Understanding OEE: 5 Myths Slowing Your Shop Floor


5 myths that are holding back the performance of your shop floor management

Overall equipment effectiveness (OEE) is considered one of the most important key performance indicators in manufacturing. Even in this age of modern digital shop floor management, it promises transparency regarding the actual performance of machines and systems. However, many companies interpret OEE incorrectly or do not use it consistently enough.

In this article, we debunk the five most common myths surrounding OEE and show you how you can turn a simple number into a real lever for production optimization.

What is OEE – and why is it important?

The OEE metric measures the actual productivity of a machine or plant. It serves as a benchmark for the effectiveness of production facilities and provides a comprehensive explanation of overall equipment effectiveness (OEE) by taking into account the three main components—availability, performance, and quality—as well as influencing factors such as equipment or performance losses. Collecting and analyzing OEE data requires a certain amount of effort, as various parameters and status information of the machines must be monitored. The role of the operators is crucial here, as their behavior and attention significantly influence the OEE. It is equally important to analyze historical OEE results regularly after each shift.

It consists of three metrics:

1. Availability – How long was the equipment actually available compared to the planned operating time? The actual running time of the machine in relation to the planned operating time is a key factor here. Downtime refers to the period during which a machine is not producing due to malfunctions and repairs. Unplanned downtime has a direct negative impact on OEE, as it reduces the availability and thus the productivity of the equipment.
2. Performance – How fast did the system produce compared to the target speed? Performance losses, such as those caused by reduced speed or short stops, are one of the main factors contributing to a reduction in OEE.
3. Quality – What was the percentage of parts produced correctly or “well”? This refers to the percentage of error-free parts in the total production.

Equipment is a key component in OEE calculation, as its effectiveness and availability have a significant impact on the key performance indicator. Various parameters such as speed, downtime, and quality rates are used to measure and optimize OEE. The status of the machines is continuously monitored in order to identify bottlenecks and optimization potential at an early stage.

OEE = Availability × Performance × Quality

An OEE of 100% means maximum utilization of production time at full speed and zero scrap. In reality, this is only theoretically conceivable over a longer period of time. But the closer you get to this ideal value in practice, the more efficient your production is. OEE takes everything into account – planned and unplanned downtime, losses, and other factors that influence production performance.

Myth 1: “We know our OEE – that’s enough.”

Truth: Many companies record OEE once a week or once a month, often using Excel or manual reports. But an isolated figure without context is of little use.

The OEE metric is only valuable if you use it to identify the causes behind potential inefficiencies—for example, by regularly analyzing why unplanned downtime, performance losses, or scrap occurred. Without ongoing root cause analysis in real time, preferably in daily shop floor rounds, much potential remains hidden.

Our OEE calculator gives you an initial indication of how effectively your systems are working.

Myth 2: “Downtime is our only problem.”

Truth: Downtime is visible and noticeable—losses in performance and quality often are not.

An example: If a machine continuously runs 10% slower than planned, this is hardly noticeable in everyday operations – but efficiency and therefore OEE remain below optimal levels.

Performance losses caused by even the smallest deviations from the cycle time are often the biggest “invisible loss.” Only with digital target/actual comparisons can you identify these accurately.

Through the targeted conversion and optimization of processes, such losses can be systematically reduced and the efficiency of the plants increased in the long term.
It’s all about increasing efficiency and minimizing losses – discover our OEE guide to find out more.

Myth 3: “Paper and Excel are sufficient for evaluation.”

Truth: Paper-based data collection is time-consuming, error-prone, and prevents quick decisions.

A modern MES system (Manufacturing Execution System) ensures automated, seamless recording of production data. This is the only way to calculate and utilize OEE in real time – directly on the line or in the control room.

Recommended reading: “From paper to digital production” – the success story of LOEW Präzisionsteile GmbH

Myth 4: “Our manufacturing is too customized for standard KPIs.”

Truth: In complex production environments, it is often assumed that standard metrics such as OEE are not suitable. However, a uniform data basis is crucial, especially when there is high variance and order diversity.

With flexible MES solutions such as MES FLEX or SAP Digital Manufacturing, OEE can be customized to specific processes without losing the benchmark value.

Recommended reading: “Smart makes it twice as good” – how the long-established Swiss company MPS AG doubled its capacity utilization with an MES solution and OEE

Myth 5: “OEE alone is the solution.”

The truth: High OEE is not an end in itself. It’s not just about efficiency, but about targeted improvement measures along the production processes.

OEE is an early indicator: It shows where the problems are – but only if you interpret the data and act consistently.

OEE assessment and planning: From key figures to strategy

The OEE metric is much more than just a measurement—it is the starting point for a targeted strategy to increase overall equipment effectiveness (OEE). Setting and achieving OEE targets requires structured planning that takes into account all relevant process parameters and the entire manufacturing environment.

A key success factor is employee training: sustainable improvements can only be achieved if the team understands the importance of OEE and knows how to deal with deviations and data. In the planning phase, the most important key figures are first analyzed and weak points identified – for example, by monitoring materials, checking process parameters, and evaluating real-time data.

Based on this analysis, targeted measures can be derived to increase productivity and identify deviations at an early stage. Change management strategies help to successfully implement the planned changes in the plant and ensure acceptance among employees. The combination of sound OEE assessment, strategic planning, and continuous monitoring thus forms the foundation for a sustainable increase in overall equipment effectiveness.

How to set OEE targets, evaluate them, and derive concrete measures from them

OEE calculation with special tools: digitalization as a lever

Digitalization opens up completely new possibilities for making OEE calculation more efficient and accurate. Modern systems such as the Manufacturing Execution System (MES) or solutions based on OPC technology enable production data to be recorded, analyzed, and clearly visualized in real time.

By using these tools in a targeted way, companies can not only calculate OEE automatically, but also react right away to any issues and spot ways to improve. Here’s a quick example: With an integrated software system, all the important data from machines, devices, and processes is collected and shown on a dashboard. This allows for better inventory control, increased productivity, and a sustainable improvement in overall equipment effectiveness.

The combination of MES, OPC, and other digital tools ensures that companies can make optimal use of their resources, shorten throughput times, and flexibly adapt production to new requirements. The digitalization of OEE analysis is therefore a decisive lever for greater efficiency and competitiveness in production.

Which software solutions and MES integrations take OEE analysis to a new level

OEE assessment and planning: From key figures to strategy

The OEE metric is much more than just a measurement—it is the starting point for a targeted strategy to increase overall equipment effectiveness (OEE). Setting and achieving OEE targets requires structured planning that takes into account all relevant process parameters and the entire manufacturing environment.

A key factor for success is employee training: sustainable improvements can only be achieved if the team understands the significance of OEE and knows how to deal with deviations and data. In the planning phase, the most important key figures are first analyzed and weak points identified – for example, by monitoring materials, checking process parameters, and evaluating real-time data.

Based on this analysis, targeted measures can be derived to increase productivity and identify deviations at an early stage. Change management strategies help to successfully implement the planned changes in the plant and ensure acceptance among employees. The combination of sound OEE assessment, strategic planning, and continuous monitoring thus forms the foundation for a sustainable increase in overall equipment effectiveness.

Blog post: Lean manufacturing: Maximizing value creation, minimizing waste

Which software solutions and MES integrations take OEE analysis to a new level

How to optimize OEE – step by step

Effective OEE management starts with the right data. Use our free OEE calculator to get an initial indication of your efficiency potential:

Sample calculation:

• Planned operating time per day: 8 hours
• Unplanned downtime: 0.5 hours
• Target quantity: 1,800 parts
• Actual quantity: 1,700 parts
• Scrap: 100 parts

The targeted analysis and differentiation of value-adding and unproductive activities, such as setup or maintenance, is crucial for optimizing OEE in the long term.

Results:

• Availability: (8 – 0.5) / 8 = 93.75%
• Performance: 1,700 / 1,800 = 94.44%
• Quality: 1,600 / 1,700 = 94.12%
• Total OEE: 0.9375 × 0.9444 × 0.9412 = 83.06%

Manufacturing companies benefit from consistent OEE optimization because it enables them to increase the effectiveness of their equipment and minimize losses in the manufacturing process.

A brief look at the history of OEE

The concept of Overall Equipment Effectiveness (OEE) was first introduced by Seiichi Nakajima in 1982. With his Total Productive Maintenance (TPM) concept, he established a method that enables companies to identify specific weaknesses and opportunities for improvement in their production processes in order to reduce production costs.

This approach responded to a growing need that had been emerging since the 1960s: production structures in large industrial companies were becoming increasingly complex, requiring a shift away from traditional breakdown management. Breakdown management focused on repairing defective machines. With the development of manufacturing execution systems (MES) and standardization through norms such as ISA-95, the importance of OEE as a key performance indicator for increasing efficiency and communication in industrial automation was further strengthened.

This led to the development of productivity management, in which production employees were actively involved in maintenance and repair. This made it possible to better cope with the increasing complexity of the plants and to increase the overall availability of the machines. At the same time, it became more difficult to evaluate actual plant availability in the context of the respective operating conditions and thus to identify specific optimization potential. This is exactly where the Overall Equipment Effectiveness key performance indicator comes in, enabling systematic evaluation. The need for OEE and MES today stems in particular from advancing automation and increased requirements for transparency and traceability in modern production environments.

For more information on OEE, see our glossary.

Conclusion: From key figures to real improvement

OEE is not an end in itself – it is an early indicator of efficient manufacturing. Used correctly and regularly, OEE shows you where you can start to improve production processes in the long term. Its use is particularly useful for so-called “bottleneck” machines – i.e., machines that are particularly critical to success.

By visualizing OEE data and efficiency indicators, potential improvements can be identified more easily and the communication of plant losses and optimization measures is significantly simplified.

Combined with other analysis modules such as Pareto analysis, Track&Trace, or energy monitoring, OEE provides important data for higher-level process control in advanced systems – for example, with MES FLEX or SAP DM.

Start your journey into digital manufacturing with a number that will give you real competitive advantages.

Would you like to learn more about optimization opportunities in your manufacturing with OEE and MES?

There are many ways to optimize your production with OEE and MES. By continuously monitoring process parameters and analyzing deviations, you can increase productivity, reduce inventory, and improve overall equipment effectiveness in the long term.

The use of modern tools and software systems makes it possible to collect all relevant data in real time and use it specifically for process improvements. The combination of OEE analysis and MES integration opens up new ways for you to make your manufacturing processes more efficient and respond flexibly to changes.

Do you have questions about the possibilities of OEE and MES optimization? Our experts are happy to work with you to develop customized strategies and measures that are precisely tailored to your manufacturing environment. Take the opportunity to take your production to the next level—we support you every step of the way!