The Good and Bad of OEE

April 6, 2009
David Berger, P.Eng., contributing editor, says overall equipment effectiveness is a powerful, meaningful metric if you're aware of what it excludes.

For the past 10 years, I've witnessed a steady rise in the interest senior management displays regarding asset management. This trend coincides with the increase in asset cost and complexity, especially plant equipment, making it even more important to manage assets well. Not surprisingly, in response to these trends, top management has been demanding greater visibility into asset health, better control of costs, and improved asset effectiveness. Therein lies the reason behind the steady popularity gain of measuring overall equipment effectiveness (OEE).

OEE is an asset's actual output divided by the theoretical maximum output, expressed as a percentage. The metric is commonly quantified as the product of availability times performance times quality.

This formula is based on the premise that there are three main impediments to achieving the theoretical maximum. First of all, if the asset experiences downtime and is unavailable to produce, then it can't achieve maximum output. Secondly, output is lower if the asset's performance is suboptimal. For example, it might be restricted to a lower speed than the theoretical maximum. Finally, even if the asset is always available and operates at full speed, a percentage of its output might be of unacceptable quality, thereby rendering it impossible to achieve the theoretical maximum output.

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