11th August 2008
How do you understand your KPI’s?
Paul Sebire - August 2008
Many businesses endeavour to measure business performance by using Key Performance Indicators (KPI’s). The theory being that these performance measurements will expose both achievements and short comings and allow managers to take targeted action to improve the performance for which they are responsible.
At first glance this sounds like a great and relatively simple method to manage and increase performance, and it certainly is!
However the introduction of KPI’s can raise issues for the managers who are responsible for ensuring the business meets several KPI’s. We have seen (and have experienced ourselves) that once you start to measure and set targets for a number of KPI’s, managers have to be able to work out how to influence these KPI’s and how targeting one KPI may affect another KPI.
An example scenario: You are the maintenance manager for the xyz widget factory and have a plant availability target of 95% and an actual availability of 92% so desire an increase of 3%. You also know you spend 50% of your trade people’s effort on Preventative Maintenance and have 6% of downtime due to breakdowns. How do you determine what needs to be done to meet your availability target?
This is where you need a mental model of the business system or process that is being measured for KPI’s. The model provides a means to understand how the different KPI’s interact and what pulling one lever will do to the remainder of the system.
An example model: acm have developed a model called acmPelorus for maintenance management KPI’s that identifies which levers to pull to influence maintenance performance and how pulling these levers may impact performance in other areas. Figure 1 below shows a graphical display from this model.
Figure 1: Maintenance KPI Model
This model has been used by one of our customers to highlight how their ability to plan work significantly influenced their ability to control breakdown maintenance. They were not getting defects identified by operators and trade people during PM’s fixed in time before they actually stopped the plant.
The provision of a model to evaluate KPI’s will enable business managers to readily identify the most appropriate improvement opportunities and to quickly and precisely address performance issues.
Useful Links and Reference
- For more information on KPI’s, models and theoretical underpinning Key Performance Indicators (KPI’s), Mental Model & Theory of Constraints at Wikipedia,
- For details of acm’s unique maintenance KPI model please go to acmPelorus,
- acm’s maintenance KPI model is built from the theory of constraints a management theory introduced by Dr E M Goldratt in the book The Goal.
[...] blue pencil | How do you understand your KPI’s? - An example scenario: You are the maintenance manager for the xyz widget factory and have a plant availability target of 95% and an actual availability of 92% so desire an increase of 3%. You also know you spend 50% of your trade people’s effort on Preventative Maintenance and have 6% of downtime due to breakdowns. How do you determine what needs to be done to meet your availability target? [...]
[...] Please visit the post at Understand your KPI’s. [...]