Power of Leading KPIs in Maintenance
Published on : Monday 05-07-2021
Suresh Babu Chigurupalli elaborates on the importance of KPIs in maintenance with real life examples from a leading enterprise.
A performance indicator or key performance indicator (KPI) is a type of performance measurement. KPIs evaluate the success of an organisation or of a particular activity in which it engages. While measuring the performance of the maintenance function, one of two kinds of KPIs are leading indicators or lagging indicators (also referred to here as leading and lagging KPIs). Leading KPIs lead to results, such as scheduled compliance; lagging KPIs are the results, such as maintenance cost (affected if scheduling is not working). Leading indicators for the maintenance function measure how well we conduct each step in the maintenance process. For example, a leading indicator for the work planning element of the maintenance process could be the percentage of planned jobs executed using the specified amount of labour. If the planner is estimating labour correctly, we see a high percentage of jobs completed using the scheduled labour hours.
A maintenance manager who finds that the value of the KPI is lower than expected can speak with the planner about how best to improve the results immediately, possibly for the remainder of that day. So leading indicators measure how well we perform our jobs while lagging indicators measure results. We manage using leading indicators, and we react to results using lagging indicators. Leading indicators for the maintenance process can provide management capability, while the lagging indicators show us how well we managed the maintenance function. Both leading and lagging KPIs is the only way to effectively manage an operation to achieve the results expected to succeed in a business.
Background and context
Peter Drucker, the industrial revolutionary, stated: "You cannot manage something you cannot control, and you cannot control something you cannot measure." The problem is that management should learn to manage operations through KPIs (both leading and lagging). The metrics or indicators they worked with were cost, asset availability, equipment downtime, and overall equipment effectiveness. While helpful in measuring performance, all these measurements or indicators cannot be used to manage the maintenance and reliability process. They are simply the results of all the previous actions in the maintenance and reliability process. Again, one cannot drive results. One can manage only the processes leading to the results. A company that uses any of these metrics to manage its operation without leading indicators is reactive. If leading indicators show underperformance, then underperformance will affect the lagging indicator, which could be reliability, cost, capacity, and the like. Manufacturing KPIs provide information on the current state of manufacturing.
Asset capability, operating practices and the maintenance of asset condition all contribute to the ability to meet these performance requirements. Maintenance is a critical function in the Ferrochrome manufacturing industries. Balasore Alloys Limited, as one of the globally leading Ferrochrome manufacturing industries foresighted the importance of maintenance way back in 1990s and made a thrust on management initiatives like Total Productive Maintenance (TPM), Six Sigma, Lean Management, etc., to monitor the KPIs. Everyone from a maintenance person to the plant manager monitors KPIs on a daily or weekly basis in order for them to make basic and immediate management decisions. Over three decades of explicit knowledge on leading and lagging indicators is an asset to the organisation. The impression was that the controllable operating cost of the plant was very constant over this time period. The lagging indicator data pointed to the obvious fact that the reliability of equipment directly correlates to operating cost. In our plant, at each level, we utilised a small number of lagging KPIs, along with a bigger number of leading KPIs that were important to manage the business.
Decision making process and the solution
We were able to achieve the results by managing the maintenance and reliability process, element by element, using leading indicators. Our experience validates that managing with both leading and lagging KPIs is the only way to effectively manage an operation to achieve the results expected to succeed in a business. The maintenance and reliability process has the following steps in dealing with the KPIs.
Step 1. Educate management, from executive level to floor level supervisors, on KPIs and how the leading and lagging indicators should be aligned to meet the business goals. Then, provide a similar education to the maintainers and operators.
Step 2. Define and assess the current maintenance and reliability processes against a future state. A future state is formed of known maintenance and reliability "best practices." As part of this assessment, develop a business case with financial opportunities and the costs of change. This step continues the education process and creates an awareness of the opportunity at hand.
Step 3. Develop a plan based on the assessment to include financial opportunities and cost on a timeline. This plan must include:
1. The definition of the elements of the maintenance and reliability process (work identification, planning, scheduling, work execution, etc.).
2. The workflow process for each element in that process.
3. The definition of roles and responsibilities for each task.
4. The specification of leading and lagging KPIs in each element of the process.
5. Targets and world-class benchmarks established against the defined KPIs.
Step 4. Implement the process and begin managing based on leading indicators. Begin by measuring only a few KPIs (maximum of three). Then, allow people at the lowest levels to make the decisions required to ensure the maintenance and reliability process is proactive and effective. The use of leading KPIs is a great awareness tool and brings everyone into the decision-making process.
This process is not easy; however, it is not magic either. Developing KPIs is time-consuming but must be done for a company to survive.
Some of the maintenance activities
Manufacturing performance requirements can be associated with quality, availability, customer service, operating costs, safety, and environmental integrity. For instance, let us quote some of the maintenance activities carried out in the plant, concerning the identified problems.
Problem 1
Oil leakage from furnace pipeline leading to fire hazard, stoppage of furnace and production loss.
Improvement activity in leading KPIs:
(i) Shift wise visual inspection of oil pipe and equipment.
(ii) Shift wise monitoring of surrounding temperature and components.
(iii) Inspection of physical condition of components and timely replacement.
Result/Benefit: Elimination of oil leakage and furnace breakdown and also the reduction in production loss.
Problem 2
Spillage from belt conveyor system.
Improvement activity in leading KPIs:
(i) Regular inspection of the conveyor system.
(ii) Proper installation of Tru-Trac idlers to avoid belt siding.
(iii) Timely replacement of damaged belt.
Result/Benefit: Minimise of spillage, rehandling of spillage materials.
Problem 3
Premature failure of crane wire rope.
Improvement activity in leading KPIs:
(i) Regular inspection of rope dimension and physical condition.
(ii) Timely replacement of rope if the diameter is reduced.
(iii) Training to operator for proper operation of the crane during material handling.
Result/Benefit: Elimination of rope failure, improvement in human as well as machine safety.
Summary of the results
After revisiting the lead KPIs, remarkable results were noticed. The results were encouraging to establish the maintenance management process. This helped the maintenance team to focus on other pain areas to capture the gaps in order to re-examine the lead KPIs and also for horizontal deployment. The new lead KPIs helped to minimise downtime, losses, etc., and to enhance productivity. The cumulative effect transformed the maintenance management, which has improved the morale of the employees and transformed the shop floors in respect to safety and environment. On the other hand, it has improved the quality, availability, customer service, and operating costs.
Challenges identified during the implementation:
1. Resistance to change and traditional mind set of the supervisors, maintainers and operators.
2. Resistance to adopt maintenance management processes (lead KPIs).
3. Conflict between production and maintenance teams for adopting the new KPIs.
4. Aligning the business goals with the business goals.
5. Educating the operators and maintainers.
Conclusion
The leading KPIs are to manage the maintenance process while lagging indicators provide insights into how we have managed. We manage using leading indicators, and we react to results using lagging indicators. Leading indicators for the maintenance process depict the management capability, while the lagging indicators show us how we managed the maintenance function. On most of the occasions, instead of focusing on the problems of the maintenance process, maintenance managers focus on the results. This results in the failure of maintenance management as no one can control the cost, availability without managing the maintenance process. The more accurate leading KPIs ensure better lagging KPIs. KPIs are a compass to the organisation. Managing an organisation without the right KPIs will result in a reactive environment with no hope. This is like a ship without a rudder.
Sureshbabu Chigurupalli is on the Board of Directors/Operations & Maintenance/Keynote Speaker/Lean Practitioner/Production Management/TPM Practitioner with 26+ years of experience. He is Director (Operations) at Balasore Alloys Limited, Balasore, Odisha. He did his B.Tech.in Instrumentation from Andhra University (1994). He is an enterprising leader & planner with a strong record of contributions in streamlining operations, invigorating businesses, heightening productivity, systems & procedures.
Sureshbabu has achievement-driven professional experience in spearheading entire unit/ plant operations to maintain continuity and match organisational goals through supervising Operations, Quality Control, Production Goals, Automation, Maintenance, Process Improvements, Safety Guidelines, Manpower Development, New Policy/Procedure Guidelines, Resource Allocation and Cost Optimisations. He is leading and managing all plant operations with effective utilisation of all resources and implementing industry best practices such as TPM, Six Sigma, Lean Management & others Business Excellence initiatives that contribute to improve productivity and efficiency. He has exhibited leadership in closely collaborating with numerous Japanese Consultants for implementing TPM to enhance overall plant effectiveness.
