TEEP vs OEE: Differences, Formula and Worked Example

TEEP vs OEE: what they are and how they differ

TEEP (Total Effective Equipment Performance) measures how much of all calendar time, 24 hours a day and 7 days a week, an asset spends making good product. OEE measures the same thing, but only within the time production was scheduled. The link is direct: TEEP = OEE × utilization.

OEE answers "how well do we use the time we scheduled?". TEEP answers "how much of the capacity this asset really has are we using?". A machine with 75% OEE that sits idle at night and on weekends has a much lower TEEP, and TEEP is what exposes that hidden room. For the basic OEE calculation, see OEE: how to calculate overall equipment effectiveness.

Visual map: from calendar time to TEEP

The map shows the three layers of time (calendar, scheduled and running) and the numeric example of this article from start to finish.

OEE, utilization and TEEP formulas

OEE = Availability × Performance × Quality

Utilization (loading) = Planned production time ÷ Calendar time

TEEP = OEE × Utilization

• Availability: run time ÷ planned production time. Lost to breakdowns, changeovers and material shortages.
• Performance: actual output ÷ ideal output during run time. Lost to minor stops and reduced speed.
• Quality: good parts ÷ total parts. Lost to scrap and rework.
• Utilization: the share of the calendar in which the plant chose to run. Lost to unstaffed shifts, weekends and holidays.

Worked example: a line running 2 shifts, 5 days a week

Fictional example of a filling line. Weekly calendar time is 168 h × 60 = 10,080 min. The plant schedules 2 shifts of 8 h for 5 days: 80 h = 4,800 min. The ideal cycle time is 0.5 min per part (120 parts/h).

Shortcut check: 7,197 good parts × 0.5 min = 3,598.5 min of fully productive time. Divided by 4,800 min that gives OEE (75.0%); divided by 10,080 min it gives TEEP (35.7%). The OEE looks healthy, yet the line turns barely more than a third of calendar time into good product.

Which lever pays more: OEE or utilization?

TEEP lets you compare two different decisions on the same yardstick. Using the example line:

Five OEE points yield 483 extra parts a week (+6.7%). Adding a third shift yields about 3,600 (+50%), but only pays off if there is demand, staff, maintenance coverage and enough margin to carry the shift cost. Scenario B also assumes OEE holds, which often fails on shifts with less technical support.

The takeaway: before buying another machine, check whether the current one has already exhausted the calendar. To size capacity and utilization, see production capacity: how to calculate utilization and efficiency.

When to use TEEP and when to use OEE

• OEE: daily shop-floor management, shift comparison, loss prioritization and TPM routines.
• TEEP: capacity investment decisions, bottleneck asset analysis, deciding how many shifts to run and negotiating planned downtime.
• Both together: OEE tells you where to improve inside the shift; TEEP tells you whether it is worth opening more production time.

Bottleneck equipment deserves TEEP first, because every lost hour there is a lost hour for the whole plant. See the logic in the theory of constraints. To tie availability losses to maintenance, use MTBF and MTTR.

Common mistakes and limitations

• Mixing time bases: comparing the OEE of a 2-shift plant with the TEEP of a 3-shift one without stating the base.
• Treating 85% as a TEEP target: the 85% benchmark is usually quoted for OEE; the TEEP of an asset that does not run 24 hours a day will never get close, and that is normal.
• Defining "planned" loosely: if stops for lack of orders or material are removed from planned time, OEE improves on paper and the loss disappears from view.
• Using an unrealistic ideal: the ideal cycle time should be the design or best demonstrated rate, not this month's average.
• Optimizing the metric, not the flow: raising TEEP on a non-bottleneck resource only builds inventory. Keep the analysis tied to takt time and demand.
• Ignoring data quality: without reliable stop and scrap records, all three OEE factors are guesses.

Frequently asked questions

What is the difference between TEEP and OEE?

OEE uses planned production time as its base; TEEP uses all calendar time (24 h × 7 days). TEEP = OEE × utilization.

How do you calculate TEEP?

Multiply OEE by utilization. In the example: 75.0% × 47.6% = 35.7%. You can also divide fully productive time (good parts × ideal cycle time) by calendar time.

Can TEEP be higher than OEE?

No. Utilization is at most 100%, so TEEP is equal to or lower than OEE. They match only if the plant schedules 24 hours a day, every day.

What is a good TEEP value?

There is no single benchmark, since it depends on the work calendar and on demand. What matters is tracking the same asset over time and comparing TEEP with OEE.

Does TEEP replace OEE?

No. OEE remains the daily management metric for efficiency; TEEP complements it by showing capacity not yet used.

When does it make sense to add a shift?

When demand is firm, the equipment is a bottleneck, TEEP is low because of calendar (not losses) and the extra shift costs less than the margin it adds.

About the author

Vagner Soares

Lean Manufacturing & Behavioral Management Specialist

Over 20 years in the automotive and metalworking industries (GM and Dana), Lean Manufacturing practitioner since 2006. SENAI instructor and mentor in Brazil’s Brasil Mais Produtivo program, delivering consulting, training and audits for 50+ companies, combining quality, productivity and people development.

LinkedInInstagramFull profile →