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Improving Overall Equipment Effectiveness (OEE)- The Smart Factory Journey!

Improving Overall Equipment Effectiveness (OEE)- The Smart Factory Journey!
November 22, 2018

In an ideal factory situation, equipment would operate 100 percent of the time at 100 percent capacity, with a quality output of 100 percent. In real life, however, this situation is rare. The difference between the ideal and the actual situations is due to the complex and interdependent processes which make it impossible to ensure 100% productivity. Therefore, calculating the overall equipment effectiveness (OEE) is a crucial process. OEE empowers manufacturing organizations to systematically improve processes and, in turn, ensures improved consistency, quality, and productivity – all resulting in measurable and direct bottom-line savings.

How can IIoT help in improving OEE (Availability, Performance, and Quality) by connected devices and sensors?

IoT Approach for OEE optimization:

Today, most of the manufacturing industries are using process automation equipment which has some information gathering capability. This capacity can range from a simple sensor counting the number of outputs to the capability of raising alarms in case of any defects in the process. Capturing this information at a central location will help initiating the troubleshooting process immediately with the attention of senior officials. The Internet of Things (IoT) brings new capabilities to help manufacturers to identify and correct the negative factors to improve the OEE. Equipment performance through connected devices (sensors) and analytics can help identify and take proactive actions before it is too late.

OEE has emerged as a best practice for translating the figures from various data sources into a simple set of numbers that enable manufacturers to direct resources toward issue resolution and improved output.

This information is valuable only when used in a timely and informative manner to improve the effectiveness of the entire process. By routing the information through an OEE system for analysis, the efficiency of individual machines, manufacturing cells, assembly lines, or even entire plants can be monitored and resources directed to fine-tune operations.

OEE targets the most common and critical sources of manufacturing productivity loss and places them into three primary categories – availability, performance, and quality.

Availability compares the amount of time a machine or line should ideally be available with the actual time it is up and running. Performance statistics compare the ideal and optimal operating speeds of line or components. Quality quantifies products that do not meet quality standards. All the three factors, and OEE itself, are generally expressed as percentages reflecting efficiency allowing for ease of comparison and improvement measurements. By monitoring the quality parameters continuously, the defect rates can be reduced, which will help in reducing the after-sales warranty expenses.

Optimized line efficiency, however, cannot be achieved with OEE alone. Continuous line monitoring and control is an ideal way to prevent inefficiencies. Long before a problem manifests itself in the OEE analysis, it occurs on the line. Such problems will, if left unaddressed, ultimately impact line productivity. An integrated OEE system assists in production surveillance provides alerts for incidents that can potentially impact productivity, increases operators’ interactions along the line, and turns raw data into actionable knowledge that boosts overall line efficiency. It is only this combination of OEE analysis and constant line vigilance that can deliver optimal line performance. Now, let us see how IoT can help manufacturing facilities achieve this target in our next section.

How Industrial Internet of Things (IIoT) can help in improving OEE (availability, performance, and quality) by connected devices and sensors? Let us take a deep dive into how this can be achieved?

Connected equipment continuously transmit usage information or data to a central location. By processing and analyzing the data, a lot can happen. If the data can be presented in a meaningful way, then this will help in taking the right decision at the right time to achieve OEE closer to 100% level.



Early warning of equipment failure can help avoid unplanned downtime which can improve the MTTR (mean time to repair). Also, IoT-enabled devices or equipment can send alerts and/or reminders to the service provider on a real-time basis before any failure occurs. This will ensure 100% uptime of equipment.


Continuous monitoring of the production line can help improve quality drastically. This can be possible by using IoT-enabled equipment. The equipment itself can send alerts about preventive maintenance requests. If the equipment needs calibration, any variation from prescribed dimensions, speed, time, temperature, tolerance level, etc. then calibration, system upgrade, and change in operation pattern can be done remotely using IIoT technology from a centralized location. This will ensure better quality output and, in return, this will reduce recalls and after-sales warranty cost.


Connected devices transmit huge amounts of data to a central location by analyzing the current data along with the historical performance data (usage pattern), as a result of which maintenance planning can be optimized. By embedding sensors in devices and equipment as part of IIoT which can completely transform various aspects of equipment performance. In addition, equipment/sensors can send reminders for preventive maintenance based on the usage pattern which will help in achieving the best performance for each of the connected equipment. All these initiatives are part of the smart factory journey. Let us discuss more about smart factories in our next section.

Do we really need smart factory and what are the challenges?

Do we really need smart factories and what are the challenges?

Having said that, increased efficiency, improved quality, improved performance, and safety are the key milestones in any manufacturing industry. The Manufacturing industry is going through revolution starting from Industry 1.0, 2.0, 3.0 and now we are at Industry 4.0. Connected devices, IIoT (Industrial Internet of Things) along with powerful analytics which are some of the key enablers in making this journey very successful. These are all part of the smart factory journey to make the shop floor more robust and efficient.

It is obvious that we need a smart factory. But there are some key challenges mentioned below in making this journey successful.

  • Determining how to onboard or widen the smart factory initiative, which must align with the business needs of a manufacturing company
  • Getting business approval
  • Upgrading all legacy devices and connecting them using Industrial Internet of Things
  • Keeping all devices up and running

Each industry has its own challenges. This is why the how of achieving a smart factory cannot be generalized.

OEE efficiency, safety, and sustainability can be achieved through a smart factory journey. There are indirect benefits too: better product quality, the greater possibility of increasing market share, and increased speed to market.

Management support and incremental investment are critical to the success of a smart factory journey.