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A guide to everything OEE and its relation to TEEP

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.

What is OEE? What does it mean?

OEE stands for overall equipment effectiveness. It is a performance indicator that quantifes 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. 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. For instance, it can be used to compare how the similarities and differences in processes affect the performance of the plants.

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

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.

What are the different ways to calculate OEE?

The standard method

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

Firstly, 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:

I

deal 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%

The simplified method

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 the 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 insight 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.

Tip: Be consistent with defining the periods of operation to get reliable results.

What is the OEE industry standard?

OEE values can vary across multiple industries and multiple types of equipment. To provide a general sense on how well an asset is performing, benchmark values have been identified and suggested. These benchmarks come from the historical performance observation of several top-performing plants. Best practices suggested by the Society for Maintenance and Reliability Professionals (SMRP) provide individual benchmark scores for each of the components as follows:

  • Availability > 90%
  • Performance > 95%
  • Quality > 99%

These individual scores total to a best-in-class OEE value of 85% or greater. To put this value in a real-world perspective, a 2009 report noted the performance of 700 global manufacturing operations. The top-quartile performers were found to operate at 78% OEE, with some of the best organizations at 93% OEE.

Why is OEE important?

OEE is a simple and clear way to measure the current state of an asset’s performance. Tracking OEE over time enables maintenance teams to come up with data-driven strategies to identify which processes help improve the plant’s performance. As a metric, OEE acts as a goal that the team can work to achieve. Progress in OEE scores can reflect how efforts to improve processes are affecting the performance of the plant.

Tracking OEE over time across multiple assets might sound like a daunting task, and it surely is if you’re doing it with pencil and paper methods. However, we are now living at a time when a computerized maintenance management software (CMMS) can enable users to access equipment data even on mobile devices. Given the available technology, it’s the best time to use OEE as an actual instrument to effectiveness rather than just being a laborious chore.

How can I improve OEE?

Improving each of the components that make up the OEE directly result to an increase in the OEE score. 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 – therefore leading to an improvement in the OEE.

Downtime losses

Downtime losses, aptly named, reduce the uptime of an asset. These losses contribute to a reduction in equipment availability. A few things cause downtime losses, including:

  1. Equipment failure and breakdown events
  2. Downtime from setup and adjustment procedures in between batches of operations
Tip: Maximize your CMMS by using it to track downtime more accurately.

Speed losses

Speed losses occur when actual operating conditions are below the optimal levels. As the name suggests, these losses result in slower production times compared to the ideal production times, causing a decrease in performance efficiency. Speed losses include:

  1. Idling and minor stoppages that cause interruptions to the production process
  2. Reduced speed in production compared to the equipment design speed

Losses due to defects

Losses due to defects reduce the number of quality products produced by a plant. The larger these losses are, the lower the rate of quality for the plant. A few things causing losses due to defects are:

  1. Quality defects and rework due to malfunctioning equipment
  2. Reduced yield, especially when an equipment in early stages of operations has not stabilized yet

What is TEEP?

In learning about performance metrics, you might have also heard of total effective equipment performance (TEEP), a term commonly interchanged with OEE. In the next sections we’ll see how these two are actually distinct values that differ in definition and in application.

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. TEEP 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 non-stop for 24 hours a day, 365 days a year. Therefore, in setting target TEEP values, carefully consider periods of time when assets will be idle. Teams must schedule servicing periods for equipment and its components ahead of time, and factor those times in when setting realistic TEEP goals.

How do I calculate 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

Quantify utilization as the time that an asset is scheduled to operate. 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.

What’s the difference between OEE and TEEP?

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, with the addition of the utilization factor, 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.

Given the utilization rates of assets, the team strategizes on how to schedule, increase, or extend production times. For example, if there is a requirement to ramp up production rates to meet seasonal demands, it is usually more economical to increase the utilization rate of an asset instead of purchasing brand new units.

Conclusion

OEE and TEEP are valuable indicators of a plant’s productivity. Taking a step back, 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. Think of OEE and TEEP as health checks for your facility to track its capacity to perform effectively.