OEE or Overall Equipment Effectiveness is the most recognized measurement of manufacturing productivity. Developed about 100yrs ago by Harrington Emerson, OEE was originally designed as a single machine performance calculation with the goal of reducing waste. It is typically used in the context of Lean Manufacturing.
OEE is used to quantify efficiency with a basic calculation, composed of 3 factors: Availability, Performance, and Quality. The goal is to use this measure to locate the source of inefficiencies and quantify/measure them. "If you measure it you can improve it".
Six Big Losses
The 6 big losses are:
Change overs and Setups
Startup Scrap during machine warm
Scrap during normal production
These can be categorized into 3 buckets:
Availability losses - Breakdowns, Change Overs, and Setups
Speed Losses - Waiting around, i.e. machine idling or reduced speed.
Quality Losses - Scrap and Startup Scrap
With these pieces of information we can begin to calculate OEE with the 3 factors: Availability, Performance, and Quality
Each factor is represented as a ratio of the actual vs. ideal and expressed as a decimal rate. Finally you have to have a Planned Output. This is the ideal amount of production completed for the process being analyzed.
To simplify the OEE equation we'll define 3 new factors:
Gross Output = Planned Output - Availability Losses
Net Output = Gross Output - Speed Losses
Valuable Output = Net Output - Quality Losses
Finally we have our 3 main factors of OEE:
Availability = Gross Output / Planned Output
Performance = Net Output / Gross Output
Quality = Valuable Output / Net Output
OEE = Availability X Performance X Quality
When you multiply these together you get a ratio that is then used as a percentage to express the OEE. Continually measure and improve your OEE to increase efficiency.