HOW TO ESTABLISH TEEP AND OEE MEASURES
This instruction covers the collection and evaluation of data in order to calculate and display the level of utilisation of standard production equipments. It is best used with standard production equipment such as grinding, turning, milling, molding, stamping machines etc.
Definition, abbreviations and bibliography
See the graph in tab Appendix 1 of enclosed spreadsheet.
OEE %: overall equipment efficiency; similar to demonstrated capacity and TRS; eliminates “legal pauses” and “lack of orders” from the 100% baseline
TEEP %: total effective equipment productivity; the base is always 24x7
eta %: utilisation; TEEP = eta*OEE
dem.Cap.: demonstrated capacity; like OEE but includes “legal pauses” and “lack of orders” in the 100% baseline. It is the demonstrated equipment utilization during plant open time (= work calendar) and should go into the capacity threshholds of your MRP system.
MRP: material requirement planing; MRP used to be a common abbreviation for standard enterprise software packages (ERP)
TRS %: taux de rendementsynthetique; similar to OEE and demonstrated capacity (French)
a) Std Cycle Time : this is the standard cycle time as established by industrial engineering procedures (cycle counting, MTM, work factor ...). It is the "optimum" cycle time of an operation and does not include any form of downtime or variance allowances. This Std Cycle Time needs to be entered into the root sheets of the MRP system.
b) Earned Hours : the total of std cycle times consumed (or planned) in order to produce good (sellable) products for a reporting period. It includes make-to-order and make-to-stock production.
c) 'Overall Equipment Effectiveness OEE' is a percentage figure that represents how effectively an asset is being used (to produce good parts) when it is planned to be used (i.e. the "run time" of the equipment - not the working calender in your MRP system).
Other commonly used but not identical expressions for OEE are "demonstrated capacity" and "TRS=taux de rendementsynthetique".
The general approach of establishing OEE values for a given equipment is:
OEE = AE * QP * AV
AE = Efficiency (compared to standard) of the line when intended to run = Parts processed * std cycle time / run time (should be ~95%)
QP = Quality performance of the line when running = (processed amount - defect amount) / processed amount (should be ~99%)
AV = Availability of line when running = (run time - downtime) / run time (should be ~90%-95%)
The run time is the time when the equipment is supposed to run minus time for planned maintenance minus lack of orders minus pauses.
In order to calculate OEE values per equipment you may use enclosed spreadsheet template (Appendix 2) - this is optional and not required to generate TEEP values as per this instruction.
A different way of establishing OEE values is described further below.
d) 'Utilization eta' typically refers to the percentage of time an asset is actually used versus total time available (i.e. if we use an asset 40 hours out of a 168 hour week we would have a utilization of ~25% (but the OEE could range anywhere from 0% to 100%).
e) 'Total Effective Equipment Productivity TEEP' is a percentage figure that represents the portion of production of good parts versus total available time or mathematically:
TEEP = eta * OEE
TEEP is used to calculate capacity requirements, standard hourly rates etc. Max level ~ 85%, average level's around 50%! THerefore it is best fit for RCCP (rough cut capacity planning) and for monitoring performance on the shop floor.
e) Demonstrated Capacity = long term demonstrated level of production of good parts on a given equipment. It is similar to OEE and TRS - the major difference is that the baseline is the shift calender as defined in the ERP system which includes "pauses" and part of "lack of orders".
Hartmann Edward H. : Successfully Installing TPM in Non-Japanese Plant;
TPM Press Inc, 1992; ISBN 3-478-91370-5
Description of establishing TEEP values
Please refer to the graph of "Production Performance TEEP and OEE" in tab Appendix 1 of enclosed spreadsheet. On the left side you see Japan Management Association's perception of good/max level's of performance.
Data has to be collected as or converted into hours (or minutes). The OEE and TEEP values are percentages derived from the data collected. Reporting needs to be done for TEEP values only.
The 100% base in this instruction is considered to be the maximum available time which is
24hrs per day or
24hrs * 7 days per week or
24hrs * 365 days per year
This is for reference only and does by no means imply that you are supposed to run ALL your machinery around the clock.
Time consumed on any production equipment may be split into:
1) Machine Idle Time
time where the equipment is supposed to be idle such as during lack of orders or planned maintenance or legal pauses.
2) 'Environmental' Downtime
time where the equipment is down due to environmental influences such as set up and lack of resources (personnel, material, energy, tools, ...). This downtime needs to be attacked by management.
3) 'Technical' Downtime
time lost due to technical influences such as machine downtime, variation in the performance level of the equipment versus the standard time or production of scrap. This downtime needs to be attacked by process engineering and by (preventive) maintenance.
It is mandatory to group the data for idle times into these three categories. Within these three categories other subcategories may be defined to suite the needs of the individual operational unit.
There are two ways of generating OEE and TEEP data:
1) Bottom up:
count "good parts produced" and multiply them with the standard cycle time in your route sheets. This time (=earned hours) in relation to max available time gives you a TEEP value (approach of Nakajima = bottom up). This time (=earned hours) in relation to your open time is the OEE value.
2) Top down:
collect all types of times wasted by categories:
- machine utilisation (lack of orders, planned maintennance)
- environmental influences (set-up times, lack of resources such as people, material, energy ...)
- technical influences (downtimes)
- actual long term demonstrated cycle time compared to theoretical net cycle time
You may do the data collection with chronometers mounted to the equipment or with a simple sheet per equipment (tab Appendix 3 of spreadsheet). Enter the collected data into tab Appendix 4 of the spreadsheet in order to create TEEP values per machine or line on a per shift basis. You are invited to modify this spreadsheet in order to suite your needs. Make a summary spreadsheet per process department (grinding, turning, milling, molding, plating, stamping) where you sum up the data of each machine or line and report it according to the next paragraph of this instruction.
For operational purposes it is recommended to create subtotals per machine groups in order to judge capacity requirements per machine sizes such as e.g.:
Stamping_GRP1 : subtotal of all presses less than 30 tons
Stamping_GRP2 : subtotal of all presses above 30 tons
STAMPING : total of Stamping_GRP1 + Stamping_GRP2
Now subtract all non productive hours from maximum available time. The resulting time in relation to your open time is the OEE value and the relation to the maximum available time is the TEEP value.
During an introductory phase it is recommended to use both methods of establishing the TEEP values. This way management can verify
- discipline in collecting the data in operations,
- discipline in applying material transactions/booking procedures and
- data accuracy of route sheets.
The difference of the TEEP ratios generated by using these two approaches should not exceed 5% in order to trust the data collection process.
TEEP should be used by management to judge plant utilisation and capacity investment/desinvestment. The earned hours are required to establish your hourly rates during budget preparation (whatever good they are).
1) It is dangerous to use TEEP and OEE to benchmark different operations - see examples below.
2) TEEP and OEE values usually do not qualify as indicators for goal setting as this will cause overproduction in order to generate high OEE/TEEP ratio's. For the company as a whole it is important to sell products in order to have cash flowing INTO the company. Overproduction will cause cash to flow OUT of the company.
Consider the following two examples :
Molding : two companies producing the same product on identical machines, identical molds (cavities, cooling) and using the same material in a make-to-order environment have the following key data :
Company A operates at 15sec std cycle time with TEEP=70%
Company B operates at 20sec std cycle time with TEEP=80%
Company A is of course performing better as it generates
16,7%=20sec/15sec * 70%/80%
more product than Company B although Company B has the superiour TEEP ratio.
Stamping : two companies are stamping the same terminal on the same
size of presses in a make-to-order environment :
Company A : 1200 strokes per minute, single line with TEEP = 50%
Company B : 800 strokes per minute, double line with TEEP = 40%
Company B generates much more product than company A although it has an
inferiour TEEP ratio.
Presentation of data
For better visualization the data should be presented in so called run-charts. There is a template to generate run charts in tab Appendix 5 of enclosed spreadsheet.
The spreadsheet will calculate lower and upper "process limits" based on +/- 3*sigma around the average monthly budgeted TEEP values.
Each month you will have to enter the TEEP value into the appropriate field of the spreadsheet and the template will update the chart to represent the progress in the relevant production department.
Keep in mind that due to statistical rules a "significant" change (compared to your budget)in your production departmentocurred when either
- one single TEEP value is outside the lower/upper limit boundaries or
- 3 out of 4 consecutive TEEP values are closer to one of the limits than to the average or
- 8 consecutive TEEP values are on one side of the lower/upper half of the chart.
For a given reporting period (=fiscal year) you have to establish monthly "budget" TEEP values which should take into account :
- seasonality of business
- ramp up and ramp down of programs
- capacity increases or transfers or disposals
use this link in order to retrieve spreadsheet TEEP.XLS
which includes :
Appendix 1 Production Performance TEEP and OEE
Appendix 2 OEE Template (grabbed somewhere from the WWW)
Appendix 3 Machine Down Times
Appendix 4 Template to collect and evaluate machine downtimes
Appendix 5 Process behaviour chart for TEEP performance