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Industry Specific Insights

A guide to everything OEE and its relation to TEEP

Ryan Chan

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Key Takeaways:

  1. OEE is a performance indicator that considers equipment availability, performance, and quality.
  2. Benchmark values for OEE are 85% and above, with top performers achieving up to 93% OEE.
  3. TEEP describes the performance of a plant compared to its maximum operating potential.
  4. The productivity of a plant can increase by eliminating the six big losses.

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Today’s modern factories and manufacturing companies use many different strategies, plans, and organizational methods. Each of these uses different metrics to measure the success or failure of any given strategy. Two of the most common and useful metrics are the total effect of equipment performance (TEEP) and overall equipment effectiveness (OEE). 

On the surface, they look like they measure the same things. They are both concerned with equipment and its performance. They are also concerned with the sum total of the productivity of the equipment and not with a single plant or piece of machinery. 

However, they measure very different aspects of performance. Let’s take a look at how to calculate TEEP and OEE, their differences, where each of them is best used, and how companies can see the best return on investment from these strategies. 

What are TEEP and OEE?

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Total effective equipment performance is a measurement of the performance of a plant compared to its maximum operating potential. 

Overall equipment effectiveness is a performance indicator that considers equipment availability, performance, and quality. 

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In other words, total effective equipment performance considers all of the time that a plant is operating and the percent of the time that it performed, compared to its maximum potential. Overall equipment effectiveness considers equipment productivity and produces an indicator in the form of a number that showcases how well a plant is producing.

If they look the same, it’s because they do have a lot of similarities. Both metrics are concerned with the equipment and performance of a plant. They simply go about measuring it in different ways. 

To add to the initial confusion, the TEEP formula has a variant in which it uses the OEE formula. Here’s an in-depth explanation of both formulas to clear things up. 

A deeper dive into total effective equipment performance

TEEP quantifies the performance of an asset out of all available time in a given period. Looking into a plant’s TEEP answers the question of whether you have a “hidden factory” tucked within your operations. 

It uncovers the unused potential of your plant by factoring in the actual utilization of operation time, based on total availability. Unlocking the full potential of your hidden factory is usually a more cost-effective alternative to purchasing new equipment.

TEEP considers all available time to be the theoretical maximum time for which an asset is running. For most operations, the intention is not for equipment to run nonstop for 24 hours a day, 365 days a year. When companies set target TEEP values, they must carefully consider periods of time when assets will be idle. Each team must schedule servicing periods for equipment and its components ahead of time, and factor those times. 

When setting realistic TEEP goals, always look to the data. 

A breakdown of overall equipment effectiveness

OEE stands for overall equipment effectiveness. It is a performance indicator that quantifies the effectiveness of manufacturing operations. OEE is a common benchmark used to measure the productivity of an organization.

When measured over time, OEE can be used to show how the plant progresses with process changes.  For example, it can be used to compare how the similarities and differences in processes affect the performance of the plants.

Comparing OEE scores can highlight improvements that contribute to increased productivity. For organizations within similar industries and with comparable operating capacities, OEE becomes an even more relevant benchmark. 

The effectiveness of an asset is measured by looking into three key components. These are availability, performance, and quality. OEE can be used as a simple standard to measure how plants should perform in each key component.

Finally, there are various ways available to calculate an asset’s OEE from historical data. However, collecting reliable data is not always an easy task, especially when all assets in a plant are considered. As a result, different ways of calculating OEE can be explored to suit particular situations. 

We will explore this later in the article. For now, let’s move on to the major differences between these metrics and why they matter. 

 

The major differences between overall equipment effectiveness and total effective equipment performance

The main difference between OEE and TEEP lies in the time component being considered. OEE describes the performance of an asset within its scheduled operating periods, while TEEP quantifies the performance of an asset as a percentage of its potential operating period.

While OEE accounts for the six big losses that affect availability, performance, and quality, it does not address opportunities from unscheduled operations. TEEP takes into account schedule losses that the OEE does not consider. Typical schedule losses stem from periods when an asset is not performing any work and TEEP picks up on this fact in its calculations. 

Finally, the biggest difference between these two metrics is the fact that total effective equipment performance takes into account the entire plant, equipment, and time. Overall equipment effectiveness considers the amount of planned production time, as opposed to the actual production time. 

How to calculate these metrics

The basic formulas are as follows:

OEE = Availability x Performance x Quality

TEEP = Availability x Performance x Quality x Utilization

If you feel like you’ve seen the TEEP formula before, you’re right, it almost exactly resembles the OEE formula. The difference is that TEEP multiplies the OEE formula by an additional term. In fact, you can express the TEEP formula in terms of the OEE value:

TEEP = OEE x Utilization

Different ways of calculating OEE

The standard method of calculating OEE is by taking the product of three key components. In other words, find OEE by using the formula:

OEE = Availability x Performance x Quality

Availability

First, availability refers to the actual time that equipment is operating. Availability is a percentage of the asset’s planned or scheduled operating time. For example, say that a maintenance schedule lists a mixing machine as operational for 10 hours. However, due to an hour-long breakdown, it was only able to run for 9 hours. The availability for the machine, in this case, is therefore 90%. In formula form, availability is expressed as:

Availability = [Actual operating time (hrs) / Scheduled operating time (hrs)] x 100%

Plugging in the values from our sample scenario, we can show that:

Availability = [9 hours / 10 hours] x 100% = 90%

Performance

The second key component is performance, also known as performance efficiency. This measures how fast an asset is producing units compared to the ideal time that it should take to make them. A significant increase in the actual cycle time indicates that parts of the process are not working optimally. For example, machine deterioration, process jams, and poor sequencing of activities can cause unusually higher cycle times. The general formula for performance is:

Performance = [Ideal production time (hrs) / Actual production time (hrs)] x 100%

Where ideal production time can be taken by multiplying the ideal cycle time to produce 1 unit, by the total number of units produced:

Ideal production time = [Ideal cycle time to produce 1 unit x Total number of units produced]

Let’s say that for the same mixing machine that ran for 9 hours, a total of 100 packs were produced. Moreover, assume that the best-recorded cycle time to produce 1 pack of product is 0.0855 hours (i.e. equivalent to 5.13 minutes). Using the given values, ideal production time and performance can then be calculated as follows:

Ideal production time = [0.0855 hours per pack x 100 packs] = 8.55 hours

Performance = [8.55 hours / 9 hours] x 100% = 95%

Quality

Lastly, quality refers to the number of quality products produced. It is a percentage of the total number of units manufactured. Calculate this component by taking the number of quality products and dividing by the total number of products. You can write it as:

Quality = (# of quality products / Total # of products) x 100%

Still referring to our mixing machine example, recall that a single run produced a total of 100 individual packs. You observe the last pack, however, as below the required volume to meet the standard – containing fewer. The rate of quality products in this scenario can then be computed to be:

Quality = (99 packs / 100 packs) x 100% = 99% OEE

After obtaining the values for availability, performance, and quality, calculate OEE as:

OEE = 90% x 95% x 99% = 85%

Note that the formulas that define each of the factors, can be plugged into the standard OEE formula. The result is a simplified way of calculating the OEE. This alternative calculation is as follows:

OEE = [Ideal cycle time to produce 1 unit (hrs) x # of quality products] x 100% / Scheduled operating time (hrs)

Taking the same values we used for our mixing machine example, we can arrive at the same OEE calculation as shown below:

OEE = [0.0855 hours per pack x 99 packs] x 100% / 10 hours = 85%

Choosing a preferred method

Both the standard and simplified methods are acceptable calculations to find OEE. Depending on your purpose, each calculation will have its own set of pros and cons. For instance, the simplified calculation can save you loads of time and effort in gathering data. On the other hand, performing the standard step-by-step calculation might provide more insights into what’s driving the OEE. By breaking apart the OEE value into its individual components, your maintenance team can easily identify opportunities for improvement and new ways to achieve industry standards.

Different ways of calculating TEEP

Calculating TEEP simply takes the product of an asset’s availability, performance, quality, and utilization. In formula form:

TEEP = Availability x Performance x Quality x Utilization

If you feel like you’ve seen that formula before, you’re right, it almost exactly resembles the OEE formula. The difference is that TEEP multiplies the OEE formula by an additional term. In fact, you can express the TEEP formula in terms of the OEE value:

TEEP = OEE x Utilization

We’ve already covered overall effective equipment performance, so how does a company find utilization?

How to find utilization

It’s easiest and most accurate to quantify utilization as the time that an asset is scheduled to operate. Then, express “U” as a percentage of the total time available within a period (e.g. a total of 24 hours in a day). 

In formula form, write utilization as:

Utilization = (Scheduled operating time / Total time available) x 100%

For example, a machine’s schedule expresses 12 hours of operation one day. Then, calculate utilization to be 50% as shown below:

Utilization = (12 hours a day / 24 hours in a day) x 100% = 50%

Tip: Not at a 100% utilization? Don’t worry. Downtime and idle time may be due to essential activities such as preventive maintenance.

Improving your strategies by using TEEP and OEE

The founder of the Total Productive Management (TPM) system, Seiichi Nakajima, identified six big losses that hinder an asset’s overall performance. These losses are classified as downtime losses, speed losses, and losses due to defects. Eliminating or at least minimizing these losses improve availability, performance, and quality.  

The losses are:

  1. Equipment failure and breakdown events
  2. Downtime from setup and adjustment procedures in between batches of operations
  3. Idling and minor stoppages that cause interruptions to the production process
  4. Reduced speed in production compared to the equipment design speed
  5. Quality defects and rework due to malfunctioning equipment
  6. Reduced yield, especially when equipment in early stages of operations has not stabilized yet

Another way of thinking about the six big losses is to divide them into downtime, speed, and due to defect losses. Since TEEP and OEE are direct indicators of performance and indirectly tied to these three categories, they can be a very important resource to plants who are struggling with the six big losses.   

Where to use OEE

OEE is best used in situations where improvement is wanted and necessary. It provides a road map and mile markers to track a plant’s planned progress. It’s especially useful where there is a lot of discrepancy between plant productive time and actual productive time.

Improving specific productivity within a plant

If companies want to look at a specific plant, piece of machinery, or production line, OEE shines bright. The formulas and equations that create OEE indicators are able to point out the losses of specific situations and showcase how they could be fixed. 

It’s a relative metric that works in a lot of different situations and in a lot of different cases. Similar to a measuring tape or yardstick, OEE is a great tool for multiple different situations. That being said, it’s not a great overall indicator of progress.

And that’s what TEEP shines brighter.  

When to use TEEP

A high-level plant overview of performance

If you need an overall metric that displays how well or how poorly a plant is doing, the total effective equipment performance metric may be exactly what you need. This metric is best used when a high-level viewpoint is needed to determine overall plant performance and how it impacts the company as a whole. 

For example, if a plant is functioning well but consistently shows average or below-average TEEP, you may have much more potential on your hands than you realize. On the other hand, if your TEEP is at a very high percent, your plant is performing exceptionally well. 

In summary

OEE and TEEP are valuable indicators of a plant’s productivity. Awareness of how these values vary over time enables maintenance teams to gauge the state of individual assets, as well as the whole production facility. 

A good way to think of OEE and TEEP is as health checks for your facility to track its capacity to perform effectively. Just like people need check-ups every so often in order to perform to the best of their abilities, plants, equipment, and production lines need to be monitored every so often in order to raise them to their fullest potentials. 

This article was updated with additional information in June, 2020.

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