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OEE vs. TEEP

Q: What is more important, Overall Equipment Effectiveness or Total Effective Equipment Performance (TEEP)?

A:

Robert Hansen responds:

TEEP is the amount of good product made relative to the amount that could have been made over the total calendar time. TEEP is useful for business analysis and important to maximize before spending capital dollars for more capacity. TEEP is important in reviewing overall asset utilization and production costs.

OEE is the first and highest priority for any operating organization. Being able to effectively make products to specific orders, on time, in full is the most powerful tool manufacturing can deliver. However, because most products are derived from a series of production steps, another key element is necessary from a system perspective.

OEE is a throughput metric, and therefore it is critical to prioritizing achievement of high OEE of the system constraint first. Dr. Eli Goldratt explains in his latest book on Theory of Constraints that long-term success has three components: throughput, production costs and inventory. Of these areas, throughput is first, followed by inventory and production costs, with the latter two being equal in importance.