1.6 Total Effectiveness Equipment Performance (TEEP)

Whereas OEE measures the effectiveness of planned production schedules, Total Effectiveness Equipment Performance (TEEP) measures the overall equipment effectiveness relative to every minute of the clock, or calendar time. In many settings, management is especially interested in how well a factory's key assets are used relative to total calendar time. TEEP is the me tric that indicates opportunities that might exist between current operations and world-class levels. It reveals the hidden factory that can and should be leveraged to make the company more competitive. Like OEE, TEEP must be used in combination with financial information.

TEEP numbers can be used to speculate on the potential capacity of an existing plant. The last increments of reaching total capacity usually have higher unit manufacturing costs especially if labor overtime is involved. The final increments need to be evaluated from business and OEE perspectives. With focused improvement projects for OEE and TEEP which makes every hour of operation more effective, it is quite possible that future capacities with overtime will be manufactured at less than current (before OEE) standard unit costs without overtime.

The strategy at many companies is to run their factories 24/7 – 24 hours a day, 7 days a week – and to produce the maximum amount of product possible. These companies often can sell everything they can make; they may also be the lowest cost producer. In some cases, the capital investment in equipment and facilities is quite large; and using the asset around the clock maximizes return on investment. In other cases, the process is continuous and, therefore, expensive or difficult to shut down and start up. A 24/7 strategy may also be appropriate for a portion of the year to meet seasonal demands. Understanding the total size of the hidden factory becomes important. For factories that are already running 24/7, the hidden factory represents an opportunity for increased capacity.

Because TEEP categorizes all events around the clock, it is the metric that should be used when you develop a business case for more capacity or capital expansion. TEEP can be a good indicator of the capacity that is still available within an existing asset. Developing this hidden factory is beneficial because it is cost effective. Other advantages would be the hidden factory could be developed sooner. It also comes with fewer risks than new or modified equipment and systems.

According to a presentation at the 1999 Society of Maintenance Reliability Professionals conference, Rohm and Haas Corporation determined that developing hidden capacity of existing factories was ten times less expensive than building new capacity. Consider how favorable this savings is to return on assets.

Even areas that are not yet filled to capacity can benefit significantly by improving the effectiveness of non-production activities. One such benefit is the ability to respond immediately to unexpected increases in production schedules.

An important operating strategy for all companies is to maintain the balance between production and production capability over both the short and long term. Maintaining this balance helps a company sustain strong net profits on a consistent basis. To maintain this balance between production and production capability, companies must effectively manage required off-line activities; they must not delay or cancel required work. Section 6.1 provides a case study of how managing shutdown and maintenance work provided ten additional production days per year for a plant. Frequently, decisions by management to delay equipment shutdown and maintenance work in favor of generating more product for current orders, can lead to a poor performance that jeopardizes current and future orders.

OEE ignores planned downtime whereas TEEP brings into focus the necessary activities required when not planning to make product. These activities include equipment shutdowns and planned maintenance stops, experiments, new product development, meetings, training, and planning for staff needs, shift schedules, and manufacturing strategies. TEEP also re cords all online rework that affects the key equipment.

Companies must make good business decisions regarding how they allocate time for the various activities that impact the key assets. If all activities are highly effective, then planning and scheduling become straightforward and less reactive. Non-production tasks should take place as scheduled; they should deliver the anticipated results (expected throughput) with high reliability (quality). Opportunities to leverage part of the hidden factory can come from targeted improvements on non-production tasks. Examples include:

❑ Reduce planned maintenance downtime (see section 6.1 for a case study).

❑ Use pre-assembled equipment modules to "swap out," reducing replacement time.

❑ Execute only statistically designed experiments (minimize guessing).

❑ Staff work areas appropriately to cover lunches, breaks, week ends, and holidays.

❑ Train and educate workers off-line.

❑ Hold multiple meetings to communicate with employees before or after shifts. This avoids work stoppage for full community meetings.

❑ Improve reliability of delivery.

❑ Improve transitions to new equipment modifications (see section 9.1).

When proactive leadership drives improvements in both production and non-production activities, the increased effectiveness from the entire work community improves the bottom line. When the focus is only on production, and non-production activities are ignored or undervalued, poor work practices develop in off-line work that eventually impacts OEE.

1.7 The Bottom Line: Good Goods at Lowest Cost—Now!

The dynamics of the world, both internal and external to the factory, generate great uncertainty about what the future will be for any one course of action taken today. This uncertainty, often the source of "analysis paralysis," can cause corrective actions to be delayed day after day. Because of global competition, every company must strive to be the best it can be at delivering quality goods, on time, at attractive prices, today.

Highly effective factories are certainly advantageous. They increase your company's ability to leverage stronger financial benefits and sustain more favorable positions relative to its competition.

In many cases, the threat of plant shutdowns and job losses occur before the workforce accepts change. This scenario doesn’t have to happen! Instead, management must determine the true size of the hidden factory and proactively set a course of action that leads the company to world-class numbers.

Where does this leadership start? It starts at every level of the factory. Promoting change should be like discovering gold and then communicating to the rest of the organization about the potential treasure. Once the organization grasps the size of the hidden factory, it has a compelling reason to begin its own gold rush.

For change to take place, everyone in the work community must recognize the consequences of the current path. Without improvement, a serious crash will happen. And in today’s competitive environment, everything happens faster. Everyone must recognize the difference between "continuing as is" (the base case) and "what could be" if high OEE and TEEP levels existed,.

The next two chapters explain how the definitions categorize every minute of calendar time, how the three methods of computing true OEE reconcile, and how true OEE correlates to Operating Income (Earnings Before Interest and Taxes, EBIT) and Return On Assets (ROA). After understanding that that each method reconciles to the same OEE, and that the hidden factory can be identified easily, your next step is to determine the size of the opportunity for your plant or work area. Even a small increase in OEE leverages a bigger increase in net profits.

A detailed analysis will bring into focus the areas where opportunities for major improvement exist. At that point, a broad range of tools and methods can be applied to these clearly defined targets. Be creative in developing solutions. Do not limit your vision to only internal resources. Think about bringing in people from other departments and disciplines as well as outside resources. In all cases, be sure to work from good data. Verify your actions with statistically designed experiments. The most important aspect is to get started now. Improved benefits will only be realized after changes are implemented. Every day counts.

Companies and factories often approach new processes by identifying a pilot area. In the selected area, they test and develop methods before applying the process to other areas or plants. This approach has a number of pitfalls relative to an aggressive OEE strategy. Most change involves educating the specific work center about the metric, collecting and analyzing information, and forming cross-functional teams to work on the major limiters. The experience of the pilot group is not easily transferred to other areas. Furthermore, if the pilot area is not of key importance to the plant or overall process, it may not get the resources and attention it needs to be completely successful.

Aggressive OEE strategy should be launched in conjunction with the five steps of constraint management methodology described by Eliyahu Goldratt in Critical Chain7.

1. The strategy should be implemented as a plant or factory objective using the prioritized list of bottleneck assets (Identify).

2. The strategy should focus the resources and the initial program on the top ranked bottleneck (Exploit).

3. All other areas of the plant should not only be informed of the key equipment OEE goals. They should also be supportive of the prioritized list and serve the key assets accordingly (Subordinate).

4. The selected bottleneck area should incorporate all necessary changes for high OEE (Elevate).

5. When this area is successful, the next prioritized key asset should implement the new methods, insuring that the greatest benefits are achieved quickly (Go Back).

Many companies have achieved tremendous improvement by launching such a strategy, including Reynolds Metals Company, as outlined in the June 1998 issue of Reliability magazine8. Reynolds Metals embraced a new process it called "Total Productive Manufacturing." This process refocused its manufacturing at the plant level, from "Mission/ Vision" all the way to best practices on the shop floor. Measuring its own progress was a vital part of the process of change. The backbone of these measures was OEE improvement.

References:

1. Nakajima, Seiichi. Introduction to TPM: Total Productive Maintenance . Cambridge, Massachusetts: Productivity Press, 1988.
2. Allen, F. "How Do You Make Paper Clips?." American Heritage of Invention & Technology, Volume 14/number 1, (1998): page 6.
3. Pray, Tom. "Decide II Simulation: A Full-enterprise Business Simulation. Tom Pray, " Rochester Institute of Technology, New York (1999).
4. Shingo, Shigeo. A Revolution in Manufacturing: The SMED System, Cambridge , Massachusetts : Productivity Press, 1985.
5. Moubray, John. Reliability-centered Maintenance. 2^nd Edition, New York, New York: Industrial Press, 1997.
6. Cox III, J., Spencer, M. The Constraints Management Handbook. Boca Raton , Florida : The St. Lucie Press, 1998.
7. Goldratt, Eli. Critical Chain. Great Barrington, Massachusetts: The North River Press, 1997.
8. Holt, F., E. Myers, R. Underwood, and others. "Building and Sustaining Total Productive Manufacturing At Reynolds Metals Company." Reliability Magazine Volume 5 Issue 2, (June 1998): pages 4-12.

Copyright © 2004 Industrial Press Inc.