OEE Calculation Exposed

By Devin Baldwin
31 Oct 19

OEE has been hiding something from you.

OEE has been used in manufacturing plants all over the world for decades to measure equipment effectiveness. It is simple to calculate, too. Just multiply three industry standard metrics together. However, once you dig deeper into the math, it turns out that your OEE calculation is reporting something entirely different.

The OEE Calculation(s)

Before I get into the math, let’s talk about the foundational equations that are used for OEE calculation. Each of the three contributing metrics expose an inefficiency.

Availability and Performance expose inefficiencies caused by downtime, but they each take a different approach. Both use Run Time, which is how much time a line actually ran, but Availability uses Planned Production Time, and Performance uses Ideal Run Time (which is the product of Ideal Cycle Time and Total Count).

Availability Formula
Perforomance Formula

Quality reveals inefficiencies caused by bad parts.Quality Formula

OEE is the result of Availability, Performance, and Quality. In order to illustrate the nuances of OEE, I’m going to rewrite the OEE calculation using the raw components of the contributing metrics.

OEE Formula

Here’s where it gets interesting. Run Time and Total Count are cancelled out since they are both in the numerator and the denominator.

OEE Formula Cancelled

Now we can rewrite the OEE calculation like this:

OEE Formula Simplified

Just to validate the math, here are a few examples of OEE, calculated the long way, and calculated the short way:

Line Name

Run Time

Planned Production Time

Ideal Cycle Time

Total Count

Good Count

Line A

450 minutes

480 minutes

.42 minutes



Line B

400 minutes

420 minutes

.18 minutes




Line A OEE long calculation:

OEE Example 1 Long

Line A OEE short calculation:

OEE Example 1 Short

Line B OEE long calculation:

OEE Example 2 Long

Line B OEE short calculation:

OEE Example 2 Short

As you can see in these two examples, the end result is exactly the same no matter which formula you use. I encourage you to test these formulas using metrics from your plant.

What Is Your OEE Calculation, Truly?

What does OEE actually mean, then? 

OEE is actually a ratio of the Ideal Production Time to Planned Production Minutes. Ideal Production Time is how much time it would take to produce parts in a perfect world with no downtime, no defects, and lines are producing parts as fast as it possibly can. The perfect world doesn’t exist, and Planned Production Minutes accounts for the inevitable downtime and defects.

Does this mean that your OEE calculation is useless? 

No. Not at all.

It can be used as an indicator, or as an invitation for a conversation. OEE by itself can’t tell the entire story. If your plant is using OEE exclusively, consider including Availability, Performance, and Quality in your OEE report as well. L2L’s OEE report includes all 4 metrics on a common trend chart.

At the very least, please be aware of what an OEE calculation can actually tell you. And, on the flip-side, please be aware what OEE can’t tell you. OEE has never swung a hammer, and most definitely can’t turn a wrench. 

OEE doesn’t lie, but it can’t tell the whole truth. In all reality, no metric tells the whole truth. There isn’t a single report that can match the data you can gather from your most valuable asset: Your coworkers. 

So, next time your OEE takes a dip, take a walk. Have a quick chat with the line operator. It’s the only way to learn what OEE has been hiding from you. 

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