Operations Management Basics: Overall equipment effectiveness framework
The term overall equipment effectiveness framework (OEEF / OEF framework) refers to a method for evaluating the productivity of machines and other resources. In a first step, all the time that is available on a certain resource is added up. During the following step, the waste times (idle time, time spent on failures, maintenance time etc.) are identified and also added. By subtracting the wasted time from the total time, one can then calculate the productive time of the resource. The ratio between productive time and available time is the overall equipment effectiveness of the resource. The OEF framework was first introduced by the consulting company McKinsey.
When calculating the OEF framework, we can differentiate between three types of waste times:
- Speed losses: idle time, reduced speed
- Downtime losses: breakdowns, changeovers
- Quality losses: defects, restarts, operator faults
These lecture notes were taken during 2013 installment of the MOOC “An Introduction to Operations Management” taught by Prof. Dr. Christian Terwiesch of the Wharton Business School of the University of Pennsylvania at Coursera.org.