# How Do I Determine the Value of OEE?

Overall equipment effectiveness (OEE) can be an accurate representation of overall plant performance. Derived from Total Productive Maintenance (TPM) and the Toyota Production System (lean), OEE is a single, calculated value that represents the plant’s effectiveness in three key performance indicators:

1) availability or runtime, 2) production rate, and 3) quality rate. This straightforward value was intended to be the product of these three values, but has become a convoluted, almost infinite variation of calculations.

The correct calculation for OEE is the product of the availability, production and quality rates and should be calculated as follows:

## Availability Rate

Availability rate is the actual production runtime for a specific time interval divided by the “planned” runtime for the same interval. For example, an asset that is planned and scheduled to operation eight hours per day, five days per week has a total availability of 40 hours. If it has an actual runtime of 20 hours, the resultant availability rate is 50 percent.

## Production Rate

Production rate is the actual gross units produced for a specific time interval divided by the number of units that should have been produced. Technically, the denominator in this case should be the ideal rate as defined by the asset’s design specifications; but in most cases, assets are operating well above the original “nameplate” production rate.

Therefore, the best demonstrated production rate should be used for this calculation. Best demonstrated is simply the best sustainable rate, based on asset history that your plant has been able to achieve.

For example, when an asset produces 1,000 units per hour and its best demonstrated rate is 2,000 units per hour, the resultant production rate is 50 percent.

## Quality Rate

Quality rate should be straightforward. It is the total quality units produced divided by the total or gross units produced. Total quality units is defined as the total (gross) units produced minus all scrap, rejects, reworks and any other units that cannot be sold as prime.

For example, if the asset produces 1,000 total units but 100 units are rejected, the numerator becomes 900 and the denominator is 1,000, or a quality rate of 90 percent.

## Put it all Together

Once these three values are determined, the final OEE calculation is simply the product of the three values, expressed as percentages, or 50% x 50% x 90%, or 22.5%. 