Thursday, March 24, 2022

Overall Equipment Effectiveness (OEE) | How to calculate OEE? | QSQTECH.COM


Hello guys, Today we will discuss on OEE (Overall Equipment Effectiveness). Sometimes, people don't call it overall equipment effectiveness, and call it overall equipment efficiency. Is it true? Is effectiveness and efficiency mean the same thing? If efficiency and effectiveness are two different words then what is the correct meaning of OEE? It is very important to know before start the concept Overall Equipment Effectiveness (OEE). The words efficiency and effectiveness have been used in a confusing way. These two words are popularly used by managers. To begin with, let us understand the clear difference between effectiveness and efficiency before discussing OEE. 

Difference between Efficiency and Effectiveness:- 

Efficiency is a good indicator that indicates the working performance of a machine, operator, or any equipment that is performing in any process. It helps to get the maximum output with minimal resources. It considered the present state. Likewise, It focuses on the process.
For example - Any operator is running the machine and getting the production, and we are monitoring the efficiency on daily basis. In this we are doing work consistently. Its objectives are, refers to complete the task with minimal cost, optimum utilization of resources and doing this in cost-effective manner. 


Peter F. Druker (1909 - 2005), who is an American management guru. According to him, Efficiency:- Is doing things right? 
It means that if you're doing things right, then you are efficient for to do this work. 
Formula of Efficiency:- Output/Input

Effectiveness:- Is doing the right things?
It means that if you are doing the right things. Then you will match your output with target. 
That is, if the target we set is matching the output, then it will effectiveness for us. 

This is also a good indicator which indicates the working performance of machine, operator or any equipment. It measures our output to desired goal. It focuses on the results. It considered the future state. It means that, with the efficiency with which we are working, we will achieve the target. In this we are doing innovative way of working. Its objective is, refers to complete the task on time, no matter whatever the cost. 

Task complete at give time.


Efficiency and Effectiveness are useful management tools and both are popularly used by managers. These are very useful for monitoring and evaluating machines or employees output. Both are helping to have a clean mind for innovation and creativity. 
Both are the performance indicators. This is help to get things done on time and avoid mistakes. 
We are given one also example to understand the difference between Efficiency and Effectiveness:-
Manager given task to his 2 engineers to produce 1000 nos of products in their shift. Then, the engineer of Shop-1 completed his work in 4 hours by consuming 20 manpower and 100 units of electric power to make 1000 parts.
On other hand, the engineer of Shop-2 completed his work in 8 hours by consuming 25 manpower and 200 units of electric power to make 1000 parts. 
Here, Shop-1 engineer made 1000 parts in less time, less manpower and less electricity power than the shop-2 engineer. 
It means that shop-1 engineer is working on their efficiency and the engineer of Shop-2 has achieved his goal also of making 1000 nos products but has consumed more time, more man power, and more electricity power as compared to the shop-1 engineer. It means that shop-2 engineer is working on effectiveness and focused on achieve the target only no any attention on resource's consumption.

Relationship between Efficiency and Effectiveness:- 

Efficiency and effectiveness are not only differences between the two but also have some similarities and relationships. Let's try to understand the relationship between Efficiency and Effectiveness. Efficiency and effectiveness are equally important to accomplish a task, it has to be done without wasting resources. Just as there are two sides to the same coin, effectiveness and efficiency are also two sides of the same coin, and that coin is management. 
Management says that the main priority of any person should not be that he completes his work on time. At the same time, it should also be remembered that this is the right way to finish the work using the least amount of resources. So finishing the work at the right time, that too, with less resources, is the main object of both the management. That's why there is a relationship between these two. 


OEE is a measure of the performance, availability and quality of any manufacturing process or machine by which we measure it. 
In short, It is a measure of how well the manufacturing process or machine is utilized as compared to its full potential, during the periods when it is scheduled to run. 

How to Calculate OEE?

There are three factors that measure the OEE of any machine:-
  1. Availability
  2. Performance
  3. Quality 

It is the ratio of Availability, Performance, Quality. 
OEE = Availability x Performance x Quality

1. Availability:- 

Availability is that, for how long was the machine available for actual production out of total production time. If the machine was available for 07 hrs of actual production in full shift, and the shift time or planned production time is 08 hrs. Out of which 01 hour waste due to planned and unplanned stoppage. It means that machine was running for 07 hrs. 

Formula of Availability = Actual production time / Total available production time

Availability = 7/8 = 0.875  or 87.5%

Unplanned and planned stoppages during planned production are taken into account of availability. A 100% availability Score means that the machine continues to run smoothly during the available production time. 

2. Performance:- 

Performance is that, for how fast the machine produced output during actual production time. 
For example:- A machine produces 400 pieces in 07 hours. And the actual production was 370 pieces in 7 hours. 
Planned production qty = 400 pieces
Actual production qty = 370 pieces
Formula of Performance = Actual production qty / Planned production qty

Performance = 370/400 = 0.925  or 92.5%
So this means that it gave 92.5% performance due to short stops and slow cycles. 
Slow cycles and short stops are taken into account performance. A 100% performance score means that the process or machine is running as fast as possible of its full potential. 

3. Quality:- 

Quality is that, for how many pieces are of good quality produces during the production time. 
E.g. A machine is produced 400 pieces of  total production. Out of which 20 pieces will have to be rework and produced 10 pieces setup rejections and 04 pieces were rejected in the process. 

Formula of Quality = Ok qty / Total production qty

Quality = 366/400 = 0.915  or 91.5%
It means that 8.5% rejection and rework pieces and 91.5% good pieces are produced during production. 
Defects like setup rejection, process rejection and including parts that need Rework are takes into quality account. A 100% score of quality means that there are no Defects produced during production (only Good Parts are being produced). 

So, OEE = Availablity x Performance x Quality

OEE = 0.875 * 0.925 * 0.915 = 0.740  or 74%
OEE = 74%

We hope you will understand this topic. 

Thank you. 

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