How to calculate OEE in lean manufacturing?

What is OEE?

OEE (Overall Equipment Effectiveness) is a term used for measuring productivity in the manufacturing process. It is to calculate the percentage of time an equipment is truly productive. OEE is the main KPI of production to check the productivity of an equipment / plant. For calculating OEE of the plant or multiple machines, we can calculate by doing average of all machines. Again use average method to calculate OEE of plant or multiple machines in a month. Seiichi Nakajima developed the concept of OEE.

OEE, Overall Eqipement Effectiveness

3 Components of OEE :

There are three factors for calculating OEE. These are Availability, Performance and Quality. Let’s understand each one as below:


It is the percentage of time an equipment is available for production out of the total available time. It means that if there is a stoppage in the equipment, then that will be subtracted from the total available time. Stoppage can be plan and unplanned in this category. For example tool setting on machine is in plan category. But machine breakdown is in unplanned category.

Availability ratio

Availability % = (Total available time – Stoppage) / Total available time *100


It is the performance of equipment as per defined cycle time. For calculating performance there can be effects of slow cycle time and small stoppages.

Performance ratio in OEE

Performance % = Production Quantity / ( Net available time * Cycle Time )*100.

Performance % can be calculated as Production quantity / Target production quantity as per cycle time.


It is the percentage of good quality products produced out of total production. Good quality products are total rework and rejection subtracted from total production.

Quality ratio in OEE

Quality % = Total OK Products / Total Production *100

Overall Equipment Effectiveness (OEE) calculation :

OEE is the product of Availability, Performance and Quality. OEE is calculated in percentage.

Overall equipment effectiveness,OEE

OEE % = Availability % x Performance % x Quality %

6 Big Losses:

There are 6 big losses in the manufacturing process. For calculating OEE, we have to calculate all these losses.

  1. Unplanned stops ( Equipment breakdown)
  2. Planned stops ( Setup and adjustments)
  3. Small stops ( Minor stops)
  4. Slow cycle ( Reduced speed)
  5. Production rejects ( Process defects)
  6. Startup rejects ( Reduced yields)
Availability LossPerformance LossQuality Loss
1. Unplanned Stops ( Breakdown)3. Reduced speed5. Rejection & Rework
2. Planned Stops ( Tool / Machine setup)4. Idling & Minor stops6. Setup Rejection

Example of calculating OEE:

Calculate OEE by considering a shift of 8 hrs, Machine breakdown of 30 minutes, Total production of 3800 parts and rejection of 20 parts and target as per cycle time is 4000 parts.

Availability = (Total available time – Breakdown time) / Total available time *100

Availability = ((480 – 30) / 480)*100 = (450 / 480)*100 = 93.75%

Performance = Production Quantity / ( Net available time * Cycle Time )*100

Performance = (3800 / 4000) *100= 95%

Quality = Total OK Products / Total Production *100

Quality = (3780 / 3800) *100 = 99.47%

OEE = Availability x Performance x Quality

OEE = 93.75% x 95% x 99.47% = 88.59%

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