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 tab Appendix 1 of enclosed spreadsheet.

abbreviations :

OEE % overall equipment efficiency; similar to demonstrated capacity and TRS
TEEP % total effective equipment productivity
eta % utilisation
MRP managment requirement planing; MRP is also a common abbreviation for a
standard enterprise software package
TRS % taux de rendement synthetique; similar to OEE and demonstrated capacity

definitions :

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 open time or the working
calender in your MRP system). Other commonly used expressions for OEE
are "demonstrated capacity" and "TRS=taux de rendement synthetique".
The general approach of establishing OEE values for a given equipment
is :

OEE = AE * Q * V

AE = Efficiency (compared to standard) of the line when intended to run =
Parts processed * std cycle time / running time (should be ~95%)
Q = Quality performance of line when running = processed amount - defect
amount / processed amount (should be ~99%)
V = Availability of line when running = (open time - downtime) / open time
(should be ~90%-95%)

The open time is the time when the equipment is supposed to run (shift
or work calender time) minus time for planned maintenance minus lack of
orders. 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 used 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% !

e) Demonstrated Capacity = long term demonstrated level of production
of good parts on a given equipment; similar to OEE and TRS.

bibliography :

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 bar 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.
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)
- scrap
- actual long term demonstrated cycle 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
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 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).

WARNING :

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 visualisation the data should be presented in so called
run-charts. There is a template in tab Appendix 5 of enclosed
spreadsheet.

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
- etc

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 department ocurred 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.
 
 

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