Let’s assume you have the necessary sponsorship and formal approvals to invest in improving reliability. Remembering Stephen Covey’s second habit – begin with the end in mind – how can you measure whether your reliability improvement project is delivering results that align with your organization’s business objectives?
Begin by evaluating your current state
It’s likely that some aspect of your operations, maintenance, or equipment is not meeting expectations. You’ll want to establish a current-state baseline so that you can track how reliability improves and the business benefits after you start tackling identified problems. Begin your assessment by collecting data to assemble hard facts. Here are good areas to measure:
- Overall equipment effectiveness (OEE)
- Production volume performance (use a statistical process control chart to highlight variability)
- Historical maintenance spend trend
- Level of reactive maintenance (labor hours spent on emergent and urgent work vs. total labor hours)
- Overtime for production and maintenance
- Top 5 – high-repeat failure equipment, production process issues, cost areas
- Maintenance backlog
- Schedule compliance
John Cray, CMRP, is a principal consultant with Life Cycle Engineering. He has more than 35 years of experience in maintenance management, reliability engineering, small capital projects, manufacturing leadership, corporate reliability leadership, and consulting. He also has extensive technical, safety, CMMS (MAXIMO, SAP) and organizational change management knowledge. Contact him at [email protected].
Next, interview a small cross-section of employees to collect the “soft” facts. Make sure to interview people closest to the work, namely operators, tradespeople, and storeroom staff. Ask open-ended questions to get workers’ full perspective on reliability. I always conclude 45- to 60-minute interviews with two questions:
- If you were plant manager for a day and had magical powers, what one aspect of the operation would you improve?
- Do you have any questions for me?
Asking people their opinion shows appreciation and generates buy-in. And, of course, remember to thank them for their time invested.
Define your scope and create your scorecard
With a good baseline of “hard” and “soft” facts, including a diagnosis of which areas need the most improvement, define your problem statement and the project scope. It is important to have a well-defined scope and timeline as well as realistic business objectives so that leaders can manage toward a plan and schedule. Leaders must understand the gaps and the business benefit of closing them; this will allow them to answer questions from their organization.
The scope of the reliability improvement and associated benefits will allow the project leader to create a reliability scorecard. The scorecard should change over time as the organization transitions, completes a given project, and matures to sustaining new levels of performance.
The reliability scorecard is critical to capturing project benefits and should include the following types of measures:
Transition – These are temporary project measures to indicate whether reliability changes are taking place. When objectives are reached, you can remove these measures from the scorecard and add new transition measures. Examples include the percent of labor hours recorded on a work order, the number of assets with a criticality ranking, and the number of employees trained on a given topic.
Leading – These are measures of a process; they’re also called dashboard measures because they are forward-looking. Process measures indicate how well an organization is executing a particular process. Examples include backlog in crew-weeks, weekly schedule compliance, and the number of critical assets with a maintenance strategy.
Lagging – Also known as rearview-mirror measures, lagging measures typically measure completed actions, such as volume produced. Examples include number or weekly “widgets” produced, maintenance monthly spending, and finished-goods inventory.
The scope and business objectives of your improvement project are the basis for which measures you select. The point to remember when developing a scorecard is to keep a balance of all three metric types during the project. At a minimum, include the business result measure(s). For example, if the objective is more “pounds” of production, measure in pounds, and then translate into agreed-upon financial terms – revenue, conversion cost, or profit.
Report progress and results
This article is part of our monthly Tactics and Practices column. Read more Tactics and Practices.
It’s easy for any improvement project to fall into a trap of measuring and reporting progress based on measuring activities. An activity can be anything from the number of new assets loaded in a CMMS or the number of employees trained in root-cause analysis to the number of work orders with a job plan and an estimate. These are important but transitional project activity metrics.
Robert H. Schaffer and Harvey A. Thomson wrote an excellent article for the Harvard Business Review (Jan./Feb. 1992) titled “Successful Change Programs Begin with Results.” Their research in the early days of quality improvement programs indicated that two-thirds of organizations focused on measuring and reporting activities, not results.
Establishing the right effective measures for your reliability scorecard at the beginning of a project will first establish the use of “leading” and “lagging” measures, which can be new for the organization. Then, by including the business objective measure(s) in the scorecard, you create visibility and reinforce to leadership and the organization as a whole the importance of the project to the business. Lastly, when you update the scorecard and report it to the organization and senior leadership, you provide a balance of project execution, process performance, and – most important – reinforcement of the business objective.