Production managementReading time 12 min

OEE: Know What Goes Into the Denominator

A machine can be running most of the shift and still deliver poor OEE. Availability, performance and quality each remove a different kind of loss. Define the planned time before comparing numbers.

OEE

01Availability, performance and quality

Metric	Calculation	What it deducts
Availability	Actual running time ÷ loading time	Breakdowns, changeovers, material changes, waiting
Performance	(Ideal cycle time × output) ÷ actual running time	Idling, minor stops, reduced speed
Quality	Good pieces ÷ total pieces	Defects, rework
OEE	The three multiplied	—

Three strong-looking factors can still multiply to a much lower overall OEE.

02Six common losses

Loss	Which factor	Typical cause
Equipment failure	Availability	Unplanned stops, waiting for repair
Set-up and adjustment	Availability	Changeover, first-piece adjustment
Idling and minor stops	Performance	Jams, sensor misfires, tens of seconds each time
Reduced speed	Performance	Tool wear, or slowing down out of caution
Process defects and rework	Quality	Parameter drift, material variation
Start-up losses	Quality	Scrap between switching on and settling down

Short, repeated stops are easy to miss unless the data collection captures them.

03OEE versus TEEP

OEE uses loading time as the denominator and asks whether the scheduled hours were used well.
OOE uses operating time, including planned downtime.
TEEP uses calendar time (24 × 365) and asks how much of the machine's capacity is being used at all. It is an investment metric.

OEE and TEEP answer different questions. OEE looks at losses during planned production time; TEEP also accounts for unused calendar time. A high-mix shop with frequent changeovers should not be compared directly with a continuous production line without understanding those differences.

04Find the largest loss first

Low availability → changeover time is the first target. SMED separates changeover work into internal tasks, which need the machine stopped, and external tasks, which can be prepared while it still runs. Converting internal into external routinely halves changeover time.
Low performance → measure the minor stops first. Most plants do not record stoppages under three minutes; making them visible comes before anything else.
Low quality → go back to process capability (Cpk) and the measurement system (GR&R), and establish whether the process is genuinely unstable or the measurement is misjudging.

05Where the data comes from

To calculate the three OEE factors, record running and stopped time, actual output against the ideal cycle, and good versus rejected units. Define each source consistently before comparing shifts or machines.

State comes from machine I/O, current sensing or the CNC interface, far more accurate than a hand-written log.
Output comes from counters, sensors or labour reporting.
Good count comes from inspection records, and the basis for inspection comes from the drawing.

Quality data must be based on the correct acceptance limits. If inspection criteria are copied incorrectly from a drawing, the reported reject count—and therefore OEE's quality factor—can be misleading.