What is the Definition of Overall Equipment Effectiveness (OEE)

Definition of overall equipment effectiveness? And OEE stands for the Term initially used by Seiichi Nakajima in 1960 to measure how efficiently we utilize 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 identify the capacity 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) to identify the various scope of success of lean manufacturing best practices.

Definition of overall equipment effectiveness is a straightforward metric to immediately indicate the status of a manufacturing process and provide 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 it is the best practice 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 a value-added production process.

  • Availability considers 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 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 considers 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 measures the process/equipment’s effectiveness in producing 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. Usually, 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


The quality considers 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 the defective products that need to be reworked later and do not meet the set quality standards.
  • Quality Rate (%) = (Units passed in first go/ Total units Produced) * 100

How to Benchmark OEE

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

So, considering overall equipment effectiveness meaning how to evaluate the good and bad OEE scores is significant to understand

Perfect Production

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

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

Production of all products with 100 % Quality score.

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