OEE: How to Calculate Overall Equipment Effectiveness

What OEE is

OEE (Overall Equipment Effectiveness) shows how much of a machine's scheduled time turns into good parts made at the ideal speed. It comes from Total Productive Maintenance (TPM), and the Lean Enterprise Institute treats it as the TPM measure of how effectively equipment is being used.

Its strength is putting three different problems into a single number: the machine that is down, the machine that runs slow and the machine that makes bad parts. Each one usually has a different owner on the plant floor. OEE makes everyone look at the same result.

An OEE of 100% means making only good parts, as fast as possible, with no stops during planned production time. In practice the number works less as a grade and more as a map: it shows where the minutes go.

What is it for? Comparing shifts on the same line, ranking losses, measuring the effect of an improvement, and deciding whether the problem is maintenance, method or quality before anyone asks for another machine. It works best in repetitive processes with a known cycle, such as machining, molding, filling and assembly lines.

The three OEE factors and the formula

OEE = Availability × Performance × Quality

Planned production time is the time the plant planned to run. Meal breaks, meetings and planned maintenance stay out. Changeovers, material shortages and breakdowns stay in, because they are losses. Write this rule into the data-collection procedure, or every shift will measure it differently.

Ideal cycle time is the fastest cycle the machine sustains with that product, not the cycle people are used to. Because each factor is a fraction of the one before, multiplying them captures the accumulated loss. The Lean Enterprise Institute illustrates it with 90% availability, 95% performance and 99% quality, which give 0.90 × 0.95 × 0.99 = 84.6%.

OEE calculator

Fill in the data for one shift: planned production time, minutes of downtime, ideal cycle time, total parts and bad parts. The calculator shows each factor and points out which one is dragging the result down.

To build it in a spreadsheet, use one row per shift with five input columns and three result columns: availability = (planned - downtime) ÷ planned; performance = (total count × cycle time) ÷ (planned - downtime); quality = (total - bad) ÷ total. OEE is the product of the three cells.

OEE worked example, step by step

Illustrative example. An 8 hour shift has 480 minutes. After a 30 minute meal break, 450 minutes are planned. The line was down 45 minutes for breakdowns and ran for 405 minutes. The ideal cycle time is 0.5 minute per part. The line made 729 parts, 20 of them scrapped, leaving 709 good parts.

There is a shortcut to check it: OEE = (good count × ideal cycle time) ÷ planned production time = 709 × 0.5 ÷ 450 = 354.5 ÷ 450 = 78.8%. Of the 450 planned minutes, only 354.5 were fully productive.

Now see where the other 95.5 minutes went. Reading the loss in minutes is more useful than reading percentages, because it shows where to attack first.

No factor looks serious on its own. Yet out of every 100 planned minutes, more than 21 did not become good parts. Here downtime and speed weigh almost the same, and quality is the smallest slice. So the first attack goes to breakdowns and changeovers, and the second to speed.

Illustrative what-if: if maintenance and changeover work cut downtime in half, from 45 to 22.5 minutes, availability rises to 95% (427.5 ÷ 450). With the other two factors unchanged, OEE becomes 0.95 × 0.900 × 0.973 = 83.2%, a gain of 4.4 points. The same effort on scrap, already at 97.3%, would pay back far less.

The six big losses behind OEE

The most common way to organize losses comes from TPM and names six big losses. The classification varies between authors; this is a practical organization, tied to each factor and to a tool to attack it.

Minor stops of a few seconds are almost never written down by hand. If your OEE looks too high, suspect them: a machine that jams 40 times a shift rarely shows up in the downtime report.

What is a good OEE score, and OEE vs TEEP

TPM literature cites 90% availability, 95% performance and 99% quality as a world-class reference, which works out to about 85% OEE. Treat it as a reference, not a universal target. A process with long changeovers and high variety can have a good OEE well below that. What matters is comparing the same line over time.

TEEP (Total Effective Equipment Performance) is OEE multiplied by calendar utilization. With the example: if the plant schedules 450 of the 1,440 minutes in a day, utilization is 31.25% and TEEP is 78.8% × 31.25% = 24.6%. OEE tells you whether the line runs well when it runs; TEEP tells you whether it is worth running more shifts before buying another machine. For plant-wide numbers, see production capacity.

Common OEE measurement mistakes

• Using the usual speed instead of the ideal one. If the cycle time in the formula already includes the slowness, performance sits near 100% and the loss disappears from the metric.
• Removing real losses from planned time. Changeovers and material shortages are not unplanned time off. Removing them improves the number and hides the problem.
• Comparing OEE across different machines. The metric tracks one line over time. Different products and cycles make a ranking unfair.
• Relying on memory for logging. Downtime without a recorded reason cannot be prioritized.
• Measuring and not acting. The biggest loss of the week must become an action with an owner and a date, ideally in a PDCA cycle.

Next step

1. Pick one machine, preferably the bottleneck. The theory of constraints helps you find it.
2. Write down what counts in planned production time and what the ideal cycle time is.
3. Log for two weeks, by shift: downtime minutes with a reason, total parts and bad parts.
4. Calculate the three factors, build the loss table in minutes and attack the largest one.
5. Post the result at the station on a simple board.

Repeat the measurement for four weeks before drawing conclusions. One good or bad shift says nothing; the trend does. When the largest loss changes type, the action plan should change too.

Frequently asked questions

What is the OEE formula?

OEE = Availability × Performance × Quality. Each factor is a percentage, and so is the result.

How do you calculate OEE for a shift?

Calculate availability (run time ÷ planned time), performance (total count × ideal cycle time ÷ run time) and quality (good count ÷ total count), then multiply the three.

What is a good OEE score?

TPM literature uses about 85% as a world-class reference. The most useful comparison is the same line over time.

Can OEE be over 100%?

Not if the ideal cycle time is correct. A result above 100% means the cycle used in the calculation is slower than the machine's real capability.

What is the difference between OEE and TEEP?

OEE uses planned production time as its base. TEEP uses calendar time and includes utilization, showing capacity you have not used.

Are OEE and TPM the same thing?

No. OEE is the metric TPM, total productive maintenance, uses to measure how effectively equipment is used.

How do you calculate OEE in Excel?

Use one row per shift with planned time, downtime, ideal cycle time, total count and bad count, then three factor formulas multiplied in the last column.

About the author

Vagner Soares

Lean Manufacturing & Behavioral Management Specialist

Over 20 years in the automotive and metalworking industries (GM and Dana), Lean Manufacturing practitioner since 2006. SENAI instructor and mentor in Brazil’s Brasil Mais Produtivo program, delivering consulting, training and audits for 50+ companies, combining quality, productivity and people development.

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