Calculating OEE – have you got it right

The two most common methods of calculating OEE is by either using Equations or the Time Loss model

Calculating OEE – have you got it right

by Ross Kennedy, 29 October 2018

The 2 most common methods of calculating OEE is by either using Equations which involves multiplying Availability, Performance Rate and Quality; or by using the Time Loss model where you start with Available Time then remove all the time associated with downtime, rate and quality losses.

Both methods, if done correctly, will give the same OEE result, however we have found the Time Loss model will provide much more detail regarding where the loss opportunities are.

Another measurement tool for calculating OEE is the High Level OEE (HLOEE) equation which is based on a simplified version of the Equation method.

20181029 HLOEE Calculation

It is a very simple and accurate way to calculate OEE, however it does not outline where the losses are coming from.

When capturing raw data to calculate OEE for either of the methods above, there are three issues you need to consider:

  1. If recording is captured manually, it may not be very accurate especially when it comes to minor or short duration stops;
  2. If recording is captured automatically, often the reason or reasons for the minor or short duration stops are poorly recorded resulting in a high level of ‘other’ losses; and
  3. If poor definitions are in place for key losses such as Ideal Speed, Available Time and some of the Quality losses, OEE calculations can be distorted.

Once you have selected your OEE Calculation method and considered all the issues, it is important to remember that the whole reason for collecting Loss information is to make improvement decisions. One of the most common tools used for this is the Pareto Chart. The Pareto Analysis should initially start with the 7 Main Losses (1st Level Pareto) then a 2nd Level Pareto should be created for each of the 7 Main Losses starting with the biggest loss. In some cases you may even create a 3rd Level Pareto of the reasons for the largest 2nd Level Pareto issues.

Being able to accurately display Loss information correctly becomes a very helpful tool to identify OEE improvements, and help lead your Business Improvement journey to achieve Operational Excellence.

If you would like to learn more about CTPM – The Centre for Australasian TPM & Lean, and our approach to OEE, contact myself Ross Kennedy at or purchase my OEE book using this link.

This was a review of the “Understanding, Measuring, and Improving Overall Equipment Effectiveness” book, published by CRC Press Taylor & Francis Group – Productivity Press.
OEE Book Cover