1.

Introduction

OEE is defined as the product of availability factor, performance factor and quality factor. It is a
metric used in manufacturing to measure equipment effectiveness. Lean manufacturing refers to
reducing wastes and radically improving quality of the products. Now-a-days businesses look for a
more holistic indicator of effectiveness. As a result, the old OEE paradigm is becoming archaic to
the current needs. There is a significant link between OEE and lean manufacturing which is
brought into light with the help of a new framework, the Lean OEE Model that highlights business
performance at various levels by incorporating additional indicators of process capability and asset
management.

1.1 Overall Equipment Effectiveness

OEE is defined as the product of availability factor, performance factor and quality factor. The total
production cost consists of production losses and other hidden and indirect costs. Nakajima (1988)
advocated that OEE is: “A measure that attempts to reveal these hidden costs”. Although OEE can
be applied at every step of the process, it should first be applied to the bottleneck step that defines
the output of the process. He also defined OEE as a “bottom-up approach where an integrated
workforce strives to achieve overall equipment effectiveness by eliminating the six big losses”.

1.2 Bottleneck
It is defined as the machine or process in the value stream which has the highest cycle time and
puts limitation on the maximum output in the line. One value stream can have more than one
bottleneck if all those bottlenecks have the same cycle time, which is highest in the value stream.

1.3 Purpose of OEE

The OEE metric is used in various manufacturing environments. OEE can be used for measuring
the initial performance of a manufacturing plant in whole. The initial OEE values can be compared
with future OEE values, in order to gauge the improvements. OEE value can be used to compare
the performance of various lines in the same plant. OEE value can also help to identify which
machine is not performing upto the desired effectiveness, and therefore suggest where the TPM
resources should be directed.

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1.4 Calculation of OEE Components
OEE value is obtained by multiplying Availability, Performance and Quality factors. The value
obtained represents the percentage of effectiveness.

OEE can be generated easily and accurately. It can quickly demonstrate the size of the hidden
factory in a specific area. In turn, the plant leadership can apply people and resources to proper
locations for faster improvements.

1.5 Downtime and Losses

Planned Downtime: It is defined as a fixed time and duration in which the production is not done.
Deviations are considered as a loss. Downtime is considered as a planned activity if:

 Push system: information is available 48 hours in advance

 Pull system: information is available one levelling period in advance
Examples of planned downtime are:

 Legal or contract based breaks

 Shift changeover
 Planned maintenance/ inspection
 Planned continuous improvement process rounds and visits

Planned breaks = (10 + 15 + 30) × 3 = 165 mins

Planned operating time (POT) = Total available time − Planned breaks

= (24 ∗ 60) − 165 = 1275 mins

Availability Loss: It is defined as the period in which the machine could have been available for
production but no parts were produced. Availability loss is the sum of the losses which reduce the

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run time duration of the machine. Duration of single interruption should be greater than 5 minutes
to be accounted as availability loss. Availability loss includes:

1. Technical Availability Loss:

 Breakdown or failure in machine
 Unplanned maintenance

2. Organization Availability Loss:

 Absenteeism/ manpower shortage
 Material shortage
 Additional changeover due to material shortage
 Kanban cards not available

3. Change Over:
 Set- up change from one type to another i.e. type change over
 Tool change
 Changeover standard not followed
Availability factor defined as the ratio of net operating time to planned operating time (POT).

Σ Technical Loss 43 mins

Σ Organization Loss 123 mins
Σ Change Over Loss 75 mins

Availability loss = (43 + 123 + 75) = 241 mins

Net operating time = Planned operating time − Availability loss

= 1275 − 241 minutes = 1034 mins

Net operating time (mins) 1034

Availability(%) = × 100% = × 100% = 81. 10%
Planned operating time (mins) 1275

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Performance Losses: It is defined as the loss due to small interruptions which affect the tact time.
Duration of single interruption should be less than 5 minutes to be accounted as availability loss.
Performance loss means that the machine runs but not up to the desired speed. It includes:

 Short downtime and idle run

 Machine setting
 Speed loss
 Small interruptions of each type
Performance factor is defined as the ratio of gross production time to net operating time.

Gross production time = Ideal cycle time × Total count

sec sec
= (44 pc × 865 pcs of A) + (93 pc ×

205 pcs of B)

= 57125 secs = 952.08 mins

Performance loss = Net operating time − Gross production time

= 1034 − 952.08 mins = 81.92 mins

Gross production time (mins) 952.08

Performance (%) = × 100% = × 100% = 92.08%
Net operating time (mins) 1034

Quality Loss: It is defined as the loss due to scrap and rework. Quality loss includes defects that occur only
on a specific production line or a specific machine. It includes:

 Scrap
 Rework
 Set- up/ start- up parts loss
Quality factor is defined as the ratio of net production time to gross production time.

Quality Loss = (Scrap + Rework Quantity) × Ideal cycle time

Σ Quality Loss for Type A = 2 pcs.× 44 sec/pcs = 88 seconds = 1.47 minutes

Σ Quality Loss for Type B = 14 pcs.× 93 sec/pcs = 1302 seconds = 21.7 minutes

Quality Loss = (1.47 + 21.7) = 23.17 minutes

Net production time = Ideal cycle time × Good count

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 sec sec
= (44 pc × 863 pcs of A) + (93 pc × 191 pcs of B)

= 55735 secs = 928.92 mins

Quality loss = Gross production time − Net production time

= 952.08 − 928.92 mins = 23.16 mins

Net production time (mins) 928.92

Quality(%) = × 100% = × 100% = 97.57%
Gross operating time (mins) 952.08

1.6 OEE Diagram

0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400

Total Available Time = 24 hours = 1440 mins.

Planned Operating Time (POT) = 1275 mins. Planned Breaks = 165 mins.

Net Operating Time = 1034 mins. Availability Loss = 241 mins.

Gross Production Time = 952.09 mins. Performance Loss = 81.91 mins.

Net Production Time = 928.92 mins. Quality Loss = 23.17 mins.

Figure 1: Overall Equipment Effectiveness diagram

𝐎𝐯𝐞𝐫𝐚𝐥𝐥 𝐄𝐪𝐮𝐢𝐩𝐦𝐞𝐧𝐭 𝐄𝐟𝐟𝐞𝐜𝐭𝐢𝐯𝐞𝐧𝐞𝐬𝐬 (𝐎𝐄𝐄) = 𝐀 × 𝐏 × 𝐐 = 𝟖𝟏. 𝟏𝟎% × 𝟗𝟐. 𝟎𝟖% × 𝟗𝟕. 𝟓𝟕%
= 𝟕𝟐. 𝟖𝟔%

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OEE can also be calculated using the following methods:

1.

Net Production Time 928.92

OEE = × 100 = = 72.86 %
Planned Operating Time (POT) 1275

2.

Output Quantity × Cycle Time

OEE = × 100%
Planned Operating Time

In case of mix- type, weighted average cycle time is used for calculation of OEE.

(439 × 44 + 191 × 93 + 424 × 44) 55735

Weighted Average Cycle Time = = = 52.88 seconds
(439 + 191 + 424) 1054

1054 × 52.88⁄60
OEE = × 100% = 72.86%
1275

1.7 Extension of OEE Concept

OEE is only measured based on the time that we plan to use equipment. Sometimes it might be
useful to know what the maximum capacity is of the equipment we own. In that case we need to
include the planning losses due to overcapacity, R&D time in production and stoppages because of
no energy or other reasons beyond the control of the company. Additionally we can also take into
account the unused time (i.e. the factory is closed). Hence we compare the good output with the
maximum obtained if the total time (365 days @24 hours/day) were used. Total Effective
Equipment Performance (TEEP) is a metric that provides insights into the true capacity of the
manufacturing operation. It takes account the equipment losses, as measured by overall equipment
effectiveness as well as the schedule losses, as measured by utilization factor . TEEP is calculated
by multiplying Availability, Performance, Quality, and Utilization factor.

24hrs
Planned production time day × 6days
Utilization(%) = × 100% = × 100% = 85.71%
All time 24hrs
day × 7days

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 𝐎𝐯𝐞𝐫𝐚𝐥𝐥 𝐄𝐪𝐮𝐢𝐩𝐦𝐞𝐧𝐭 𝐄𝐟𝐟𝐞𝐜𝐭𝐢𝐯𝐞𝐧𝐞𝐬𝐬 (𝐎𝐄𝐄) = 𝐀 × 𝐏 × 𝐐 × 𝐔

= 𝟖𝟏. 𝟏𝟎% × 𝟗𝟐. 𝟎𝟖% × 𝟗𝟕. 𝟓𝟕% × 𝟖𝟓. 𝟕𝟏%

= 𝟔𝟐. 𝟒𝟓

2. Literature Review
Abrahamson (2000) reasoned that business is a case of change or perish. In order to remain
competitive in market place, businesses must improve their operations continuously. Barney (1991)
gave the concept of “exploiting internal strengths that must match to external environmental
opportunities and at the same time managing external threats and internal weaknesses. Focusing on
the internal analysis perspective taking a resource-based view (RBV) of a firm, Wilk and
Fensterseifer (2003) argued “competitive advantage can be realized through different amalgams of
productive and strategic resources”. Wernerfelt (1984) suggests “resources are anything that could
be thought of as a strength or weakness of a given firm, defining resources as tangible and
intangible assets which are tied semi-permanently to the firm”. Antecedent work by Penrose (1959)
argues “resources bundled together, render a service as an input to a production process and it is
these bundles of resources – providing potential services – that are the source of uniqueness in each
individual firm”. Penrose (1959) also suggested “unused productive services are a waste that they
are potentially free and therefore, if used profitably, can provide competitive advantage”. “Waste
elimination is a key objective of the lean concept and it can provide a competitive advantage.
Adopting the resource-based view internal analysis in order to exploit internal strengths focusing
on the improvement of resource bundles and waste elimination, the total productive maintenance
(TPM) measure of overall equipment effectiveness (OEE) is introduced as a powerful
benchmarking key performance indicator focusing on three plant/ process efficiencies: availability,
performance and quality”. Nakajima’s (1988) argues “TPM is the process and OEE is the measure
for unlocking the hidden factory, improving resource utilization”. As a measure of TPM
implementation, Raouf (1994) argues “OEE focuses on maximizing production equipment
effectiveness (PEE) delivering higher capital productivity”. Dal et al. (2000) suggest “OEE can be
used as an operational measure as well as an indicator of improvement activities within a
manufacturing environment”. This is validated by the use of OEE as a measure within the Six
Sigma DMAIC process presented by Gibbons (2006b). In relation to asset management, Ahuja and
Khamba (2008) suggest “a main objective of OEE is to focus on reducing the total cost of
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ownership of assets”.
Although the OEE measure is seen as a useful and powerful KPI, it has its share of criticism. It is
now seen as anachronistic to the needs of businesses that require a more holistic indicator of plant
and process effectiveness. Developing the OEE measurement framework further, this paper
discusses how OEE can be used to overcome some of the criticisms without moving away from the
original calculation framework presented by Nakajima (1988).

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3. Methodology
The research was carried out by studying the Overall Equipment Effectiveness (OEE) metric used
in various manufacturing plants as a measure of performance. The limitations of the metric were
studied along with the link of OEE with lean. A new framework known as the Lean Overall
Equipment Effectiveness is presented which takes into account additional measures and adds more
depth to the conventional OEE framework.

4. Discussions
4.1 Issues with OEE
1. The Overall Equipment Effectiveness metric is used in various industries but it has a "sweet
spot" for discrete manufacturing and packaging lines. In these cases, it is possible to measure
machine availability, throughput and quality in real time and these factors have a direct impact on
the profitability of the line.
2. In some industries, the OEE metrics is distorted beyond recognition, moving it away from the
original framework. In these cases, it is not possible to use OEE values as a benchmark.
3. There are limitations in using OEE in continuous processes. Plants with continuous processes
often have parallel processing or process lines that divide and then merge again later. The critical
equipment often has a back-up and intermediate buffer tanks to avoid disruptions in case of
breakdowns. Often, the throughput depends on the quantity of raw materials fed into the process.
Therefore, the optimum throughput is a dynamic number. Measuring quality is also a challenge.
The output is typically sent to a laboratory. The results of the quality are received in a day or two.
4. There are a variety of ways to calculate OEE without any particular standard on how to calculate
it. There are just generally accepted practices and principles.
5. It is crucial to keep in mind the context while using OEE metric. High volume manufacturing
processes tend to have long production runs with few changeovers. As a result, they have a higher
OEE value. Comparatively, a low volume manufacturing processes tend to have short production
runs with several changeovers. As a result, they have a lower OEE value. Lacking context, OEE
can focus the organizations towards unimportant things in order to achieve a higher OEE value.
6. OEE becomes risky especially in situations where OEE performance is set as a target and linked
to pay and/or reward systems. The well-known ‘Uncertainty Principle of Heisenberg’ in quantum
physics also applies to measuring operational performance of any business system: any
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measurement influences the behavior of the system. Hence, we should be extremely careful that the
choice of metrics and even more important, setting goals and objectives, are not driving unwanted
or even the wrong behavior, especially when the measurement systems are linked to financial
rewards.
7. OEE is often used to compare equipment or plants. We hereby assume always that higher OEEs
indicate more output and thus better performance. But that is not necessarily true. There are several
factors that need to be considered in this case such as the machines with a different name plate
capacity, the influence of the product mix that has been produced on each machine and so on.
8. OEE as an overall figure does not offer an insight in improvement opportunities and can be
misleading. Even analysing all three factors may not be enough. Indeed, a 1% loss of each factor
separately might represent a different cost. Hence, two identical OEEs - one of 90%x90%x80%
and the other one of 90%x80%x90% - represent totally different cost. Therefore, the % as such is
not good enough to determine what the real biggest problem is.
9. OEE registration can be manipulated in order to obtain a nicer figure, especially when
registration happens manually:
 Downtimes are sometimes just ‘estimated’ after the fact
 Taking quality losses into account is avoided as the issues comes into light several
production steps downstream and then it is cumbersome to track down when they occurred.
 Only ‘abnormal’ downtimes are taken into account. ‘Normal’ downtimes are not registered.
The question here is of course: when is a downtime normal or abnormal and who decides
this?
 A lower figure for the standard cycle time or the nominal speed is put in the efficiency
calculation.
It is noteworthy that some of the above issues also occur in situations where people are not
deliberately trying to manipulate the data; they are just unavoidable when manual registration of
the data is maintained.

4.2 OEE and TOC

It is easy to make the mistake of seeking 100% OEE for every piece of equipment. This dissipates
the efforts of the technical personnel, and can lead to sub-optimization. Instead, focus should be on
the bottleneck operation or constraint. With OEE, we must resist the temptation to apply it to every
operation in the factory if we want to achieve the best results. The theory of constraints (TOC) says
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that a manufacturing process cannot work faster than its slowest operation (bottleneck or
constraint). Constraint theory shows that the operation with the least capacity limits the output of a
manufacturing plant. Trying to exceed this limit by running every operation at full load simply
builds piles of inventory at the bottleneck. Sun Tzu, in his book “The Art of War” mentions “And
when he prepares everywhere, he will be weak everywhere”. He said that to guard against every
threat, an enemy must dissipate his army. This scatters and weakens his resources, and allows the
opponent to destroy them a piece at a time. We must apply the same principle to our use of OEE. If
we spread resources over every operation, we may achieve improvements everywhere but
excellence nowhere.
Goldratt defined the following procedural steps for constraint management:
1. Identify the system constraint(s).
2. Decide how to exploit the system constraint(s).
3. Subordinate everything else to the decision made the previous step.
4. Elevate the system’s constraint(s).
5. If the capacity of the constraint is elevated to the point that the constraint is broken, go back
to Step 1 and start the entire process over.
Once we have identified the constraint, we can reduce inventory to manageable levels. This gives
the organization a unique opportunity to identify and deal with problems that inventory once hid. A
principle of Just-In-Time (JIT) manufacturing is that inventory hides problems. When we remove
these hidden problems, we lower costs and speed product flow. Once we have reduced inventories
and have trained and involved all employees in constraint management techniques, we can go to
the next step. This involves setting up a “control” point at the constraint. The control point uses the
“drum-buffer-rope” technique. The “drum” reflects the product flow through the constraint which
depends on the market’s demand. The “buffer” is inventory waiting for processing at the system
constraint. This is the only place we want inventory, and the buffer assures that the constraint will
always have work. Otherwise, an interruption in the upstream processes can starve the constraint.
The upstream processes’ variations dictate the buffer’s size. As the organization reduces this
variation, it is safe to reduce the buffer. This, in turn, reduces inventory costs and shortens cycle
time. The “rope” links production starts to the constraint buffer. As the constraint processes work,
it “pulls” material into production. The constraint’s full capacity must be exploited in order to get
the maximum throughput. The system must prevent bad products from entering the constraint,
since this wastes its capacity. The equipment and processes before the constraint require adequate
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capacity cushions (protective capacity) to avoid constraint starvation. After addressing the
constraint, focus OEE improvement efforts on operations that have little protective capacity. Table
1 shows how TOC and OEE focus the organization’s efforts.

Parameter OEE Focus TOC Focus

Smaller lot sizes increase the setups
Smaller batch sizes increase the flow
required on non-bottleneck and
of work to the constraint and reduce
decreases its availability. Dogmatic
Lot sizes inventory levels. Waiting to make a
service of OEE encourages personnel
large batch for a non-constraint tool
to wait for enough work to fill the
may starve the constraint.
tool.
Pre-constraint Protects the constraint from bad
Does not affect constraint OEE
quality checks products.
The extra capacity preludes
Extra capacity achievement of 100% OEE. 100% The extra capacity prevents the
(pre-constraint) operating efficiency is not possible bottleneck from starving.
because there is often no work.
Simultaneous improvement at all
operations does lead to a Constraint's OEE determines the
Efficiency
corresponding increase in overall overall factory performance.
factory performance.
Resources are spread across factory to Resources are focused on the
Improvement
improve individual OEEs. constraint.

4.3 Lean
The origins of lean are in the developments made by Eiji Toyoda and Taichii Ohno in conjugation
with Shigeo Shingo at the Toyota Motor Company, Japan in the 1950s. Lean approach was evolved
in Japan because there was a need to develop a mechanism wherein several small manufactures of
different automobiles with limited resources could be developed. This approach was in contrast
with the western world. In West, the norm was mass production of similar automobiles and
carrying large inventories. Lean focuses on reducing costs per unit and dramatically improving
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quality while at the same time providing large variety. The framework given by Hines et al. is
present here. It shows the application of lean as well as the relationship with other operational level
tools. At the strategic level, lean thinking sits alone and is relevant to all aspects of the framework
with the goal of understanding value creation and customer value. At the strategic level, the focus
is on effectiveness and at the operational level, the focus is on efficiency. The concept of lean
thinking at a strategic level is operationalized by a set of principles summarized as the five steps to
becoming lean:
4. Correctly specify value for the customer
5. Identify the value stream and remove waste
6. Make the product flow
7. So the customer can pull
8. By managing towards perfection

Figure 2: Framework of lean thinking

A significant element of lean at the operational level is the removal of waste. The three types of
waste typically found in manufacturing plants are:
1. Muri: It means overburden, beyond one’s power, excessiveness, impossible or
unreasonableness.
2. Muda: It means wastefulness, uselessness and futility, which is contradicting value-addition.
3. Mura: It means unevenness, non-uniformity, and irregularity.
Ohno (1988) further classified Muda into seven types of waste:
1. Overproduction

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 2. Waiting
3. Transport
4. Inappropriate processing
5. Unnecessary inventory
6. Unnecessary motion
7. Defects
Womack and Jones (1996a) introduce the concept of customer value and define three categories
which must be understood in order to improve a process:
1. Value adding (VA): In includes activities for which the customer expects to pay.
2. Non-value adding (NVA): It includes activities that are pure waste and for which the
customer does not expect to pay.
3. Necessary but non-value adding (NNVA): It includes activities that are essential for a process
to complete but for which the customer does not expect to pay.

TPS consists of several pillars as depicted in figure:

Figure 3: Toyota Production System

As can be seen in the figure, one of the important elements of the operational stability is Total
Productive Maintenance (TPM). The better the availability, reliability and quality of the equipment,
the easier it is to create flow and built in quality. Hence, TPM really supports the pillars of TPS.
Nakajima introduced OEE as a measure of TPM used for collecting and analyzing the combined
effects of plant availability, performance and quality. Robinson and Ginder (1995) define OEE as a
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measure of the effective utilization of capital assets by expressing the impact of equipment losses
based on seven types of equipment losses tracked in the OEE calculation. These seven losses are:
1. Downtime due to machine breakdown
2. Time required for set-up and adjustments
3. Time or cycles lost to inefficient start-up
4. Time or cycles lost to tooling
5. Time or cycles lost to minor stoppages
6. Operating at less than ideal speed
7. Producing defective or off-spec product that is rejected, requires rework or repair, or is sold at
a lower price
These seven equipment losses are re-categorized into the three elements of the OEE calculation.
Losses (1)-(4) are clubbed as plant availability; losses (5) and (6) are clubbed as plant/process
performance; and loss (7) is clubbed process quality. OEE, if measured and calculated the correct
way, provides insight into the real potential capacity of the equipment and how it is being used. It
is a ‘complete’ measure of machine performance taking into account all losses.

4.4 Clash between OEE & Lean

Some elements of OEE are in conflict with the essence of lean.
In most industries, the next process wants variety. Lean delivers variety primarily through quick
changeovers. Yet every changeover takes unproductive time. In the press for a high availability
rate, the natural inclination of the production team then is to reduce the frequency of changeovers
via longer production runs. Managers know just what to do to achieve high availability and OEE
scores: go for fewer time-consuming changeovers. That solution is directly contrary to lean’s
essence. It lengthens the lead time for responding to customer’s orders, and dump excess
inventories into storage.
There is another demerit of availability. The primary role of a machine may be “event response”,
which it cannot fulfill if it is busy with routine production 100% of the time. In such a case,
utilization of 100% results in availability for 0%, ensuring that prototyping, product development,
tool and die work, and so on cannot find machine time. More generally, if a producer’s niche is
quick response, it cannot tolerate high machine utilization/availability rates.
Lean’s mandate, to make/deliver what the next process wants, is compromised by the productivity
component of OEE. If the machine’s capacity is 200 units/hour but the customer’s needs add up to
15
just 100 units/hour, the machine must make just 100 units/hour and stop. That yields a miserable
50% productivity rate. But that is good (lean), not bad (fat).
Every company would like its equipment to be highly available to serve customers. But expressing
availability as a rate creates dilemma. There is no right rate. Too low rate means equipment is
down excessively- a costly waste. Too high, and demand become backorders; customers defect,
and earnings are lost. By-the-numbers management cannot work when there is np correct number.
With productivity rate, it seems that high is good, higher better. The problem is that, in application,
productivity always invites gamesmanship and, as an element of OEE, conflict. What do
supervisors do when pressed for higher productivity? They crack the whip, extend production runs,
forego training, and never mind the growth of unneeded inventory. They may even put off
preventive maintenance, the ultimate sin; given that prevention is a pillar of OEE, TPM and lean.
With quality rate, the unimpeachable ideal is 100% good, zero defects. But quality is composed of
many quality variables. Combining them into a single number shifts attention away from multiple
root causes in need of correction and toward an abstract number.
The three rates- quality, availability and productivity, and their OEE multiple- add up to
management by abstract, remote, highly aggregated numbers. That way of managing was standard
practice, say forty or more years ago. It never worked well, and it always invited “gaming the
numbers”, popular nonetheless as a career enhancer for managers able to master the game.

An important problem can arise when OEE is used while implementing lean. This misuse can work
against lean by stimulating overproduction and/or suboptimization.
Traditionally we have always strived for better efficiency. However the question is: efficiency of
what? The traditional answer here is: efficiency of individual processes. Traditional cost
calculation and accounting systems also promote this view. Lean on the contrary focuses on flow in
value streams from raw material to delivery to the customer. Value streams should be organized in
the most efficient way. This does not automatically mean that all processes need to be at their
maximum efficiency. It can be easily shown that connecting locally suboptimized processes (based
on OEE) results in a very poor value stream performance. We can maybe produce parts in one step
in a ‘cheaper’ way, but what if because of that we are producing big batches, resulting in long lead
times and high inventories (WIP and finished goods) – and all negative consequences of that ?
As described in the figure, leaner value streams have a better ratio between total lead time and total
process time. So, the main question is whether it is always good to try to increase OEE.
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The answer is yes; if it implies reducing downtimes due to technical or organizational issues, or if
it means reducing efficiency losses or improving product quality. But, beware if the OEE increase
is due to reducing overall setup downtime (in the Availability factor) without reducing the set-up
times in itself. As set-up performance is the main driver for low intervals (Every Part Every
Interval- EPEI), it will directly impact lead times and inventory levels. Avoiding changeovers (and
thereby improving OEE) has a very negative impact on EPEIs and thus overall value stream
performance, both at the pacemaker and in the downstream part of the value stream, as well as at
the connections with the shared resources (typically supermarkets). The cost of one process might
go down, but the overall value stream cost is likely to go up.

Figure 4: Changeover performance and EPEIs in a value stream

Figure 5: Negative impact on value stream performance of avoiding changeovers

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5. Results
5.1 Proposed OEE Framework

Figure 6: Proposed OEE framework

Adapted from Braglia et al. (2009)
A breakdown of OEE calculations is shown in the following figure. It integrates extra measures for
asset management effectiveness and six sigma capability.

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 Figure 7: Breakdown of OEE calculations

Figure classifies the value adding, non- value adding and necessary but non- value adding elements
to OEE:

 Final OEE value is classified as value adding component of the total available time.
 Availability, quality and performance losses are classified as non- value adding
 Planned downtime is classified as necessary but non- value adding
Three additional measures of asset management are included in availability as shown:

1. Mean Time to Failure (MTTF): It focuses on asset reliability. It is calculated as the ratio of
actual production hours by the number of asset failures during that time. Reliability is defined as
the probability that a system, device or component will perform its duty without failure for a
specified period of time when operated correctly in a specified environment. Reliability is an
indicator of asset management effectiveness.

Actual production hours

MTTF =
Number of asset failures

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2. Mean Time to Repair (MTTR): It focuses on maintainability. It is calculated as the total
downtime caused due to asset failure by the number of asset failures during the planned operating
time. Maintainability is defined as the time required for a repairable piece of plant to return to its
previous state. Maintainability is an indicator of asset management effectiveness.

Total downtime
MTTR =
Number of asset failures

3. Mean Time between Failures (MTBF): It focuses on total time between failures. It is
calculated as a sum of mean time mean time to failure and mean time to repair. Mean time between
failures is an indicator of asset management effectiveness.

MTBF = MTTF + MTTR

OEE: Loading Time: The loading time is calculated as the time available minus any planned
downtime. Loading time is necessary but non- value adding.

Loading time = Standard minutes available − planned downtime

OEE: Availability: The availability efficiency incorporates asset management effectiveness

measure: mean time to failure, mean time to repair and mean time between failures, along with the
usual process availability losses such as adjustment times and set-up times. All availability losses
are classified as non- value adding.

Total lost time = Total process downtime + total asset repair time

Total repair time = Total asset repair time

Actual run time = Loading time − total lost time

Actual run time

MTTF =
Number of repairable asset failures

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 Total repair time
MTTR =
Number of repairable asset failures

MTBF = MTTF + MTTR

Actual run time

Availability(%) = × 100%
Loading time

OEE: Performance: The performance efficiency is based on the actual throughput compared to
the potential throughput (from the actual runtime). All performance inefficiencies are classified as
non- value adding.

Total throughput
Performance(%) = × 100%
Cycle time/actual runtime

OEE: Quality: The quality efficiency is based around incorporating an indication of six sigma
process capability by using a measure of defect per million opportunities in addition to
understanding the usual process quality losses. All quality inefficiencies are classified as non-
value adding.

Good production
Defect Per Million Opportunities = × 1,000,000
Total Production

Sigma Level is given by the DPMO value.

Total good production − Total bad production

Quality(%) = × 100%
Total good production

The final OEE value incorporates the availability, performance and quality inefficiencies and gives
an indication of the total value adding time as a proportion of the time available:

OEE% = Availability% × Performance% × Quality%

The following figure depicts the proposed Lean OEE framework:

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 Figure 8: Lean Overall Equipment Effectiveness

6. Conclusion
The research brings into light the fact that any measurement system should be balance. It should
not have a narrow view and must be holistic in approach. The new Lean Overall Equipment
Effectiveness framework attempts to give a holistic framework by improving on the archaic
elements of conventional OEE metric.

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