IRON LAW: OEE = Availability × Performance × Quality
OEE is a MULTIPLICATIVE metric. 90% × 90% × 90% = 72.9%, not 90%.
Each factor compounds the loss. World-class OEE is 85%+. Most plants
operate at 60-65%. Knowing the TOTAL is useless — you must decompose
to find which factor is dragging performance down.
The Three Factors
| Factor |
Formula |
Measures |
Loss Categories |
| Availability |
Run Time / Planned Production Time |
Uptime vs downtime |
Equipment failures, changeovers, material shortages |
| Performance |
(Ideal Cycle Time × Total Count) / Run Time |
Actual speed vs design speed |
Minor stops, slow running, idling |
| Quality |
Good Count / Total Count |
Yield, first-pass quality |
Defects, rework, scrap, startup rejects |
Six Big Losses (mapped to OEE factors)
| Loss |
OEE Factor |
Example |
| 1. Equipment failure |
Availability |
Machine breakdown, unplanned repair |
| 2. Setup & changeover |
Availability |
Product changeover, die change, cleaning |
| 3. Idling & minor stops |
Performance |
Sensor blockage, jam clearing, small adjustments |
| 4. Reduced speed |
Performance |
Running below rated speed due to wear or material |
| 5. Process defects |
Quality |
In-process rejects, rework |
| 6. Startup rejects |
Quality |
Scrap during warm-up, first-article failures |
Calculation Example
Planned Production Time: 480 min (8-hour shift)
Downtime (breakdowns + changeover): 60 min
Run Time: 420 min
Ideal Cycle Time: 1 min/unit
Total Units Produced: 380
Good Units: 360
Defective Units: 20
Availability = 420 / 480 = 87.5%
Performance = (1 × 380) / 420 = 90.5%
Quality = 360 / 380 = 94.7%
OEE = 87.5% × 90.5% × 94.7% = 75.0%
Diagnosis Steps
Phase 1: Calculate OEE for each production line/machine
Phase 2: Identify the weakest factor (Availability, Performance, or Quality)
Phase 3: Pareto the losses within that factor (which specific loss is biggest?)
Phase 4: Root cause analysis on the top loss (5 Whys, fishbone)
Phase 5: Improve and remeasure
Benchmarks
| OEE Level |
Rating |
Typical |
| > 85% |
World-class |
Top manufacturers |
| 60-85% |
Typical |
Room for improvement |
| 40-60% |
Low |
Significant losses, urgent action needed |
| < 40% |
Critical |
Equipment or process fundamentally broken |