UNDERSTANDING TEEP VERSUS OEE FOR PROFITABLE MANUFACTURING

Transcription

1 UNDERSTANDING TEEP VERSUS OEE FOR PROFITABLE MANUFACTURING By Robert Hansen Parsec Automation Corp. Phone: Fax: Parsec Automation Corp All rights reserved. Parsec Automation Corp., Parsec logo, and Parsec product names are trademarks of Parsec Automation Corp. References to other companies and their products use trademarks owned by the respective companies and are for reference purposes only.

2 To ensure profitable manufacturing, two important aspects for developing a strategy for a long-term successful OEE program must be explored. These would be: 1. Understanding Total Effective Equipment Performance (TEEP) versus OEE 2. Speed to Proficiency A simple definition would be: OEE is the amount of perfect production time relative to the actual scheduled time used, while TEEP is the amount of perfect production time relative to Total Calendar Time. Another approach to understanding the TEEP value would be to compare the actual amount of good product produced relative to the amount of product that could have been produced if everything worked perfectly, with 100 percent first pass yield and at ideal rate for 365 days per year. A simple back of the envelope calculation can be done, and usually the number is significantly lower than the current OEE value. TEEP measures the overall use of the asset, and world-class levels would be nearly equal to world-class levels for OEE in the pharmaceutical industry. It measures the performance of all planned work and pushes support services such as maintenance and process engineering towards excellence. For instance, assume a work center has planned maintenance of one shift (eight hours) every seven weeks and an allowance for planned experiments of seven days a year. All other efforts are to maximize the use of the equipment for planned production. Therefore, about 2.5 days are used for planned maintenance and seven days for experiments for a total of 9.5 days of planned downtime per year. Assume that world class OEE is 75 percent for this pharmaceutical work center s type of operation, which means that perfect production occurs for.75 ( ) = days per year. World Class TEEP would be =.73 or 73%. This is just 2% less than world class OEE. The importance of understanding your TEEP number is to emphasize the gap between current operations and the world-class future state. The business case for action should be developed with world-class TEEP as the target for the life cycle performance. Often when the overall benefits are computed, organizations discover that capital additions for capacity require $10.00 for every $1.00 invested in achieving capacity via world-class TEEP. 1 The second understanding is epitomized by Speed to Proficiency, which comes from the book Breakaway 2. What this thrust brings to the table is the revelation that every day your operations are not performing at world-class OEE, (your) money is being lost. Picture your operation consuming raw materials and providing finished goods via a system that has many different conduits and pipelines that are constantly leaking. The gap between current state and world class is the level of unnecessary leakage every day. Understanding TEEP versus OEE for Profitable Manufacturing Page 1

3 By eliminating the leaks, product can be provided on time, in full, without errors, and at the lowest cost, which is the promise to the customer that initiates Breakaway results (growing market share and refilling the factory). World class TEEP is the metric used to determine the full capability of the asset and helps to develop the financial business case between current state and what could be. When the total organization (including marketing and sales) understands the amount of income that is being lost daily, collaborative support and a complete strategy for quick action usually develops. Certainly, the most important step is to improve fundamental OEE of the key product value streams. This allows the growth wheel to cycle by lowering prices; as demand increases and refills the factory, another cycle occurs. TEEP becomes the measure to expand availability and maximize income from operations. Speed to proficiency just means that the prize of survival and job security will go to those who are first to learn and put the tactical plans into action. Robert Hansen is the author of 'Overall Equipment Effectiveness: A Powerful Production/Maintenance Tool for Increased Profits' and is the founder of RC Hansen Consulting, LLC. 1. Hansen, Robert. Overall Equipment Effectiveness: A Powerful Production/Maintenance Tool for Increased Profits. New York, New York: Industrial Press, 2001, pages Fred, Charles. Breakaway, Deliver Value to your Customers Fast. San Francisco, CA, Jossey-Bass, 2002 Understanding TEEP versus OEE for Profitable Manufacturing Page 2

4 ABOUT PARSEC Parsec Automation Corp. (Parsec) is the developer of TrakSYS, the leading real-time operations and performance management software. Manufacturing companies worldwide rely on Parsec for flexible and configurable tools to execute manufacturing operations across the value stream more effectively. Without production disruption, TrakSYS helps manufacturers to significantly improve asset utilization and efficiency, increase capacity with no new capital equipment, reduce production costs, decrease lead time, and improve profitability. With measureable ROI, TrakSYS delivers the bottom-line results that manufacturing companies are looking for. For more information about Parsec, please visit the corporate Web site at Parsec Automation Corp. All rights reserved. TrakSYS, LOGICTrak, MODELTrak, INTELLITrak, GLOBALTrak, EVENTTrak, ALERTTrak, SENSORTrak, LEANTrak, PRODUCTTrak, WEBTrak, HISTORITrak, AUDITTrak, IMPROVETrak, SPCTrak, BATCHTrak, and any other Parsec products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Parsec Automation Corp. All other products and service names mentioned are the trademarks of their respective companies. Data contained in this document serve informational purposes only. Understanding TEEP versus OEE for Profitable Manufacturing Page 3

5 TERMS AND CONDITIONS OF USE Upon receipt of this electronic publication, it is understood that the user will and must fully comply with the terms and conditions of use as stipulated herein. This publication is protected by United States copyright laws and international treaties. Unless otherwise noted, the entire contents of this publication are copyrighted by Parsec Automation Corp., and may not be reproduced, stored in another retrieval system, posted on any Website, or transmitted in any form or by any means without prior written consent of Parsec Automation Corp. Unauthorized reproduction or distribution of this publication, or any portion of it, may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent necessary to protect the rights of Parsec Automation Corp. The trademarks and registered trademarks of the corporations mentioned in this publication are the property of their respective holders. All information contained in this report is current as of publication date. Information contained in this publication has been obtained from sources Parsec Automation Corp. believes to be reliable, but is not warranted by the publisher. Opinions in this publication reflect judgment at the time of publication and are subject to change without notice. THIS DOCUMENT IS FOR ELECTRONIC DELIVERY ONLY The following are prohibited: Transmittal via the Internet Reproduction for Sale Posting on any Website Understanding TEEP versus OEE for Profitable Manufacturing Page 4