In a production site where machines are roaring, managers are often confronted with this kind of confusion:
the production line seems to be running at full capacity, but why does the output always fall short of expectations?
The equipment is obviously rotating, why the efficiency index is still low? What's more, when you see the report of
“high utilization rate”, the actual efficiency is far from it. At the heart of the problem is a misunderstanding and
confusion about KPIs: OEE (Overall Equipment Effectiveness) and AU (Asset Utilization) are undoubtedly two of the
brightest stars of the manufacturing world, both of which are related to efficiency, but have very different perspectives
and connotations. Confusing them is like using a thermometer to measure blood pressure - the results are bound to
be distorted.
What is Asset Utilization (AU)?
Asset Utilization (AU), as the name implies, measures the percentage of time that plant assets (primarily equipment)
are actually being used during their available time. Its central focus is the extent to which time is utilized.
Core formula: AU = (Actual Operating Time / Scheduled Load Time) * 100%
Scheduled Load Time: The total amount of time the equipment is theoretically scheduled to be used for production
(usually minus legal holidays, scheduled days off, etc.).
Actual Up Time: The time when the equipment is actually in production (regardless of whether it is producing good
or defective products, as long as the equipment is “moving”).
What does AU tell us?
It is a visual representation of how busy the machine is “on”:
A high AU (e.g. 90%) indicates that the equipment is running most of the time during the scheduled time.
A low AU means that there is a lot of idle, standby, under-scheduled or unplanned downtime (unutilized time).
Limitations of AU:
AU only cares about whether equipment is “on” or not, but not at all:
Is the equipment running fast or slow (loss of performance)?
Is the equipment producing a good or bad product (loss of quality)?
Is the equipment producing what it is supposed to?
What is Overall Equipment Effectiveness (OEE)?
Overall Equipment Effectiveness (OEE), on the other hand, provides a more comprehensive and rigorous perspective. It looks
not just at whether equipment is moving, but how well it is moving.OEE measures the percentage of planned load time that
is truly effective and valuable manufacturing time. It reveals the extent to which equipment potential is being realized and is
the gold standard for measuring the quality of manufacturing process efficiency.
Core Formula: OEE = Time On Rate * Performance On Rate * Conforming Goods Rate * 100%
Three core dimensions:
Exposed Loss: Waste from quality defects such as start-up scrap, process scrap, and rework.
Exposed Losses: Equipment speeds below design standards (minor downtime, idling, speed loss).
Revealed Losses: Unplanned downtime (failures, changeover adjustments, startup losses), planned downtime (e.g., morning
meetings) take up too much time.
Time On Rate: (Actual Running Time / Planned Load Time) * 100% (This is the same basis of calculation as AU, but only
the first part of OEE)
Performance Start Rate: (Theoretical Process Cycle * Production Quantity) / Actual Running Time * 100% or (Actual Production
/ Theoretical Production) * 100%.
Conformity rate: (Number of conforming products / Total number of units produced) * 100%.
What does OEE tell us?
OEE is a percentage between 0% and 100%, with world-class levels usually above 85%. It is a composite of six major losses that erode
the potential of the equipment:
Breakdowns, changeover adjustments, startup losses (affects time-on rate)
Minor downtime, speed loss (affects performance start-up rate)
Process scrap, startup scrap (affects pass rate)
A high OEE value means that the equipment is not only on for a long time (high time on rate), but also runs fast (high performance on
rate) and produces good products (high pass rate).
The most critical point of difference:
Scenario 1: High-speed production of scrap
The equipment is running at full speed (AU close to 100%), but the product pass rate is very low (e.g. 50%).
AU: close to 100% (looks “efficient”)
OEE: very low (probably less than 50%), a true reflection of the huge quality loss.
Scenario 2: Low speed operation with no rejects
The equipment is running (AU may be high), but at speeds well below the design criteria (low performance start-up), with 100% pass rate.
AU: High (looks “busy”)
OEE: Medium or low, reflecting speed loss.
Scenario 3: Equipment Idle
Equipment is not turned on for the scheduled time (waiting for scheduling, waiting for material).
AU: Low
OEE: Low (Time On Rate of 0)
How to synergize OEE and AU to improve plant efficiency and productivity?
OEE and AU are not mutually exclusive, but complementary diagnostic tools. A wise plant manager will combine the two to
pinpoint the root cause of the problem:
Diagnostic Starting Point: AU - Identifying Wasted Time
Why isn't the equipment running? Is it under-scheduling, material shortages, poorly scheduled maintenance, or long
changeover times taking up production time?
Actions: Optimize production planning and scheduling; Improve material kitting; Apply SMED technology to compress
changeover times; Analyze the reasonableness of planned downtime.
Low AU? Prioritize huge waste during planned load times:
Deep Dive: OEE - Uncovering the Black Hole of Efficiency and Quality
Low AU? Deep dive into causes of unplanned downtime (failures, minor downtime, startup losses). Implement TPM (Total
Productive Maintenance) to enhance preventive maintenance.
Low performance start-up rate? Focus on speed loss and minor downtime. Monitor the actual running speed of equipment
and analyze the causes of minor stoppages (e.g., brief jams, fine-tuning of workpieces).
Low conformity rate? Pay close attention to quality loss. Analyze first-piece yield, process stability, and process parameter
control. Apply SPC (Statistical Process Control).
AU is not low but OEE is low? The problem must be hidden in the equipment operation process:
OEE Decomposition: Decompose OEE to line, equipment and even station level, pinpoint bottlenecks and the most costly
links. Implement targeted improvement programs (Kaizen).
Co-optimization: Driving overall productivity
Low AU can mean the need to increase orders or optimize scheduling to improve asset utilization.
Low OEE clearly points to the need to invest in equipment maintenance, technical modifications, or personnel skill enhancements
to improve operational efficiency and quality.
Goal Setting and Tracking: Set baseline and improvement goals for both AU and OEE. Monitor trends with real-time dashboards.
Resource allocation decisions:
Total Performance View: AU reflects macro-intensity of asset utilization and OEE reveals micro-performance. The combination of
the two can map out the real productivity of the factory, avoiding “false prosperity” or “blind busyness”.
Conclusion: Let indicators return to the essence, drive real value
OEE and AU are one deep and one broad, one quality and one quantity. Mixing them up is like looking at flowers in the fog,
missing a good opportunity to improve; distinguishing them accurately and utilizing them in synergy is like holding a precise
dashboard, hitting the efficiency pain points directly.
AU reminds us to examine the efficiency of time utilization and eliminate the “sin of idleness”; OEE ruthlessly interrogates the
quality of the operation process and exposes the “death of idling” and “pain of waste”. Only by mastering these two standards
at the same time, manufacturing factories can really move from the surface of the “machine rotation” to the deeper level of the
“value of the surge”, in the double dimension of efficiency and effectiveness to achieve a breakthrough, to release the hidden potential
of the huge productivity. It's time to redefine your manufacturing performance with a clear view of OEE and AU!