Where (x%) =


y% =


Figure 1.5 OEE: Key performance indicator

Figure 1.5 OEE: Key performance indicator

• First-line management - the line or factory: door-to-door OEE

• Senior management - the business, i.e. supplier to customer: value chain OEE.

As the figure illustrates, there is little merit in driving up the machine OEE from 65 per cent to 90 per cent by attacking the classic six losses, if the door-to-door, line or factory OEE stays at 55 per cent. Similarly, you will not satisfy your customers if the value chain OEE remains at 45 per cent.

As stated earlier, company-wide TPM is concerned about attacking all forms of waste. In the illustration, measurement of the machine OEE will allow the operator/maintainer core TPM team to focus their efforts on prioritizing and then attacking the classic six losses of:

• Breakdowns

• Set-ups and changeovers

• Running at reduced speeds

• Minor stops and idling

• Quality defects, scrap, yield, rework

The first two losses affect availability the second two affect the performance rate when running, and the final two affect the quality rate of the resultant OEE figure.

This measurement must also highlight the door-to-door losses outside their immediate control, so that first-line management can prioritize the flows to and from the machine. This form of door-to-door measure will typically highlight the following.

To the machine or process

• Ineffective raw material and tool marshalling

• Lack of forklift and/or forklift driver availability

• Inadequate access to the machine or process

From the machine or process

• Inadequate take-off/take-away facilities (i.e. track reliability)

• Upstream/downstream bottlenecks

• Poor shift handover arrangements

Finally, the value chain OEE measure is a senior management key performance indicator, typically aimed at highlighting the following.


• Poor procurement procedures

• Poor quality and/or lack of consistency of incoming materials/ components


• Lack of responsiveness to customer call-off changes

In our experience, part of the essential planning and scoping stage prior to TPM implementation is a detailed assessment of the three OEE levels outlined above. Do not be surprised if well over half of your lost opportunity costs or costs of non-conformity lie outside the machine or process OEE.

In reality, overall equipment effectiveness measures how well a company's production process or individual piece of equipment performs against its potential. Through the best of best calculation, it also indicates a realistic and achievable target for improvement.

Not only that, but due to the linkages with the hidden losses, it identifies the technique which can best address the type of problem. (Each loss has a different TPM approach to resolving it.)

The outcome of a loiv OEE is a reactive management style. Here the root cause of many of the unplanned events throughout the organization can be traced back to the production process. As OEE is raised through TPM, opportunities are presented to drive out waste and improve customer service.

The route to TPM encourages teamwork and cross-functional learning. As such, TPM provides a mechanism to deliver change when directed correctly, which can have a powerful impact on company-wide perceptions and attitudes. An improving OEE indicates:

• how successful the organization is at achieving what it sets out to do;

• success in establishing a continuous improvement habit;

• buy-in to the company vision and values;

• development of capability to achieve and then exceed current accepted levels of world-class performance.

Some myths and realities of the OEE measurement process can be described as shown in Table 1.1.

Table 1.1 Myths and realities of OEE



OEE is a management tool to use as a benchmark

OEE should be calculated automatically by computer

OEE on non-bottleneck equipment is unimportant

OEE is not useful because it does not consider planned utilization losses

We don't need any more output, so why raise OEE

This misses the benefit of OEE as a shopfloor problemsolving tool

The computation approach is far less important than the interpretation. While calculating manually, you can be asking why?

OEE provides a route to guide problem solving. The main requirement is for an objective measure of hidden losses even on equipment elsewhere in the chain

OEE is one measure, but not the only one used by TPM. Others include productivity, cost, quality, delivery, safety, morale and environment

Management's job is to maximize the value generated from the company's assets. This includes business development. Accepting a low OEE defies commercial common sense

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