What is OEE and what significance does it have in manufacturing?

OEE, the abbreviation for Overall Equipment Efficiency, is a term introduced in the sixties to measure the efficiency of the manufacturing process. To put it into simple words, OEE is the measure of the productive manufacturing time. OEE is measured on a scale of 0% to 100% with high score manifesting better OEE, and consequently, productivity.

But from a more profound perspective, OEE is a far more complex concept, incorporating three fundamental dynamics. You will realize that the OEE score is derived from three variables; quality, performance, and availability. These three variables are combined to determine the OEE of manufacturing in this simple formula;

OEE = Availability × Performance × Quality

This formula makes sense in theoretical terms, but when it comes to real manufacturing application, it is condensed to;

OEE = (Good Count × Planned Cycle Time) / Scheduled Production Time

In OEE, the quality score refers to the number of good parts that have been yielded from the manufacturing process. The quality of the manufacturing process takes into account all the losses from defective products, including any that require remanufacturing. Performance, on the other hand, also known as process rate, refers to how fast the equipment has been through manufacturing. This variable takes into account all the slow days and delays as well. Lastly, availability is all about the time the equipment has been scheduled to operate. This metric is derived after considering all the foreseen and unforeseen delays and stops.

Today, managers are very keen on measuring OEE in manufacturing settings. If you want to put efficiency in your manufacturing processes, you need to start monitoring your OEE, for there are three direct benefits of measuring OEE; loss identification, process benchmarking and boosting productivity.

If you are in the manufacturing business and you are not keen on OEE, then you might be losing a lot. Make sure you introduce it soon and monitor the efficiency of processes, improve the existing infrastructure and most importantly, boost productivity to drive in profits!

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