Overall Equipment Effectiveness (OEE) for agriculture and horticulture businesses

What is Overall Equipment Effectiveness (OEE)?

All agriculture and horticulture businesses take inputs, pass them through a process and produce outputs. The process can be broken down into steps in the same way a production line manufacturing cars or mobile phones could be.

The difference in agricultural production is those steps are spread over a wider area. The ‘machinery’ of production is a complex biological system. In the case of crop production, that is the soil, in the case of livestock production, that is the cow, sow or ewe.

While OEE does propose that sentient animals should be treated as a machine, it suggests that the performance and careful management strategies used in manufacturing could be used to improve the performance and welfare of these animals. This can also help reduce the carbon footprint and increase the financial performance of the business.

OEE is a ratio that allows producers to assess the availability (A), performance (P) and quality (Q) of their production unit.

On their own, these indicators or measures of performance can seem impressive. However, when multiplied together, they expose the full extent of those parts of production (numbers of cows, sows and ewes or hectares of land) that do not yield maximum productivity. These are the ‘wastes’ in the system.

By dealing with the lower indicators first, labour can be targeted more specifically to drive up overall productivity. The lost opportunity cost from the ‘wastes’ can be realised as profit coming into the business.

As mentioned previously, there is a direct link between lost profit and carbon lost to the atmosphere, a reduction in waste, and an increase in profit. This lowers the carbon footprint of agricultural and horticultural production.

Calculating OEE

While the calculation is straightforward, deciding which metrics to utilise is more complex.

Availability

Accounts for planned and unplanned stops in production (the usual biological limits of performance). In livestock terms, this is the percentage of animals guaranteed to produce a new unit of production, i.e. calving rate, lambing rate and farrowing rate. In crops, it is the percentage of potential fertile land that has received a sown crop.

Performance

This refers to slow cycles and small stops in production (the unforeseen events). In livestock production, it’s the percentage of animals producing a target fertility marker, i.e. percentage of sows hitting 2.25 litters/sow/year or ewes hitting a target lambing percentage and calves having a positive pregnancy diagnosis. In crops, it is those areas of land that have germinated a sown crop (germination rate).

Quality

The percentage of ‘machinery’ remaining after removing those deemed ‘defective’ (through mortality or deliberate replacement). In livestock terms, it’s the retention rate (not replacement rate) of animals within their productive window. In crop terms, it’s the area of land that produced a target yield.

Example calculations

A calculation of OEE is made by multiplying the three values together

Overall Equipment Effectiveness = A x P x Q

Pork example

OEE pigs = Farrowing percentage x Percentage of pigs achieving target litters/sow/year x Retention rate

If a pork producer is farrowing at 83.12% (UK average Q4 2020) and 80% of the sows are producing 2.25 litters per year or more (UK average Q4 2020), and their retention rate (not replacement rate) to parity five is 65% then their OEE equals:

OEE = 0.8312 x 0.80% x 0.65%

OEE = 43%

Beef example

OEE beef cattle = % non-empty cows x % of cattle hitting target calving period x Retention rate

If a beef producer has a % non-empty cows of 90.3% (9.3% average empty cows from 2016 stock take) and a % of cattle hitting a target calving period of 15 weeks of 90% as well as a retention rate of 83.3% (based on a 16.7% replacement rate from 2016 stock take) then the OEE would be:

OEE = 0.903 x 0.90 x 0.833

OEE = 68%

While each of the measures of performance is in a threshold that would be considered good (they are the average for the industry), when taken as a whole, they show the true extent of the herd that is not meeting the maximum productivity. In other words, 32% (almost one-third) of beef breeding cattle in this example are not at their maximum productivity.

OEE percentages explained

In manufacturing terms, the following OEEs are rough benchmarks for those businesses considered excellent, average and need that to take action.

• An OEE of 85% = A business with excellent control of its production performance and is in the top 25% of all effective businesses. This would be described as world-class.
• An OEE of 65% = A business that has room for growth but is performing well. In manufacturing, this is the average.
• An OEE of 40% = This is considered low and would indicate either a business with production issues requiring urgent attention or a business that is new and still aligning its production processes. At this point and below, a business’s viability would be questionable.

Improving your OEE

The use of OEE shows producers three key areas of their production. Targeting the lowest percentage first is a good strategy. In most livestock enterprises, this is focusing on effective selection integration and early management of breeding stock to ensure they have the potential to remain in the herd.

AHDB resources available to help with better selection and retention include:

• Pork: Gilt Watch®
• Pork: Gilt selection and management
• Beef: National beef evaluations 
• Dairy: Dairy Breeding and Genetics
• Lamb: Selecting ewe lambs for breeding
• Cereals: Recommended Lists for cereals and oilseeds (RL)