What is OEE (Overall Equipment Effectiveness)?
Overall Equipment Effectiveness (OEE) measures how effectively a machine, line, or plant turns scheduled production time into saleable output. It combines availability, performance speed, and first-pass quality into a single percentage that links shop-floor losses directly to asset productivity, unit cost, and value creation.
Formula
Equivalently, when you combine the three components:
Example
A line is scheduled for 480 minutes with 60 minutes of unplanned downtime, so operating time is 420 minutes. The ideal cycle time is 45 seconds per unit, the line produces 540 units in total, and 525 of them are good.
Availability:
Performance:
Quality:
Overall Equipment Effectiveness:
An OEE of ~82% signals a strong but improvable asset: most planned time is productive, yet downtime and speed losses still represent hidden cost-of-capacity that depresses throughput, margins, and ultimately the firm’s return on invested capital.