Understanding Maintenance Reliability

Key Performance Indicators

by Ricky Smith CMRP, CRL

"KPI stands for key performance indicator, a quantifiable measure of performance over time
for a specific objective. KPIs provide targets for teams to shoot for, milestones to gauge
progress, and insights that help people across the organization make better decisions".

change quickly. In f

view
mirror. if you were successful or not until either its too late, or disaster strikes.
With the car example in mind, your results are:

Car goes in the ditch high cost (or worse)

You never reach your destination business goals not met

This is a serious problem and it costs companies around the world billions of dollars as a result of
what, I consider, a lack of management control.

Peter Drucker, the great industrial revolutionary stated:

t control and you cannot control something you

performance we want to measure. Is it the performance of the equipment? Is it the performance of

the spare parts warehouse? Is it the performance of the maintenance function? This may seem

specific area of the business for which they are attempting to measure performance.

kinds o

Example: Scheduled Compliance

Example: Maintenance Cost (effected if scheduling is not working)

Leading Indicators are those that we use to manage a part of the business, while Lagging
Indicators are those that measure how well we have managed. With Leading Indicators therefore,
it is possible to directly and immediately respond when a poor result is found. With Lagging
Indicators, we get value from knowing how well we performed, but we have little opportunity to

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immediately affect underperformance. Instead, when we see an unacceptable Lagging Indicator,
we must typically drill down to the Leading Indicators to uncover the cause of the
underperformance, and from there we can implement appropriate changes.

Leading Indicators for the maintenance function are those that measure how well we are
conducting each of the steps in the maintenance process. For example, a Leading Indicator for the

bor correctly, we
will see a high percentage of jobs completed using the planned amount of labor hours. If the
maintenance manager finds that the value of the KPI is lower than expected, he/she can speak
with the planner to discuss how best to improve the results immediately possibly for the

not suggesting that Leading Indicators can be tweaked to improve upon past performance. But
you can see in this case, that if we are managing using Leading Indicators, we can respond
immediately when needed.

measure results. We manage using Leading Indicators, and we react to results using Lagging
Indicators.

In the example above, a Lagging Indicator would measure the results of how well we managed the
maintenance function. In a situation where the maintenance function is well managed, we would
expect an appropriate balance between the cost of maintenance and the plant availability. A
Lagging Indicator could therefore be the actual maintenance cost for a month, as a percentage of
the budgeted maintenance cost for that month. If the actual maintenance cost for last month is
found to be 110% of budget, there is really very little we can do to directly influence the
performance of this KPI today. Instead, we would look at all of the Leading Indicators, probably
including those that measure the performance of our maintenance process, to determine whether
those values give us a signal for managing the problem.

Unfortunately, in our quest for excellence, we often are attracted to outside consultants that offer
d to effectively run our
business. Be careful, when considering these services, that you are not signing up for a laundry

you already acknowledged when you sought outside help.

Figure 1 shows how Leading Indicators for the maintenance process can provide management
capability, while the Lagging Indictors show us how well we have managed the maintenance

overall performance of the maintenance process, which will result in a certain level of maintenance
function performance. The Lagging Indicators in this case which are affected by these Leading
Indicato
Lagging Indicators will suffer if there is sufficient underperformance in the Leading Indicators. In
this following example you see the alignment of the maintenance
leading to lagging.

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 Figure 6.1.1 - Leading and Lagging Indicators

Figure 6.1.
process. Instead I have listed some of the ones I prefer to use in the table below, along with the
world class level, where applicable.

Type of KPI Measuring Key Performance Indicator World Class Target Level
Result/
1 Cost Maintenance Cost Context specific
Lagging
Result/ Maintenance Cost /
2 Lagging Cost Replacement Asset Value 2 - 3%
of Plant and Equipment
Result/ Maintenance Cost /
3 Cost < 10 15%
Lagging Manufacturing Cost
Result/ Maintenance Cost / Unit
4 Cost Context specific
Lagging Output
Result/ Maintenance Cost / Total
5 Cost 6 - 8%
Lagging Sales
Result/ Mean Time Between
6 Failures Context specific
Lagging Failure (MTBF)
Result/
7 Failures Failure Frequency Context specific
Lagging
Result/ Unscheduled Maintenance
8 Downtime Context specific
Lagging Related Downtime (hours)
Result/ Scheduled Maintenance
9 Downtime Context specific
Lagging Related Downtime (hours)
Result/ Maintenance Related
10 Downtime Context specific
Lagging Shutdown Overrun (hours)
Process/ Maintenanc Percentage of work 80% of all work requests
11 Leading e requests remaining in should be processed in 5
Strategy days or less.

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 Type of KPI Measuring Key Performance Indicator World Class Target Level
than 5 days, over the
specified time period.
Process/
Leading Percentage of work orders
with man-hour estimates
14 Planning Planning accuracy of greater than 90%
within 10% of actual over
Element / the specified time period.
Lagging
Process/ Percentage of work orders,
Leading over the specified time
15 Planning 95% +
period, with all planning
fields completed.
Process/ Percentage of Work Orders
Leading a
This level should not exceed 2
16 Planning (Due to a need for
to 3%.
additional Planning) over
the last month.
Process/ 80% of all work orders should
Leading Percentage of Work Orders be possible to process in 5
days or less. Some work
17 Planning
status less than 5 days, orders will require more time
over the last month. to plan but attention must be
paid to 'late finish date'.
Process/ Percentage of work orders,
95%+ should be expected in
Leading over the specified time
order to ensure the majority of
Scheduling period, having a scheduled
18 Scheduling the work orders are
Element / date earlier or equal to the
completed before their 'late
Lagging late finish or required by
finish date.'
date.
Process/ Percentage of scheduled
Leading available man-hours to total Target 80% of man-hours
19 Scheduling
available man-hours over applied to scheduled work.
the specified time period.
Process/ Percentage of Work Orders
Leading
to unavailability of This number should not
20 Scheduling
manpower, equipment, exceed 3 to 5%.
space or services over the
specified time period.
Process/ Percentage of Work Orders Schedule compliance of 90%+
Leading completed during the should be achieved.
21 Execution schedule period before the
late finish or required by
date.
Process/
Leading Percentage of maintenance
Rework should be less than
22 Execution Execution work orders requiring
3%.
Element / rework.
Lagging
Process/ Should achieve 95%+.
Percentage of work orders
Leading Expectation is that work
24 Follow-up closed within 3 days, over
orders are reviewed and
the specified time period.
closed promptly.
Table 6.1.1 Specific Examples of Leading and Lagging Indicators

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 ntenance function example, we can use them in other
areas of the business. This approach is particularly interesting where multiple functional areas
each play a role in a given goal, such as plant reliability. Plant reliability is a shared responsibility
of the maintenance, production and engineering functions. Leading indicators for each
departmental process would feed the lagging indicators for the department function, which would
then summarize to the plant level as shown in Figure 6.1.2.

Figure 6.1.2 The use of Leading and Lagging Indicators across Functional Areas

The Problem
Most of the problem is management should
leading and lagging). In my 30 year plus career, I have seen many plants shut their doors forever.
They blamed the closing on many reasons but the one thing they all had in common was that
d with were
ones like:

Cost
Asset Availability
Equipment downtime
OEE

All of these measurements or indicators, while useful for measuring performance, cannot be used
to manage the maintenance and reliability process. They are simply the results of all the actions
that have taken place in the maintenance and reliability process. Again, you cannot manage
results. You can only manage the processes leading to the results. If your company uses any of
the above metrics to manage their operation, without Leading Indicators they are in a reactive
mode.

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Companies must ask themselves some very basic questions:
Does your company differentiate between those can be used to manage
(Leading Indicators) from those that we can use to measure results (Lagging
Indicators)?
Does your company measure performance of the maintenance process, where they
can easily manage when needed?
If Leading Indicators show underperformance, then the underperformance will affect the Lagging
Indicator which could be reliability, cost, capacity, etc. People must understand the relationship
between a Leading and Lagging Indicator and their affects on the maintenance and reliability
function.

Most maintenance managers are told to control cost, improve reliability and increase asset
availability with no idea where the problem may be in their maintenance process. Unfortunately
many lose their job as a result. The fact is you cannot control cost, reliability, or availability without
managing the maintenance process.

John Day, (retired) Alumax: Since 1999, Alumax has been a leader in all alloys of aluminum.
Their Mt. Holly plant was rated as one of the best maintained plants in the world for over 20 years.
John Day, former engineering and maintenance manager comments on how he
managed using Hundreds of companies visited our plant, paying $1000 each to see our
maintenance program up close, but only a few learned from their visit. John feels they missed out
on how Alumax managed with aligned . John was also invited to visit over 500 plants in the
US, Canada, and Aus

with
Lagging Indicators and made decisions based indicators such as cost and reliability.

ems brewing long before they

would become a serious issue. Alumax had a system in place where we could measure everything
in our maintenance process - from Leading Indicators such as the identification of potential failures
through to the lagging financial

underperformance was identified before cost and reliability (the Lagging Indicators) were impacted.

department to establish over 60 financial accounts just for maintenance. These financial accounts

also Lagging
tablished benchmarks which measured if the
maintenance process was in or out of control. This approach may sound complex, but once you
have it in place, management can truly manage the reliability of plant equipment.

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John shared with me 13 years of KPI data that was so impressive it would bring tears to any

order for make basic and immediate management decisions. Each level in our organization utilized

over a 13 year period, I found

that their maintenance cost (a Lagging KPI) did not increase but was constant. Maintenance cost
as a percentage of Return on Asset Value held at around 3% for all of those years. Equally
impressive was that the controllable plant operating cost was very constant over this same time
period. This Lagging Indicator data pointed to the obvious fact that the reliability of equipment
directly correlates to operating cost.

By managing the maintenance and reliability process, element by element using Leading

achieve the results expected to succeed in a business. By the way, over 26 years ago I was
blessed to work for John Day at Alumax and enjoyed every day I worked for him.

The Solution

How much money do corporations loose every year due to plants not managing with good leading
and lagging

t to explain because there are

none.

they Leading and Lagging Indicators should be aligned to meet the business goals. You then must
provide a similar education to the maintainers and operators.

Define and assess your current maintenance and reliability process against a future
state.
you must develop a business case with financial opportunities and cost of change.
This step continues the education process and creates an awareness of the opportunity at hand.

Develop a plan based on the assessment to include financial opportunities and cost on a
time line. This plan must include:
a. The definition of the elements of your maintenance and reliability process (work
identification, planning, scheduling, work execution, etc.)
b. Work Flow Process for each element in your maintenance and reliability process
c. The definition of roles and responsibilities for each task
d. tenance and
reliability process in each element
e. Targets and World class benchmarks that are established against the defined KPI

Implement the process and begin managing based on Leading Indicators. I would begin
(maximum of 3). Then allow people at the lowest levels to make

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the decisions required ensuring your maintenance and reliability process is proactive and effective.
making process.

This process is not easy however it is not magic either. Developing KPIs is a time consuming process but one
which must be done in order for a company to survive.

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