The ultimate guide and hidden secrets of OEE. The presentation include how you can utilize OEE to improve productivity, eliminate wastes and increase performance. Overall equipment efficiency (OEE) is a total productive maintenance (TPM) module; machine capacity is a part of all three terms: availability, performance, and quality. Each term present numerous improvement opportunities. Presentation contents: 1. OEE calculation to find the improvement opportunities. 2. Relation between wastes and profitability. 3. Review of OEE as a TPM module. 4. OEE metrics - Measurement, Analysis & Improvement. 5. OEE Analysis Process. 6. Following Toyota Way of solving problems.

1. 1

2. 2
OEE Can Be Your Key to Productivity Improvement
Presented by:-
Eng. Mohammed Hamed
Published in the IIE Magazine Issue of AUG2013

3. Example to present different types of improvement
OEE Overall Equipment Effectiveness calculation
Basically, any machine has a capacity. It should be able to deliver
specific number of units in a given time. If it can produces 20 units
in an hour. In 8-hour day, it should have the ability to produce 160
units. Over 5 days, the capacity is 800 units. This is the rated
capacity when everything is perfect.
If the machine has to be slowed to half speed due to poor
maintenance, it would make only 400 units.
Performance would be (800-400)/800*100=50%=0.5
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑚𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑒𝑑
𝑃𝑜𝑠𝑠𝑖𝑏𝑙𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠
1. Finding the Improvement Opportunities
Performance % X 100
3

4. 4
Consider the break-times. So, over five days, the equipment was not
available for use for a five-hour period.
𝑇𝑜𝑡𝑎𝑙 𝑡𝑖𝑚𝑒 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 − 𝑇𝑜𝑡𝑎𝑙 𝑑𝑜𝑤𝑛𝑡𝑖𝑚𝑒
𝑇𝑜𝑡𝑎𝑙 𝑡𝑖𝑚𝑒 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒
X 100Availability%=
In a 40-hour week, the availability is (40-5)/40*100= 87.5%=0.875
With a lost time, we can only make 0.875 times 100= 350 units in a
week.
Availability tracks any time the machine isn’t available for use.

5. Quality %=
If we have 10 units that need re work due to quality defect, this mean
Quality ratio is (350-10)/350*100= 97.14%=0.9714
OEE=Performance x Availability x Quality= 0.5 x 0.875 x 0.9714=
42.5%.
𝑇𝑜𝑡𝑎𝑙 𝑛𝑜 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑 − 𝑇𝑜𝑡𝑎𝑙 𝑛𝑜 𝑜𝑓 𝑑𝑒𝑓𝑒𝑐𝑡𝑠
𝑇𝑜𝑡𝑎𝑙 𝑛𝑜 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑
X 100
5

6. One more thing is whether OEE calculation should be based on 24
hours and 7 days or just the number of hours the machine was
operated. The OEE is higher if only the operating shifts are
considered. If there is a perfect OEE of 100 but the factory is only
open for a single 8 hours shift 5 days per week and the factory
shutdown the rest of the week, this doesn’t means the OEE is 100%.
What about the 128 hours the machine is not available because the
factory is closed? Should the availability not be only 40/168=23.8%?
OEE gives us only 340 units, the world-class OEE is 85%, this is an
indication that something needs to be fixed.
6

7. 57.5%
Quality
problems
Performance
Problems
Availability
problems
Value
added
42.5%
Losses
Figure 1.Losses & non-Value Adds during the Operating Time
Data Box:
Value add = 42.5%
Non-value add =57.5%
OEE
OEE Calculation Based on 87.5% availability 7

8. Plant
Unavailability
Working Period
23.8
Operation
Cost
Total Investment
Additional
investment
“what we give
investment”
76.2
Value Add
Operation Losses
13.6%
Data Box:
Investment =100%
Plant Availability = 23.8%
Non-value added= 78.8%
Benefit/Gain = 10.2%
Operation Losses= 13.6%
10.2%
Figure.2 The real picture
Equipments
Peoples
Facilities
Utilities
OEE Calculation based on 23.8% availability 8

9. First figure focus only on the wastes inside the operation time which
is called operation wastes. The second one shows that 76% of
improvement is possible, if a huge order appeared, the team would
know that there are 128 extra hours of availability and can be used if
sales improved. So both figured should be used and calculated.
Some organizations have reported that OEE is low, due to the sales
problem; it means if they have an order of 600 pieces per shift, and
the equipment is capable of 1200 per shift, they will only produce
what customer needs. OEE in this shift is 100% if the equipment is
running at optimum efficiency and producing the target of 600 in 4
hours. Others would produce it in 8 hours! And OEE in this case is
50%.
In the first case, the equipment was available for the other 4 hours
because the factory was open, but there were no product to process.
In the second case, this is the improvement that should be made to
the process. 9

10. 2. The Relation Between Wastes and Profitability
Frequently, the inexperienced estimators will perform a cost
estimate assuming everything is perfect and the plant is working at
full capacity. This approach is totally erroneous as it does not
consider all operation wastes such as downtimes, waiting between
processes, inventory carrying for long periods, re working for
quality, and delay of orders delivery.
The relation between the profit and these wastes can be seen
through this simple formula:
𝑷𝒓𝒐𝒇𝒊𝒕 = 𝒓𝒆𝒗𝒆𝒏𝒖𝒆 − { 𝒇𝒊𝒙𝒆𝒅 𝒄𝒐𝒔𝒕 + 𝒗𝒂𝒓𝒊𝒂𝒃𝒍𝒆 𝒄𝒐𝒔𝒕 + 𝑾𝒂𝒔𝒕𝒆𝒔}
10

11. The fixed and the variable costs are the manufacturing operation
costs required to make the product. Organizations that are working
at or near the breakeven, can find ways to be more profitable
through the losses.
For example, if a company is running at 80% of their actual
capability and can sell 100% of their capacity. There is an
opportunity to produce the extra 20% through the losses. Those
twenty percentages of losses are the sales losses that can be
recovered through removal of the operation wastes. The losses are
the price of the unsold parts which recover the profit, labor salaries,
maintenance costs, overheads, and indirect expenses.
11

12. 12
Brainstorming!
Specify which is fixed cost and which is variable cost from the
following resources:
1. Employees basic salaries
2. Machines depreciation
3. Bonuses & rewards
4. Materials
5. Transportation

13. 13
Publication at the Institue of Industrial Engineers, August 2013

14. 3. Review of Overall Equipment Efficiency as a TPM module
Overall equipment efficiency (OEE) is a total productive
maintenance (TPM) module; machine capacity is a part of all three
terms: availability, performance, and quality. Each term present
numerous improvement opportunities.
14

15. How OEE is related to productivity and capacity?
OEE measures the ratio (%) of what product is actually made which
is defect less and sellable, to what could be made according to the
design. One hundred percent of OEE is the design or maximum
capacity a process or a machine is designed to make with zero
defects.
The intention is to find why this process is not working as what have
been expected, and why the real output is low. Then, some actions
should be taken to maximize the current process capabilities, fix
problems, and improve productivity.
Why use OEE & what is the intention behind this?
𝑹𝒆𝒂𝒍 𝑫𝒆𝒇𝒆𝒄𝒕𝒍𝒆𝒔𝒔 𝑶𝒖𝒕𝒑𝒖𝒕 / Design Output
15

16. 4. OEE Metrics
OEE involves three metrics, described as follow:
4.1. Availability
this is a time metric that is usually measures as a percentage of the
operating time. Machine availability is a measure of how much time
this machine was available to run product. A machine that is busy or
can’t make product is considered unavailable.
Improving the machine available time by reducing wastes and excess
motions from the process will improve:
 Costs
 Utilization of both operating time & resources
 Time required to make a product
 Overtimes
16

17. 4.2. Performance:
This is one of the most debate issues. It takes into account the
factors that are affecting the speed of the machines. Most of
companies take the number of pieces produced and compare it to
the design, count quality and availability, then, assume the problem
is a machine speed that has been caused by in proper maintenance.
Actually, the performance can be affected by many other
factors:
1. Untrained operators
2. Bad/insufficient operation instructions
3. No instructions
4. No work standardization procedures
17

18. What is the effect of working at lower performance or speed?
 Consume more resources
 Waste money
 Longer production lead time
 More operators
Some companies plan their productivity according to the current
situation and the current process capability, making a few hours
job last the whole shift. With no trial to evaluate the process or see
if it can be improved, the process will never run efficient.
18

19. 4.3. Quality
This is one of the greatest wastes in the process. Quality is so
important for customers, adding value to your customer is what
keeps you in business. If a process is producing a number of
defected pieces, the required working time to compensate those
defects and re produce sellable items will reduce the capacity of
making a new product and will consume more resources. Cost of
producing a defected piece plus the cost of re working it could be
more than double the cost of making it right at the first time. And if
a defected product passed to the customer, this can lead to complete
business loss. It is more important to make sellable parts rather than
focus on just making high number of parts. Reducing the defects
ratio will improve the real output of the machine, increase the
capacity of making product, reduce the inspection effort, reduce
costs, and add value to your business.
19

20. 20
Quality
Cost
Defect
Parts
Re
Work
Parts
If poor quality or failed product gets through to the
customers, we have an issue worse than just a drop in
production. There is a risk of losing the customer which
worth more than money.

21. 5. OEE Analysis Process
Find: What waste time? What slow the speed? What degrades
the quality?
Production availability & time analysis
As shown in fig.1, availability of the machine can be affected by any
of these factors. Each problem in fig1 presents a different type of
improvement. Availability often presents the waiting waste which is
one of the most common wastes in terms of muda (seven-wastes). It
can be seen in the most of process improvement events.
Unfortunately, many people use the availability as a measure of
uptime subtracting many other wastes, and present the formula by
this way:
𝑻𝒐𝒕𝒂𝒍 𝒘𝒐𝒓𝒌𝒊𝒏𝒈 𝒕𝒊𝒎𝒆 (𝒖𝒑𝒕𝒊𝒎𝒆 + 𝒅𝒐𝒘𝒏𝒕𝒊𝒎𝒆) − 𝑻𝒐𝒕𝒂𝒍 𝒅𝒐𝒘𝒏𝒕𝒊𝒎𝒆
𝑻𝒐𝒕𝒂𝒍 𝒘𝒐𝒓𝒌𝒊𝒏𝒈 𝒕𝒊𝒎𝒆
21

22. The above formula tends to focus on an individual process which is
the machine downtime, often caused by preventive maintenance,
routines, adjusting, calibration, overhaul and the other maintenance
activities.
The maintenance folk’s main goal is the uptime-keep the equipment
working which does not means that this equipment is available to
run product. There are still many factors influence the availability of
the process or machine as presented in fig.1. But by considering only
downtime, this means reducing the PM time or the mean time to
repair (MTTR) and losing the opportunity to improve the overall
process effectiveness. The main goal of the OEE is to understand the
obstacles and wastes that are lowering the productivity rate. For this
reason, the availability should be presented by this formula:
𝑇𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑡𝑖𝑚𝑒 − 𝑇𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑑𝑜𝑤𝑛𝑡𝑖𝑚𝑒
𝑇𝑜𝑡𝑎𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑡𝑖𝑚𝑒
22

23. Productivity
time
Non-Value Add
Activities
Wait for loading
Machines setting
time for changeovers
No operators
Break-times
Operation
Losses Value-add
Figure 1. Most common availability and time lost
issues during the operating time
Maintenance downs
downsWait to get tools
Wait for quality
inspection
Wait for CNC
program loading
Wait for instructions
Wait for materials
Wait for spare parts
Electric cut-off
Wait for the
manufacture
drawing
23

24. 24
Factor Cause Cause
Wait for loading
No material
Bad planning
Inventory issue
Transportation delay
Too much work in process
inventory WIP causes process
waiting
Clark breakdown
Clark driver is absent/not
available
No order to process Sales or market problem
5.1. Time Analysis for Availability Issues
Use Why Why to investigate causes

25. 25
Factor Cause Cause Possible
solutions
Machines
setting time
for
changeovers
Lack of operator
training on the
changeover task
Training has been
neglected for several
reasons
Company don’t invest
on training the staff
Allocate budget for
training
No work
standardization
procedures
No continuous
improvement culture in
the organization
Build a culture of
continuous
improvement
Operator spend
time getting the
tools needed for
the changeover
task causing a
delay to the
process
Tools are not handy or
operator is not trained
to realize where is the
appropriated tools for
this task
Tools have to be
arranged and
provided in a clear
place. Operator
has to be trained
sufficiently to
recognize where
the appropriated
tools are located

26. 26
Factor Cause Cause Possible
Solution
Operator
absent
Any type of vacation:
sick, annual,
emergency,..etc
Need supervision
and control
Change
management
Too much overtime
cause many absences
during the normal
working days
Inappropriate
distribution of
workload cause
overtimes and
increase operation
costs
Eliminate/reduce
the overtime, revise
planning, and
smooth the
workload
Lack of operators
number
Break-times
Operator take breaks
to lunch or rest, the
machine operation is
basically depend on
him and can not
process any
production during his
absent
Operators need
break because
machines are
manual based
operation
Find a management
solution to
eliminate the
production losses,
or replace operators
with some robots &
automation

27. 27
Factor Cause Cause Cause
Maintenance
downs
Failure
Improper maintenance
Lack of PM/ inefficient
PM
Each failure need a
preventive task in the
PM process
Operator is not trained to
do the routine tasks
regularly to keep the
equipment running
The failure is complex
result in longer MTTR
Training is needed for
all of workers so they
can perform all
maintenance jobs
efficiently
Delay in processing the
work request when the
failure occurred
ERP issue or planning
problem

28. 28
Factor Cause Cause Cause
Maintenance
downs
PM
activities
are taking
long time
(cleaning,
inspection,
replacing
parts…etc)
Spare parts not available
No system to provide the
technician with the tools &
parts need in the right
orientation
Lack of preparation
Technician is not
trained enough to do
the job efficiently
Training has been neglected
because management think
it is not important
Tools not available
Insufficient tools/lack of
tools
PM is complex for this
machine
Improper selection of
maintenance policy

29. 29
Factor Cause Cause Cause
Wait for
quality
inspection
Waiting for
the inspectors
Absence/insufficient
labors
Process is
producing
defects that
need
intensive
inspection
No work standardization
procedures to improve
the process
Lack of continuous
improvement culture
in the organization
Wait for
material
Planning
problem
The purchase department
Warehouses
problem
ERP or planning problem
Supplier
problem
Shipping has been
delayed
Production
problem
Too much WIP inventory
between process steps

30. 5.2. Performance Analysis
In many times, the primary cause of performance issues is hidden
and overlap with the availability metric.
Performance
Maintenance
issues
Data Management
programs like ERPs
don’t provide solution
or root cause of the
problem. The reason of
low machine output
regardless of the
quality issue and
availability can be the
speed of the machine
Operator
Skills
Training
Skills
30

31. It is hard to catch the performance reasons by a software. It will
require a deep observation at the gemba.
Performance (low speed issues) Causes
Maintenance
Machine need calibration, adjusting, or
tweaking.
Machine condition has been deteriorated
Lack of PM/ Machine need to be
restored to its basic condition
Operator Training Operator has not been trained well
Quality of instructions
Lack of work standard process, lack of
instructions, no instructions, or no work
standardization procedures
31

32. 32
The root cause of some activities which are affecting the
availability could be performance problem such as slow
changeovers which is a result of operator training issue on
the changeover task

33. 33
5.3. Quality Analysis
It is not difficult to know how many defects
exist using a simple sheet to record the
number of the defected parts which can’t be sold.
What is not easy to know is the cause of
this defect which requires an intensive
effort to understand the source of variation
that is causing the quality problem.
It will be necessary to perform an in deep process
analysis in order to grasp the real situation for elimination of the
root causes.

34. 6. Toyota way of analyzing & solving quality problems :
1. Genchi genbutsu (Observe the real situation at the gemba)
2. Mistake-proofing (Poka Yoka)
3. Simple tool like Pareto for data analysis
4. Ask 5 whys to find the root causes.
What Six Sigma and other complex analysis tools can do?
34
Prepared by Eng.Mohammed Hamed Ahmed Soliman
Industrial Engineering Consultant & Lecturer
Email: mhamed206@yahoo.com
: m.h.ahmed@ess.aucegypt.edu
Tel : +201001309903
LinkedIn: eg.linkedin.com/in/mohammedhamed/