Return (ROI) Calculator
Mathematically discover how much money your plant is losing each month due to unscheduled downtime and low speed.
Recovery Potential
Annualized Projection
Projected new revenue
$416,667
How it is calculated
annual gain = annual revenue × (target OEE − current OEE) ÷ current OEE
- annual revenue
- What the line or plant you are going to instrument bills, not the whole company.
- current OEE
- Availability × performance × quality, measured over the time the line was supposed to be producing.
- target OEE
- The level you are aiming for. The ratio between the two, not the difference, is what gives the real capacity increase.
Where to get each input
- 1Revenue comes from the accounting system, filtered by the line or cost center you are going to measure. If you use the whole company's figure, the result means nothing.
- 2Availability is run time divided by scheduled time. The typical mistake is subtracting the "justified" stops from scheduled time, when those are exactly the ones you need to see.
- 3Performance compares actual speed against the equipment's rated speed, which is on the nameplate or in the manufacturer's manual. Micro-stops of a few seconds live here, and nobody writes them down.
- 4Quality is good units over total units, counting rework as a bad unit. If the line reworks product and you do not discount it, OEE gets inflated.
- 5Multiply the three. An OEE of 60% does not mean the machine is stopped 40% of the time: it means that between stops, speed and rejects, that fraction of capacity is lost.
What this number leaves out
- The investment. The result is gross potential benefit, not net return: the cost of instrumenting and operating still has to be subtracted.
- The physical limit of the equipment. No machine reaches 100%; changeovers, cleaning and planned maintenance have a technical floor.
- Demand. If you already sell everything you produce, the extra capacity gets sold; if not, it turns into fewer shifts and less overtime, which have to be valued separately.
- The time it takes. OEE improvement is not a step, it is a slope over months. The number is annual once the target is reached, not the first year.
- Bottlenecks upstream and downstream. Raising the OEE of a machine that is not the process constraint does not increase what goes out the door.
Frequently asked questions
Where does the improvement percentage come from?
From the ratio between target OEE and current OEE, not from the difference. Going from 60% to 85% is not "25 more points": it is producing 41.7% more with the same installation, because 85 divided by 60 is 1.417. The difference understates the improvement in plants with low OEE and overstates it in plants that are already high.
Why is the result so high?
Because it assumes all the recovered capacity gets sold. In a plant with unmet demand that holds; in one that already covers its demand, the improvement turns into less overtime, fewer shifts or less subcontracting, which is still money but shows up on a different line of the income statement.
What is a reasonable OEE target?
It depends on the type of process and the starting point. Gaining fifteen points from a low OEE is usually a matter of measuring properly and attacking micro-stops; the last points before the equipment's technical limit cost much more than the first ones. Set the target at the next reachable step, not at the ideal figure.
Is it useful if I do not measure my OEE yet?
It is useful for sizing the order of magnitude, not for committing to a figure. If current OEE is an estimate, so is the result. The first task is not calculating the return: it is measuring real OEE for a few weeks.
Does the calculation include the cost of the improvement?
No. It gives the potential annual benefit, not the net return. For the return you have to subtract the investment and the operating cost, and those depend on how many lines get instrumented and what is on the dashboard today.
Keep going
How to calculate OEE, step by step
The guide with the spreadsheet, to measure current OEE before projecting anything.
Downtime cost calculator
The same problem seen from the other side: what every minute of downtime costs.
OEE and production
What gets measured, what it is measured with and which decisions it changes.
Industrial energy efficiency calculator
What it costs to keep machines running without producing, in money and emissions.
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