OEE (Overall Equipment Effectiveness) measures how large a share of the planned production time actually produces good parts. OEE = Availability × Performance × Quality. World class is reckoned at ≈ 85%; typical unoptimised plants sit around 60% (Nakajima, 1988).
The three factors each isolate a type of loss: Availability captures stops (breakdowns, changeovers), Performance captures speed loss (reduced pace, minor stops), Quality captures defective parts and start-up scrap. An OEE of 60% means 40% of the planned time is lost — typically without anyone being able to see where.
OEE’s value is not the number but the conversation: a shared, honest definition of loss makes capacity waste visible and prioritisable. The classic mistake is to “dress up” OEE by moving losses outside planned time.