Key performance indicators give you a more sophisticated look at things

Key performance indicators (KPI) connect dissimilar metrics in a way that provides a sophisticated worldview. Executive Editor Russell Kratowicz P.E., suggests using them to help maintenance.

By Russell L. Kratowicz., P.E.

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If you don’t measure it, you can’t control it. How often have we heard that little piece of wisdom? Although it’s considered a necessary activity, measuring alone is insufficient to impel the change that results in a better future state of being. Merely identifying a trend in some variable is of minimal significance. For example, is it necessarily bad that maintenance expense increased 5% during the last calendar quarter? What if throughput or sales increased 25% during the same period? The point is that a given phenomenon requires more than one number to make it an important feature in a corporate landscape.

Key performance indicators (KPI) can be used to connect sometimes dissimilar metrics in a way that provides a more sophisticated view of the world. With a KPI in place, one can then identify an upper or lower bound, depending on the KPI, which triggers a corrective action or response when the KPI starts wandering.

Just because it’s possible to identify candidate metrics for inclusion in a KPI doesn’t mean the resulting indicator will make sense. As with so many other concepts in the maintenance arena, it’s a matter of balancing the cost of collecting data with the benefit achieved by allowing the metric to guide one’s decisions.

Please join me for another dive into the morass we call the Web in search of practical, zero-cost, noncommercial, registration-free resources about maintenance-related KPIs. Remember, we search the Web so you don't have to.

Look in the right places
One can’t take the cookbook approach to finding the right key performance indicators. Each plant has unique objectives, and even these evolve over time. You’ve got to take a few steps backward to find the right perspective. Richard Beck and Rod Oliver from Meridium Inc. in Roanoke, Va., explain a philosophical approach to selecting appropriate KPIs for the here and now that can identify areas for improvement. The pair wrote “Selecting key performance indicators for strategy,” an article that appeared in [i]Petroleum Technology Quarterly[i]. The idea Beck and Oliver promote is improving plant maintenance operations by connecting the corporate objectives with the equipment, processes and learning using a strategy map, a construct they use to tie it all together. Hike on over to Meridium.com for the details in this four-page document.

Ahead or behind?
There’s no doubt that plant personnel are already collecting measurements galore, many of which are used for a single purpose at the point of collection. The general idea, though, is that individual metrics need to be combined if they are to yield usable key performance indicators. The KPI is a multivariable function and is only as accurate as the underlying metrics, a fact reminiscent of the old computer adage, “garbage in, garbage out.”

The employees of Life Cycle Engineering Inc., a maintenance consulting firm in North Charleston, S.C., seem to know a lot about key performance indicators. Fortunately, the good folks working there are willing to share some of their hard-won knowledge about three KPIs: replacement asset value, maintenance cost and repair factor. These asset-management performance measures are covered in three editions of the company’s online newsletter. Visit the LCE site to find a list of newsletter dates. The three you want are dated July 1, 2003, October 1, 2003 and January 1, 2004.

That said, Ricky Smith of Life Cycle Engineering cautions that KPIs come in two varieties: leading and lagging. Making business decisions on the basis of either a badly formulated or a lagging indicator isn’t nearly as good as working from a good leading indicator. You can access “Key Performance Indicators -- Leading or Lagging and When to Use Them” for the details and a list of suggested leading KPIs.

Get it on paper
Paperloop Inc., a publisher headquartered in Bedford, Mass., focuses on the pulp and paper industry. It posted “Key performance redefined,” an article by Bruce Kopkin. It's a rather short read that gets a little too commercial for comfort near the end. Nevertheless, Kopkin suggests that framing KPIs in terms of business language is the best way to get the attention of those standing between you and the funding needed to improve things in the plant. For example, connect a maintenance stockout to lost equipment availability. Then make a connection to lost production and revenue. The goal in this case is to use a KPI of some sort to help balance maintenance stores expenditures with the dollar value of production.

Bloggers arise
Web logs are one of the current online fads. A blog, or Web log, according to Webopedia.com, is "a Web page that serves as a publicly accessible personal journal for an individual. Typically updated daily, blogs often reflect the personality of the author." In the business arena, a single-topic blog can serve as a useful tool for collaborative work and for establishing consensus. As one would expect, there are blogs for various maintenance-related issues, including KPIs. For example, NetexpressUSA Inc. in Fort Myers, Fla., publishes blogs from plant professionals on MaintenanceTalk.com, its Web site. One blog entry titled “Key Performance Indicators,” offers some philosophical thoughts for any plant wanting to establish a set of meaningful KPIs to monitor the maintenance function. It’s a short read and definitely worth your time. Perhaps you’ll be motivated to toss your own two cents into the pot.
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