What is Overall Operating Efficiency?
Overall Operating Efficiency (OOE), also known as Overall Operating Effectiveness is a calculation that measures the availability of factory operations from beginning to end of the production process. OOE is used to help manufacturers understand their effectiveness in operations management and determine whether and where there may be room for improvement.
Unlike other efficiency measurements, the operational efficiency calculation looks at the total available operations time, taking into account the fact that there will be some unscheduled time. The overall operating efficiency formula is as follows:
OOE = performance * quality * availability (where availability is equal to actual production time/operating time)
Manufacturers use OOE to help make better decisions when it comes to scaling up their operations and/or improving productivity, with a well-managed factory usually scoring around 85%.
What’s the Difference Between OOE and OEE?
In addition to OOE, manufacturers also measure overall equipment effectiveness (OEE). The biggest difference between the two is the way “availability” is defined. OOE takes into account that not all hours of the day are available for operations, but OEE limits availability further by not including any unscheduled time and assuming that any downtime reduces equipment efficiency.
What Factors Determine OOE?
The overall operating efficiency formula is made up of three factors: performance, quality and availability.
Performance – measured as a percentage of the total possible performance. This number is impacted by the speed of production, as not all products can be produced at the same rate. For example, it may take longer to produce larger items as compared to something smaller.
Quality – measured by the percentage of good quality products out of the total quantity produced. Although factories aim for zero defects, most production lines will result in at least some amount of defective products that need to be discarded.
Availability – measured as a percentage of full available operations time. If a machine is defective it cannot work, nor does it operate during planned maintenance times, both of which are not included in the operational efficiency calculation.
How to Improve OOE
OOE is a powerful tool to help improve effectiveness in operations management. The following tips can help a factory improve their OOE:
- Open Communication – the overall operating efficiency of a factory will be high if open communication and collaboration is encouraged throughout the workforce. With every department working together towards a shared goal, the entire operational process will run more smoothly and efficiently.
- Product Management – emphasis should be placed on product quality and customer service to ensure that customer expectations are met.
- Training & Development – employees need to be set up for success and given the proper training and access to knowledge and best practices to help them keep the entire operation running efficiently.
- Leverage Technology – take advantage of the multitude of technological tools available to help monitor OOE and identify opportunities for improvement.