Practical TPM and Maintenance Excellence – Part 3: OEE Reveals Where Production Capacity Is Lost
A machine can be running and still continuously lose production capacity.
Short stops, reduced speed, repeated adjustments, unstable operation and quality deviations do not always appear as clear equipment failures. Yet the underlying causes may include wear, contamination, inadequate lubrication, distorted settings or other conditions that can be controlled through maintenance.
For this reason, the impact of maintenance cannot be assessed only by counting completed maintenance tasks or repaired faults. Its real impact is seen in how much of the planned time the equipment can operate steadily, at the correct speed and at the required quality level.
The first part of this series examined the structure of TPM and the role of 5S as its foundation. The second part covered the five steps of 5S from the perspective of practical maintenance work. In this third part, the focus shifts to measurement.
OEE makes visible where production capacity is being lost. At the same time, it helps identify where maintenance can influence downtime, speed losses, quality and equipment utilisation.
Pentti Enlund discusses the OEE metric, the seven most significant losses and their connection to TPM and continuous improvement.
Pillar 1: Loss Analysis, OEE Measurement and Continuous Improvement
OEE is a metric used to measure the actual effectiveness of a production machine or production line in relation to its full potential.
From a maintenance perspective, the value of OEE lies in making visible technical losses that do not appear as direct breakdowns. Deteriorating equipment condition may show up as reduced speed, short stops, unstable operation or quality deviations.
Why Is Improving OEE Important in TPM?
- OEE exposes losses: downtime, disturbances, underperformance and defective products.
- It directs attention towards continuous improvement, or Kaizen.
- It provides a measurable basis for developing maintenance and production.
- It creates a common language between production and maintenance.
OEE alone does not reveal the root cause of a loss. It shows where production capacity or process utilisation is being lost. Maintenance must work together with operations and production to determine whether the loss is related to equipment condition, settings, wear, basic conditions or working practices.
The target is zero breakdowns, zero defects and zero accidents.
The teams are responsible for identifying and measuring the 16 types of loss, calculating Overall Equipment Effectiveness (OEE), analysing the causes of production-process problems, applying a problem-focused resolution process to prevent and eliminate recurring issues, using a systematic ten-step method, and carrying out team-based continuous improvement according to the Kaizen philosophy.
Although no one expects perfection, the effort to move towards it must be continuous.
Losses That Reduce Overall Effectiveness
There are 16 different types of loss that reduce overall effectiveness, but seven are particularly significant for equipment performance.
These are losses caused by equipment failures; setup, changeover and adjustment losses; tool and wear-part changes; start-up losses; minor stops and idling; the gap between theoretical and actual output; and defects and rework.
The five major losses affecting human efficiency are losses caused by support functions, motion and handling losses, organisational losses, losses caused by insufficient automation, and losses related to monitoring and machine adjustments.
The three losses related to underutilised resources are losses caused by poor material utilisation, energy losses, and losses caused by materials, jigs and fixtures.
The way losses appear varies by industry. In manufacturing, they often show up as downtime, longer cycle times, scrap or lost unit output. In process industries, the same loss may appear as reduced throughput, process instability, quality variation or lower utilisation.
The Seven Most Significant Losses
1. Equipment Failures
Equipment failures may be sporadic or chronic. They appear as production interruptions, recurring disturbances or declining equipment performance. From a maintenance perspective, it is essential to distinguish an isolated breakdown from a recurring or slowly developing problem.
2. Setup, Changeover and Adjustment Losses
This loss occurs when a production batch, work stage or operating condition is changed and time is required before operation returns to an acceptable level. A long or unstable adjustment phase may also be related to wear, contamination or an incorrect baseline setting.
3. Tool and Wear-Part Changes
This loss results from replacing worn, broken or end-of-life tools, wear parts or other components that affect the process. The loss can be reduced when the actual service life is known, parts are available and the replacement can be prepared before failure.
4. Start-up Losses
Start-up losses occur when equipment or a process is restarted after maintenance, repair, a break or a shutdown. A machine starting does not yet mean the work is complete. The equipment must be returned in a controlled way to its normal performance and quality level.
5. Minor Stops and Idling Losses
Minor stops are short interruptions from which operation usually recovers quickly. When repeated, they consume a significant amount of production capacity. They do not always generate a fault report, even when a recurring technical cause exists in the background.
6. Speed and Capacity Losses
A speed loss is the difference between planned and actual performance. Wear, contamination, overheating, incorrect settings or inadequate lubrication may not stop the equipment, but they can reduce its performance over a long period.
7. Quality, Yield and Rework Losses
This loss means time lost because of defects and rework. The link between maintenance and quality becomes visible when a product or process defect is caused, for example, by equipment wear, looseness, contamination, incorrect settings or unstable operation.
How the Seven Losses Affect OEE Calculation
Figure 2. The seven losses in OEE calculation in a machine-shop environment. Source: Dave Griffin, TPM Institute.
OEE = Availability × Performance × Quality
Availability is calculated by subtracting downtime, meaning losses 1–4, from the available time. Performance describes how effectively the equipment operates while running. Losses 5 and 6 reduce performance. Quality represents the share of accepted output in total output. Loss 7 reduces the quality factor.
In process industries, the same logic can be applied using throughput, production volume, flow rate or another measure of actual process performance instead of unit count.
Practical Example: Load-Haul-Dump Machine in a Metal Mine
The example is based on work stages measured in a real mining environment and a typical 15-tonne payload for the loading machine. In addition to the technical condition of the machine, performance is affected by bucket fill factor, haul distance, traffic, and the availability of the dumping point and crusher.
| OEE component | Example calculation | Result |
|---|---|---|
| Availability | 9 h operating time / 10 h planned time | 90% |
| Performance | 80 completed loads / 100 target loads | 80% |
| Quality | 78 accepted loads / 80 transferred loads | 98% |
OEE = 0.90 × 0.80 × 0.98 = 71%
Maintenance affects availability by reducing breakdowns. It affects performance by keeping the hydraulics, powertrain, brakes, tyres and working movements in good condition. Its effect on quality is visible when the load is transferred in a controlled way to the correct destination without reloading or other corrective work.
If practical maintenance actions improve the loading machine’s OEE from 71% to 76%, accepted output increases from approximately 1,065 tonnes to 1,140 tonnes per day. The improvement is 75 tonnes per day. At a theoretical ore value of USD 175 per tonne, the impact is approximately USD 13,000 per day, or around USD 4.3 million per year based on 330 operating days.
The improvement is not based only on a technical repair or a maintenance programme. It also depends on how quickly an abnormality is recognised, how accurately the cause is narrowed down and how reliably the repair is completed correctly the first time. Effective use of experience, observations and previous learning reduces unnecessary searching, shortens disturbance time and prevents the same failures from recurring.
OEE Makes the Loss Visible; Maintenance Resolves Its Cause
The strength of OEE is not the percentage itself. Its value comes from showing the form in which production capacity is being lost.
A clear shutdown is usually noticed quickly. More difficult are minor stops, constant adjustment, reduced speed and quality deviations that gradually become accepted as part of normal daily work. Yet these may contain the greatest hidden improvement potential.
From a maintenance perspective, this changes the way equipment condition is viewed. A machine is not simply either operational or broken. It can be running while continuously performing below its true capability.
The mining example makes the impact visible. When the value of a single day of downtime can rise to hundreds of thousands of dollars, small and recurring losses are also economically significant. The value of maintenance does not come only from the repair itself, but from how much availability, capacity and quality can be preserved throughout the production chain.
OEE helps show where time and production capacity disappear. It does not yet explain why this happens.
The next part of the series examines the structure and causes of losses. The focus then shifts from measurement to problem solving: how sporadic disturbances can be distinguished from chronic problems, and how Pareto analysis, 5 Whys, cause-and-effect diagrams and Kaizen help direct improvement actions to where they have the greatest impact.
Pentti Enlund
MexLink Oy