What Is OEE? Calculating and Improving Overall Equipment Effectiveness

Peakboard calculates OEE automatically from machine data, PLC signals and ERP order data – and shows Availability, Performance and Quality in real time on the shop floor display, without anyone entering a value by hand. That is OEE monitoring with Peakboard: no end-of-month spreadsheet, no estimated figure, no blind spots between shifts.

What is OEE?

OEE stands for Overall Equipment Effectiveness. The metric measures how effectively a production asset is used compared with its theoretical maximum. OEE was developed as part of the Total Productive Maintenance (TPM) approach and is today one of the most important metrics in discrete manufacturing and the process industry.

Peakboard calculates OEE directly from machine controller signals – with no detour through manual entry or separate systems.

How is OEE calculated?

OEE is made up of three factors that are multiplied together:

OEE = Availability × Performance × Quality

Availability

Availability measures how much of the planned production time the machine actually runs. Stoppages due to faults, maintenance or missing materials reduce this value.

Formula: Availability = Operating time / Planned production time

Performance

Performance measures whether the machine reaches the theoretically possible output during operating time. Causes of performance loss include reduced cycle times, mini-stops or worn tools.

Formula: Performance = (Quantity produced / Operating time) / Ideal cycle

Quality

Quality measures the share of defect-free parts in total production. Scrap and rework push this value down.

Formula: Quality = Good parts / Parts produced

OEE example calculation

A machine runs 7 of 8 planned hours (Availability: 87.5%), produces 90% of the theoretically possible quantity (Performance: 90%) and has a scrap rate of 3% (Quality: 97%). This gives: OEE = 0.875 × 0.90 × 0.97 = 76.4%.

What is a good OEE value?

As a benchmark, an OEE value of 85% is considered world-class in manufacturing. This figure was defined as a target by Seiichi Nakajima, the founder of the TPM concept. In practice, many manufacturers sit between 40 and 60% – which means considerable room for improvement.

• Below 65%: significant action needed, often structural problems
• 65–75%: typical starting point for many plants
• 75–85%: a solid basis, targeted improvements possible
• Above 85%: world-class level by the TPM definition

The six big losses in TPM

The OEE concept goes hand in hand with the six big losses originally defined by Nakajima:

• Unplanned stoppages (Availability)
• Set-up and adjustment times (Availability)
• Idling and minor stoppages (Performance)
• Reduced cycle speed (Performance)
• Start-up losses and scrap (Quality)
• Quality losses in normal operation (Quality)

Peakboard makes all six loss sources visible and attributable in real time.

Calculating OEE automatically with Peakboard

The decisive difference from manual OEE calculation: Peakboard connects directly to the machine controller (PLC, OPC UA, MQTT) and pulls operating times, cycle counts and scrap data automatically. No one has to enter values. No shift leader has to maintain a spreadsheet. The OEE value is always current – on the shop floor display, on the tablet during a walk-through and in the report for management.

Connection to shop floor management

OEE is the backbone of shop floor management. An SQCDP board in the shop floor meeting shows the OEE value as a central KPI. The Andon board escalates automatically when OEE falls below a defined threshold. And the digital shift log documents OEE-relevant events in an audit-proof way for every shift.