
in queue
Sub Total Availability Losses:
(A + B hours)
10.64 24 hrs – 10.64 = 13.36
13.36 ÷ 24 x 100 = 55.67%
C. Performance efficiency losses: (Count)
10. Minor stops 10 events Jams!
11. Reduced speed or cycle time 100 vs. 167
units
Design rate: 12.5 units/hour
Sub Total Efficiency Losses: 100 ÷ 167 x 100 = 59.88%
D. Quality & yield losses: (Count)
12. Scrap product / output 2 Waste, non-salvageable
13. Defects, rework 1
14. Yield / Transition 5 Startup & adjustment
related
Sub Total Quality & Yield Losses:
8 100 – 8 = 92 good units
92 ÷ 100 x 100 = 92.00%
Overall Equipment Effectiveness % 55.67 x 59.88 x 92 = 30.66%

Example discussion: Historically, “Machine D” OEE percentage averaged 40.2% year-to-date,
35.06% in the prior day, but now has slipped to 30.66% in the current day as shown in the Table
1example. “Machine D’s” OEE percentage obviously shows a declining trend. These OEE percents
can be charted by the month, week, day, and shift.
A review of “Machine D’s” current day OEE percentage should direct the Focused Improvement
Team to further analyze the types or reasons for the performance decline. Improvements could be
made in availability, efficiency, and/or quality losses. The current OEE data (information), shown in
Table 1, is sufficient to begin comparisons to prior OEE data and root cause analysis activities. The
question “What changed?” should guide the improvement efforts.
Overall Equipment Effectiveness Timeline
Timeline illustrations of the concept and components of Overall Equipment Effectiveness losses are
shown in Figure 1. These losses are adapted from the original Major Losses and OEE teachings of
Seiichi Nakajima.
Figure 1. Overall Equipment Effectiveness Timeline
OEE Component Definitions
Overall Equipment Effectiveness: A measure of equipment performance considering overall time,
speed, and throughput or output. “Overall” means total, complete, all inclusive, and whole.
Gross Available Time: Calendar time 24 hour / day – 7 days /week – 365 days/year
Scheduled Operating Time: Gross Available Time – (Planned shutdown + No scheduled Prod +
Planned Maintenance)

Performance Efficiency: The degree to which the equipment operates at “design” (or historical best)
speeds, rates, and/or cycle times. Performance efficiency can vary widely depending on the material
and/or products being run.
Quality: Degree to which product characteristics agree with the requirements specified for the
product or output.
Equipment: A “machine” or asset that performs an operation on input materials resulting in an
output (production) for example: CNC milling machine, injection molding machine, chiller, cooling
tower, heat treat furnace, air compressor …
Single Stream Processes: Single process or production line asset with multiple interconnected assets
functioning as a single “machine” for example: Rolling mill – steel, aluminum; metal
coating/painting line; packaging line; pumping station …
Suggested Methods for Using OEE
Time Basis:
Real time: Hourly or per operating shift
Daily: Summary Report of OEE Performance
Period Trending: Shift, daily, weekly monthly, quarterly, and annual comparisons
Indicator type: Typically a “lagging” metric when used as OEE percentage
Primary and Secondary Uses:
• Primary: Loss data from the OEE factors (availability, efficiency, and quality/yield) should
be used to capture asset performance information as a basis for specific improvements at the
plant-floor, operations, maintenance, and departmental decision-maker levels. The OEE data
provides defined and quantifiable reasons for poor equipment performance. These can then
be prioritized, used for root cause analysis, and problem elimination progress.
• Secondary: The OEE percentage can be used as a relative indicator of asset performance for
individual equipment or single-stream processes by plant engineering, operations, and
maintenance to evaluate equipment stability and the availability of untapped or “hidden”
capacity for the purposes of production scheduling and capital investment justification.
Tracking and tending OEE percentages for the targeted equipment or single-stream process
shows rates of improvement and/or degradation over time.
OEE Issues to be Considered
1. Acceptance of a single OEE definition within business and industry is unlikely given years of
use and misuse.
2. Lack of agreement on OEE definition between recognized OEE experts.
3. Comparable or similar metrics. The metrics of Asset Utilization (AU), Overall Plant
Effectiveness (OPE) for petro-chemical process industries, and Total Equipment Effectiveness
Performance (TEEP) are derivations of the original Overall Equipment Effectiveness (OEE)
metric promoted by Seiichi Nakajima, Vice President/President, Japan Institute for Plant Maintenance, in his seminars from 1989 through the 1995, and in his books (Introduction to
TPM and TPM Development Program).
4. Lack of agreement on the definition of “Availability” as 24 hours, seven (7) days, scheduled
time, or actual running time (utilization).
5. The “Overall” nature of OEE is not all encompassing. Other related metrics that should be
considered include operating and maintenance costs, return on net assets (RONA), mean time
between failures (MTBF), mean time to repair (MTTR), and utilization.