Overall Equipment Effectiveness (OEE)

What is overall equipment effectiveness?

Overall Equipment Effectiveness (OEE) is a key performance indicator that lets manufacturers easily assess their operational efficiency. OEE measures the percentage of time a given machine is operating at its peak. Successful manufacturing leaders monitor OEE closely to identify performance issues at the asset effectiveness level, since the reduced performance of just one machine can lead to plant-wide problems.

Best-in-class manufacturers (roughly the top 25%) enjoy OEE in excess of 80%. The average manufacturer (representing half of all manufacturers) has OEE of approximately 66%.

ANDRITZ industrial machinery showing clean white and blue area and perfectly functioning equipment.

SMARTsensing Suite Parent IoT unit mounted conveniently on industrial machinery.

How to calculate overall equipment effectiveness

The formula for calculating OEE is A x P x Q = OEE

There are three asset metrics that must be known to accurately calculate OEE:

Availability (A)
Performance (P)
Quality (Q)

As an example, if your machine is running 87% of the time (A), is running at 82% of its potential speed (P), and produces a usable product 98% of the time (Q), your calculation would look like this: 0.87 x 0.82 x 0.98 = 0.699

In this example, your asset has an OEE of approximately 70%.
To determine the values for A, P, and Q, first choose a window of planned production time, expressed in hours. The longer the window of time, the more accurately your OEE figure will represent the average performance of the asset.

How to calculate availability for OEE

Availability is your asset’s total uptime during planned production times. Availability can be calculated by subtracting both planned and unplanned downtime from your total planned production time to determine your actual uptime, and then dividing that number by your planned production time.

To determine actual uptime, planned downtime is subtracted from planned production time (along with unplanned downtime) because while it can’t be totally avoided, in many cases it can be significantly reduced.

(Planned Production Time – Planned Downtime – Unplanned Downtime) ÷ Planned Production Time = Availability (A)

How to calculate performance for OEE

Your production performance rate is a measure of your machine’s actual throughput compared to its maximum possible throughput. As an example, imagine your asset has an ideal cycle time of five seconds per unit, and should theoretically be able to produce 720 units per hour. If that asset only produces 680 units in an hour due to slow cycles, jams, or small stops, then its production performance rate for that hour is 94%.

Actual Throughput ÷ Maximum Possible Throughput = Performance (P)

How to calculate quality for OEE

(Total Units Produced – Lost Units) ÷ Total Units Produced = Quality (Q)

Lack of visibility

Many manufacturers struggling with poor OEE don’t fully understand why their equipment is failing. A major contributor is the lack of real-time visibility into asset health. With limited resources and expertise, teams often miss early warning signs that could prevent breakdowns. Without a clear strategy for optimizing machine health, even small issues can lead to large drops in performance and output.

The high cost of unplanned downtime

Unplanned downtime accounts for roughly 80% of OEE losses, and nearly 40% of those costs are tied directly to equipment failure. The top 25% of manufacturers report that only 0.5% of downtime causes are unknown—while the bottom 25% attribute more than 15% of downtime to unknown reasons. That’s a 30X knowledge gap, highlighting just how critical it is to close the loop on asset performance visibility.

Production floor with clean-room visible for industrial manufacturing.

See what’s really happening on your plant floor

Modern technology gives manufacturers unprecedented insight into machine health and operational performance. With access to real-time data and smarter analytics, you can identify the key drivers of OEE loss and take proactive steps to improve.

Gain visibility into:

Machine behavior and asset condition
Process changes, operator behavior, and maintenance missteps
Fault detection, diagnostics, forecasting, and advanced alarming

This level of awareness helps manufacturers stop issues before they escalate and uncover opportunities to streamline operations.

Start with a Pilot

Turn insight into smarter action

Improving OEE isn’t just about collecting data—it’s about knowing what to do with it. Today’s digital tools help you make decisions faster, reduce waste, and optimize resources without compromising safety or quality.

Use machine health data to:

Fix the right things at the right time
Reduce waste and increase throughput
Streamline workflows and prioritize high-impact tasks
Invest where it counts for long-term gains

Keep in mind: chasing short-term OEE wins can backfire if they come at the cost of safety or product quality. A balanced, data-informed approach leads to smarter, sustainable improvements.

Knowing where the real opportunities are to improve asset and plant performance requires a 360-degree view of your operations enabled by smart machine health monitoring technology.

Moving beyond predictive maintenance to machine health optimization

OEE is just one piece of the performance puzzle. To drive lasting improvements in availability, performance, and quality, manufacturers need to focus on the root cause: machine health.

Since 80% of failure-related downtime stems from maintenance and operations issues, optimizing machine health presents your biggest opportunity to improve production, flexibility, safety, and quality.

KCF’s machine health optimization approach goes beyond predictive maintenance, helping you improve your current plant conditions and unlock your full performance potential.

See how we help manufacturers move from monitoring to meaningful impact.

Explore Our Solutions

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