Overall Equipment Effectiveness (OEE)

Introduction

Overall Equipment Effectiveness can be defined as a metric or a system of metrics that is used for measuring the utilization and effectiveness of a manufacturing operation or piece of equipment. OEE can help in identifying where an improvement in process performance is required and how the improvement can be achieved. This can also work along with lean manufacturing methods as a performance measuring tool for indicating success. OEE is a system that comprises of 5 key metrics. These metrics can be divided into two categories - top level metrics and underlying metrics.

Top level metrics

The two top level metrics are Overall Equipment Effectiveness and Total Effective Equipment Performance. These two metrics are related to each other quite closely and both provide a clear picture of how the facilities, time and material for manufacturing operations are being utilized overall. Both these metrics help in finding out the gap between the actual performance and ideal performance of manufacturing operations.

OEE determines how well a manufacturing unit is performing in relation with its designated capacity during the time periods when it is being run, Total Effective Equipment Performance measures OEE against calendar hour.

Underlying metrics

There are three underlying metrics that form a part of and are used to calculate the OEE. These are the availability rate, the performance rate and the quality rate. The availability rate is a measure of the percentage of time the equipment or operation was running in comparison with the available time for running the operation. The performance rate is used to determine the speed with which the operation was running compared to its maximum capability. The quality rate is the number of good products manufactured in comparison with the total number of products manufactured. These three metrics are helpful in determining the Overall Equipment Effectiveness of a manufacturing operation.

Overall equipment effectiveness

The Overall Equipment Effectiveness is the product of the three underlying metrics – availability, performance and quality. Each of these metrics serves as an indicator to which part of the process needs to be improved. Another way to calculate OEE is to divide the minimum time needed to manufacture the product by the actual time required to do it.

Total effective equipment performance

Total Effective Equipment Performance measures effectiveness of a manufacturing unit against calendar hours as compared to scheduled hours as is the case in OEE. Total Effective Equipment Performance reports the fundamental utilization of assets.

Conclusion

Overall Equipment Effectiveness or OEE, if used efficiently, can help in finding out any flaws in a manufacturing operation that need to be improved upon. It also helps firms to recognize the efficiency of their equipment.

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