Which asset management metrics should you start with?
You just left college life and joined your first maintenance and reliability team. With eyes as wide as saucers on day one, you quickly learn what a RACI is and that you are the "R" responsible for making sure the equipment runs when intended. Not overwhelmed by this, that soon changes as you balance motivation versus discipline within a pack of wolves consisting of electrical and mechanical maintainers. You begin to learn how to identify work that needs to get completed tomorrow while empathetically learning how to address the assault of unplanned work pummeling you today. This collection of assets that you are managing has a replacement value of around $100M, but you are still years away from understanding what Replacement Asset Value (RAV) is and how it is influenced by the CEPCI (Chemical Engineering Plant Cost Index). However, you are responsible for the inventory of spares that the finance organization says you have too much and your supervisor questions why you don't have a spare.
This is where my career started, and I was eager to learn, fail, and grow in this educational, rookie role. As my supervisors challenged my results and coached me on my shortfalls, I felt as if I was missing tools to measure my team’s asset management maturity and our ability to show improvements over time. As my team collectively strived to improve, I was fortunate to be in an environment where individuals encouraged me to join the Society of Maintenance and Reliability Professionals (SMRP) and seek solutions to my own measuring dilemmas. This is when I got my first taste of using the SMRP Best Practices for guidance. But if you have done the same, which ones do you choose when there are 70 different metrics options?
Within my asset management journey, I believed that work was sequenced through 1. work identification, 2. planning, 3. scheduling, 4. execution, and 5. review. When done right, this process would go round and round for individual assets and enable a macro-measuring view for the collection of assets. When reflecting on this journey, if I was to go back to do it all over again, there would be ten metrics from SMRP that I would start with. The ten would be separated into two categories to review leading and lagging indicators. Health would be the first category, and it would be a collection of leading indicators that measured the probability that tomorrow will be better than today. The second category would be performance, and it would be a collection of lagging indicators that showed how we were progressing over time. Here we go, these are my ten within the two categories.
5.4.5 Standing Work Orders - This metric drives the behavior to capture work to an asset versus obsessing on capturing labor hours. Yes, I despise obsessing over capturing each actual labor hour, and this metric monitors the hours casually captured on a generic work order(s). The maturity sequence this builds stresses the importance of capturing the accurate work history of the asset first and then improving the accuracy of labor hours. It is not the other way around, because the value returned from accurate work history to an asset versus the historical allocation of work hours is exponentially different.
5.4.6 Work Order Aging - I have always used the saying that the backlog is from when the Romans ruled the world to when the zombies are coming. This means that the backlog covers everything that is not canceled, completed, or closed. This metric encourages good housekeeping and backlog cleansing of work not documented as complete or work that is no longer needed. It forces the departments to understand the importance of housekeeping within a work order backlog is just as important as good housekeeping on the shop floor.
5.4.8 Planned Backlog - Transitioning work that has been identified into work orders to be planned is critical for the organization's success. It is a maturity milestone when the department transitions from thinking more about tomorrow's work versus the emergency work today. This metric monitors the size of the backlog against the crew’s size for two purposes. First, when the upper control limit is breached more labor is required, or escalation processes are needed to ensure work is prioritized correctly. Second, when the lower control limit is breached, there is not enough work identified or too much labor available.
5.4.9 Ready Backlog - Different than 5.4.8 Planned Backlog, this metric strives to schedule work from the planned backlog to be executed. This backlog, with a unique identifier of the work order’s type, helps the team be ready to assign work when the operating unit is running, scheduled down for outage work, or windows of opportunity (WOOs). The visibility of this backlog matures the organization to commit to a notion that work is deemed ready after it has been accurately planned with the best knowledge available and the spares are staged and ready for use. The team that is tasked to execute work is just waiting for it to be scheduled for them from the ready backlog.
5.4.11 Preventive Maintenance (PM) & Predictive Maintenance Work Orders Overdue - Similar to 5.4.6 Work Order Aging, this is looking at the proactive work that has aged. This is a pulse indicator of not getting the time to conduct predetermined proactive work, highlights important proactive work that has been missed, and exposes where proactive work volume may not meet the expected return on investment. As the organization matures to understand this metric, it will become more adaptable to PM Optimization strategies, connecting OEE to contributions-per-bottleneck-hour, and life-cycle cost in the future.
2.1.1 Overall Equipment Effectiveness (OEE) - Not many things I like more than OEE. It is the one key performance indicator (KPI) that you cannot hide from no matter how hard you try (Winkenhoffer effect). Once you capture an operating unit’s max demonstrated run rate, you can measure an operating unit’s effectiveness from then on. I also gravitate to OEE and stay away from classic definitions of maintenance delay rates and utilization because these can be fudged by influencing numerators, denominators, and backlog gyrations. OEE can get the organization to talk one language, focus on the bottleneck, and provide a monetary value to perform effective asset management. Without OEE, the organization is hoping that everyone will grasp the value of effective asset management.
5.3.3 Actual Cost to Planning Estimate - The efforts that go into estimating the cost of work are shown in this metric. As you mature, you will see variability become flatter and a standard deviation that decreases. There will be one-offs that impact this metric on the top side of the upper control limit when you get into those hornet's nests. However, there will be others instances that impact this metric on the bottom side of the lower control limit when you get lucky on a job. The goal here is to decrease variability within the targetted zone. As you mature your asset management disciplines, you will see this occur.
5.4.1 Reactive Work - As the organization strives to build and complete the schedule, reactive work will inevitably disrupt the schedule. The organization will learn that measuring schedule compliance with a CMMS (computerized maintenance management system) is not as easy as it looks, and trying to do this on day one is a challenge. Instead, using this metric to monitor work that was created and completed in a very close timeframe, allows the organization to trend disruptions to the schedule. I tend to use the CMMS by trending if the work was created and completed in less than 7 days and then classify this work as Reactive Work. This notion holds if you are trying to build a schedule to be executed next week, and are striving to measure the compliance to this schedule.
5.4.10 Preventive Maintenance (PM) & Predictive Maintenance (PdM) Work Order Compliance - The trickiness of the word “compliance” will get you every time and you will most likely improve its definition over time. This metric guides the department to realize that compliance is within a window and not a finite date. This is true for most non-regulatory, proactive work and easily relatable to things like getting your car serviced. Additionally, this metric mentally prepares the organization to encourage meter-based proactive work versus time-based to improve cost and reliability.
5.5.31 Stores Inventory Turns - I prefer that inventory has value, and is not expensed to an operating cost center when purchased. This enables metrics to measure maintenance spent over time, versus showing the cost of the spare when purchased. This approach then empowers the projects and disciplines to have an inventory that turns and is sized to dynamically adjust based on the reliability of the assets and the market conditions impacting lead time. This metric monitors a low ratio as an indication that the inventory is too high and a high ratio that the inventory levels could be compromising the OEE of the facilities.
My top 10
These are my top 10. In general, there is no particular order. However, 2.1.1 Overall Equipment Effectiveness rules the performance ones, and 5.4.8 Planned Backlog is the leader on the health side. Do you agree? Which ones do you adamantly disagree with, that I included or excluded within your industry? Let us know.