Maintenance Fundamentals Episode 2 part 10 ppsx

19 PERFORMANCE MEASUREMENT AND MANAGEMENT The measurement and subsequent management of organizational performance is necessary to determine whether goals and objectives are being met. Numerous books have been written detailing performance management, benchmarking, competitive analysis, or a multitude of other names. The purpose of this section is to provide an introductory overview of performance measurement and man- agement. The first section will focus on measurement, and the next section will focus on management practices. PURPOSE The purpose of measuring performance is to help predict future action and performance based on historical data. Measuring performance helps identify areas that need management attention. On the other hand, measuring perform- ance also highlights successful areas and accomplishments. Both are necessary to get a picture of how the organization is performing. Knowing the direction or trend in which the organization is headed is the first step in setting or correcting performance. Developing raw data into useful information requires a skill set. Measurements must be reviewed on a regular basis to provide insight into the organization. Use of measurements can vary from one organization to another. The following pages provide an overview of using performance measurement. Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 374 374 BEST PRACTICES To properly position the use of performance measurement, some general philo- sophical guidelines need to be developed. The following is intended to correctly position how performance measurement and management should be viewed.  You can’t measure everything.  Performance management is like a gauge to equipment; it tells operat- ing condition.  Manage what you measure.  Turn data into information, then into action.  Indicators must tie into a ‘‘strategic business plan’’ and have purpose. The best organizations have most, if not all, of the following essential practices in place: (1) performance measurement/management system developed; (2) Key Performance Indicators (KPIs) driven by business initiatives and linked to strategic direction; (3) focus on internal trending measured and continuous improvement managed.  Downplay only external comparison. External benchmarking data collected, analyzed, and ‘‘shared.’’ ‘‘Core’’ critical success factors iden- tified and measured/managed. ‘‘At a glance’’ performance designed systems and procedures.  For both equipment and manufacturing processes.  Posted and visible ‘‘on the fly.’’ Accessible, user-friendly format, re- sponsive to requests.  Regular performance information review and updates, at least quar- terly.  Multiple recognition and reward systems designed and functioning. Simple to ‘‘digest’’ performance information.  Must be in chart or graph form.  With explanation and reveals trending measurement. What is ‘‘meas- ured’’ gets ‘‘managed.’’ MANAGEMENT REPORTS Every maintenance organization should have a reporting system, regardless of size or whether or not a computerized program supports the organization. Feedback from these systems provides assistance to the organization in deter- mining whether its goals or objectives are being met, if it is satisfying customer needs, and if it is operating efficiently and economically. Last but not least, feedback helps to identify design and quality improvements. The following are examples of reports. Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 375 Performance Measurement and Management 375 Broad Indicators This group includes the ratio of maintenance costs to sales ratio of maintenance costs to value of assets maintenance expenditures by cost centers. Work Load Indicators This group includes current backlog, total backlog ratio of preventive mainten- ance to total maintenance, ratio of daily maintenance to total maintenance, ratio of work performed under blanket work orders (or charge numbers) to total maintenance, ratio of capital work to total maintenance, ratio of shutdown work to total maintenance, ratio of area maintenance to total maintenance, and ratio of craft equipment backlog. Planning Indicators This group includes jobs completed versus jobs planned, jobs completed versus jobs scheduled, estimated versus actual (effort-hours and cost) ratio of planned to unplanned jobs, ratio of emergency jobs to total jobs, and ratio of downtime to available ‘‘run-time.’’ Productivity Indicators This group includes percentage of wasted time, maintenance labor costs versus maintenance material cost, and maintenance cost per unit of production. Cost Indicators This group includes work class or type percentages, actual maintenance cost as compared with budgeted costs, and percentage of maintenance administration cost to total maintenance cost. These reports will be developed from information provided by all maintenance personnel. This is why it is so important to develop an efficient feedback system. The work order system is probably the most important feedback system in maintenance. Equipment Efficiency For a process industry, we recommend the following elements to be included in the analysis of equipment efficiency: Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 376 376 Maintenance Fundamentals 1. The percent of availability or uptime % AVAILABILITY OR TIME UP TIME UP  100 A TIME UP þ TIME DOWN TIME UP þ TIME DOWN ¼ 365 DAYS A YEAR 2. % PRIME QUALITY VOLUME PRIME QUALITY VOLUME  100 Q PRIME QUALITY VOLUME þ REJECTS 3. % OPERATING RATE OR SPEED TARGET CAPACITY  100 S ACTUAL CAPACITY þ SPEED LOSSES OVERALL EQUIPMENT EFFICIENCY (OEE) IS OEE ¼ %A Â%Q  %S Most plants or facilities use only A and Q, but it is important to also include speed losses in the analysis of overall equipment efficiency. VALUE OF LOSSES/IMPROVEMENTS Depending on the product you are manufacturing, the value of a 1% increase in OEE in a 400,000-ton-per-year plant corresponds to an increase in revenue of $1.6 million to $5.5 million per year. This corresponds to an increase in operating profits or contributions to cover fixed costs of $800,000 to $2.8 million per 1% increase in OEE, or an average per-minute capacity of 400,000 tons per year of $11.2 million to $39.2 million per Chapter 14. The investment to achieve these savings is relatively small. We believe that most improvements can be accomplished by doing better with what you already have, and the key phrases are planning of operations and maintenance and implementa- tion of continuous improvement processes. Improvement efforts in maintenance performance alone can often affect more than half of the improvement potential, and increased integration between operations and maintenance improvement efforts will give you the full effect of your improvement efforts. Maintenance efforts to increase OEE will almost always result in savings in maintenance costs in the range of 5–40%. Our experience data show that invest- Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 377 Performance Measurement and Management 377 ments required to improve maintenance performance are in the range of 0.5–5% of the maintenance budget during the duration of an improvement project. As a whole, maintenance improvement projects have a potential to pay back 5–15 times investments annually. PRODUCTIVITY INDICATORS During the past 10 years we have analyzed performance and developed product- ivity improvement plans for approximately 140 different paper machines and a large number of pulp mills including wood yards, bleacheries, recovery boilers, and power boilers, mainly in the United States, Canada, and Scandinavia. These analyses have been an in-depth focus on maintenance procedures and their impact on equipment efficiency and the productivity of mills. In addition to these analyses of pulp and paper mills, improvement plans have been developed and implemented in more than 200 companies before 1985. To sum- marize, the following findings were based on a vast database and much experience. Do not expect to learn anything new from this; with some additions, the bottom line is that planned maintenance is a key success factor and that planned maintenance cannot be achieved unless you have condition monitoring practices implemented to feed your planning procedures, which we refer to as condition- based maintenance (CBM). The PQV/M Factor indicates how much Prime Quality Volume is being pro- duced per $1,000 invested in maintenance. This is a Results Oriented Mainten- ance productivity indicator. The PQV/M Factor is the inverted value of maintenance cost per ton. Equipment Efficiency is based only on % Uptime  % Rejects and does not include speed losses. Poor performers only plan and schedule 10% of their work. An increase in planned and scheduled work improves equipment efficiency from a poor per- formance of 76% to 96%, an improvement of 20%. Concurrent with this, the PQV/M Factor increases from 18 to 44 Prime Quality Volume produced per $1,000 invested in maintenance. In summary, planned maintenance increases productivity and decreases costs for maintenance. Concurrent with the increase in planned maintenance and OEE, the maintenance cost is gradually decreasing by 33%. Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 378 378 Maintenance Fundamentals Other findings are that planned maintenance increases the technical life of the equipment. At 10% planned maintenance, the average life of electric motors is in the range of 3 to 7 years; pumps are 1 to 5 years, and bearings are 5 to 9 years. Excellent performers have two to three times longer technical life of their equipment. Common for excellent performers is that they all were supported by well-organ- ized professional maintenance resources. Most of the investment is intended to help people to do better with what they already have. MAINTENANCE OBJECTIVE The prime goal of a maintenance operation is to provide equipment efficiency. The secondary goal is to deliver equipment efficiency as cost-effectively as possible. Unfortunately, it is common to see that most mills have turned this goal upside down and thus focus too much attention on cutting the maintenance cost. We all know that we can easily do this for a short period of time, but we have to pay back later. The measurement goal for a maintenance organization should be: PQV=M FACTOR long term maintenance effectiveness measure Prime Quality Volume À X $1000 ¼ PQV=M Maintenance Cost Maintenance Efficiency Percent Unplanned Percent Waiting Time U/W Factor Maintenance Jobs Related to Unplanned Jobs The U/W Factor is suggested to be used as the day-to-day measurement of maintenance effectiveness. The factor should be recorded every day and followed up and compared with targets each week. An unplanned maintenance job is defined as a job that has to be started the same day it is initiated. An unplanned job always includes waiting time. A brief explanation of the U/W factor follows. Planned Work—Work orders written ahead of time for which someone has: 1. Estimated the necessary steps, skills, and manpower required to do the job Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 379 Performance Measurement and Management 379 2. For each step, identified all stock materials (by stock number) and non-stock materials required, and ordered the non-stock items 3. Tracked material availability and analyzed personnel needs (by skill levels) and availability, as well as opportunity and availability of production equipment and special tools 4. Scheduled the job (at least one day ahead of time) based upon #3 and coordinated with production plans 5. Executed the job, without interruption, when scheduled Unplanned Work—Work required to be done the same day as ordered and which might interrupt the daily schedule of work as outlined in ‘‘unplanned work.’’ Waiting (or Wasted) Time—Nonproductive time associated with unplanned work including: 1. Finding the personnel to do the work 2. The time it takes for the personnel to stop the job they are on and go to the unplanned job 3. Diagnosing the failure 4. Gathering the correct materials and tools to perform the job 5. Waiting on materials that are not on site 6. Coordinating people to work overtime (if necessary) MAINTENANCE INPUT DATA REQUIRED TO MEASURE MAINTENANCE IMPROVEMENT EFFECTIVENESS 1. Percent Emergency Effort-hours (Period) Effort-hours spent on emergency work orders (period)  100 Total direct maintenance hours (period) 2. Percent Emergency and AD Unscheduled Effort hours (period) Effort hours spent on unscheduled work orders (period)  100 ¼ % Total direct maintenance effort hours (period) 3. Breakdown Equipment Time (period) Percent downtime caused by breakdown (period)  100 ¼ N Total downtime (period) 4. Percent Breakdown Repair Hours (period) Total effort hours on breakdown repairs (period)  100 ¼ % Total maintenance effort-hours (direct) (period) Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 380 380 Maintenance Fundamentals 5. Dollar Value of Breakdown Repairs (period) Cost breakdown repairs  100 ¼ !/0 Total direct cost of maintenance 6. Percent Equipment Availability (period) Equipment run time  100 ¼ !/0 Equipment run time and downtime 7. Percent Breakdowns Caused by Low Quality Breakdowns caused by low quality maintenance  100 ¼ !/0 Total number of breakdowns 8. Dollar Value of Low Quality Maintenance Breakdowns Direct main cost and lost production cost  100 % Total number of breakdowns 9. Maintenance Dollar Percentage Mill Book Investment Total maintenance cost  100 ¼ % Plant investment book 10. Percent Labor Costs to Material Costs Total maintenance labor cost  100 ¼ Total maintenance material cost 11. Percent Clerical Manpower Costs of Total Maintenance Cost Total clerical cost  100 ¼ % Total maintenance cost 12. Percent Supervision Cost of Total Maintenance Costs Total cost of supervision  100 ¼ Total maintenance cost 13. Maintenance Cost Percentage of Total Manufacturing Cost Cost of maintenance  100 Manufacturing cost 14. Maintenance Cost Percentage of Sales Total maintenance cost  100 Dollar value of sales 15. Cost of Maintenance Hour Total cost of maintenance  100 ¼ % Total effort hours worked Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 381 Performance Measurement and Management 381 16. Breakdown Cost Component (period) Total breakdown cost  100 ¼ % Total production cost 17. Percent Efficiency Total effort hours estimated for jobs  100 ¼ % Total effort hours spent on same job 18. Percent Overtime Total overtime hours worked  100 .0/0 Total hours worked 19. Percent Work Orders Planned and Scheduled Daily Work order planned and scheduled  100 ¼ % Total work orders executed 20. Percent Scheduled Hours vs. Hours Worked as Scheduled Hours worked as scheduled  100 % Total hours scheduled 21. Percent Scheduled Hours vs. Total Hours Worked Hours scheduled  100 % Total hours worked 22. Percent Work Order Executed As Scheduled Work orders executed as scheduled  100 ¼ % Total work orders scheduled 23. Compliance with Estimated Cost Jobs executed at or within 15% of estimated cost  100 ¼ % Total estimated jobs executed 24. Ratio Maintenance Planners Total hourly personnel  100 ¼ % Total maintenance planners 25. Percent Estimated Coverage Number of planned work orders  100 % Number of work orders completed 26. Percent Activity Level of Maintenance Craftsmen Direct time working on work orders  100 % Work orders released for work Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 382 382 Maintenance Fundamentals 27. Work Order Turnover Percentage Number of work orders completed during period  100 % Number of work orders awaiting release 28. Current Crew Backlog (Weeks) Effort-hours ready to release ¼ weeks One crew week (effort hours) 29. Total Backlog by Crew (Weeks) Total effort-hours ready to work ¼ weeks One crew week expressed in effort hours 30. P.M. Coverage Percentage A. Effort hours spent on P.M. work orders (period) B. Total effort hours worked (period) C. P.M. inspections incomplete (period) D. P.M. inspections scheduled (period) E. Repair jobs resulting from inspection (period) F. P.M. inspections completed WHERE TO START No two organizations have the exact same performance indicators. This is because situations are different. Most organizations attempt to or think that they need to track 50 or more indicators. This is a waste of time and effort. The focus should be on quality, not quantity. To assist organizations in this transformation process, EDCON Inc. has pre- pared a recommended list of performance management indicators. These indica- tors should form ‘‘the core’’ of the performance measurement and management system. This core group is supported by other indicators that are tracked in support of the core group. The supporting group might be tracked for several months, then replaced by another indicator. However, the core group of indicators always (or almost always) remains the same. The following is a recommended list of core group indicators. Competitive indicators focus more on industry and ‘‘macro’’ internal measure- ment. Productive measures focus on maintenance and quality production. Oper- ational indicators focus more on equipment. The combination of all three indicators will provide an excellent ‘‘snapshot’’ of organizational performance. Keith Mobley /Maintenance Fundamentals Final Proof 15.6.2004 7:41pm page 383 Performance Measurement and Management 383 [...]... Insurance items, one-of-a-kind spare equipment; large assemblies; spare parts, for pumps, gear boxes, etc.; hardware, such as nuts and bolts; supplies, housekeeping materials, etc Little or no turnover every 2 years, every year, every 6 months, every 1 to 3 months The turnover rate should fall within the range of 6– 12 months 388 Maintenance Fundamentals In addition to tracking inventory by turnover, another... issue frequency Active usage last 12 months 70% Slow, no usage last 13 months 15% Stale, no usage last 13 24 months 10% No activity no usage last > 25 months 5% It is recommended that action be taken to address why inventory is ‘‘on the shelf ’’ yet hasn’t been issued COMPOSITION OF INVENTORY CARRYING COSTS         Capital, opportunity or borrowing costs 10 15% Cost of operating warehouse space,...384 Maintenance Fundamentals  Competitive Sales / revenue / production (prime quality) volume comparison  Prime quality production output per manufacturing expenses -Measured in output (i.e., tons, widgets, lbs, bbl.)  Prime quality production output per $ 1,000 invested in maintenance   Productive Prime quality production output per total labor hours worked -Can divide labor hours out by maintenance- production-total... entire work order process of write-up, approval, planning, parts ordered, and awaiting scheduling This is a joint effort between operations and maintenance to manage their work The reader is encouraged to refer back to the backlog management and operational asset management chapters in this text for additional information 386 Maintenance Fundamentals Schedule Compliance Schedule compliance uses the... contamination 5 10% Inventory tax 1 2% Management costs, labor, computer support, and administration 5 10% Total of inventory carrying costs per year 30–40% Shutdown and Project Management Guidelines Suggested performance indicators include: a Schedule performance On time b Budget performance þ=À 5% of allocated shutdown budget c Equipment ‘‘out of service’’ downtime Reduced 5% to 25 % versus previous... machine element that supports a part, such as a shaft, that rotates, slides, or oscillates in or on it Three major types are radial or journal, thrust, and guide bearings Bearing, conrad Type of ball bearing that is classified as a single-row radial, non-filling slot bearing Also known as a deep-groove bearing Bearing, deep-grooved See Conrad bearing 3 92 Maintenance Fundamentals Bearing, fluid-film Another... Analyzing Trends After reaching a planned/scheduled execution of over 90% of all maintenance hours, work on more long-term strategies by analyzing the following trends:    Backlog hours Overtime hours Contractors’ hours Assuming that a maintenance organization is planning, scheduling, and executing not less than 90% of all maintenance accordingly and backlog, overtime, and contractors’ hours are all... occurrences in which the storeroom cannot fill a requisition list for parts or materials because it is out of stock Stock-outs should fall in the range of 0 2% Another recommended stores performance indicator is turnover Turnover is the calculation of the average throughout the storeroom (expressed in months) Turnover ¼ Total Value of the Storeroom  12 months=year Total Value Withdrawn in a Year If turnover is... indications of the overall ‘‘health’’ of the maintenance management system is, for example, the goals should be fewer emergency and critical work orders and more routine or plannable and scheduling jobs Performance Measurement and Management 387 Stores and Material Management As previously mentioned, stores plays a vitally important role in the overall maintenance management process Several key indicators... machine Performance Measurement and Management 385 If backlog levels are too low, efficient planning, parts ordering and inventory management, and scheduling of the work force will never approach world-class levels On the other hand, if backlog levels remain low and the emergency work level is low (i.e., 2% ), the planning function might need to scope and plan more jobs or the work force could be too large . Total Maintenance Cost Total clerical cost  100 ¼ % Total maintenance cost 12. Percent Supervision Cost of Total Maintenance Costs Total cost of supervision  100 ¼ Total maintenance cost 13. Maintenance. of maintenance  100 Manufacturing cost 14. Maintenance Cost Percentage of Sales Total maintenance cost  100 Dollar value of sales 15. Cost of Maintenance Hour Total cost of maintenance  100 . Proof 15.6 .20 04 7:41pm page 3 82 3 82 Maintenance Fundamentals 27 . Work Order Turnover Percentage Number of work orders completed during period  100 % Number of work orders awaiting release 28 . Current