OEE (overall equipment effectiveness)

OEE combines three factors: availability (did the machine run when it could have run), performance (did it run at the intended speed) and quality (was what came out good). The three are multiplied into a single number.

What it means for the calculation

OEE says little about one order and a lot about the hourly rate. If a machine runs fewer hours of good work, the same fixed costs are spread over fewer hours and each hour gets more expensive. The three factors also point at different causes: availability at changeovers and breakdowns, performance at cutting data and interruptions, quality at scrap and rework. In a shop with many small batches, a low number is often not a breakdown but simply a lot of changeover, and then the figure is more an argument for pricing setup time separately than for running the machine harder.

Where this comes up

In shop floor reporting, usually per machine and per period, and in the reasoning behind the hourly rate per work centre.

Common mistakes

Taking the percentage from a mass-production plant as the target for a shop doing mostly one-off work; the two are not comparable. Also steering on the combined number without separating the three factors, which leaves it unclear where the loss sits.

What is a good percentage?

That depends entirely on the kind of work; with many small batches it naturally sits lower because of changeovers.

Does changeover time count as a loss?

In the standard definition it does, but on one-off work a changeover is unavoidable work, not waste.

Does OEE improve the calculation?

Indirectly: it shows how many hours are really available, and that is the basis under the hourly rate.