Why measure OEE

The popularity of OEE primarily consists in that it is the only well-balanced manufacturing indicator in general use (it takes all circumstances that impact manufacturing into consideration). If we forget any factor or contrarily over-emphasise it, a deficiency is always identified and the OEE value either does not change, or shall even drop.

OEE (Overall Equipment Effectiveness) has a wholly prominent position among the ranks of manufacturing KPIs.

OEE serves manufacturers as an indicator of correct machine usage, helps cut costs and also provides information for further increases in manufacturing efficiency.

Overall Equipment Effectiveness (OEE), a term created by Seiichi Nakajima in the sixties, became the Golden measure of manufacturing productivity.

However, OEE is not only a method for the evaluation of manufacturers’ own operating efficiency; it is also an indicator of their ranking within their field.

Count on us

OEE combines the factors of time, speed and quality in a sensitive and useful manner.
In simple terms, the calculation of OEE comprises answers to 3 questions.



1. Machine Time Does the machine manufacture, i.e., make the product, or not?



2. Speed At what speed does the machine manufacture, i.e., make the products?



3. Quality How the pieces made on the given machine conform to specifications?

In a perfect world, the value would be 100%. In reality, a world class value is considered to be 85%. In practice, most companies do quite a lot of hard work to achieve 65% OEE.
Where can reserves be sought? Let’s look at the individual components of OEE and their definitions.


Availability can be defined as the percentage of time during which the machine is really working as necessary. Availability = (useful time – unplanned downtime x 100%)/(total time – planned downtime). The time during which the machine is available is impacted by both planned and unplanned downtime.

Planned downtime

Excess capacity
Planned breaks
Planned maintenance

Unplanned downtime

Faults and failures
Changes to other products
Delayed material deliveries
Operator availability
Tools or component exchanges
Production start-up or modification


The performance can be defined as the difference between the real production during the time when the equipment was accessible.
Performance = (ideal cycle time x real production* x 100%)/available manufacturing time
* real production includes the quantity of conforming and non-conforming parts

The percentage performance loss factors include:

Idling and short machine downtimes (congestion, tripping of circuit-breakers, etc.)
Reduced speed, long cycle time, lower capacity


Quality can be defined as the total number of manufactured compliant parts expressed in the percentage of the total number of manufactured parts.
Quality = (manufactured parts – rejects x 100%)/manufactured parts

The loss factors that lower the quality percentage include:

Rejects, defects, rework
Variability of the input material
Loss during the start of production
Defects and inaccuracies of the equipment and tools, etc.

! It is important to remember that according to definition, the OEE is always related to the machine (line, manufacturing equipment, …), not to the product, standards, etc.!

Change to a higher gear

OEE measurement is only the first step. If you want to increase total productivity, start by targeting one or more of the losses stated above, e.g., the reduction of downtime. However, increased productivity and OEE is only the first step on the path to an optimal manufacturing process. If you want to continuously optimise the results and achieve the ideal 85%, it is necessary to gradually move from OEE monitoring and measurement to use of predictive and post-prescriptive manufacturing solutions.

Start with us

Prove it for yourself in your own production plant – take advantage of our offer and give Merz OEE a try.