In manufacturing, OEE (Overall Equipment Effectiveness) is a key KPI derived from 3 underlying metrics, Availability, Performance and Quality. An OEE score of 100% would mean production, with no downtime, at standard credit hours , and no defects. What this means for an organization, is that its delivering top notch quality to its consumers and has its core costs and efficiencies under control..
OEE is the industry norm for manufacturing and is a critical success factor for the business. At a basic level OEE is not difficult to understand, its rather common sensical. Everyone knows it is needed and knows its benefits. However, in order to keep it under control , one must be able to measure, and in order to measure , one must be able to collect the relevant data points.
Once the data acquisition process can be established there are scores of tools that can use this information to provide meaningful insights. The key to OEE is “eliminating waste”. Eliminating waste of time, material and resources.
OEE = (Good Count x Ideal Cycle Time)/Planned Production Time
The above should give the same result as the multiplication of three underlying factors : Availability , Performance and Quality.
OEE = Availability x Performance x Quality