Why Do You Need Overall Equipment Effectiveness (OEE)?

It is not like the industry people just wanted to come up with a fancy new metric for no reason. To understand its physical significance, let us approach the matter in an intuitive way.

Historically, whenever managers and people talked about equipment and industrial plants, they talked about whether everything is up in the plant or not. If a machine was down, it was bad for production and something was needed to be done immediately about it.

Therefore, a natural metric for industrial equipment became the availability (the first component of Overall Equipment Efficiency). The goal became that plant equipment must remain up and never down so that production is never halted.

Once maintenance teams and maintenance management systems evolved, they were able to keep the equipment up most of the time. This goal was now not too hard to chase. Over time, it was not considered an achievement if a maintenance team was able to just keep equipment up most of the time.

The focus now became performance. So, if a motor was not running at its full speed, it meant it is not performing well. It will produce less output which would mean less units produced at the end of the day which was bad for the company.

So, now it was not just about keeping the plant equipment up (high availability) but on top of it, keeping the plant equipment producing at full capacity (high performance).

Overtime, maintenance teams evolved and were able to achieve both a uptime of plant equipment (high availability) as well as kept the plant equipment producing at full capacity most of the time (high performance).

As time went by and quality control philosophy developed, factory owners realized that even if plant equipment has high availability and high performance, it is not enough. It was realized that when plant equipment produced defective equipment, it could not be sold to the customers and resulted in loss of profit.

Eventually, the next natural goal for maintenance teams on top of ensuring high availability and high performance of plant equipment became to ensure high quality production from the machines (the third component of Overall Equipment Effectiveness).

This final cherry of high quality rate over the cake made from high availability and high performance made the overall package which is today called “effectiveness” of plant equipment.

The Overall Equipment Effectiveness (OEE) is therefore a reflection of evolution of plant maintenance goals and plant’s owners expectations from their plant.

Overall Equipment Effectiveness (OEE) is that one metric that encapsulates all three important metrices that have historically been used in industrial plants i.e., high uptime (availability), running at rated speeds (performance) and producing defect-free products (quality rate).

Now that the basic concept of Overall Equipment Efficiency (OEE) is clear, let us go deeper into each of its three ingredients.