The full form of OEE is Overall Equipment Effectiveness.

Overall equipment effectiveness is a measure of how well a manufacturing operation is utilized compared to its full potential, during the periods when it is scheduled to run. It identifies the percentage of manufacturing time that is truly productive. An OEE of 100% means that only good parts are produced, at the maximum speed, and without interruption.

Overall Equipment Effectiveness (OEE) is simply how much your machine is working effectively within a given time frame. It is a best practice to identify the percentage of planned production time that is productive.

There is a lot of confusion out there about the words efficiency and effectiveness. We have to make a clear distinction between these two words to make the picture clear about overall equipment effectiveness. Effectiveness is successful desired result and relation between what theoretically could be produced and what actually came out and efficiency is the ratio of useful work performed by a machine with the ability to avoid wasting material, efforts and time.

If your machine can make 100 quality products in an hour and makes only 80, then it is 80% effective. Now here we have an idea an about effectiveness, but we do not know how efficient it was because we can’t say anything about inputs to get 80% effectiveness. Let’s for example say it is wasting 40% material. If we are running the machine at a setup where it is 60% effective and only lost 10% material, it would mean we are wasting 30% more material to get 20% more effective (from 60% to 80% effective).

To make this example more simple, let suppose you have to make 10 cups of tea and having 10 tea bags and 10 milk bags than your effectiveness is 100%. While if 5 milk bags are expired, and you are not using them then you can only make 5 cups of tea, here you are 50% efficient based on quality.