OEE (Overall Equipment Effectiveness)

The three terms catch three different losses. Availability is time lost to stoppages: breakdowns, changeovers, waiting for material. Performance is speed lost while running: micro-stoppages, reduced rate, a station running below its nominal cycle. Quality is output lost to scrap and rework. Multiply them and small numbers compound fast, which is the point of the metric.

The multiplication is what makes OEE useful and what makes it look pessimistic. Ninety percent availability, ninety percent performance and ninety-eight percent quality is a line most engineers would call healthy, and it produces an OEE of 79 percent. That gap between the nameplate rate and the realised rate is exactly the gap a quote has to allow for.

For quoting, OEE is where the design margin comes from. If a customer requires 55 JPH sustained and the plant historically runs at 80 percent OEE, the equipment has to be capable of considerably more than 55 to deliver 55. Where a specification states a required OEE as an acceptance criterion rather than an aspiration, that changes the equipment selection and it belongs in the price.

The three terms, and what eats each one

• Availability: planned time minus stoppages, divided by planned time. Eaten by breakdowns, changeovers and material starvation.
• Performance: actual rate divided by nominal rate while running. Eaten by micro-stoppages and slow cycles.
• Quality: good units divided by total units produced. Eaten by scrap and rework.
• World class: often quoted around 85 percent, though the figure is context-dependent and frequently misused as a target.
• Compounding: 90% x 90% x 98% = 79%. Three healthy-looking terms produce a fifth of output lost.