OEE: OEE (overall equipment effectiveness) measures how much of a machine's planned production time produces good parts at full speed, calculated as availability times performance times quality.
OEE is a standard way to see where a machine’s time goes. It multiplies three ratios:
- availability: the share of planned time the machine actually ran, after breakdowns and changeovers;
- performance: how fast it ran compared with its ideal speed;
- quality: the share of parts that were good first time.
OEE = availability × performance × quality
Example: a CNC mill is planned for 40 hours a week. It runs 34 hours (availability 85%), at 90% of its ideal cycle speed (performance 90%), and 95% of the parts pass inspection (quality 95%). OEE is 0.85 × 0.90 × 0.95, about 73%.
OEE and utilisation are easy to mix up. Utilisation asks how much of the calendar a machine is used; OEE asks how well it performs during the time it is scheduled. A machine can have low utilisation (no work booked at weekends) and high OEE (it runs well when it does run).
For quoting, OEE explains why estimates and reality differ. If a model assumes ideal speeds and no scrap, every quote is optimistic by the amount OEE loses. Measuring it, often from an MES, tells you how much allowance to build into your rates. Read the machine hour rate guide to see where that allowance fits.
Go deeper: How to calculate a machine-hour rate