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What is OEE?

OEE stands for overall equipment effectiveness and is a KPI used by manufacturers to measure the productivity of each machine and the shop as a whole. OEE measurement is based on three key components:

  • Availability – the amount of time that a machine is available and ready for use as compared to when it is experiencing planned downtime and unplanned breakdowns.
  • Performance – calculated by dividing actual production speed by expected speed.
  • Quality – the percentage of products that are produced exactly according to specification as compared to those with defects. 

The OEE KPI calculation offers manufacturers a clear understanding of how productive a given machine is relative to its potential capacity. Armed with this information, they can identify challenge areas and focus on OEE optimization to make sure that the factory is operating at its peak ability. 

Why is OEE an Important KPI?

The OEE KPI is one of the most important figures on a manufacturing KPI dashboard. Growing competitiveness in the industry is an incentive for factory managers to improve their efficiency and performance, and OEE measurement makes it possible to identify productivity and performance quality gaps that must be filled. 

Measuring OEE offers manufacturers the following benefits:

  • Insight into the main production drivers such as yields, production, energy and quality
  • Reduced downtime
  • Identify which specific products, processes and/or machines are causing performance losses
  • Ensure operators focus on availability, performance and quality at all times

How to Implement OEE Measurement?

While it is possible to manually calculate and monitor the OEE KPI, it’s more efficient to use software that can conduct the OEE KPI calculation automatically. A real-time operational intelligence (RtOI) program that integrates with an MES can easily collect the data needed in order to make sure the OEE is always updated.

An OEE KPI dashboard shows the current OEE measurement in real-time, taking into account information from all of the machines on the shop floor. This information can help managers determine how to improve OEE by identifying which machines are working properly and which ones are not operating at their peak efficiency. 

When implementing an OEE measurement system, it is important to monitor machines at 3 different levels – the individual machine, the department, and the entire shop. Relevant stakeholders can then look at the information that is most useful to their specific purpose. 

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What OEE Tells You

The OEE measurement when taken alone is a diagnostic tool, indicating that a problem exists, but if OEE optimization is the goal, more information is needed to determine what actions to take to fix the problems. Following are three examples of how the OEE KPI can be used to provide actionable insights:

  • OEE over time – while a glance at an OEE KPI dashboard will give information on OEE at any given moment, it’s also possible to analyze what the OEE KPI has looked like over time. Checking up on OEE over days, weeks or even months will identify any ongoing problems that need to be addressed and whether action steps already taken have been working. 
  • OEE and other data points – manufacturing KPI dashboards allow factory managers to compare data side-by-side in an easy-to-understand view. Looking at OEE next to other data points – such as causes of downtime or performance tracking – can shed light on problems like the most common reasons for downtime or why OEE drops during certain shifts. This information is crucial for better decision making.
  • OEE and human activity – despite the increased automation in factories, there is still a massive human presence that should not be forgotten. Looking at the OEE KPI in the context of what human activity is taking place can provide insight into downtimes caused by human error, challenges with shift changeovers or other human actions that may be impacting OEE.


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