Overall Operations Effectiveness (OOE)

What is Overall Operations Effectiveness (OOE)?

Overall operations effectiveness (OOE) is a key metric that measures efficiency and productivity of each asset’s operational processes. It expands on overall equipment effectiveness (OEE) by including other factors, like schedule adherence and capacity utilization. 

This approach provides a full view of equipment effectiveness that includes both performance and how well it uses its capacity.

The broader perspective that you can get by measuring overall operations effectiveness (OOE) helps identify where improvements can be made across the entire production process. Therefore, improving operational effectiveness, not just machinery performance score.

How Overall Operations Effectiveness is Calculated

Overall operations effectiveness (OOE) is calculated using the following formula.

OEE =  Availability × Performance × Quality

Here is what each term in that formula means. Each factor would be expressed as a percentage.

• Availability measures the ratio of actual operating time to scheduled time.
• Performance compares the actual output rate to the designed output rate.
• Quality is the proportion of good units produced out of total units.

For instance, with an Availability of 90%, Performance of 95%, and Quality of 98%, the OOE would be:

OEE = 0.90 × 0.95 × 0.98 ≈ 0.837 or 83.7%

Practical Ways to Use Overall Operations Effectiveness

Simply saying that measuring overall operations effectiveness (OOE) helps enhance operational efficiency doesn’t say much about how a facility or delivery manager should use it. 

So, here are some practical examples highlighting how your facility can use overall operations effectiveness (OOE) to assess and improve productivity.

Identifying Inefficiencies

Overall operations effectiveness helps pinpoint less effective areas within operations. This insight encourages deeper analysis and may reveal new ways to improve current performance. Knowing where the most improvements are needed also helps facilities better allocate company resources.

Benchmarking

OOE provides a benchmark for comparing equipment performance based on production line, shift, plant, or branch. Therefore, managers can better understand operational strengths and weaknesses across the entire company. Having this information helps managers with the decision-making process.

Continuous Improvement

OOE serves as a baseline for measuring the effectiveness of continuous improvement initiatives. By tracking changes over time, it assesses the impact of these initiatives. This ongoing measurement may help managers refine new processes in real time.

For example, if the facility recently purchased new equipment to reduce the number of scheduled hours needed to meet customer demand, OOE can help them assess if the new assets are providing their intended result.

Strategic Decision-Making

Managers use OOE data to make informed decisions about investments in equipment, training, or process changes. 

For example, a car manufacturer may use OOE to evaluate the effectiveness of an assembly line. If the OOE of general production lines is lower than desired, deeper data analysis may be conducted to address issues such as unplanned downtime or slow business processes.

Ways to Improve Overall Operations Effectiveness (OOE)

Improving OOE involves enhancing each component of the formula mentioned earlier. For a refresher, those components include availability, performance, quality, and utilization.

Optimizing Availability

Where availability is concerned, the best improvement strategies are implementing a planned maintenance schedule and rapid repair protocols to minimize downtime. 

Ensuring all equipment is well-maintained ensures that it can operate at its peak during planned availability. With maximum availability, you’ll quickly maximize your entire process.

Enhancing Performance

Ensure equipment efficiency by ensuring it all operates at the same speed as expected. Optimizing operational speed will streamline processes and reduce changeover times. 

However, be careful not to force equipment to run faster than it should. Doing so will cause excessive wear and may lead to sudden defects in products.

Improving Quality

Adopting quality management systems and error-proofing techniques can significantly reduce the rate of defects. This improvement in quality control ensures that products meet the required standards consistently. You’ll also save money by avoiding losses on defective products.

Additionally, it will help you produce the least waste possible and increase customer satisfaction. Both factors influence customer loyalty as you will produce the highest quality products and can advertise your facility’s efforts to consciously reduce waste.

Increasing Utilization

To increase utilization, align production schedules with demand, and ensure all equipment and other assets are used to their full potential. 

Adjusting shifts and production runs to match order volumes can also optimize the use of resources while reducing operational costs.

For example, if a company starts to:

• Schedule maintenance during off-peak hours to enhance availability
• Train operators to minimize setup times for improved equipment performance
• Implement quality checks to catch defects early
• Adjust production schedules to avoid low-demand periods

All of these steps together will go a long way toward maximizing utilization.