What is OEE? 

OEE (Overall Equipment Effectiveness) is a widely used Key Performance Indicator (KPI) for measuring manufacturing efficiency.

OEE measures how effectively equipment uses its planned production time by considering three factors: Availability, Performance, and Quality.

Expressed as a percentage between 0% and 100%, OEE helps manufacturers understand how much of their planned production capacity is used to produce good-quality products at the expected speed.

The difference between the actual OEE and 100% represents opportunities for improvement through reduced downtime, increased production speed, and fewer quality losses.

An OEE of 100% represents ideal production conditions:

• No unplanned downtime: Equipment is available throughout planned production time.
• Optimal production speed: Equipment operates at its defined ideal cycle time.
• Perfect quality: All produced units meet quality requirements.

In practice, achieving 100% OEE is extremely difficult. The purpose of measuring OEE is not necessarily to reach 100%, but to understand where production losses occur and continuously improve performance.

How is OEE Calculated?

OEE is calculated by multiplying three components:

OEE = Availability × Performance × Quality

Each component measures a different type of production loss.

1. Availability – Are we producing when we should?

Availability measures the proportion of planned production time during which equipment is actually running.

Availability losses occur when production is stopped during scheduled production time.

Examples include:

• Machine breakdowns.
• Material shortages.
• Changeovers and setup activities.
• Other production interruptions.

2. Performance – Are we producing at the expected speed?

Performance measures how efficiently equipment operates compared with its defined ideal production speed.

Performance losses occur when production runs slower than expected.

Examples include:

• Reduced machine speed.
• Minor interruptions.
• Equipment operating below its ideal cycle time.

3. Quality – Are we producing approved products?

Quality measures the proportion of produced units that meet quality requirements.

Quality losses occur when products are rejected or require additional processing.

Examples include:

• Scrap.
• Defective products.
• Products that do not meet quality specifications.

Example: Calculating OEE

Imagine a production line with the following results:

The calculation is:

OEE = 90% × 85% × 95% = 72.7%

This means the production line achieved approximately 72.7% of its ideal good-quality output during planned production time.

The remaining 27.3% represents production effectiveness losses that can be investigated and potentially reduced.

Why is OEE Important?

Measuring OEE is considered a best practice in manufacturing because it provides a structured, consistent way to understand production efficiency.

Rather than focusing only on how much a machine produces, OEE helps explain why actual production differs from its potential.

OEE helps organizations:

• Identify production losses: Understand whether losses are related to Availability, Performance, or Quality.
• Prioritize improvements: Focus resources on the problems with the greatest impact.
• Measure progress: Track whether improvement activities deliver results over time.
• Create a shared understanding: Give Operators, Production Managers, and leadership a common language for discussing performance.
• Support continuous improvement: Use actual production data to identify problems, investigate causes, and follow up on corrective actions.

OEE is particularly valuable when used regularly in daily production meetings and continuous improvement activities.

OEE is More Than a Number

An OEE value alone does not explain what needs to be improved.

For example, two machines might both have an OEE of 70%, but for entirely different reasons.

One machine may experience frequent breakdowns, resulting in low Availability. Another may run consistently but below its expected speed, resulting in low Performance.

Although their OEE values are identical, the appropriate improvement actions are different.

This is why it is important to analyse the three OEE components and their underlying production losses rather than focusing exclusively on the overall percentage.

The greatest value of OEE comes from understanding the losses behind the number and taking action to reduce them.

What is the Difference Between OEE and TEEP?

While OEE measures effectiveness during planned production time, TEEP (Total Effective Equipment Performance) measures effectiveness against all available calendar time.

The main difference is the time used as the basis for the calculation.

For example, a machine that runs only one shift per day may have a high OEE during its scheduled production time but a much lower TEEP because it is not scheduled to operate during the remaining hours.

TEEP can therefore be particularly useful when evaluating whether existing equipment capacity is being fully utilized before investing in additional machines or production lines.

Using OEE in Good Solutions

Good Solutions helps manufacturers measure, visualize, and analyse OEE using actual production data.

By collecting information about machine running time, production stops, production quantities, and quality losses, Good Solutions provides the foundation for understanding production effectiveness.

You can use Good Solutions to:

• Monitor OEE and its three components.
• Compare performance across Measure Points and production periods.
• Identify the main causes of production losses.
• Investigate stops and production activities using the Timeline.
• Follow up on improvement activities and measure results over time.

By combining OEE with detailed production analysis, Good Solutions helps turn production data into actionable insights.