Manufacturing

How to Calculate Overall Equipment Effectiveness

by ManagerPlus on September 23, 2020
 

In business terms, there may be no maintenance-related metric more important than overall equipment effectiveness (OEE).

Overall equipment effectiveness provides one of the quickest ways to assess operational efficiency. It can also help you pinpoint performance issues. If a particular machine has a high rate of downtime, you likely have a maintenance issue, a part that needs to be replaced, or operator error. Surprisingly, many companies fail to track this key performance indicator. 

What is overall equipment effectiveness? 

World-class companies, by contrast, use equipment management software to track detailed information on their equipment and monitor their overall equipment effectiveness numbers carefully to target areas for improvement. These companies maintain upwards of 90% equipment availability, performance rates of 95% or more, and overall quality of 99% for an OEE greater than or equal to 85%.

Overall equipment effectiveness is the percentage of time your equipment is actually productive and generating revenue for your company. It takes into account your equipment's availability, performance, and quality.  

How to calculate overall equipment effectiveness

Here's a closer look at each of the components of overall equipment effectiveness:

Availability

Equipment availability is the percentage of time your equipment is actually running as planned. It's run time divided by planned production time. Run time is the time your equipment is running, minus any stops due to equipment failure, scheduled maintenance, or other planned stops. 

Availability = Run Time/Production Time

Performance

Equipment performance is a measure of how close the equipment is to running at its maximum speed. It  takes into consideration any slowdowns or short stops.

Performance = (Ideal Cycle Time x Total Count of Parts Produced )/Run Time

Quality

Quality is how well the parts your equipment produces meet quality standards, including being free of defects. 

It's simply the number of quality parts divided by the total number of parts produced. Parts that need to be scrapped or reworked would be removed from the "good" count. 

Quality = Good Count/Total Count 

Overall equipment effectiveness is the sum of all these three factors multiplied together.

OEE = Availability x Performance x Quality

How EAM software improves overall equipment effectiveness

World-class companies will define several specific timespans (work shifts, for instance) and calculate the overall equipment measures for each  to compare them. 

Here's a closer look at how to calculate each one using EAM software. 

How EAM software improves equipment availability

Availability is the foundation for calculating overall equipment effectiveness because it is a straightforward measure of downtime. When it comes to improving OEE, availability is the best place to start.

There are two key factors involved in availability: machine breakdowns and machine adjustments/setups.

EAM software makes it easy to track machine runtime in the form of logs that can be entered via smartphone, tablet, or PC. In ManagerPlus, the “Work Order Down Time” report shows the amount of time that a piece of equipment was inoperative.

Work-Order-Down-Time-OEE-calculation A sample view of a work order down time report from ManagerPlus (Click to enlarge.)
 

In this example, we see that this forklift has been down for 65 days. Let’s assume for this example that the total number of days that this forklift should have been available is 365. The runtime would therefore be 65 - 365 or 300 days. 

Availability = 300/365 or 82%

We’re not too far off from the world-class benchmark range of 90%. Now, how do we get there?

First, we want to look at the asset history for this forklift in our EAM software. If the majority of the work orders associated with it were for “Reactive” or “Emergency” repairs, scheduling more preventive maintenance will likely help reduce downtime and push us closer to the 90% range.

OEE-calculation-asset-historyThe Work Order History view in ManagerPlus (Click to enlarge.) 

In this example, we see that there have been three work orders associated with reactive repairs that have been performed on this forklift—these account for the 65 days that the forklift was inoperative.

Looking more closely at each of these work orders, we see that the engine has persistent issues. In particular, we should focus on the parts, services, and notes in the work orders to identify common issues.

Based on this information, we can then build preventive maintenance schedules in the system to prevent full-down breakdowns in the future. Let’s say that we create a preventive maintenance schedule with some routine engine checks and part replacements—performing these tasks will require far less than 65 days, and will therefore help boost availability for this asset. In addition, EAM software makes it easy to create these PM tasks that can be applied to multiple assets. In this case, you could create a single schedule for all similar forklifts.

By taking a more proactive approach to preventive maintenance, you can reduce breakdowns and spend more time making smaller adjustments.

How EAM improves equipment performance

Ideal Cycle Time, sometimes referred to as Nameplate Capacity, Theoretical Cycle Time, or Design Cycle Time, is a measure of what a given piece of equipment should be capable of producing under ideal circumstances within a given timeframe.

In manufacturing settings, this is usually measured by throughput—how many parts/pieces a machine produces. In other industries, such as construction, this can be somewhat more difficult to measure, but virtually any measure of output/productivity is workable.

In ManagerPlus's maintenance management software , you can easily set up throughput (or cycle counts, in our example) as a log value. If output falls outside of the acceptable range, you can set up a workflow that automatically triggers a work order. 

First, open ManagerPlus and click on the “Logs” module (1). Within the Logs module, click on the gear icon (2) in the upper left hand corner of the tab, select “Log Types” and click “Edit Lookup” (3) in the Log Settings window.

Log-Type-Creation_1-OEE-calculation

Next, click the green “+” icon at the top of the Log Types Lookup window and select “New Log Type.” On the Detail tab, name the new Log Type (we’ve named ours Cycle Count), select “Metered” under Options, and select “Allow Meter Reset” under Meter Options. The thinking here is that most manufacturing equipment includes some form of built-in metering technology that counts parts/products automatically as they’re produced. The “Allow Meter Reset” option simply allows us to start the meter over for a fresh cycle count.

Log-Type-Creation_2-OEE-calculation

Now we can associate this new log type to specific asset categories. In the Assets module, click the gear icon (1) to pull up the Asset Settings window. Click the Lookups tab (2) and choose the asset category, type, manufacturer, etc., that you’d like to associate with the new Cycle Count log type.

Log-Type-Creation_2_5-OEE-calculation

In our example, we will associate the new log with the “PRODUCTION” Asset Category. To add the Cycle Count log type, we click the “Add Log Type” (1) button with the green plus, select “Cycle Count” and then click “Ok.” Next, we select the “Log Entry” (2) option so that we can manually enter these values.

Log-Type-Creation_2_75-OEE-calculation

We can now enter logs for Cycle Count to any asset that falls under the category “PRODUCTION.” We can also go back and make Cycle Count available for other Asset categories, types, etc., if necessary.

Tracking this log type will make it much easier to calculate the performance portion of the OEE equation. Ideal Cycle Time data can either be established manually by tracking Cycle Counts over time, or obtained through the equipment manufacturer.

With this information in hand, it will be much easier to assess the efficacy of your maintenance program directly in terms of productivity, adding another dimension to basic measures of uptime.

The “Log Change Summary” report provides an easy way to track these values and adjust your maintenance schedules accordingly.

How EAM improves quality

As with equipment performance, quality is easiest to measure in manufacturing settings where you are producing physical products. This doesn't mean organizations that provide services need to be left out—it just takes some creative thinking to come up with ways to measure the overall quality of the services you provide. Measuring in terms of positive reviews or customer complaints and tying those back to equipment performance are a good start.

Using ManagerPlus' EAM software, you can set up a separate cycle count for quality similar to how you set up a cycle count for performance. If you already have a cycle count set up for total output, all you have to do is add another for the number of rejected pieces and you’re all set. Simply subtract the latter from the former and divide the result by the total output.

What are benchmarks for overall equipment effectiveness?

The key with OEE is to bear in mind that all three components—availability, performance, and quality—need to be balanced. If increasing equipment availability leads to a substantial decrease in quality, you don't have strong overall equipment effectiveness. 

While there are world-class benchmarks for overall equipment effectiveness, they have remained unchanged for decades. They are: 

Availability: 90.0%
Performance: 95.0%
Quality: 99.9%

While these standards reflect the best of the best, they are far from typical. Vorne cites studies indicating the average overall OEE for most manufacturing plants is closer to 60%.

Instead of trying to measure up to these standards and falling short, set realistic goals for key pieces of equipment. If you want to ensure the maximum efficiency of your equipment, you need your own internal benchmark for comparison. 

This is the only way you'll know if you start to veer off course. 

To learn more about how ManagerPlus improves overall equipment effectiveness, request a demo today. 

close

Subscribe today!

Stay up-to-date with news, tips, and product
updates by subscribing to the ManagerPlus blog.