How to Calculate OEE – The Real OEE Formula with Examples

Single-Minute Exchange of Die
Image via Wikipedia

A lot of time and effort is wasted collecting and analyzing data and the results.  Fortunately, Overall Equipment Effectiveness, or OEE, is one of those metrics that is easily calculated and can be applied to any process, department, or the entire organization.

We have created  a number of Excel spreadsheets that are immediately available from our FREE Downloads page or from the Free Downloads widget on the side bar.  These spreadsheets can be modified as required for your application.

OEE is comprised of three factors:  Availability, Performance, and Quality.  While calculating these factors is fairly straightforward, it is important to recognize that a standard industry definition for OEE does not exist.  It is important to understand the assumptions you are making to make sure that you understand the final OEE result.  This is increasingly more important when attempting to compare the results of one department or plant against the performance of another.

OEE measures how effectively TIME is used to produce a quality product.  Use the following definitions of TIME to calculate OEE:

  1. Scheduled Production Time or Planned Production Time
  2. Planned Down Time:  Scheduled down time events
  3. Unplanned Down Time:  Unscheduled down time events
  4. NAT = Net Available Time (Scheduled Production Time – Planned Down Time)
  5. NOT = Net Operating Time (Net Available Time – Unplanned Down Time)
  6. IOT = Ideal Operating Time (Time to Produce All Parts at Rate)
  7. LOT = Lost Operating Time Due to Production of Scrap or Non-Saleable Product.

Although we will provide examples of these calculations, the following formulas are used to calculate each of the OEE factors and overall OEE:

  1. Availability % = NOT / NAT * 100
  2. Performance % = IOT / NOT * 100
  3. Quality = (IOT – LOT) / IOT * 100
  4. OEE = Availability * Performance * Quality

You will notice that a quick way to check your OEE result is to calculate the time required to make good parts divided by the Net Available Time:


A word on Availability:

Availability is based on the actual “scheduled production time”.  Assuming a production process is scheduled to run over an 8 hour shift or 480 minutes (60 * 8), the following definitions are applied for planned and unplanned downtime.

Planned Downtime:

  1. Scheduled break times.
  2. Scheduled clean up at the end of the shift.
  3. Scheduled Preventive Maintenance.

Unplanned (Process/Equipment) Downtime:

  1. Setup / Tool Changes
  2. Material Changes
  3. Material Handling
  4. Quality Concerns
  5. Process Downtime
  6. Equipment Failures
  7. Personnel Relief

While it could be argued that setup or tool changes are planned events, they are considered part of the overall production process.  If tool change or set up events affect equipment or capacity utilization, then an effort to reduce these times will reflected by improved availability and an increase in available capacity.  It also makes capacity utilization much easier to calculate.  Again, knowing what is in the definition is important.  The purpose of establishing OEE is to drive improvement in your organization.  For example, Quick Die Change, or SMED, programs are specifically geared to improve the change over process.  If a separate program is used to manage the change over process, then you may so choose to leave this activity as a separate entity.

A word of caution! OEE is a metric, not a program.  Use existing systems and processes wherever possible to manage or support your OEE activities at launch.  New initiatives often fail because they are introduced in isolation and are often accompanied by “new ways” of doing business and tend to disrupt other existing work flows.  A true improvement or initiative that saves the company time and money will stand on its own merits.  This same initiative can be acted upon regardless of whether an “OEE Improvement Plan” exists.

I highly recommend reading Velocity: Combining Lean, Six Sigma and the Theory of Constraints to Achieve Breakthrough Performance – A Business Novel.  This engaging story exemplifies the challenges of integrating new initiatives into a company and how to overcome them.  This book ranks among the best with other books like The Goal.

Calculating OEE:  A real life example

An 8 hour shift is scheduled to produce three parts as shown in the schedule below.  The shift has two 10 minute breaks and a 5 minute clean up period.

Production Schedule:

  • M/C:  A   Part #:  A123, Cycle:  10 (seconds), Produced:  2240, SCRAP:  50, Unplanned Downtime:  32 minutes
  • M/C:  B   Part #:  B456, Cycle:  45 (seconds), Produced:  450, SCRAP:  25, Unplanned Downtime:  18 minutes
  • M/C:  C   Part #:  C789, Cycle:  70 (seconds), Produced:  229, SCRAP:  11, Unplanned Downtime:  22 minutes

Lets start by calculating our time factors for each machine:

Net Available Time:  Since each machine is scheduled to run for the full 8 hour shift, the Net Available Time for each machine is calculated as follows:

  1. Scheduled Time = 8 hours = 480 Minutes (8 * 60)
  2. Planned Down Time = 2 breaks * 10 minutes + clean up 5 minutes = 25 minutes
  3. Net Available Time (NAT) = 480 – 25 = 455 minutes

Machine A

  1. Unplanned Downtime = 32 minutes
  2. Net Operating Time (NOT) = Net Available Time – Unplanned Downtime
  3. NOT = 455 – 32 = 423 minutes
  4. Ideal Operating Time (IOT):  2240 total parts * 10 seconds = 22400 / 60 = 373.33 minutes
  5. Lost Operating Time (LOT):  50 scrap parts * 10 seconds = 500 / 60 = 8.33 minutes

Machine A:  OEE Factors are calculated as follows:

  1. Availability:  NOT / NAT = (423 / 455) * 100 = 92.97 %
  2. Performance:  IOT / NOT = (373.33 / 423 ) * 100 = 88.26%
  3. Quality:  (IOT – LOT) / IOT = (373.33 – 8.33) / 373.33 * 100 = 97.77%
  4. OEE = A * P * Q = 92.97% * 88.26% * 97.77% = 80.22%

We could also have calculated OEE using the Quick Check as shown below:

Time to produce good parts ONLY:  373.33 – 8.33 = 365

OEE = (IOT – LOT) / NAT = (373.33 – 8.33) / 455 * 100 = 80.22%

Using the same formulas as above the time factors for Machines B and C follow.

Machine B

  1. Unplanned Downtime = 18 minutes
  3. NOT = 455 – 18 = 437 minutes
  4. Ideal Operating Time (IOT):  450 total parts * 45 seconds = 20250 / 60 = 337.5 minutes
  5. Lost Operating Time (LOT):  25 scrap parts * 45 seconds = 1125 / 60 = 18.75 minutes

Machine B:  OEE Factors are calculated as follows:

  1. Availability:  NOT / NAT = (437 / 455) * 100 = 96.04 %
  2. Performance:  IOT / NOT = (337.5 / 437 ) * 100 = 77.23%
  3. Quality:  (IOT – LOT) / IOT = (337.5 – 18.75) / 337.5 * 100 = 94.44%
  4. OEE = A * P * Q = 96.04% * 77.23% * 94.44% = 70.05%


Time to produce good parts ONLY:  337.5 – 18.75 = 318.75

OEE = (IOT – LOT) / NAT = (337.5 – 18.75) / 455 * 100 = 70.05%

Machine C

  1. Unplanned Downtime = 22 minutes
  3. NOT = 455 – 22 = 433 minutes
  4. Ideal Operating Time (IOT):  229 total parts * 70 seconds = 16030 / 60 = 267.17 minutes
  5. Lost Operating Time (LOT):  11 scrap parts * 70 seconds = 770 / 60 = 12.83 minutes

Machine C:  OEE Factors are calculated as follows:

  1. Availability:  NOT / NAT = (433 / 455) * 100 = 95.16 %
  2. Performance:  IOT / NOT = (267.17 / 433 ) * 100 = 61.70%
  3. Quality:  (IOT – LOT) / IOT = (267.17 – 12.83) / 267.17 * 100 = 95.20%
  4. OEE = A * P * Q = 95.16% * 61.70% * 95.20% = 55.90%


Time to produce good parts ONLY = 267.17 – 12.83 = 254.34

OEE = (IOT – LOT) / NAT = (337.5 – 18.75) / 455 * 100 = 55.90%

Our next post will show you how to calculate a truly weighted OEE based on the examples given here.

Until Next Time – STAY Lean!

If you have any questions regarding this post or simply want more information, please feel free to send an email to

Twitter: @Versalytics

59 thoughts on “How to Calculate OEE – The Real OEE Formula with Examples”

  1. I like very much this site because the comments are based in pratical applications and help a lot of users.
    I have a doubt.

    The performance efficiency is a factor in the calculation of OEE. It is a function of cycle time (theoretical time to produce a unit of product):

    Performance Efficiency = (Ideal Cycle Time x Total Prod Qt) / Net Operating Time) x 100

    Total Prod Qt: total quantity of products

    Cycle time is easily measured in continuous production lines.
    However, I am calculating the OEE for a batch process equipment.
    It is a tablet coating equipment. We fill the machine with the entire batch of tablets, the process is carried out and then we discharge the batch of coated tablets. I was thinking of dividing the batch production time by the total number of tablets processed to determine the cycle time of each batch, but I don`t know if it is correct to call it cycle time? Is there another formula to calculate the performance for batch processes?

    Another question. I would like to calculate the capacity of this equipment using OEE, but I need an academic reference of it. Do you know any? As I am attending a master´s degree program and my project will be about the application of OEE in the pharmaceutical industry, I need to reference this calculation.

    Thanks in advance

  2. Hi Sir i would to know hould can i get the “cycle time” for production of goods or per scheduled production. please answer me as soon as you read this comment. thank you so much

    1. Hi Mark, thank you for your comment. I trust the following will help to answer your question.

      The cycle time is the ideal amount of time required to produce a part or product. In my experience, one machine or process may be used to run a variety of parts, each requiring a different cycle time due to size, shape, complexity, or other factors directly attributed to the product itself.

      As such, I recommend performing a time study to determine the cycle time for each part or product that is produced in a given machine. As improvements are introduced, additional time studies will be required to maintain your standards.

      For automated processes, such as automated assembly lines or robotic welding operations, the cycle time is typically stated or shown on the PLC or machine controller and can also be confirmed through a simple time study.

      Processes that are driven by human effort (manual operations) are typically measured using the “button to button” time. The cycle time begins when the operator starts the machine and ends when the operator starts the machine again to produce the next part. This assures that all loading and unloading activities are captured in the total cycle time.

      Note that some companies use the “machine capacity rate” or “plate” rate. For example, a press may be rated to run up to 60 strokes per minute yielding a cycle time of 1 second while the tooling may only be capable of running at 30 strokes per minute yielding a cycle time of 2 seconds.

      I recommend using the part specific cycle time, however, your plant policy may state that the “machine capacity rate” is the goal.

      To establish your cycle time, I recommend performing a time study over a reasonable period of time and sufficient quantity of parts (suitable for your process) to capture any slight variances that may occur during the machine cycle and over the course of the run.

      For processes that rely on human effort alone, it is important to consider factors such as fatigue. This is one of the many reasons that job rotation is becoming common place in many plants.

      As a final note, the Performance factor for your OEE should not exceed 100% as this implies that the process was running faster than the ideal cycle time you already established. If this is the case, understand what changed, document, and perform another time study to update your standard.

      I trust this meets with your immediate requirements and thank you for your question.

  3. Really this help me alot in improving OEE, If you could provide me the downtime calculation like MTTr, MTBF Etc……

    1. Thank you for your comment Mohammed, I’m glad to hear that we have helped to make improvements in your OEE. MTTR and MTBF are based on data collected over time and are summarized as follows:

      MTTR – Mean Time To Repair = Total Corrective Maintenance Time / Total Number of Corrective Maintenance Actions.

      Note that some companies distinguish between response time and actual repair time. For example, it may take someone 15 minutes to respond to a 5 minute repair. The objective is to both minimize the response time and the repair time.

      MTBF – Mean Time Between Failures = Total Operating Time / Total Failures
      Where, Total Operating Time is the actual machine UP Time

      A good application for MTTR and MTBF can be found in spot welding operations where tip changes are quite frequent. Data can be collected over a relatively short period of time to determine the real life of a weld tip before it must be “dressed” or replaced altogether.

      Thank you for visiting with us.

    1. If the Tool change or Tool index time is incurred during the cycle time required to produce a part, the “down time” falls under Performance.

      The time required to complete one full production cycle (“button to button” or “start to start”) is the cycle time. Operations or sequences that occur during the cycle are all inclusive in the cycle time.

      If the tool change is required to produce a different part, the down time falls under Availability.

      Thank you for visiting!

  4. OEE has fascinated maintenance world for quite some time and dominated the discussion space also in a significant way. But I feel while it may have served the purpose of integrating some factors affecting the performance of a plant related to maintenance it has limited us also. It is time for critical analysis of this term and its validity also.
    I am not going to repeat some of the limitations of OEE which has been spoken about in the past such as treating 20%*80%*90% equal to 40%*60%*60% whereas they are not and not acknowledging the relative weightage of the three factors or the cost associated with them etc.
    Instead I am going to speak of two aspects of it:
    1. How do we make use of information on OEE? Obviously we break it into the three components and analyse each of them separately and make an action plan on each of them. What is the additional value derived by it in such a case?
    2. The value of OEE may be in fact giving wrong indication. Look at the following example:

    Let us take a plant suppose to produce 1 component per hour under normal circumstances and let us consider a 30 days month.

    It is shutdown for maintenance for 12 hrs in a month and has a breakdown for 6 hrs. Hence the availability is = (720-12-6)/720*100 = 97.5%
    (loss of production= 18 components)

    Let us assume it had problem in one of the machines foe which they had to run it at reduced rate (75%) for 12days. Though the machine did not stop producing but correcting the vibration problem took long. Hence the speed factor is =(18+0.75*12/30*100 = 90%
    (loss of production= 72 components)

    Let us further assume there was a fault in one of the machines which started generating 6defects per day and it took 3 days to diagnose and rectify it. Hence the quality factor is = (30*24-6*3)/(30*24)*100 = 97.5%
    (loss of production= 18components)

    Let us look at OEE. OEE = (0.975*0.90*0.975)*100 = 85.6%
    If we calculate loss of production by this it is = 720*14.4/100 = 103.7

    Whereas the loss of production actually is = 18+72+18 = 108 which will be reflected by the actual availability figure of 100-2.5-10-2.5 = 85.

    In this example the difference is only 0.6% but one can take more extreme value and find out that it is in fact much more.

    Hence while I fully agree that being aware of, measuring, keeping track of and making action plan against all the three factors is absolutely essential, the more meaningful way is the conventional way. All aware organisations measure all three convert them into equivalent and make action plan for improvement against all of them. If at all there is meaning full way of combining them it is addition. We may give it a name, let’s say Overall Performance for simplicity.

    1. Thank you for your comment. I trust the following will clarify our perspective and also address our concerns regarding your application of the OEE formulas as described in the scenario presented. You will find that the correct application of the formulas for OEE will yield the identical result.

      1. The objective of OEE is not necessarily to create 3 separate action plans, 1 for each of the factors. Rather all factors should be considered as a whole to determine whether correlations between factors exists. The factors serve to isolate 3 aspects of the process that may be contributing to reduced OEE.

      A poorly maintained process can result in excessive cumulative downtime for “band aid” fixes, reduced cycle times (lower performance), and increased quality defects. From this perspective, a single and proper process fix resolves three “correlating” factors.

      In other words, the factors serve to identify both correlating and individual incidents or conditions that may affect them.

      2. Regarding your calculations of OEE, you are attempting to calculate TEEP (Total Equipment Effectiveness Performance), not OEE. As a result, it appears that there is some confusion with the application of the formulas to calculate OEE as well.

      Planned maintenance is not considered as available operating time and therefore is not a factor in the OEE calculation, however, it is required for TEEP.

      Total Time Available = 30 days * 24 hours = 720 hours
      Net Available Time = Total Time Available – Planned Downtime
      Net Available Time = 720 – 12 = 708 hours

      Planned Availability = Net Available Time / Total Time Available = 708 / 720 = 98.33%

      OEE Availability as presented by your “scenario” should be as follows:

      Net Available Time = 720 – 12 hours = 708
      Net Operating Time = 708 – 6 = 702 hours

      OEE Availability = Net Operating Time / Net Available Time = 702 / 708 = 99.43%

      The cumulative (TEEP Availability * OEE Availability) factor is (98.33% * 99.43%) = 97.77%

      Performance as presented by your “scenario” is also incorrect. Your formula assumes 30 days of net operating time when in fact only 702 hours are available after accounting for lost availability. The resulting performance calculation should be as follows:

      If the machine was operating at 75% for 12 days, the performance loss for 12 days = 25%. Therefore, the Ideal Operating Time is calculated as follows:

      Ideal Operating Time = Net Operating Time – Performance Lost Time
      Ideal Operating Time = 702 – 25%*(12*24) = 702 – 72 = 630 hours

      Performance = Ideal Operating Time / Net Operating Time = 630 / 702 = 89.74%

      Finally, the Quality factor is Net Value Added Time / Ideal Operating Time

      Value Added Time = Ideal Operating Time – Quality Losses
      Value Added Time = 630 – (6 * 3) = 612

      Quality = Value Added Time / Ideal Operating Time = 612 / 630 = 97.14%

      OEE = Availability * Performance * Quality
      OEE = 99.43 * 89.74 * 97.14 = 87.2%

      TEEP = 98.33% * OEE = 98.33 * 86.67%
      TEEP = 85.23%

      Calculation variance is the result of rounding only. Not error introduced as a result of the formulas themselves.

      In summary,

      Multiplying each of the factors together, Availability * Performance * Quality, should yield the same result as the following formula:

      OEE = Ideal Time * Total Good Parts Produced / Net Available Time

      OEE = 612 / 702 = 87.2%
      TEEP = 612 / 720 = 85.0%

      This formula easily confirms whether the resulting OEE calculation is correct and eliminates the need to determine each individual factor.

      3. Regarding the significance of each factor, we have also written (and made available on our downloads page) a copy of our cost based OEE spreadsheet that uses cost drivers to determine which factor has the most significant effect from a cost perspective.

  5. Dear sir, We are chemical industry in which we want to implement OEE concept. Can you please help how to implement OEE concept in chemical industry maintenance. Also in chemical industries, Quality of product is depend upon many parameters like raw material quality, process steps, adding times. Then how we calculate quality ? What will be formula for quality of equipment in our industry which is batch type. Please guide.

    1. Thank you for your request for assistance. I have reviewed your website and I am encouraged to note that your quality system is ISO-9001 registered. This suggests that an operating system exists where a frame work for implementing OEE can be established.

      As you may appreciate, OEE is premised on three key factors: Time, Rate, and First Time Through Quality. Regardless of the commodity type, the ideal rate of production through your process is a pre-requisite for OEE.

      The nature of your integration / implementation is best served offline to address your specific needs. I can be reached by e-mail at

      Thank you and we look forward to working with you.

  6. hello sir,
    how to calculate the OEE for continuous production such as paper industries, please give it with example.

    1. “Operator” variation is introduced with each button push and will be more significant with shorter cycle times. To minimize this error, I recommend adding a feature that allows the user to enter the number of parts produced or cycles completed over a measured period of time.

      For example, consider a clock hanging on the wall and measuring the movement of the second hand. Counting 10 movements then pushing the button is likely to provide a better “average” cycle time than averaging the time of 10 presses of the button. It is very doubtful that any of the individual “observed” lapsed times will equal 1 second. The accuracy of the cycle time is misleading since the operator error is likely more significant than the resolution presented.

      Although the intentions are good, we can’t recommend this app as presented. We note that similar functionality is provided on the BlackBerry’s clock app although the data send option is limited. Apple’s clock provides “stop watch” capabilities without the ability to export data.

      Thank you for visiting our site and we’ll keep watching for any future updates.

      1. I agree with you, we cannot avoid error introduced by user (operator). This app is just to have an idea of the speed of a machine. Your idea is very interesting, I will keep in mind for the next update! I usually design machines control software with an internal cycle time calculator that use a on/off signal as trigger (very fast), so it is very accurate, but sometimes we have machines in which the programmer doesn’t provided this calculator and the only way to get it is to use a stopwatch. Unfortunately common stopwatches doesn’t have an instant mean calculator and so I decided to built it by myself because mean is very significant in processes where each cycle time could be different, due to a series of causes. I usually take times looking at both machine internal counter on hmi screen and my app, my error is usually under 100ms that for processes of 10 seconds is acceptable. For next updates I will try to get a signal directly from the machine as trigger ( I don’t know exactly how), this could be an idea for improving accurance.

      2. For automation, I’m accustomed to seeing the cycle time displayed on the HMI screen. After visiting your website, I can appreciate that you would be doing the same.

        It’s good to see comments from machine builders and programmers here.

        Thank you again for your comment.

  7. Hello Redge,
    I have a quick question regarding scrap parts and OEE. I see in the calculations that for each scrap part, it is assumed that there is a complete cycle loss. This may be the case in stamping presses where the quality is assessed after the machine operation.

    However, what if quality can be determined at different points in the cycle?
    For example, if a part is inspected prior to loading to the machine, and a defect is found, it can be rejected before cycling the machine. In this case, there is not a complete cycle loss. If this happens multiple times an hour, it can severely skew the calculations. ie. 20 scrap parts at only a 15 s loss each, compared to a complete cycle of say 60 s each.
    How would you deal with a situation like this?

    1. Hello Martin, this is an excellent question and I agree with your synopsis. The objective of OEE is to capture and identify assignable causes for lost time. In this case I would treat this downtime as an availability loss with the added benefit of knowing the assignable cause (in-process quality defect).

      The quality factor is intended to measure “First Time Through Quality”. The operative word in this case is “through”. If a product is deemed defective prior to entering the process, it doesn’t make sense to reflect this against the quality factor.

      Thanks for visiting!

      1. Thanks for the response. I hadn’t thought of adding it to the Availability calculation, but you are absolutely right. The machine is available to be used, but the operator is spending time looking for a good part to load into it. This is an availability loss.

        And your point about “first time through quality” is spot on, since lean thinking assumes all incoming stock to be good.

        I still don’t have an easy way to track the time loss here, since it is not a complete cycle, but what I have decided to do is assign an average “partial” cycle time to each defective part. The operator spends time dealing with the part, but it is not practical for me to get an exact time for each scrap part dealt with. I am working on a way to automate this time tracking, but for now I will use an average “scrap loss time” for each part and apply it to the Availability metric.
        Thanks again.

      2. Martin, it sounds like you’ve got it and you’re definitely on the right track. I appreciate your original question and your feed back.

        Thank you again for visiting.

  8. Redge :
    Thank you for visiting!

    Hi I am Vinayak Kamath,

    I have a small query on the Tool change time. We have CNC Turning & Machining Centres. We need to index/replace the tool once it gets worn out. This happens many times during the production of a batch of identical parts. We consider this downtime under availability. Is this correct ?

    Thanks in advance.

  9. I am looking for s simple formula that I can use to determine how many pieces a machine center can run in an hour by my take a simple stop watch cycle time study. I used to run production and we had time studies performed to establish the number of pieces required to run every hour.

    1. Juan, you don’t provide much detail regarding your time study method, however, the following formulas may provide the answer you are looking for. We recommend measuring the time required to produce a reasonable quantity of parts (without disruption).

      There are two immediate approaches for a very simple study: 1) Measure the time required to produce “x” parts or, 2) Count the number of parts produced over a fixed period of time. We prefer the first method for processes with a clearly defined “finished” product or cycle.

      Parts per Hour = (“x” parts produced / “y” seconds of time) x (3600 seconds / hour)

      If you have determined the number of seconds required to produce a single part, as implied by your comment, then Parts per Hour = (3600 seconds per Hour) / (Seconds / Part).

      By way of example, if the cycle time is 10 seconds then,

      Parts per Hour = 3600 / 10 = 360

      For scheduling purposes, we strongly suggest using OEE to determine a realistic hourly run rate rather than a pure cycle time.

      Thank you for visiting.

  10. I am implementation of lean management system in aautomobile service centers and i am finding it very difficult to collect datas or i am not able to understand what to collect or the calculations that can be done relating to lean.few of which i know are takt time,vsm etc..can you plz help????

    1. Lean is the pursuit of perfection through the relentless elimination of waste. Data collection efforts should be focused to address areas where waste is prevalent in your operation. You may have to create metrics that meet your needs. Here are just a few examples that you may find helpful.

      Customer Focus: Customers want their cars repaired the right way and in the shortest time possible. So, it may be worth your while to measure Customer wait times, Time to Service (Plan versus Actual), Repeat Services for the same Symptoms / Causes.

      Lean is not a simple matter of measuring “something” or just “anything”. Why and what you measure must be meaningful to you, the company, and ultimately the customer. Your analysis of plan versus actual performance, “things gone wrong”, or “things gone right”, or other metrics that you create should resolve to a corrective action or actions that lead to improvements.

      Lean is not a prescriptive set of measurable data points, rather it is a culture that focuses on the elimination of waste through continuous improvements (daily).

      Thank you for your comment. We wish you the best of successes on your lean journey.

  11. Sir i am appointed to access the OEE of the Carding Machine and i am confused about the Quality as it is difficult to determine the defected Meter run of the output.

    1. Thank you for your inquiry, however, we don’t have enough information to provide you with a meaningful response. Please provide more detail regarding your process.

    1. Tool change over is unplanned downtime – although we know it must occur at some point – and will affect your availability factor.

  12. OEE performance is relative to a baseline for a given piece of equipment. Therefore it is specific to that equipment and not comparable across departments or plants.

    We are told 80% OEE is “world class”. Based in part on how OEE is calculated this can lead to bad decisions like over producing.

    Who on the shop floor actually understands what OEE means and using it for improvement?

    1. The goal is to continuously improve as evidenced by a positive OEE trend. Clearly, equipment and processes are unique to a given machine, department, or plant, and are not necessarily directly comparable. However, a leadership team that truly understands OEE can make informed comparisons between plants and departments including the factors that comprise OEE itself (Availability, Performance, Quality).

      By way of example, consider a plant where availability (which is typical) is significantly less than another and it is determined that tool changes are a significant source of the down time. Many teams attempt to offset excessive setup times by over producing parts. However, by comparison, we learn that one plant has expended time to implement SMED (Single Minute Exchange of Dies) or QTC (Quick Tool Change) techniques to reduce the setup time. Setups that once took hours are now completed in a matter of minutes (literally). The lessons learned and the rewards can be shared where everyone wins.

      Consider another example where a stamping plant is frustrated by poor quality due to material splits and thinning metal due to the poor drawing quality of a commercial draw quality (DQ) steel they are using. Another plant may have experienced similar concerns on a completely different part but found that the cost of upgrading the material to a DDQ (Deep Draw Quality) steel was worth a 100% defect product.

      There are numerous examples of shared experiences that can help to improve OEE at both micro and macro levels. While working with a major automotive supplier, monthly Management Review meetings were hosted by each plant on a rotating schedule. OEE was one of the major topics discussed and a driving underlying theme as it related to financial performance, inventory turns, safety, preventive maintenance, and quality to name a few key indicators. The concept of OEE was clearly understood by the executive management team. This learning was cascaded down throughout the organization – including the shop floor.

      Employees understand run rates. They also understand the quick (back of the envelop) formula to calculate OEE. This is not difficult to teach. Our employees calculate and post their OEE results at their machines at the end of each shift.

      While some organizations may focus on achieving world class OEE, the goal we embrace is a continually improving trend in our OEE results.

  13. We have machine unit of 35 machines comprising of conventional & cnc m/c, welding m/c,
    we manufacture nearly 50 odd parts, our machines are also not fixed for particular products . We need to calculate OEE for each machine monthly basis . Plz support

  14. what if the company has no record of the quality rate or the defects and reworks? What should I assume on the quality level to compute for the OEE? what is the conservative assumption for it?

    1. Assume 100% for quality rather than skew the overall result. Either way you report quality you will have to qualify what happened to the quality factor if it is different from what you assumed.

      I would recommend placing a disclaimer on the OEE result stating that “The quality factor is assumed to be 100% until such time as adequate data has been collected to determine it’s actual value.”

      In this case, the explanation for a reduction in OEE can be explained by simply stating that “Actual values for the quality factor are now in effect.”

      Lastly, in my opinion there is no “industry” standard for the quality factor. For the companies I manage, our target is zero defects and have actually achieved that level for many years.

      I recognize that there are certain process that have inherently higher yields than others and the challenges are, or may be, much more demanding on those processes with higher defect rates.

      The least of your concerns should be benchmarking against others. Rather, focus on your operation with a goal of continuously increasing your OEE month over month. Targets or objectives are great, but simply move in the right direction every month is a step in the right direction.

    1. We provide free templates from our “Downloads” page. Feel free to use or modify as required for your specific processes.

      Thank you for visiting.

  15. There is no need for OEE. Just show each category of loss individually to better understand the issues. Stop trying to build a space ship just to cross the street. Remember, your job is to make complex issues simple to use and understand. Stop trying to hash it up. Your job is to break it down!

    OEE is ‘fake lean’ – not a native lean tool. It is consultant driven. We used OA at Toyota, sorry…

    1. Hi Kevin, to a greater degree you are correct unless the “need” is a corporate mandate to report overall plant OEE that is also a major topic of review at every monthly management review. In this context, “my job” is to ensure that my team understands how to calculate OEE correctly and to understand what is actually being measured. While most who were, or are, exposed to OEE can recite the basic formula, few can actually calculate OEE for a given process, even fewer understand the result, and almost no one is able to calculate OEE where multiple processes, departments, plants, or the entire organization are concerned.

      While one may challenge how meaningful the resulting OEE is, there is no pleasure in corporate executives taking a team to task when few know how to calculate OEE correctly and even fewer understand the result. Measuring OEE alone will not drive change, however, recognize that it is also an inherent measure of our ability to manage our systems and processes such as preventive maintenance to minimize or prevent unplanned downtime and machine faults, scheduling resources (labour and materials) to minimize idle time, problem solving to permanently resolve quality concerns and prevent recurrence, or continuous improvements to increase process efficiencies and performance.

      Over the course of my career, I have enjoyed the opportunity to work with all of Toyota’s manufacturing facilities in North America and a select few in Japan. Toyota’s culture is truly unique and often misunderstood by outside observers. It is worth noting that Toyota never coined the term “lean”. An attempt to apply a prescriptive label to the process or means by which Toyota continues to evolve is ironic and to suggest that a lean strategy can be served by a single core tool alone is even more so.

      It’s great to get feedback on a post that was written almost 8 years and 350,000+ visitors ago.

      Thank you for visiting and taking the time to comment.

  16. Hey Redge, we process an ore that has sizing requirements for the two products produced. For example it has to have x% below 10mm and the second product has to have y% below 20mm in the product. The products can still be sold if it doesn’t conform to these targets although there are penalties involved when it is sold to the customer. How would you incorporate a quality effectiveness factor when the product can still be sold albeit at a lower price?

    1. Hi Leighton,

      This is an excellent question as cascading quality standards are not typically considered by the quality factor. The quality factor is a metric based on time not value, however, using a “value weighted” ratio to measure the level of conformance is reasonable.

      The quality factor is the percentage of ideal process time used to produce good parts as determined by “First Time Through” conformance to required quality standards.

      In this case the quality standard to establish conformance levels is value driven. I would suggest that a cost weighted ratio could be used to determine a weighted average quality factor. This requires reporting quantities of each class separately then calculating an aggregate result.

      If Class A and Class B products are valued at $100.00 and $80.00 respectively, then the Weighted Quantity Factors based on value can be calculated as follows:

      Class A Weighted Quantity = (100 / 180) = 0.5556
      Class B Weighted Quantity = (80/180) = 0.4444

      Multiply Class A and Class B quantities by their respective factors to determine the weighted “average” of quality product produced.

      As an aside …

      The ideal value stream would not include subsequent sort and / or rework processes. The purpose of calculating OEE is to identify and minimize (eliminate) potential sources of variation in our processes.

      What are the challenges to achieving higher yields of product that can be sold at a higher price?

      Would this still be a question if all product conformed to the higher price level quality threshold?

      What is the capability of the current process? What process factors influence the size of the product?

      Thank you for visiting our site and providing the opportunity to serve you.

  17. Very good and detailed analysis of OEE factors and how they are used to calculate Overall Equipment Efficiency. Collection and real time analysis of OEEstatistics can help any plant reduce its downtime considerably and get better productivity. It not only saves on time loss but unnecessary problems caused due to it in the production line.

    1. Hi Jennifer, thank you for commenting on our site. I was also encouraged by your website to provide “Machine Downtime Tracking” solutions.

      The ability to monitor and minimize or eliminate downtime represents a significant opportunity to those who want to continuously improve trends in OEE.

      Thanks for visiting.

  18. Nicely defined!! Overall Equipment Effectiveness (OEE) is a holistic KPI and one must know how to use it to measure the things. A wrong approach can leave a big dent on your ROI. Collecting the right data is very important and you must be able to do it with efficiency. As you have discussed that taking help from some good OEE software can make thing easy. Following the same thing for my manufacturing plant, I am using a downtime tracking and OEE calculation software by Thrive:
    Please also share your experience. Cheers!!

  19. Perhaps you can help me clarify the calculation. My understanding of OEE is looking at the ratios of what actually happened with the standard. I am not seeing anything in your calculations based on what actually happened. Maybe I am missing something?


  20. Hi Redge,

    thank you very much for this greatly written article! I am trying to get my head around OEE and how I can implement it correctly. My question is regarding the calculation of “Time to Produce All Parts at Rate” for the production line. How can I measure the Cycle or the Rate to produce one part when I have transportation duration? This article is from over a decade but I hope my question gets a reply, if not, it is still the best article I read on OEE 😉 -All the best!

    1. Hi Tiho, thank you for visiting our site and reading my post. As for measuring the Cycle or Rate to produce one part when you have transportation duration, I would suggest that you “decouple” your processes and focus on the bottleneck operation or process.

      The bottleneck operation is the throttle that utlimately controls the throughput of your process. Is transportation the limiting control affecting throughput?

      “Transportation” suggests moving materials from one operation to the next and its unclear as to whether this is a batch or single part.

      If you can clarify your process steps / value stream, I may be able to provide a better solution or answer to your query.

      I’ll look forward to receiving more information from you. You can email me directly at or

      Thank you again for your kind words and visiting our site.

      Best regards, Redge

Leave a Reply to Redge Cancel reply
