OEE (Overall Equipment Effectiveness) is a key performance metric in manufacturing that measures how effectively equipment is being used. It is one of the most powerful tools for identifying production losses, improving manufacturing efficiency, and boosting productivity.
The OEE formula combines three essential components - Availability, Performance, and Quality - into a single percentage:
OEE = Availability × Performance × Quality
But what do these components really mean, and how do you calculate OEE in real life? Let’s break it down step by step.
To calculate OEE accurately, you’ll need to collect the following data from your production process:
| Term | Meaning |
|---|---|
| Planned Production Time | Total time you intended the machine to run |
| Unplanned Downtime | Machine stops due to breakdowns, setups, or changeovers |
| Ideal Cycle Time | Fastest possible time to produce one part |
| Total Pieces Produced | Total units made, including defective parts |
| Good Pieces | Number of units produced without defects |
OEE is made up of three core components: Availability, Performance, and Quality. Each can be calculated using simple formulas based on the data collected in Step 1.
| Component | Formula | Description |
|---|---|---|
| Availability | Availability = Run Time ÷ Planned Production Time Run Time = Planned Production Time – Downtime |
Measures the percentage of scheduled time that equipment is actually running. Accounts for breakdowns, setups, and minor stops. |
| Performance | Performance = (Ideal Cycle Time × Total Pieces Produced) ÷ Run Time | Measures whether the equipment is running at the ideal speed. Highlights slow cycles or minor stoppages that reduce output. |
| Quality | Quality = Good Pieces ÷ Total Pieces Produced | Measures the proportion of good parts produced versus total parts. Accounts for defects and rework. |
Once you have calculated Availability, Performance, and Quality, you can determine your OEE score:
OEE = Availability × Performance × Quality
Each component is expressed as a decimal or percentage. Multiplying the three gives your overall OEE score, which reflects the true efficiency of your production process.
Consider a production shift with the following details:
Calculation Steps:
| Step | Formula / Calculation | Result |
|---|---|---|
| Run Time | Planned Production Time – Downtime = 480 – 40 | 440 minutes |
| Availability | 440 ÷ 480 | 0.9167 (91.67%) |
| Performance | (1 × 400) ÷ 440 | 0.9091 (90.91%) |
| Quality | 380 ÷ 400 | 0.95 (95%) |
| OEE | 0.9167 × 0.9091 × 0.95 | 0.7919 (79.19%) |
| OEE Score | Meaning |
|---|---|
| 85%+ | World-class performance |
| 60–85% | Room for improvement |
| < 60% | Significant losses present |
Note: Benchmarks vary by industry. For example, plastics, electronics, food, and metalworking all have different OEE standards.
Manually calculating OEE is a great start, but it doesn’t scale as operations grow. That’s where HorasOEE software comes in:
👉 Request a demo or see how it works
Calculating OEE is a powerful step toward lean manufacturing and improved production performance. By understanding where your time, resources, and quality are being lost, you can make smarter decisions on the shop floor and move closer to world-class manufacturing efficiency.