Overall equipment effectiveness (OEE) is a hierarchy of metrics developed by Seiichi Nakajima in the 1960s to evaluate how effectively a manufacturing operation is utilized. It is based on the Harrington Emerson way of thinking regarding labor efficiency. The results are stated in a generic form which allows comparison between manufacturing units in differing industries. It is not however an absolute measure and is best used to identify scope for process performance improvement, and how to get the improvement. If for example the cycle time is reduced, the OEE can also reduce, even though more product is produced for less resource. Another example is if one enterprise serves a high volume, low variety market, and another enterprise serves a low volume, high variety market. More changeovers (set-ups) will lower the OEE in comparison, but if the product is sold at a premium, there could be more margin with a lower OEE.
OEE measurement is also commonly used as a key performance indicator (KPI) in conjunction with lean manufacturing efforts to provide an indicator of success. OEE can be illustrated by a brief discussion of the six metrics that comprise the system. The hierarchy consists of two top-level measures and four underlying measures.
Read more about Overall Equipment Effectiveness: The Top-level Metrics, The Underlying Metrics, Calculations For OEE and TEEP, OEE As A Heuristic, Automated OEE Systems, Further Reading, See Also
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