What is 1% of OEE worth?
Two numbers from your annual report. See what a 1% improvement in OEE is worth to your business, and what 5%, 10% or 25% would mean.
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Successful MES/MOM programmes often deliver a 10% to 20% improvement in production output. Deloitte's 2025 survey of large manufacturers found the same range. But even a much smaller improvement often pays for the whole project, and more, within 12 to 24 months.
And that's before the savings this calculator doesn't count:
- Less scrap and rework
- Fewer quality escapes, complaints and recalls
- Lower inventory and work in progress
- Less time spent on paperwork, re-keying and chasing information
- Faster traceability, audits and compliance reporting
- Lower energy use per unit
- Fewer overtime hours and expedited shipments
- Better on-time delivery, and happier customers
Why this question
What would a 1% improvement in OEE be worth to your business? Most people have never worked it out. For most manufacturers it's a very significant number.
You only need two figures from the annual report to start. Then pick your industry and add what you know to make the estimate sharper.
The defaults describe an example manufacturer with £1bn of revenue, so you can see how it works. They're not a forecast.
Here, a 1% improvement means 1% more good output from the same equipment and hours. That's deliberately cautious. At 50% OEE, one extra point of OEE is actually 2% more output.
If you do have an OEE figure and it's captured by hand, treat it with care. Manual OEE usually misses short stops and slow running, so it tends to look better than it really is.
The improvement needs to land on the equipment that limits your output. Gains on a machine that's waiting for the one before it don't add output.
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a year, for a business with – of revenue
| Improvement | Extra capacity | Value a year |
|---|
For the research behind the 10% to 20%, see What the research says about smart factory ROI.
How it's calculated, and where the defaults come from
An improvement of X% in OEE gives X% more good output from the same equipment and hours, as long as it's on the equipment that limits output.
Selling more: revenue × share you make × X% × share you could sell × margin. It uses contribution margin if you enter it, and gross margin if you don't.
Costs you no longer incur: the output you can't sell is made in less time instead, which saves conversion costs × X ÷ (100 + X) on that share. If you don't enter conversion costs, they're estimated as cost of sales minus materials, on the products you make, times the share that falls with fewer hours.
The value is the sum of the two. It counts nothing for inventory, scrap or quality escapes avoided, which usually make the real number bigger.
Industry materials shares are cost of materials divided by value of shipments, from the US Census Bureau Annual Survey of Manufactures (2019 by industry; 2021 for all manufacturing). Census cost of materials includes purchased fuel and electricity. Shares in the UK and Europe will differ, so use your own accounts where you can.
Stuck on something? Ask me.
A question about your project, or about something you've read here. I read every one, and the useful ones become articles or FAQ answers, with names and companies left out.
This is a peer conversation, not a sales call or a consultancy. I work for an MES vendor, so I won't recommend a product, mine included.
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