Leveraging Overall Equipment Effectiveness in Manufacturing

machine worker

Equipment Effectiveness

Leveraging Overall Equipment Effectiveness in Manufacturing


How do you truly measure your facilities performance? OEE (overall equipment effectiveness) is a great measure that takes three core metrics and rolls them up into one key performance indicator (KPI) that shows true operational performance.

Overall Equipment Effectiveness, or OEE, in its purest form is simple and easy. Yet we as leaders often make it too difficult to understand. We get in the habit of using the term loosely in our manufacturing plants and find ourselves not truly teaching it to our teams. Maybe because most don’t understand it themselves or maybe because we fall into that trap that “it’s always been this way.” This mindset causes frustration and lack of total employee ownership.

OEE = Overall Equipment Effectiveness. In other words, how effective is your company’s biggest assets, their equipment. It is meant to be a performance measure that provides your organization a better understanding of manufacturing operations and should be used as a KPI for your performance system


How is OEE Calculated?

Now that we have defined OEE, how do we calculate it, and how is it measured? It is simply A(availability) x P(performance) x Q(quality). Leadership tends to make it harder to understand and utilize than it is. OEE is great when used consistently from machine to machine and plant to plant and it is best to establish a baseline that is then compared weekly or monthly using the same formula to show true performance. It can also be a great tool to show off your Continuous Improvement efforts and can be used to create friendly competition between shifts and departments.


Benchmarks of overall equipment effectiveness

In the PbySM Process Industries Performance Study where practices and performances in place at 153 manufacturing facilities were examined found that for the past year, respondents noted that overall equipment effectiveness percentage rate was 63.4% on average. While this fell within a typical range, there’s plenty of room for improvement.

Where does your manufacturing organization fall on the benchmark scale?

All organizations have room for improvement and these benchmarks are meant to give you a starting point.


OEE Analysis

So how do we improve OEE? Beyond looking at OEE in a silo in terms of a single piece of equipment or area, or even a single plant, it is best to consider the improvements realized across your plant or organization. It can also be used to capture and define losses found in manufacturing processes as it relates to; scheduled downtime, unscheduled downtime, rate losses, and yield percent loss. Once these losses are identified you can begin to identify and prioritize improvement opportunities.

Beyond the numbers, letting your employees own the metrics and then improve upon them through the tools and teams within a performance system, such as the Milliken Performance System, can truly make your OEE soar. However, it is important to keep in mind that before your employees can own it, they must understand it. Discussing it in meetings and posting it in a highly visible place are no brainers, but really helping your employees understand it and explaining the “why” behind measuring it are the true keys to success. When everyone understands what it is and why it is important for their department/factory, they tend to buy in.

So remember,

  1. use terms that your people will understand
  2. use real factory examples
  3. teach it at the line/plant floor level
  4. create friendly competition between shifts and departments

How do you measure improvement in your facility? OEE.

How do you improve OEE? Let you employees manage that through their performance system.


Are you ready to achieve improvements to your OEE and plant performance? Let Performance Solutions by Milliken help get you started. Not familiar with our services? Learn more about our Operational Excellence Consulting. Ready to get started? Contact us today.