Calculate TEEP

What is TEEP?

TEEP (Total Effective Equipment Performance) is a performance metric that provides insights as to the true capacity of your manufacturing operation. It takes account both Equipment Losses (as measured by OEE) and Schedule Losses (as measured by Utilization).

Calculate Total Effective Equipment Performance by multiplying Availability, Performance, Quality and Utilization
TEEP is calculated by multiplying four factors: Availability, Performance, Quality, and Utilization.

Let’s briefly contrast OEE and TEEP:

If your TEEP score is 100% then you are making only Good Parts, as fast as possible, with no stops, around the clock (24/7). In other words, you have no Schedule Losses and no OEE Losses.

Calculate TEEP (Total Effective Equipment Performance) by multiplying OEE by Utilization
TEEP is the ratio of Fully Productive Time to All Time. It takes into account schedule losses and OEE losses (the latter shown here broken into the Six Big Losses).

How is TEEP Calculated?

TEEP is calculated as:

TEEP = OEE × Utilization

Utilization is calculated as:

Utilization = Planned Production Time / All Time

Here is a simple example, based on a manufacturing operation with a 65% OEE score, that is running two 8-hour shifts per day, five days per week.

OEE65.00%How to calculate OEE
Planned Production Time80 hours8 hours × 2 shifts × 5 days
All Time168 hours24 hours × 7 days
Utilization47.62%80 hours / 168 hours
TEEP30.95%0.6500 × 0.4762

TEEP and the Hidden Factory

TEEP indicates how much capacity is waiting to be unlocked in your “hidden factory”. In other words, it shows how much potential you have to increase throughput with your current equipment. In many cases, reclaiming time from your hidden factory is a faster and less expensive alternative to purchasing new equipment.

TEEP can also be used to get a sense of your potential sales capacity as it takes into account the full capacity of your manufacturing plant. Keep in mind though, that even a world-class manufacturing plant operating around the clock typically achieves only 80% to 90% Utilization of total capacity.

Manufacturing Capacity and Utilization

Capacity can be defined as “the amount that can be produced”. From a discrete manufacturing perspective, we can define capacity as “the maximum number of parts that can be manufactured”. Capacity is fundamentally a part-based metric (e.g., our current capacity is 24,000 red widgets per hour).

Utilization can be defined as “how much something is used”. From a discrete manufacturing perspective, we can define utilization as “the proportion of time that manufacturing equipment is used”. Utilization is fundamentally a percentage-based metric (e.g., our current utilization is 47.62%).

Perspectives on Loss

Interestingly, losses can be viewed from three perspectives:

  • Part Units (we lost 1,000 units of potential production)
  • Time Units (we lost two hours of production)
  • Percentage Units (we lost 17% of our Planned Production Time)

All three perspectives can be useful – depending on whether you are thinking in terms of sales/capacity (part units), labor/utilization (time units), or manufacturing performance (percentage units).

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