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).
Let’s briefly contrast OEE and TEEP:
- OEE measures the percentage of Planned Production Time that is truly productive.
- TEEP measures the percentage of All Time that is truly productive.
TEEP is calculated as:
Utilization is calculated as:
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.
|OEE||65.00%||How to calculate OEE|
|Planned Production Time||80 hours||8 hours × 2 shifts × 5 days|
|All Time||168 hours||24 hours × 7 days|
|Utilization||47.62%||80 hours / 168 hours|
|TEEP||30.95%||0.6500 × 0.4762|
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.
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%).
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).