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Manage 3 Lean KPIs to transform your manufacturing operations; OEE, Utilization and TEEP.


In operations management, it’s critical to understand how effectively your equipment is being used and how to unlock its full potential. Three key metrics—OEE (Overall Equipment Effectiveness), utilization, and TEEP (Total Effective Equipment Performance)—help provide insights into equipment performance. However, improving these metrics requires a strong foundation in Lean manufacturing, a focus on operational excellence, and a commitment to continuous improvement.

Understanding how these metrics work, and how they connect to broader Lean and operational excellence strategies, can lead to significant improvements in both efficiency and profitability.


What is Utilization?

Utilization is a simple measure of how much of the available production time your equipment is in use. It compares the actual time a machine is running to the total time it is scheduled for production. While it’s an important measure of capacity, it doesn’t account for whether equipment is running efficiently or producing quality products. Utilization tells you how much of your scheduled capacity is being used but not whether it is being used effectively.


Utilization = Available Time / Operating Time​×100


What is OEE?

OEE (Overall Equipment Effectiveness) is a more comprehensive metric that measures how effectively a machine is running during its operating time. It breaks down equipment performance into three factors: availability, performance, and quality. OEE gives a fuller picture by revealing whether your equipment is producing good parts, running at the right speed, and minimizing downtime. An OEE score of 100% would mean that the equipment is producing only good parts, at the maximum possible speed, with no downtime.

Availability measures the percentage of the scheduled production time during which equipment is running. It accounts for unplanned downtime (e.g., breakdowns). Some practitioners also include planned downtime, such as idle time due to lack of work, in the availability calculation. However, in this article, we will address planned idle time separately as underutilization in the next section. Performance: Evaluates whether the equipment is running at its maximum speed when it is operating. Performance losses like slow cycles are considered, but not periods when the machine is intentionally idle.

Quality: Considers the proportion of good products produced versus defective ones during the operating time.


OEE = Availability × Performance × Quality


What is TEEP?

TEEP (Total Effective Equipment Performance) looks at total capacity, including both scheduled and unscheduled time. While OEE focuses on how well equipment is being used during scheduled production time, TEEP assesses how much of the total possible production time (24 hours a day, 7 days a week) is being utilized. TEEP is particularly valuable for identifying potential capacity in unscheduled hours. For example, if TEEP is low, it may indicate opportunities to add shifts or extend production times.


TEEP = OEE × Utilization


TEEP OEE

Fig. 1. Visual representation of Utilization, OEE, and TEEP


Impact of Lean Manufacturing on OEE, Utilization, and TEEP

Lean manufacturing focuses on reducing waste and improving process flow, which directly impacts OEE, utilization, and TEEP. By streamlining workflows, reducing downtime, and improving equipment reliability, Lean helps optimize the performance of production assets.


  • OEE benefits from Lean practices such as Total Productive Maintenance (TPM), which reduces unplanned downtime, and Kaizen events, which improve performance and quality.

  • Utilization improves when Lean reduces idle time and better aligns production with demand, ensuring machines are being used more efficiently.

  • TEEP increases when Lean efforts extend production into underutilized shifts or times, boosting overall capacity usage.


IoT’s Role in Optimizing OEE and Lean Practices

The Internet of Things (IoT) is transforming how companies approach equipment monitoring and Lean improvement initiatives. IoT-enabled devices and sensors gather real-time data from machines, providing actionable insights to improve OEE, utilization, and TEEP.


  • Real-Time Monitoring: IoT sensors can detect machine failures, track downtime, and measure performance, leading to faster corrective actions that boost OEE.

  • Predictive Maintenance: IoT data enables predictive maintenance, reducing unexpected breakdowns and improving availability, a key factor in OEE.

  • Quality Control: By monitoring production conditions, IoT helps ensure quality output, reducing the number of defects and rework, thus enhancing OEE.

  • Optimizing Utilization: IoT can help balance workloads by providing insights into idle machines, enabling better scheduling and utilization.

  • TEEP Enhancement: IoT-driven analytics identify unused capacity, suggesting opportunities to extend production or optimize shift patterns for greater overall equipment use.


The Power of Lean Manufacturing and IoT

Combining Lean manufacturing with IoT helps businesses create a culture of continuous improvement. With real-time data at hand, companies can make informed decisions about their operations, identify inefficiencies, and address them proactively. This alignment ensures that businesses can continuously optimize performance, improve equipment effectiveness, and maximize their production capacity.


Conclusion

Metrics like OEE, utilization, and TEEP provide critical insights into how well your equipment is performing, but true optimization comes from combining these metrics with Lean manufacturing and leveraging IoT technology. At Techam Solutions, we help businesses harness the power of Lean and IoT to drive operational excellence, improve efficiency, and maximize asset utilization. Contact us today to learn how we can help transform your operations.

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