How to Calculate OEE and Use it to Improve Manufacturing Performance

The OEE formula is a straightforward way to measure manufacturing performance. It’s easy to calculate, and the results help you identify problems and opportunities for improvement in your business. By measuring OEE on a regular basis (weekly or monthly), you can track trends and spot early signs of negative trends before they get out of control.

How to Calculate OEE and Use it to Improve Manufacturing Performance

This article will cover everything you need to know about calculating OEE and using it to improve manufacturing performance in your business.

Define the OEE formula

OEE is a measure of productivity. It's a ratio of the amount of time that equipment is working to produce goods, divided by the total time it takes to produce goods. For example, if your machine has an OEE of 80%, then you can expect it to run at full capacity for 80% of its life and break down or require maintenance during the remaining 20%.

You can also think about OEE as being a quality metric, the higher your OEE score, the better quality your product will be. You'll find that high-performing machines are able to produce more parts per hour than low-performing machines (and therefore have higher OEE scores).

Choose an OEE software solution to implement

Once you have decided to implement OEE, it's time to choose an OEE software solution. The best way to do this is by considering the following factors:

  • Ease of use. A good OEE monitoring software solution should be easy enough for anyone in your organization, from plant managers and engineers on down, to use without extensive training or IT support. It should also provide intuitive interfaces, so users can access the information they need quickly and easily.
  • Scalability. Your business may grow or shrink over time; therefore, it's important that any OEE system have the ability to scale with fluctuations in production volume without requiring extensive modifications or upgrades (or hiring more IT staff). If possible, opt for a solution that automatically adjusts for changes in capacity levels so that you don't need manual adjustments every time there's an increase or decrease in demand on resources like labor hours or materials consumed during operations (such as raw materials used during manufacturing).

Set up your first OEE dashboard

Now that you know what OEE is and how it can help your manufacturing operation, it's time to set up your first dashboard. A good OEE dashboard should include:

  • The three main elements of OEE: Availability, Performance and Quality.
  • How these elements relate to each other (i.e., if there are problems with one element, it will likely affect others).
  • An easy-to-understand visual representation of each element's performance over time so that you can quickly identify trends or significant changes in performance over time.

Identify and fix bottlenecks in production

The first step to improving your OEE is identifying where you have bottlenecks in your production. A bottleneck is a resource that limits the amount of product you can produce; if it's down or broken, the whole process comes to a halt. The most common kinds of bottlenecks include:

  • Machines whose speed or efficiency cannot keep up with demand, for example, if an assembly line requires one hour per unit but only has two machines that can do this work in two hours each; then there will be a bottleneck at those two machines until more are added
  • Workers who don't have enough training/skills/time on task; for example, if someone needs three hours to complete their job but only has two available slots during which they're able-bodied enough for physical labor

Use historical data to improve manufacturing performance

One of the best ways to improve manufacturing performance is by using historical data. By tracking your performance over time and identifying trends, you can identify opportunities for improvement and make informed decisions about what needs to be done next.

Here are some things you can do with historical data:

  • Identify parts or processes that need improvement. If your OEE is low, it may be because one part of your process has been substandard for a while, you might want to look at its quality control measures, or even redesign it entirely if necessary.
  • Identify bottlenecks in production times; this will help you optimize workflow so that more products get made faster while still maintaining good quality standards

Calculate OEE with a spreadsheet

For those who don't have access to an OEE software solution, you can use a spreadsheet to calculate OEE. The steps are as follows:

  • Calculate the total number of pieces produced during the period (E). This is the sum of all units produced, regardless of whether they were defective or not.
  • Calculate the number of parts that were defective (F). This can be determined either by counting them or by using an average based on sample data from previous periods.
  • Calculate defectives per 100 units (DPU) by dividing F by E and multiplying by 100%. DPU represents defects per 100 units produced during a given time period in which both good parts and bad ones are included in your calculation; therefore, it will always be higher than zero

You can easily calculate your OEE and use it to improve your manufacturing performance

OEE is a simple but powerful metric that can help you identify and eliminate waste in your manufacturing process. It's calculated by dividing the total number of hours your equipment was running by the total number of hours in a given period (usually one shift). Let's say that you have five machines that run for eight hours each day, so they run a total of 40 hours per day. If one machine goes down for an hour, that would be 4% OEE, not great!

For example, You have five machines running 24/7 with an annualized capacity rate of 100%. Each machine has its own downtime rate, which averages out to 10%. The OEE is therefore 90% (100% - 10%).


OEE is a useful metric because it combines many different types of data into one number. It's easy to calculate and understand, which makes it an ideal tool for measuring performance in any industry. OEE can tell you how well your company is doing and where improvements can be made so that everyone involved has a better experience.