What is overall equipment effectiveness?

Overall equipment effectiveness (OEE) is the highest standard used to measure manufacturing productivity. OEE identifies what percentage of manufacturing time has been the most productive. A 100 percent OEE score essentially means a company is producing the best products, as quickly as possible, with no time delays or inefficiencies. In a more technical sense, a 100 percent score means a company has 100 percent quality (the best parts), 100 percent performance (the best possible speed), and 100 percent availability (without stoppage).

Measuring overall equipment effectiveness is a manufacturing best practice. By measuring OEE and any underlying losses, a company gains insightful data into how to improve manufacturing processes. OEE is the ideal metric to identify losses, benchmark progress, and improve the productivity of manufacturing equipment to reduce waste.

Time is money, and not utilizing machinery at full capacity or having unplanned downtime can significantly hurt an organization’s bottom line.

In terms of functioning, overall equipment effectiveness analyzes the performance of machines or equipment and compares this to its theoretical maximum capacity. OEE applies only to those time frames where the machine or equipment has a scheduled run. If the machine is not scheduled to run at night, that downtime is not taken into consideration.

Overall equipment effectiveness has three main factors: availability, performance, and quality.


Availability refers to all the planned stops that are part of the production process. It includes downtime for setups or adjustments during planned maintenance, cleaning, and quality inspections. It also refers to unplanned stops in the production process. These are usually because of breakdowns, which impact overall equipment effectiveness. Brief stops and short spells of idle time are important too. These stops occur because of blocked sensors, misfeeds, or jams.


Performance is when production is running at its fullest possible capacity. Bad performance could be the result of worn-down equipment, poorly maintained machinery, environmental factors, or possibly operator issues like human error, inexperience, or availability.


Quality refers to the state of products and expected yield. Poor quality can result in damaged products or lowered yield. Some examples of poor quality include operator error, incorrect settings, or inefficient batch changeover processes.

Why is overall equipment effectiveness important and what are the benefits?

OEE can open up the latent manufacturing potential in your factory. This increases the production and efficacy of your manufacturing operations while being cost-effective.

Utilizing overall equipment effectiveness is particularly useful in the long-term but has its benefits for the short term too. Some benefits are increasing production, investing in new equipment, outsourcing production, or setting up new facilities to even out loads.

A score of 85 percent OEE is exceptional, but few manufacturing facilities attain this. Therefore, the scope of improvement for manufacturers is massive. Here are some of the benefits of overall equipment effectiveness in manufacturing:

  • Ensures a company’s existing equipment functions at its fullest capacity, reducing need for further investments
  • Provides better insight into the production process, allowing you to know where problems are and how to best prioritize and solve them
  • Ensures a good return on investment, whether its increasing capacity, pushing efficiencies, or launching new products
  • Maintains competitiveness in a saturated market, particularly in sectors like pharmacy and medical device manufacturing
  • Assures enhanced process quality and reduces product recalls, which can have a devastating impact on businesses
  • Brings down costs of machine maintenance and repair, putting in place proper maintenance plans and schedules
  • Enables manageable scalability of the production line

How is overall equipment effectiveness calculated?

There are two ways to calculate OEE; the easiest is to find the ratio of good product manufacturing to ideal production time. The equation is:

Overall equipment effectiveness = (Good count × ideal cycle time) / planned production time

This is a valid and true calculation of overall equipment effectiveness, but it does not give granular insights into the loss-related factors of performance, availability, and quality. For this reason, manufacturers prefer to calculate utilization.

Utilization calculation is based on three major loss-related factors: availability, performance, and quality. Overall equipment effectiveness is calculated by multiplying these three factors together. Here is what each part of that equation stands for:


Availability accounts for all the events that considerably halted planned production. Availability is calculated as a ratio of actual run time to planned production time.

Availability = Actual/real run time / scheduled production time


Performance accounts for all the problems that cause manufacturing to run below optimal speed. This includes small stops for adjustments or slow cycles that are overly complex. Performance measures anything that negatively affects optimal capacity and can be understood as the ratio of net runtime to run time.

Performance = (Ideal cycle time × overall total count) / run time


Quality accounts for below-quality parts or parts that need to be redone. Quality is calculated as:

Quality = Good count / total count

An overall equipment effectiveness score gives manufacturers clear insight into the efficacy of the manufacturing process by simplifying improvement tracking. By calculating utilization OEE, a single figure can capture a manufacturer’s overall performance. Additionally, an OEE score can give insights into the basic loss factors of availability, quality, and performance--making it easier to understand manufacturing systems and flaws.

While overall equipment effectiveness is simple, it can be difficult to implement. For example, while calculating availability for a bottling machine, its real uptime may be affected by broken parts in the upstream process. Or it could be related to unplanned maintenance or jammed parts. Such occurrences make it difficult to define the critical parameters needed for overall equipment effectiveness. Manufacturing plants with old machines may have the most trouble getting accurate availability data.

Manufacturing is, by and large, a digitally powered business. Manufacturers are constantly adopting analytics and business intelligence to regularize production performance at the machine level. These insights can be used to scale all manufacturing operations. Manufacturers are becoming more digitally-enabled and can capture and act on figures from machines and automation, which standardizes overall equipment effectiveness.

The key to quality overall equipment effectiveness is ensuring you use the right data. OEE is the data fuel that pushes manufacturers to improve their line performance as well as their process quality gains.

elements of OEE