This is the eigth post in our blog series, 9 Reasons EAM Implementations Fail (And How to Fix Them).
If you want to improve performance, you have to measure it. By itself, a CMMS or EAM software system won’t reduce MRO costs, increase uptime, or produce any of the other results you’re after. You must use the software to track performance so that you have the information you need to create change.
Performance measures, particularly key performance indicators (KPIs), are foundational to this effort. They allow you to measure how well your operation is progressing toward specific goals.
Establishing KPIs for Asset Management
KPIs help you to measure progress. They should be closely connected to your asset management objectives. For example, if one of your objectives is to improve maintenance planning, you might establish KPIs to track maintenance delays and “rework” work orders (i.e., work orders that were sent back for additional planning). This close connection between objectives and KPIs creates organizational alignment, tying maintenance efforts to the leadership team’s desired results.
This KPI for Emergency Maintenance % measures how reactive the maintenance program is.
I’m using maintenance as an example, but asset management KPIs are not limited to maintenance. Achieving your asset management goals often requires involvement from business functions outside maintenance. If you’re trying to reduce maintenance costs, for example, the MRO materials management function will have a large part to play. In the long run, you should identify performance measures for those business functions too. This goes hand in hand with the holistic management system approach that we’ve talked about in previous posts.
But start small. It’s better to have a handful of highly relevant KPIs to guide maintenance efforts than to be overwhelmed by too many. One good method is to implement KPIs slowly alongside each CMMS or EAM system module that you implement. For example, start with work planning and scheduling, then add inventory management, and so on.
Best Practices for EAM/CMMS KPIs
Here are a couple more best practices for CMMS and EAM system KPIs:
- Benchmarks and Targets. For each KPI, establish a benchmark so that you know your baseline or starting point, and set performance targets so that you know what level you’re trying to reach and how far you are from the goal.
- Hierarchies. Organize KPIs into hierarchies to facilitate analysis. Performance measures are all related; one can impact another. If inventory cost is high, for example, you need to be able to drill down and see the cycle count percentage, because low inventory accuracy can drive up inventory cost.
Monitoring KPIs in Your CMMS or EAM Software System
Once you’ve identified your KPIs, the next step is to set them up in your CMMS or EAM software. Some of the setup will be simple, using the software’s built-in KPI and scorecard tools. Some may require more advanced reporting, which we will discuss in our next post.
However you set them up, the person responsible for a given KPI should be able check it easily in the system. This goes back to establishing your roles and responsibilities and then configuring the CMMS or EAM system using role-based user groups.
Using KPIs to Drive Maintenance Improvement
It’s not enough to simply measure performance. If you want to improve, your performance measures need teeth. You must use them to drive change. People talk a lot about the best way to do this—that’s why there are whole conferences dedicated to change management. Generally, it comes down to giving workers a strong enough reason to pay attention to KPIs and improve their performance.
In my experience, the most effective way to get change in an organization is to tie performance measures to paychecks. Connect performance measures to goals and goal accomplishment to compensation. You can do this by function (e.g., maintenance, procurement, materials management) or by role (e.g., buyer, technician, supervisor). Any change—building weekly schedules, organizing the storeroom, etc.—is more likely to stick if you give people an incentive to follow through.
Setting Up Your EAM/CMMS Implementation for Continuous Improvement
Performance improvement is an ongoing process. You have to measure performance, make changes, and measure again. And that can’t happen without performance measures. If you want to drive real improvement with your CMMS or EAM software, develop a hierarchy of KPIs for asset management and use them to monitor and encourage performance.
The next post in this series, EAM Pitfall #8: Inadequate Reporting Tools, will cover best practices for developing CMMS and EAM reports.