5 common mistakes companies make when setting up maintenance KPIs
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1. Companies should select a family of interrelated KPIs rather than a single KPI to fully capture performance. 2. All KPIs should ultimately relate to and align with larger corporate goals. 3. Benchmarking against best practices is important, but an overemphasis on metrics can lose focus on the underlying practices. KPIs should have clear and unambiguous definitions of "good" performance.
5 common mistakes companies make when setting up maintenance KPIs
- 1. mistakes companies make when setting maintenance and reliability KPIs
- 2. What defines KPIs? KPIs are a measure of success, allowing individuals to monitor progress and identify areas of potential improvement. They relate to a defined objective in a manner that is relevant to the process under scrutiny. A KPI facilitates comparison with past performance, and the performance of other organizations. However, the KPI should also provide some prognostic and diagnostic information.
- 3. Selecting a single KPI to monitor Any single KPI will be hard pressed to show the true performance and help to identify what needs to be improved. That is why an organization needs to formulate a family of relevant and interrelated KPIs that operate at various levels of hierarchy. This will provide individual managers with key information to effectively control their specific contribution to the overall business result. 1
- 4. KPI’s are disconnected from larger business goals2 The setting of organizational KPIs is a “top-down” process, meaning that all KPIs ultimately should relate to the corporate goal. Each maintenance department or organization must therefore make sure that their sets of KPIs are in alignment with corporate objectives.
- 5. Successful KPI determination Financial (eg. Maintenance cost per unit of production or inventory value as a percentage of estimated replacement value). Maintenance process KPIs providing timely warning that scope for improvement exists (eg. Predictive maintenance effectiveness or Emergency purchase orders raised as a percentage of all purchase orders raised). Overall maintenance performance assessing the quality and efficiency of services provided to the organization; for example the unscheduled downtime as a percentage of total downtime. Functional KPIs to identify specific improvements for individual activities such as Preventative and predictive maintenance. These could include cost savings that result from early detection of faults (measuring PdM effectiveness) and schedule compliance of estimated replacement value. Part 1/2
- 6. System-related KPIs identifying the effectiveness and utilization of maintenance management systems, such as the number of equipment items that exist within the CMMS database, expressed as a percentage of the total number of equipment items on site.e of estimated replacement value). Inventory management KPIs involved in the measurement of maintenance inventory management often parallel KPIs employed for management of other inventories (i.e. raw materials, work in progress, or finished goods). Personal development KPIs such as training hours per maintenance employee. Successful KPI determinationPart 2/2
- 7. Not knowing what good looks like3 Benchmarking is a continuous improvement process through which an organization attempts to identify “world class” or “best in class” practices through studies of other organizations and their procedures. Benchmarking projects cannot be quantified unless performance is measured and improvements are tracked. However, there is more to benchmarking than just metrics. In fact, an over emphasis on metrics may cause benchmarking to lose focus, as the real objective of a benchmarking exercise is to identify the practices behind the metrics. When a performance indicator can be clearly and unambiguously aligned with best practice, it becomes a benchmark that may be employed as a process improvement goal.
- 8. Choosing KPIs that are too hard to measure4 Like any other monitoring process, effective use of KPIs requires a clear and accurate measurement process. If data varies due to collection inconsistencies, the degree of change needs to be greater before it assumes significance, which causes timeliness to be impaired. If it is not possible to identify a hard objective measurement for a key issue, inject some logic into the assessment process by specifying definite conditions relative to values recorded.
- 9. Not making it part of a living program5 After establishing the required regime of KPIs and configuring the business processes to collate the required data, results should be subject to regular review and analysis. Numerous tools are available to aid tracking and interpretation of KPIs. Simple, easily understood KPI graphical can dispel suspicions about the reasons for data collection, and may have a positive motivational effect. Such displays help individuals understand the contribution made by them towards the corporate result.
- 10. Avoiding these 5 common pitfalls KPIs should provide alignment of individual processes to long term corporate goals as well as timely, clear, and unambiguous warning of opportunities for process improvement.