J. Stanton McGroarty, CMfgE, CMRP, is senior technical editor of Plant Services. He was formerly consulting manager for Strategic Asset Management International (SAMI), where he focused on project management and training for manufacturing, maintenance and reliability engineering. He has more than 30 years of manufacturing and maintenance experience in the automotive, defense, consumer products and process manufacturing industries. He holds a bachelor of science degree in mechanical engineering from the Detroit Institute of Technology and a master’s degree in management from Central Michigan University. He can be reached at [email protected] or check out his Google+ profile.
This is how interlocking KPIs create a system that models the overall performance of the maintenance operation. While these values are built on historical performance, they can also be viewed as forward-looking indicators that forecast the direction of backlog growth and the cost-effectiveness of the maintenance operation. Also, whether it is seen initially as overtime growth, poor maintenance completion, or poor PM completion, the degradation of machine performance will be predictable. Customer service, OEE, and availability will respond next to a maintenance slide. If we are tracking a proper set of interlocked KPIs, we can prevent this chain of events from being a surprise. Hopefully, it will be prevented altogether if we have seen it in our forward-looking metrics.
Note that if any of the KPI set had been eliminated, it would have been easy to get good KPI grades without controlling maintenance. For instance, if we can’t keep up with the work, but we’re not tracking overtime, we can schedule overtime freely. This is particularly easy in budgeting systems where the OT column only carries the overtime premium, instead of total payroll cost. Overtime work costs three or four times the premium, but this is not visible in the typical accounting system.
Similarly, if we’re not tracking the percentage of work scheduled, then we can get great completion numbers by just scheduling half the workforce and half the work. Eventually we’ll see it in the backlog, but then we’re as likely to hire more maintenance staff as to schedule the ones we have.
An interlocking set of KPIs is not a substitute for managing our areas, but they make a great dashboard to tell us about the near-term results and long-term prospects of our current management decisions. KPIs should make us harder to surprise and equip us to support good financial decision making by top management. Just think, if you are scheduling all of your people and getting good completion of the work, a growing backlog or continued emergency work suggest that you either need more resources or you need to choose the work better. This could be the start of staffing and training improvements that have been overdue in past budgets. A careful examination of the nature of the failures and a detailed review of the growing backlog may also provide useful clues to what next steps the company ought to be funding. Sounds downright strategic, doesn’t it?
Read Stanton McGroarty's monthly column, Management Measures.
