What Is OEE & Why Is It Important?

OEE is - Overall Equipment Efficiency. It is a gold standard measure of the success of the manufacturing line in producing quality products

What is OEE

The primary goal of every product manager is to score high in producing quality products that reduce the costs and meet budgetary limits set for the company. Technology is influencing the management process in manufacturing systems to include business Intelligence.  

OEE is part of the business intelligence concepts familiar with every successful manufacturing manager 

OEE (Overall Equipment Efficiency) is a gold standard measure of the success of the manufacturing line in producing quality products.  

In short, OEE is a measure of the actual productivity of a machine or equipment. Many managers and line supervisors are worried about whether they will meet the quality standards required in manufacturing products and remain within the budgetary requirements. OEE helps managers identify the performance of the equipment, a knowledge that can help identify the head costs arising from poorly maintained equipment.  

“If you always do what you always did, you’ll always get what you’ve always got.” 

Henry Ford

What are the factors that affect overall equipment efficiency? 

Though every equipment has its theoretical productivity, it is not practical to attain the complete potential of the machine. However, efficiency can be raised to attain the best results possible with well-maintained equipment and competent operators. Several factors make it difficult to obtain a 100% overall equipment efficiency. These includes:   

1. Availability

Availability is the total time the equipment is in operation, not including the overtime if not scheduled. Planned and unplanned activities influence the availability of the equipment. Planned stops include those done for adjustment, setups, cleaning, and inspections, among others. On the other hand, unplanned stops could arise from breakdowns and temporary idle time caused by erroneous commands, jams, blocked sensors and other faulty issues.  

2. Performance

Performance is the time taken by the equipment to run against the standard time defines the machine’s performance. However, performance is influenced by a variety of factors.  

Some of these factors are environmental. Others include poorly maintained equipment worn out parts, among others. Some operators could also lead to low performance of a machine if they are not experienced enough to command the machine. These erroneous commands can lead to jams and less productivity, hence affecting the performance.

3. Quality

Quality is crucial in the production of defective and non-defective products. The objective of every production line is to produce quality, non-defective products.  

However, there are a variety of things influence the quality of products. These include the operators’ inexperience, defective parts, and any faulty occurrences within the machine or the equipment. 

How is OEE related to business intelligence?

Overall equipment efficiency (OEE) as part of Business intelligence is helping manufacturing units scale up and brings the better performance of companies. Many start-ups are investing in OEE in a bid to improve their delivery timelines and customer satisfaction.  

The statistics show that many successful manufacturers have shown a high score in valuing overall equipment efficiency. By analyzing the performance of the equipment, OEE can help to identify the fault areas and suggest correction strategies.  

OEE is the best metric to analyze the company’s performance and help improve the sales through met timelines and satisfaction.  

Time lost in the production line can result in significant losses in finances, for instant, reduction in production. Maintaining the operators and workers within the production line with machines that have stopped working due to defective parts and poor maintenance results in financial losses.  

Therefore, businesses improve their return on investment by reducing expenditure while improving their income. Overall equipment efficacy enhances the performance and sales in production systems while reducing the externalities that result in financial losses.  

How do you measure OEE?

You need the following data to measure the overall equipment performance of equipment.

1. The number of products without defects – this can be calculated as the sum of the produced goods minus the defective products

2. Actual machine speed – this is the actual production period of the machine

3. Lost time – this is the time taken when the equipment stops

Note, when availability is multiplied by the performance and quality, the measure of the overall equipment performance is obtained.

Why is OEE important?

Various statistics proves the rating of OEE by manufacturers. 45% of plastic and rubber products manufacturers mention that OEE is essential for maintaining steady production. The following are the 10 reasons OEE is important.  

1. Improves production line efficiency

Efficiency measures the production of quality products within a manufacturing unit. Overall equipment efficiency improves the production efficiency.  

The higher the OEE, the better the efficacy in the production line. OEE makes the equipment achieve the best possible performance and thus influences the production.  

2. It acts as an improvement strategy

Overall equipment efficiency helps identify the faults and errors in the equipment. Through this identification, the parameter can be used to suggest improvement strategies for the equipment.  

3. Cost saving

OEE helps in bringing the equipment or machine to its full potential use. Therefore, by attaining the potential use, you maximize the returns and reduce the costs of investing in other new equipment. Additionally, through OEE, you also save on the overhead costs of faulty equipment and the losses incurred in defective products.  

4. It gives you the best oversight of the production line

Overall equipment efficiency gives you the best oversight of the production line. It is not easy to tell where the problem is in a production line. However, with OEE, you can tell where the problem lies and help you prioritize the repair and maintenance practices.  

5. It spurs business growth through improved sales

OEE helps in improving the quality of the products and on-time deliveries. For instance, meeting the order timelines motivates customers and increases attraction. An increase in sales mean additional revenue for the business. Therefore, through influencing sales, OEE can improve the business’s revenue, resulting in improved business performance.  

6. OEE evaluates machines, not people. Don’t blame people.

In the cases when the objectives of the production are not met, there are increased chances of shifting blames to the production line managers. However, OEE measures the performance of the machines. Therefore, the blame does not push to the managers and supervisors for underproduction. It cannot be a source of blame game as it analyses the performance of the machines.

7. Improves competitiveness

Every business seeks for a competitive advantage over the others. The competitive advantage is the distinguishing factor that places a business or company ahead of others. Overall equipment efficacy improves business’s competitive advantage through met production targets and delivery timelines of customers’ orders.  

Satisfied customers are a source of marketing and generates attraction. Having many customers for the business means increasing revenue and competitiveness.

8. Improves the reputation of a business

Overall equipment efficacy influences the performance of the production system in meeting the customers’ orders.  

When timelines are met, customers are satisfied and positively rates the business. Satisfied customers are more likely to tell others refer the company compared to unhappy customers.  

Therefore, when a positive rating is increased, the company’s reputation improves, generating attractions and retaining customers. All these results in improved returns on investment and company revenue.  

9. Improves the scalability of the machine or equipment

Overall equipment efficiency helps in upgrading the production capacity of the equipment. With a high score in OEE, a production line can introduce new products or scale the production of the existing produce higher. Maintaining scheduled maintenance of equipment is more effective. Therefore, it can achieve more production in the manufacturing industry.   

10. Prioritizes production operations

By installing the OEE monitoring application in the mobile phones. The production managers can monitor the performance of the production lines on a real-time basis. Therefore, they can identify the performance and thus prioritize the production operations.  

Business intelligence results in automated technologies and can analyze the OEE at a time in the production units. The measurement of the produced goods and against the equipment’s potential can inform on the performance of the equipment.  

However, the sum of the multiplication of the equipment’s availability, quality, and performance informs the overall equipment efficiency. Diagnosis of defects has never been easy before the development of the OEE parameter. It is easy to tell where the shoe pinches within the production lines through OEE.  


Overall Equipment Efficacy technology (OOE) is what you could be lacking in your manufacturing business. There are a variety of software technologies that are available in the market that configures production lines performance analyses helping to identify the overall equipment efficiency on real time basis.  

Most of these software are developed into mobile applications which you can install in your phone and help you track the efficacy of your manufacturing company. It is not too late to have OEE in your manufacturing business. 

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