What is the Definition of Overall Equipment Effectiveness (OEE)

Definition of overall equipment effectiveness? and OEE stands for Term initially used by Seiichi Nakajima in the year 1960 to measure how efficiently we are utilizing our equipment. Seiichi Nakajimn was a Japanese citizen and the inventor of total productive maintenance (TPM).

OEE cannot be a measurable number but it can be widely used to find the scope of improvement in a manufacturing process and identifies the scope to increase productivity with optimum resources.

Definition of Overall Equipment Effectiveness

In several organizations, the Definition of overall equipment effectiveness is used as a key performance indicator (KPI) and to identify the various scope of success of lean manufacturing best practices.

Definition of overall equipment effectiveness is a very simple metric to immediately indicate the status of a manufacturing process and providing a frame of improvement in the process. Now ques is that what is overall equipment effectiveness.

OEE stands for Overall Equipment Efficiency (OEE), overall equipment effectiveness meaning is the best practice that is assigned for best improvement opportunities in manufacturing.

Overall Equipment Effectiveness formula

The preferred OEE calculation is based on the three OEE Factors: Availability, Performance, and Quality.


OEE = Availability × Performance × Quality


The availability rate quantifies how much the production equipment is available to run for a value-added production process.

  • Availability takes into account all events that stop planned production long enough where it makes sense to track a reason for being down (typically several minutes).
  • Availability is calculated as the ratio of Run Time to Planned Production Time:
    Availability = Run Time / Planned Production Time
  • Run Time is simply Planned Production Timeless Stop Time, where Stop Time is defined as all-time where the manufacturing the process was intended to be running but was not due to Unplanned Stops (e.g., Breakdowns) or Planned Stops (e.g., Changeovers).
  • Run Time = Planned Production Time − Stop Time


The performance takes into account anything that causes the manufacturing process to run at less than the maximum possible speed when it is running (including both Slow Cycles and Small Stops).

  • Performance rate is the measure of the effectiveness of the process / Equipment to produce parts within defined cycle times.
  • Performance is the ratio of Net Run Time to Run Time. It is calculated as:
    Performance = (Ideal Cycle Time × Total Count) / Run Time
  • Performance loss considers all factors responsible for less run of the equipment at its maximum possible standard running speeds. Normally these factors are slower cycle time, Small unplanned stoppage, etc.
  • Performance rate = (Actual output product line / Ideal output to be delivered from the line based on cycle time in total available time) *100


Quality takes into account manufactured parts that do not meet quality standards, including parts that need rework

  • Quality rate or First-time pass yield is the measure of Quality performance and it quantifies how robust the processes are to deliver consistent Quality Results.
  • Quality is calculated as.
    Quality = Good Count / Total Count
  • The factors responsible for quality loss are mainly the defective products that need to rework later not meeting the set quality standards
  • Quality Rate (%) = (Units passed in first go/ Total units Produced) * 100

How to Benchmark OEE

The Benchmark of OEE is very important as it can be compared to the performance of used equipment from set standard industry parameters and applicable to similar assets using in-house operations.

  • A 100% score of An OEE is an ideal production. It means we are manufacturing defect-free products at full speed without any breakdown or stoppages.
  • 85% score of an OEE can be considered as excellent manufacturing and can be considered as a long-term target of any organization
  • 60% score of An OEE can be considered as good but needs effort for improvements in the production system
  • 40% An OEE score can be considered as bad operation and need to restructure to improve productivity, cycle time, or defect rates.

So, considering overall equipment effectiveness meaning on how to evaluate the good and bad OEE score is very important to understand

Perfect Production

Perfect production is called when production is done at full capacity without any time loss without losing any quality of the product. OEE stands for the overall equipment effectiveness formula.

Production of all products with 100 % Quality score.

So Here you will get the answer of what is overall equipment effectiveness and one stands for, the definition of overall equipment effectiveness.

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Hello, this is Manoj, A Soldering and DIY Tool expert. Writing is one of my hobbies. With more than 20 years of broad experience. I love researching, discovering, and sharing new products with others, I hope you’ll enjoy the greatest featured products to make life easier, more fun, and more productive.

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