CHAPTER V
Measuring Your True Equipment Productivity Unlocking The Hidden Factory

Within most plants around the world there lies a hidden factory. Occasionally you catch a
glimpse of it, when production is humming along and everything is going right and no
machine is down. You know it's there, just below the surface, the potential of what your
plant could be if everything would just continue to work as it should. You wish it could
be that way all the time, but somehow problems get in the way and it vanishes, screened
from your sight by the reality of everyday business.

TPM is the key that can unlock that hidden factory and bring perhaps another 25 to 30%
of capacity into your production areas. Here is how you calculate your current equipment
productivity and determine your improvement potential. Equipment Productivity

True equipment productivity is measured by Total Effective Equipment Productivity
(TEEP).

This is the overall formula that includes Equipment Utilization (EU) and Overall
Equipment Effectiveness (OEE). Most of the current TPM literature discusses only OEE
and disregards the fact that a high level of equipment utilization is required to accomplish
a high degree of equipment productivity and a good Return on Assets (ROA). You can
improve your OEE at the expense of equipment utilization by doing all your set-ups and
PMs during planned downtime. If plant management is truly interested in getting good
asset and capacity utilization, the TEEP formula is of prime importance (Figure 7).


Figure 7

Therefore a third formula, that clearly reflects the true quality and effectiveness of
equipment while it is running, seems to be in order. Net Equipment Effectiveness (NEE)
is this formula.

It excludes not only planned downtime (as does OEE), but also downtime required for
set-ups and adjustments. It is a reflection of the true mechanical condition of your
machine. Equipment Losses

In order to calculate these three indices--TEEP, OEE, and NEE--you need to know what
your equipment losses are. TPM focuses on equipment losses that cut into your
equipment effectiveness. There are at least five categories:

• Set-up and adjustments
• Equipment failures
• Idling and minor stoppages
• Reduced speed
• Process defects (see Figure 8)

In many companies, there are more, such as warm-up losses, test runs, etc. Those losses
must be identified beforehand and included in the appropriate formula. It has been found
that the "reduced yield" or "start-up" loss (the difference from equipment start-up to
stable production) as described in other publications can not be measured as such, since it
normally consists of a combination of above five losses during the equipment de-bugging
or start-up phase. It is recommended to calculate the OEE at equipment


Idling and minor stoppages falls into this category. The machine's motor is running, but
no product is being processed. Perhaps there is a jam and no product is coming into the
machine, or the machine next in line is down and you are "blocked," or the operator is not
available for a few moments. Maybe you are momentarily out of parts, or the machine is
out of adjustment and needs to be re-adjusted. There are so many reasons for idling and
minor stoppages.

These little problems can cause some of the biggest losses in a factory. In one electronics
plant in Asia, a female operator was testing electronic parts that came down into the
machine through a channel. Every so often, the machine stopped (jammed) and the
operator used a small tool like an oversized toothpick to get it running again. It only took
her about four seconds to fix the problem, which happened on the average of three times
a minute. That's 12 seconds, and if you stop to figure it out, it's 20% of each production
minute. Multiply those 12 seconds per minute by eight hours and you have a considerable
loss of production. Jams figure prominently on every chart of idling and minor stoppages
analysis and frequently account for a high percentage of loss. Yet the reasons for most
jams are relatively easily corrected.

Reduced speed is the fourth major equipment loss. It stems mainly from poorly-
maintained, worn out or dirty equipment. Some other causes of speed losses are
insufficient debugging during the start-up phase, defective mechanisms or systems,
design weaknesses and insufficient equipment precision.

These two losses figure in the calculation of performance efficiency. In each case, the
machine is not broken down, but performs at a lower level of efficiency.

The fifth equipment loss is process defects. If a part is rejected or must be reworked, the
equipment time producing it is lost. This loss is relatively small when compared to other
major equipment losses. However, in today's environment of Total Quality, no rejects,
especially those caused by a machine, are tolerable. Typically, as the equipment gets


The time left after deduction of the set-ups is the operating time. At this point, the
calculation of the Net Equipment Effectiveness (NEE) starts. The amount of time the
equipment was broken down due to failures (unplanned downtime) is now deducted and
the percent uptime (93.7%) can be calculated. Unfortunately, this is often the only
number reported to plant management, creating a totally wrong impression of the real
equipment situation, since it only covers one single loss. For that reason, plant and