Confusion Around Leading and Lagging Metrics

 

The confusion with leading and lagging metrics stems from the fact that we cannot truly make a list of metrics that fall into each category. Some people think you can but it depends on your perspective. What is leading Key Performance Indicator (KPI) to one level of the organization can be lagging KPI to another. Thats right, many metrics or KPIs are actually both leading and lagging. As an example, in the operations and maintenance world, preventative maintenance (PM) completion (which measures the percent of scheduled PM task done when scheduled) is a good example of this confusing element. If you are an operations leader you might call it a leading indicator of equipment reliability. In other words, if I am doing my PMs on time then I should expect reliable equipment. ...But if I am a Maintenace Supervisor then it is a lagging metric or KPI that shows that we did the work that was scheduled. 

As you are selecting metrics another way you can look at them is by using "Behavior and Result." Does this metric drive a behavior, or does it measure a result? My opinion is if you want to drive behavioral change you want to measure things that drive that specific change. You may find that you measure them often maybe even daily or weekly whereas results type metrics you measure monthly or less often to make sure you are getting what you want from the process. 

What are your thoughts?

Is The MTTR Metric Killing Your Reliability?

Metrics or Key Performance Indicators (KPI) are a force for good when they are used at the right time and with the right complementary or supporting elements. But, when they are used at the wrong point in a facilities maturity they can have unintentional consequences, or even worse they can drive the wrong behaviors.
An example that I continue to see causing more issues than it is solving, is the use of the KPI known as Mean Time To Repair (MTTR). When this metric is used alone, in immature organizations, or without an understanding of the unintentional consequences it can drive your organization in the opposite direction of world class performance. If your organization is immature from a reliability cultural standpoint and you choose MTTR as your focus then you set yourself up to become very reactive by being very quick to respond to failures. The facts are:

• Reactive response is at least 5 times more expensive than planned and scheduled work . 
• Operations will beat on you to get faster and faster at responding so that you lower MTTR. 
• Rushed repairs are less reliable.
• Reactive response requires more expensive spare parts stock.
• Repetitive failures and repairs increase the chances of the introduction of infant mortality failures. 
• You will find yourself with high skilled maintenance technicians just standing on the manufacturing floor doing nothing while waiting on a failure to occur. 
• Pressure to make the repair as quickly as possible can lead to taking elevated safety risks either intentional or unintentional. 

Many of the sites that choose MTTR as a primary metric early in their reliability journey create a brigade of firefighters on the ready with crash carts and mounds of spare parts. What we really want is to prevent the failures from happening to start with or at least reduce the frequency. For that we might use other metrics like Mean Time Between Failures (MTBF) early on and then deploy MTTR, after we increase the reliability of our systems. This later use of MTTR will allow us to address the issues we can't prevent and to understand any training gaps and other issues that might be affecting repair times.
Picture it this way: If MTTR is all you have then your organization will create tools like crash carts and quick response teams instead of using tools like Root Cause Analysis (RCA) to understand and eliminate the reoccurring problem. From the real world, I have seen bearing quick change carts developed to speed up re-occurring failures repairs where it they had just tensioned the belts properly the failures would have been eliminated.  Five really fast 2 hour bearing replacements is still much worse that bearings that don't need repairs at all. This site needed to understand better not respond quicker.
Are your metrics driving the wrong behaviors? Are you using them at the right time?
Tell us what metrics have not worked for you and why in the comments below. 

Benchmarking and Internal Assesments: Eight Questions That Will Improve Your Studies and Their Results

If you saw last weeks post on the troubles "benchmarkers" deal with here then you may be wondering how do we make it better? If you are addressing the issues mentioned there and you want to take it to the next level here are eight points to consider when assessing your performance and benchmarking with others. These are based on the seventy plus assessments I have been involved in during the last ten years and the struggles I have seen during those and other assessments.
Does your assessment or benchmarking study have the following: 
an element of Volume – Does the assessment have more than just yes or no questions? Does it look into the amount of application of the concept or element or just the existence? For example, does it ask "Do you have planners?" or "What percentage of work is fully planned?" or as a second example "Do you use work orders?" or "What percentage of your craft hours is captured on a work order?" The second question in each provides the element of volume. This demonstrates the penetration of the concept into the way the site does business not just whether they have pockets of excellence in one area.
Detail - Do you have enough data and detail in each of the sections or elements of the assessment? Do you get a complete picture of the components that make up the element being assessed?  For example: Can you address all of the elements of Planning and Scheduling effectiveness with just one question in your study? Not likely. You will need more details and data in order to identify actionable gaps for closure.
Frequency – Are you doing it often enough? If you are only assessing or benchmarking once every ten years that would show little trend data. I would recommend a robust external assessment every three to four years for maximum effect. External does not have to be a consultant driven process you just need fresh eyes from another site or division.
Process Standard – Do you have a process and standards for the benchmark assessment so that the data is of like kind and comparable with other locations?
Personnel Standard – Do your assessors have the knowledge and competency to assess? Are they task qualified in the process standard. Are they standardized? Will the non-task qualified assessors affect the comparability of the data where they are involved? I have seen this over and over. Having a standard for performance and qualifying individuals is crucial to effective benchmarking.
Performance – Is the assessment having the desired effect? Is the assessment providing a view into the gaps that you need to address? Is the study executed at a level that identifies next steps to close the gaps. Is it driving the organization to close those gap? Is the organization better as a whole because they did the study?
Efficiency – Are you doing the study efficiently? Is it a major disruption to the business or can it be accomplished with minimal interruptions. Is your assessment or benchmark study addressing the elements required without being exhaustive? Is it full of manual calculations or does it standardized on base data that is used to generate the various calculations "automagicly"?
Innovation – Are you finding a better way to do it? Have you improved the assessment and benchmarking process each time you have executed it? This could be through data standardization or tool improvements or collected history.
This become the checklist that I review to ensure the highest level of success with benchmarking and assessments. Every time I use this list I am upping the return on effort of the study.

Are you happy with your assessments and benchmarking studies? Tell us about what you like with yours below in the comments section please.

Losing the War on Downtime While Winning the Battles

I recently had the opportunity to write an article for UPTIME Magazine where the focus was on distinguishing between short term wins and long term sustainability when it comes to saving and making money with your maintenance team.  In the article, I share in jest four short term solutions that while they might generate short term cash it is at the cost of long term sustainability and future reliability efforts.  I then share some thoughts on longer term solutions that provide for greater reliability and more importantly, are sustainable. 
One of the short term battles that I see many sites "winning" is the kaizen events, TPM events, continuous improvement events or whatever they may be called at the site. They can be characterized as one or two week events where we clean up an area and "solve" a few problems in a very reactive manner and then decree that this area is now reliable. Battle won!
The issue is three fold:
In many of these events the symptoms are addressed not the root causes because the team in their haste does not use detailed enough RCA tools and processes.
Secondly everything about the event is done in a reactive manner. Maintenance craftsmen are kept at the ready to address every issue the team finds as quickly as possible. This demonstrates little planning, reactive scheduling and rewards your quick fix firefighters with the work that they love. Third the team moves on and the sustainability is left to the area. Some of the people who are expected to maintain this new "reliable" state have no idea why the changes were made and what is in it for them.
So what happens in the end, well when you return to the kaizen area just a few short months later it is in its previous condition or even worse than it was before. War lost because even though the kaizen battles have been won and celebrated the equipment condition and reliability is the same or worse.
Short term focused events can work within your long term war on downtime but they must be constructed to demonstrate the best practices not reinforce the worst. They must use effective problem solving tools, and generate work that can be planned and scheduled and then executed with precision and at the lowest cost. Lastly their needs to be communication stratigies to share the intent, goals and sustainability needs and metrics to reinforce the new behaviors. If you strive to demonstrate the best practices in all you do then you can win the battle and the war on unreliability and downtime.

Looking Back for the Keys to Sustainability

From time to time I get to go back and visit plants and facilities that were clients of mine from years ago. This week happens to be one of those weeks. I find it so exciting to go back and see what they have held on to, what they have improved, and where they have slipped back and why. Interestingly I see different things in each site. Some sites progress with continued focus on reliability, others moving  into other initiatives like lean or six sigma and build off of their reliability results further building success and a third group lose focus and slides back toward the old norm and the reactive philosophies of the past. These sites have many reasons why they slip back including leadership changes, union issues, retirements, sudden changes in the market place.
The question for today’s blog is how do we lock it in? How do we sustain the cultural change that has been or is being completed?
The plants that have the most success have done these four things.
First they have moved past a champion model. Reliability for them is more than just one person’s vision. They do not have one single leader for the initiative that either charismatically leads the pack or forces compliance within the site. They have many folks who see the benefits of reliability and evangelize it consistently. Nearly all implementations start as a champion model with a key leader but the sustainable ones work this down into the organization and develop and army of like-minded drivers that demonstrate that reliability is the new way we do business.
Second, they communicated broadly as they implemented with a plan, consistent activity, and increasing site involvement. These groups start by going through a risk analysis of the transformational change. They look to understand what might go wrong and what they can do to mitigate that risk. They communicate at every stage of the process and the message and media changes based on the risk and the needs of the impacted. They focus on situational leadership and provide the individuals with what they need to help them progress through the change and then sustain.  In short they plan their communication and they work the plan increasing involvement and pushing toward the tipping point and increased likelihood of sustainability.
Third, they have a clear goal, vision, and business case and they reject things that go against that vision.  If the vision changes then that is fine but they work hard to communicate the changes. They evaluate all initiatives site wide and include only the ones that support the goals. Of those they select they sequence them in a way that supports and allows them to build. This means they may do a part of one initiative with the required resources and then complete a section of another selected improvement strategy knowing that they will build on each other and help improve overall site performance. If they take this approach then they build a system unique to them that can be developed without overloading the resources and provides for stable continuous improvement.
Fourth, they use metrics effectively. They don’t focus on every metric all the time they focus on the metrics that drive the behaviors that they need to change at that moment. Once the behavior is changed and becomes the new norm then they move their focus to other metrics and other behaviors.
There are other factors that come into play but these are some key success factors that seem to be present for success and sustainability.

Have Your Corporate Metrics Become a Time Sponge?

The corporate quest to standardize metrics can become a time sponge absorbing countess hours and distracting facilities from the real focus of bottom line performance improvement.  Today's blog is about discovering how to keep KPIs from soaking up all of your precious time and focusing on driving changes in behavior not just the numbers.
There are metrics and Key Performance Indicators (KPI) standardization efforts happening all over the world. They are happening in plants and corporate offices as well as within organizations such as The Society of Maintenance and Reliability Professionals and the European Federation of National Maintenance Societies. Many of these groups and other authors have spent endless pages defining these metrics. While I believe their work is incredibly valuable for individual facilities to understand their current state, what I commonly see is the documents they produce only lead to further internal corporate argument. Some companies have spent years and countless hours on the quest to define metrics like Overall Equipment Effectiveness (OEE) even with the standards that already exist in the market. It becomes a discussion of what time goes into the calculation, what time is out, what speed is the best demonstrated throughput, how do we define quality product and so on. At the end of the day an apples to apples comparison of different sites can be tough if the metric cannot be pulled from a standard data source such as the ERP, EAM, or Profit and Loss (P&L) statements. The EAM data is also suspect unless many of the steps of the business processes have been standardized from site to site to provide consistent data.  I believe one solution is to get it close but don't take the effort to argue through all the details and then compare sites on a delta basis. So instead of reporting just your percentage OEE or any other metric, report and focus on the change in the value from quarter to quarter or month to month. If we all agree that the goal is to improve then let's compare the efforts to improve not just the numbers. If one site is able to increase their OEE by a full point in one quarter then do an RCA to understand why and learn from them. What behaviors have they changed? What processes have they refined? Focus on the Root Cause of Success and spend the time making behavioral change not debating corporate metrics. Wring out the time sponge and get back hours to devote to real results.

10 Points to Ponder That Can Improve Your Key Performance Indicators Immediately

Here are 10 Points to Ponder That Can Improve Your Key Performance Indicators (KPI) Immediately:
1.    Spend time planning for KPI implementation
Decide who needs to know about the metric or indicator and what they need to know. Who is affected and who can affect the KPI. Communicate the intent of the metric in a way that can be easily understood.
2.    Think about unintentional consequences
Understand what your metric drives. Does it require a second metric to ensure that it does not drive a bad behavior? If you would like to read more about this topic check out this rant.
3.    Limit your focus to ten indicators or metrics or less at each level of the organization.
Even if you track many indicators in your EAM/CMMS the focus needs to be on a short list. It is OK to have a list of focus KPIs and monitor KPIs. Focus on your key performance indicators and ensure organizational understanding. Monitor your results with the common indicators. Here is a link to more information on this topic.
4.    Manage behaviors measure results.
You must identify the behaviors that you want to change and address them directly with that portion of the organization. Ensure that your indicators align directly to those organizational changes.
5.    Cascade indicators down from corporate goals.
If your primary indicators do not align and support the corporate objective then you will have organizational confusion. The process works best if indicators are developed from the top down. 
6.    Leading verses lagging indicators
You don't drive your car using just your rear view mirror. Use indicators that tell you more than just what you have done. They should help you understand what you can expect in the future.
7.    Use your metrics to ensure the truth.
Many of the indicators have corresponding indicators that work in a checks and balance fashion. This allows you to use one indicator and then if there is a question about the validity of the number you can check with the other indicators.
8.    Have metrics that both operations and maintenance share accountability for.
Consider not building or reinforce organizational silos. Try to select indicators that both operations and maintenance and others affect and share them as part of their performance reviews.
9.    Understand the components that make up the metric.
Many organizational struggles are over both metrics definitions and the data that is used to calculate them. Create or use an existing KPI standard and document the data sources.You can find the SMRP Metric Compendium here.
10.    KPI’s are not forever
Change the metrics you focus on as your business goals change or as you notice that the change in behavior that you are measuring has been completed and has become the new way the organizations works. Here is another entry on this topic.

Two Bonus Thoughts:
Balanced score cards can help in understanding your organization.
Do not compare what is not the same. Indicators cannot be bench marked well with other facilities if they are not calculated the same way.

I hope that this list helps you think about the metrics and indicators that you are using and drives the results that your facilities want. If you have any additional questions please feel free to contact me at shon@reliabilitynow.net

Do you have an "Elf on a Shelf" in Your Facility?

The Elf on a Shelf has become a great behavior modification tool in many households. In ours, all we have to do is point at the little guy and bad behaviors become good.
For those of you who have not experienced the Elf’s power it is all stems from the tradition of a Georgia family who had a small elf that reported the children’s behavior to Santa every night and would come back home and sit in a different location every day. The matron of the family recorded this in story book form and the rest is history. Now kids are controlled by the little cloth elf from Thanksgiving until Christmas Eve.
Now on to the previous question, do you have an "Elf on a Shelf" in Your Facility? Do you have something that reminds everyone to do the good things every time they see it? The good things may be focusing on improvements you are trying to make around reliability practices, precision maintenance, operational procedures, quality or others. What do you have that keeps these improvements in the mind’s eye of the folks in your site?  Does it reinforce the goals of your business? Some facilities use symbols, slogans, logos and characters. Others use metrics boards, electronic OEE marquees, and other real time metrics displays. I don’t want to argue the merits of the methods, however we do know it is crucial to find ways to remind everyone that the elf is watching and we have to do our best every day to remain competitive in this economy.
So what is the Elf on a Shelf  in your facility?
I would love to hear what has worked for your site and what you would not use again.

Holy Metrics, Metrics Madness and Metric Insurance

As I review the metrics within many facilities I see two common trends that just don’t work for me, or them. The first is the existence of eternal metrics that have become holy to the site and have been tracked for years with little change in the value or importance. The second is the metric madness that runs rampant in many facilities. It manifest itself as 347 metrics and Key Performance Indicators (KPIs) thrown all over boards, scorecards, and reports which are then delivered to everyone under the sun.

So let us look at holy metrics first. These can get their start when someone benchmarks another site and grabs on to their metrics list or corporate pushes a list down to the facilities without fully understanding the current state of the operation. Metrics and KPIs should be based on the behavior the organization is trying to change. Now don’t misunderstand, I am in favor of a few corporate or “key” performance indicators to benchmark the business but this has to be a short list. I am also OK with having other metrics that calculate based on your data within the Computerized Maintenance Management System (CMMS) or Enterprise Asset Management Systems (EAM) and remain in the background for use in problem solving. Specifically, I am talking about the metrics you use to run the business on a regular basis. These focus metrics need to be part of a short list that is designed to do two things: improve performance and provided “metric insurance.” Metric insurance is the system of checks and balances that insures that when a metric is trending the correct direction we are getting the result we should expect. For example if a measure of reactive work is going down then we would logically expect availability of the assets to be going up. If it is not then we have a something of interest to investigate. It could possibly be a calculation issue or even a bit of metric cheating going on. We have created a list of twenty of these complementary metrics with their relationships that can be used to check results.  It does not display well here but if you would like a copy send me an email and I will send it over. The key point is if your focus KPIs have not changed much in the last few months or years it may be time to remove a few from the focus list and add in a new one that can be directly linked to a business process change you are trying to make. When this metric flat lines it too should be removed and another positive behavioral changing metric should be put into its place.

If you add the new metric but you do not take the focus off of the old one you are left with metric madness as described earlier.  In my ideal world, there should be no more than ten “active” metrics and KPIs in a given area. These can change by area and level as they cascade through the organization but at any one level or department they should have ten or less to focus on. I equate this to something that I experienced recently while watching college football in a large sports bar with over 40 TVs. If each TV represents a metric, then which one do you watch? Where do you put your focus? I found myself jumping from TV to TV and never really getting a good picture of what was going on in any of the games. This can be OK for college football but it does not work at all when you are trying to manage a business.

So to wrap it all up, we need to limit the number of metrics in our focus list of KPIs so we can really put the focus on them. We must make sure that most of the metrics are active and driving behavioral change in the organization not stale and flat lined. We should not forget about the use of metric insurance to verify results are accurate. If we take these guidelines in to account as we structure our metrics program then we will push to higher levels of performance instead of just measuring where we are today.

Never Met a Maintenance Manager that had Enough People

Of all the sites I have been in all over the world, I have never met a maintenance manager who said to me “You know Shon I just have too many people.” In fact most ask me how they should go about bringing more into their fiefdom. It usually sounds a bit like this: “I need to hire planners, supervisors and a few more crafts in order to improve my reliability. If I could get support for more I could make this happen.”

Interestingly, the data tells me something entirely different. The average facility in our database is spending forty percent too much on maintenance. A portion somewhere between forty and sixty percent, depending on the industry, of that overage is labor. They are maintaining a wrench time, craft time doing value added work, of twenty three percent against a best practice of sixty-five percent. Think about that number a second, if you have twenty five craftsmen at twenty three percent wrench time that yields five point seven five FTEs (Dedicated fully utilized resource). On the flip side if you take one of those craftsmen and provide him the tools and training required to be a quality planner and scheduler then you can improve your wrench time to a very sustainable fifty-five percent. Now even with one person out of the craft ranks you can yield ten point four five FTEs without an overall head count increase. That is a eighty-one percent productivity increase… Image what that would do to your work backlog…and this is only one step to attaching high maintenance cost and unreliability. We could also talk about preventive maintenance optimization as well as others steps to provide additional gains. I'm a visual guy so here is another look at the math.

Now we know that it takes time to make the transition to the higher level of performance and that not every site is truly overstaffed but if you don’t think long and hard about wrench time productivity before you think about increasing your staff you could be doing both you, your company, and the person you hire a disservice. If you trust the benefits of planning and scheduling, the capability of your staff and you take the time to build a plan to get there you can do actually do more with less.

Eliminating the Dog Fight over Reliability

I often hear clients tell stories of the culture of their plant. They use words and phrases like “constant battle”, “eternal struggle”, and even occasionally it has been described as a “dog fight.”
When I ask why they tell me that operation “does not understand reliability” or operations thinks their job is to break it and maintenance will fix it. When I talk with operations they tell me maintenance will not respond fast enough and that they never want to leave the shop. Both sides go on and on but I think you get the point.
Interestingly, when we look at the differences between best practice facilities with a high level of reliability maturity and the dog fight facilities you notice that the mature facilities function more as a cohesive team. Below are a couple of the reasons that I believe drive this difference in behavior.
The first practice I have identified is a combined shared set of goals driven from the top and cascaded down through the organization. In the more mature facilities you find that they have removed the silos that divide the organization and have a common set of goals. Operations and maintenance are accountable for metrics like Overall Equipment Effectiveness (OEE) and also metrics like Preventive Maintenance (PM) compliance and Maintenance Cost. They understand the impact of each and they manage them together based on the business. In facilities with a disconnect you find sub-optimization. Maintenance may look to lower maintenance cost at the expense of production or production may skip preventive maintenance to “increase uptime.” This just fuels the dog fight.
The second is a partnership agreement. This is a key exercise that opens eyes on both sides. Many folks don’t understand the needs of the other parts of the organization. When they work through the partnership agreements they identify the needs of each group and develop a plan to insure they are met. Operations will discuss their expectations for the equipment in the area from a reliability and throughput standpoint and maintenance will use this information to build effective maintenance strategies that can deliver under those conditions. If the operating context changes the two groups have the partnership agreement as a path of communication. As the group works through the exercise they have “discoveries” such as operations and the operators learn that maintenance needs their input and even their help so they should stay with the equipment during breakdowns. Maintenance learns the importance of certain assets to the livelihood of the plant and what expectations the process puts on them. I have seen many reoccurring problems identified and resolved just within the dialogue that occurs while creating the partnership agreement.
In the end if you want to spray the cold water on your facility’s dog fight you need to focus on shared goals and complete understanding between the groups. This will tear down silos and make coming to work a better experience for everyone.

Metric Waste

“Metric Waste”
Do you have a ton of metric waste; an overabundance of key performance indicator (KPI)?
Many facilities today have become metrics collectors, never throwing away metric and generating reports with lots of data but no real useful information. It gets to a point in many facilities that they have full time equivalent (FTE) head count just collecting metrics data and generating reports. These metrics and reports may never be viewed or used to make business decisions or check on organizational progress.  Does this sound familiar? Let us look at a few points to consider when building a metric strategy.
Most levels of the organization can manage no more than ten metrics at one time. So, if you look at an organizational chart and assign your metrics, can you limit them to ten at each level? Some metrics will exist at multiple levels and you must keep that in mind as you complete this exercise. The best way to look at your metrics is to start at the top with the metrics that address the facility’s vision and purpose. Then your can tier or cascaded down from that goal forming a tree of metrics that measure what is important to each level. When you complete the cascading metrics you should find that each levels metrics are supported by the level below.
Secondly, a portion of the metrics should be driven by the current improvement strategies. For example, if you are trying to improve work order history, one of your maintenance level metrics could be percentage of work orders containing follow up comments or notes. This will drive organizational focus on that portion of the improvement strategy until it becomes the new norm.
The third point to remember is that metrics are not “holy metrics”. We don’t have to keep them forever. We put them in place to insure change or prevent change. When insuring change you may find that you gather and measure more often however when preventing change you can measure at a lesser frequency because they should not change as quickly. The key here is to look at the trends. If the metric value very seldom changes much this could mean that the change that the metric is driving is now ingrained in the culture and is the new way of doing business. This is the point where you can eliminate the metric or extend its frequency of observation to the metrics standard you use for preventing change. Once we eliminate a metric we can then add a new one to our dashboard that addresses a change that we are trying to make or a process we are trying to understand.
The forth point to consider is leading versus lagging indicator. If you are managing based off of only lagging metrics it is attune to diving a boat while only looking at your wake. If you practice this philosophy you could find yourself happily driving into an oncoming freighter sized problem with no real warning.
If you are going to bench mark your metrics with other facilities then the definitions and data sources become very important but if you are using them internally only then you can concentrate on the delta and look for improvement or change. If you are looking for standardization one great source is the Society for Maintenance and Reliability Professionals (SMRP). They have a great new metrics compendium that provides all the details you need on sixty plus common use metrics.
In the end, metrics are just tools and should be used when you need them. They should provide a look at the future and not just the past and there should not be thousands of them in play all at once. If you design your metrics strategy with a bit of thought you can eliminate the wasted time and resources and have a much more effective program that drives business results.