Management Insight Column: Measure key performance indicators that matter
To address the outsourcing challenge, managers must manage their departments more cost-effectively. The most effective strategy to achieve this goal is to use the five key performance indicators (KPI) that every maintenance and engineering manager should include on his or her dashboard to effectively monitor and analyze the way your current management process is performing, compared to your business model and vision for the future. Keep in mind the words of W. Edwards Deming, who popularized the concept of total quality management, who said, "You cannot manage what you cannot measure."
I will leave the customer satisfaction measurement off my list of key KPIs because most managers already focus on it. In reality, many departments are too focused on making customers happy. Most customers really don't expect the department to complete all work requests immediately. What they do expect is good communication, high-quality workmanship, reasonable cost, and follow-through on promised completion times or dates.
Many management experts will debate the top five KPIs, but to at least get you started down the road of the performance measurement, I recommend these five:
- backlog of deferred work
- percent of completed work that is reactive
- preventive maintenance (PM) program compliance
- pareto analysis of completed work
- weekly work-schedule compliance.
Let's take a closer look at each one of these to understand its purpose and application.
Backlog of deferred work. This KPI is one of the first measurements to put in place, especially if the department uses a computerized maintenance management system. The backlog measures all deferred work, which is work not important enough for assignment and completion in the current work week. In other words, the department will consider it for future weeks, depending on the priority of the request as it relates to other work tickets. Managers should measure backlogs in hours and convert the data to backlog weeks, which allows comparison of crews with different numbers of technicians. The typical goal for this KPI is a backlog of four to six weeks.
Percent of completed work that is reactive. This KPI measures whether your organization is stuck in a culture of reactive maintenance or is moving toward world-class or high-performance maintenance. This transition is important because reactive work costs four-six times more than planned and scheduled work. Managers should shoot for 20-30 percent of completed work being reactive.
PM program compliance. This KPI indicates whether the department is improving proactive maintenance. To succeed in the asset management and reliability categories of maintenance, you must have a disciplined PM program that produces results. A successful PM program includes all critical equipment, and technicians will complete 99 percent of PM inspections and procedures on time.
Pareto analysis of completed work. This KPI is critical in analyzing the types of work requests that consume maintenance resources. Pareto developed the 80-20 rule: 20 percent of a facility's assets and equipment consume 80 percent of resources. The purpose of Pareto charts and graphs is to present these results in a format employees can easily understand and interpret. Managers should publish charts weekly and monthly to demonstrate the way work needs and demands are changing.
Weekly work-schedule compliance. This KPI measures the ability to schedule and complete work for customers. One key to successful management is to be able to promise your customers the day and time technicians complete requested work. This KPI is a great tool for determining the way supporting tools work together in order to deliver a good product to your customer. Remember, no department wants to be thought of as a team of cable guys, who never complete what they promise on time.
Now you have the KPIs you need to move from a reactive organization to a proactive, world-class maintenance operation.
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Michael Cowley, CPMM, is president of CE Maintenance Solutions. Cowley provides maintenance training, coaching and consulting services to facility and manufacturing organizations nationwide. He is a frequent speaker at national facilities management conferences.