OEE: What It Is and Why It Is Essential for Your Industry

You can’t improve what you don’t measure.

Monitoring the performance of processes and equipment allows companies to identify losses, understand their causes and make decisions based on real data, not assumptions.

Efficient measurement is the starting point for continuous improvement initiatives, such as Lean Manufacturing.

On the factory floor, this means identifying bottlenecks, production deviations, machine failures or even inefficiencies in the use of time and labor.

In this scenario, performance indicators stand out as strategic tools.

In this article, we will explain what OEE is, its importance for the factory floor, challenges that can be encountered when measuring it and how to overcome them. Be sure to check it out.

WHAT IS OEE?

Overall Equipment Effectiveness is an internationally recognized measurement/metric that verifies how efficient a machine or production line is really being.

SEBRAE states that the OEE aims to “identify whether equipment is being used efficiently, whether it is performing as expected and producing quality products. In this way, possible bottlenecks and/or underutilization of production capacity can be detected”.

Therefore, it shows how much of a machine’s total available time was effectively used to produce at ideal speed and perfect quality.

Efrain Alberto Sánchez, Operational Excellence/Solutions at QAD Redzone Latin America, states that “starting to monitor OEE is crucial to understanding operational efficiency. We cannot improve something that is not measured. OEE can reveal opportunities for significant improvements, helping companies become more competitive in the market”.

OEE INDICATORS

To understand the real efficiency of industrial equipment, it is not enough to know whether it is on or producing; it is necessary to look deeper.

OEE does this by dividing the analysis into three fundamental indicators, which reveal where the main losses occur in the production process.

Each of them represents a critical stage for production to reach its maximum potential. Check it out below:

AVAILABILITY

This is responsible for measuring how much time the equipment was actually available to produce, in relation to the planned time.

This includes losses due to unplanned downtime (breakdowns or failures) and planned downtime (maintenance, tool changes).

To find out the availability of your factory, you need to use the formula:

availability = (production time / available time) x 100

PERFORMANCE

This assesses whether the equipment is operating at the ideal speed.

Even if it is on and working, if it is slower than expected, this represents a loss of performance.

Performance can be calculated using the formula:

performance = (total quantity produced / theoretical production quantity) x 100

QUALITY

This indicates the proportion of good products in relation to the total produced.

Any part that needs rework or is discarded is considered a loss of quality.

While quality can be understood through the formula:

quality = (quantity of quality items / quantity of items produced) x 100

Read also: Capacity Requirement Planning: What It Is and 7 Tips to Increase Efficiency

HOW TO CALCULATE OEE?

Measuring equipment efficiency is essential for any industry seeking to increase productivity and reduce waste.

Calculating OEE allows you to clearly identify where losses are occurring.

To calculate OEE, the company can use the formula:

OEE = Availability × Performance × Quality

WHAT IS A GOOD OEE SCORE?

Efrain Alberto Sánchez explains that “maintaining a good OEE is important to maximize productivity and minimize waste. A high OEE indicates that production is being carried out efficiently, helping to meet market demand.”

The OEE score ranges from 0% to 100%.

Total production efficiency would be to achieve a score of 100%, but this is unlikely to happen in industries, as it is as if they were operating 24 hours a day, seven days a week without interruptions.

According to Efrain, a value above 85% is considered an excellent OEE for world class production, and values ​​between 60% and 75% are acceptable, depending on the type of industry.

BENEFITS OF OEE FOR INDUSTRIES

Monitoring OEE goes far beyond calculating a number; it involves clearly seeing where the real opportunities for improvement lie within the factory.

When used strategically, OEE becomes a powerful tool for optimizing processes, reducing waste, and boosting productivity.

Below, we highlight the main benefits that make this indicator indispensable for industrial management.

IDENTIFYING LOSSES

OEE reveals exactly where the inefficiency lies, such as frequent downtime, slow production, or many defective parts.

Allowing the team to act directly on the cause of problems, correcting errors, reducing rework and wasting materials.

INCREASED PRODUCTIVITY

By improving availability, performance and quality, production volume increases without the need to invest in new machines or more shifts.

It means maximizing what already exists, using time more intelligently.

DATA-BASED DECISION MAKING

With OEE being monitored regularly, decisions are no longer based on guesswork and are guided by data collected through analysis.

This improves the focus of factory floor teams, as they can plan more efficient solutions.

REDUCED OPERATING COSTS

With mapped losses and corrective actions, the factory can produce products efficiently, delivering them on time.

This reduces costs with rework, wasted raw materials, energy and corrective maintenance.

GREATER INTEGRATION BETWEEN TEAMS

The indicator allows teams to work together, exchanging information that can be valuable to other teams.

This encourages collaboration and gives employees a greater voice.

MAIN CHALLENGES IN INCREASING PRODUCTIVITY IN INDUSTRIES

According to QAD Redzone, there are six problems that directly impact productivity in industries, which are:

Planned shutdowns

These interruptions are necessary for maintenance, but they still represent losses, as they interrupt production.

Unplanned shutdowns

Unexpected failures, such as machine breakdowns, cause interruptions in the production process and generate costly delays.

Micro shutdowns

These are quick interruptions, but despite being short, these pauses have a strong impact on productivity.

Slow cycles

When equipment operates below the ideal speed, there are losses in capacity and an increase in production time.

Rejects at start-up

Shortly after product changes, it is common for the first items produced to not meet quality standards, due to the process stabilization time.

Rejects during production

Defects generated throughout the process result in wasted material and labor time.

Read also: 5 Tips for Retaining Talent and Increasing Productivity in Industry

5 STRATEGIES TO INCREASE YOUR INDUSTRY’S OEE

Improving the OEE score is a strategic objective for industries seeking to increase their operational efficiency.

It is not enough to simply produce more; you need to produce better, faster and with fewer downtimes and defects.

To help your company, we have selected five strategies that will help increase the OEE score. See below:

Predictive Maintenance and Machine Monitoring

Predictive maintenance has a direct and very positive impact on the OEE score, as it helps reduce unplanned downtime and maintain optimal equipment performance.

Proactively schedule repairs and identify the root causes of recurring problems, optimizing maintenance processes.

The role of IIoT

The Industrial Internet of Things (IIoT) has become a great ally for industries that want to strategically improve OEE.

By integrating sensors, machines, and systems into smart networks, IIoT enables the automatic, real-time collection of production data, enabling a significant improvement over manual measurements or delayed reporting.

Automating data collection and reporting

Automating data collection and reporting is a powerful strategy for increasing OEE because it brings speed, accuracy, and real-time visibility into production performance.

For Efrain Alberto Sánchez, “technology is key to helping identify issues quickly, in real time, optimize performance, and facilitate informed decision-making to improve efficiency.”

With the help of smart sensors and technologies, teams can make decisions based on live production data, share knowledge, and detect subtle patterns and anomalies that may escape manual observation.

Culture of continuous improvement

A culture of continuous improvement encourages employees to constantly look for ways to do better, even when everything seems to be “working fine.”

This creates a proactive environment where small improvements are made on a regular basis, rather than just in response to failures.

Involving operational teams in decisions and improvements, listening to their suggestions and recognizing contributions, helps the company to have a more proactive environment.

Employee training

When teams are well trained, they make better decisions, react faster to problems and operate equipment more efficiently and safely.

Trained operators can identify early signs of failures and take action before they become serious downtime.

Ready to increase productivity in your industry?

QAD RedZone is the ideal solution for industries that want to boost OEE scores and, at the same time, increase team engagement on the factory floor.

With sensors installed on machines and the support of experienced professionals, the tool allows you to monitor operations in real time, identify opportunities for improvement and promote agile and collaborative communication between teams, strengthening a culture of continuous improvement.

In addition, you can see significant improvements in your OEE score in just 90 days, such as:

🔹 29% increase in productivity,
🔹 14 points increase in OEE;
🔹 32% reduction in employee turnover.

This means more performance, more control and faster decisions based on reliable data.

Do you want to accelerate the results of your operation?
Talk to a Vockan specialist and find out how to improve your factory’s OEE with greater speed and collaboration.