How to correctly calculate OEE? A practical guide to performance indicators

The OEE indicator is one of the most commonly used measures of production efficiency. You may have come across it in your manufacturing company, but you may not necessarily use it regularly. Well, while the formula itself is simple, the problem is that in many plants the OEE result looks good on paper but doesn’t translate into actual performance. The reason? An incorrect calculation methodology that ignores the realities of the shop floor.

The OEE (Overall Equipment Effectiveness) indicator is the product of three components:

Example:

If a machine was available for 90% of the time, operated at 95% performance, and the products had 98% quality, then:

OEE = 0.90 × 0.95 × 0.98 = 0.8379, or 83.8%

It seems simple, and yet… Remember that without context these values are just numbers. Producing 100 pieces during a shift can be a reason for celebration or concern – it all depends on the context.

Production efficiency can be analyzed from two perspectives:

This approach allows you to see whether the problem lies in the machine’s work itself or rather in the organization of the entire process.

Thus, an OEE of 85% on a line producing one type of part is a completely different result than 85% when producing 15 different variants with a changeover every 2 hours.

To fully understand how your production plant actually operates, the condition of your machinery, and where there is potential for improvement, you need to know:

By placing data in the right context, the OEE indicator becomes a tool for improving production management and optimizing manufacturing processes, rather than an empty statistic.

We already know how to calculate OEE. But are we aware of how to avoid the pitfalls related to measuring production efficiency? Omitting context when calculating the OEE indicator is the most serious mistake in assessing production efficiency. If you are thinking about optimizing manufacturing processes, don’t skip the full production cycle. Why? Imagine your machine runs for 7 hours during an 8-hour shift. OEE is 87.5%. Great result? Not necessarily. If you do not account for preparation time, cleaning, or changeovers, you may miss opportunities to optimize production.

Most often, availability is calculated only based on the time the machine is physically producing. We advise against this. You will benefit much more if, when assessing production efficiency, you take into account:

Such an approach shows the real impact of the production process on the OEE result, not just the machine’s performance detached from the plant’s realities.

If that doesn’t convince you, take a look at how misleading OEE indicators can be when analyzed out of context:

Omitting context in OEE calculation is the primary error. However, there are other common pitfalls in OEE analysis, including:

Thanks to modern systems such as the explitia Production Portal, you can read far more from a machine than just the number of pieces produced. On a clear dashboard in real time, you can see, among others:

This means you can not only observe the result but also understand what shapes it.

What’s more, you can filter data by line, shift, operator, or order. This allows for quick problem diagnosis and checking which teams maintain high efficiency.

Applications include:

Calculating OEE is not about blindly plugging numbers into a formula. It’s a method for identifying low-efficiency areas in production. Yes, with a good OEE measurement system you don’t have to guess what to optimize – you know for sure.