Overall Equipment Efficiency: What is it? Why is it important?

Imagine that you are at the plant, all of the equipment is working, and production seems to flow without problems. That is a dream come true for a maintenance manager. Everything is working fine, right…
OEE IndicatorThe thing is that all equipment is running without stopping; but breakdowns and production stops are not the only factor that affects productivity. Think about a machine that produces something, and due to some problem it only works at 90% of its capacity. The machine is working continuously, but we are still losing 10% of production. In fact, in a 10-hour shift, losses are equivalent to the machine being stopped for one hour!
Similarly, if the equipment produces defective pieces, we get the same effect because each discarded piece should be reworked or replaced by a new one. At the end of the day, the time spent producing defective pieces is comparable to stopping the machine altogether for that same amount of time.

In maintenance terms, the availability (which considers the working-time of equipment) is one of the most important indicators for measuring performance. However, using it alone can be misleading because it prevents us from finding other types of losses, like the ones mentioned at the beginning.
For that reason, a more accurate way to measure how proficient we are at the plant is the Overall Equipment Efficiency (OEE). This indicator considers all the three aspects I mention in the example above: availability, performance, and quality.
This indicator can be applied to any single equipment, to a line, or to the plant as a whole depending on our needs. It is also useful to have all historical values in an available graph to identify trends in order to evaluate the impact of our continuous improvements.


Availability is the first approach in which the time the equipment is running without stopping is considered. So, we know the total time the equipment should be working and the amount of time it is stopped due to different problems. The availability is calculated by:

Availability = (Total Time - Downtime) / Total Time

The result should be a number between 0 and 1 (multiply this number by 100 to get the result %). When the line does not stop at all, the availability is 1 or 100%.


Every equipment capable of production has individual capacity (usually measured in amount of production per working hour). We want to know if the equipment is producing all the pieces that it should. So, we know the amount of working hours, and using the equipment capacity we obtain the maximum amount of units we can produce:

Possible Pieces = Equipment Capacity (in pieces, liters, etc. per hour) x Working Hours

Then, we obtain the performance by dividing the actual number of pieces produced during working hours by the number of possible pieces:

Performance = Manufactured Pieces / Possible Pieces

Again, the result will be a number between 0 and 1 (or in percentage if we multiply by 100). If we worked using the equipment at full speed (full capacity), the performance would be 1 or 100%.


In production lines there are always quality controls to assure that defective pieces do not reach customers. In the number of products we produce, sometimes some of them are separated to be reworked or to be discarded. In this case, we can calculate how quality affects our efficiency using the following equation:

Quality = (Pieces Produced - Defective Pieces) / Pieces Produced

A result of 1 indicates that all the pieces have been produced without defects.

Overall Equipment Efficiency OEE

Once we have established each of the previous indicators, we obtain our Overall Equipment Efficiency by multiply all of them:

OEE = Availability x Performance x Quality

If we have doubts about the formulas, we can always see them in a book or on the Internet. The most important thing is to know the meaning of each term and what aspect they consider. Remember the example at the beginning of the post: having the equipment stopped 10% of working time, producing at 90% of its capacity, or delivering 10% of defective products, all similarly affect the productivity and efficiency. Availability refers to down time, performance reflects full capacity of production, and quality is concerned with the amount of achievable product; thus, we can remember the above formula by:
The OEE = (how much time we stopped the line) x (how far from our full production capacity we are working) x (how well we are producing our pieces)

How about you? How do you measure your performance?

Thanks for reading!


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