Maintenance Performance Measurement (MPM) : Issues and Challenges
Maintenance Performance Measurement (MPM) : Issues and Challenges
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Abstract
Purpose – The purpose of this study is to identify various issues and challenges associated with
development and implementation of a maintenance performance measurement (MPM) system.
Design/methodology/approach – An analytical approach is adopted to identify the issues and
challenges associated with MPM.
Findings – The study finds that for successful implementation of MPM all employees should be
involved and all relevant issues need to be considered. Furthermore, the traditional overall equipment
effectiveness (OEE) used by the companies is inadequate, as it only measures the internal
effectiveness. For measuring the total maintenance effectiveness both internal and external
effectiveness should be considered.
Practical implications – What cannot be measured cannot be managed effectively. To manage
maintenance process operating managers and asset owners need to measure the contribution of
maintenance towards their business goals. This paper discusses issues and challenges associated with
MPM system, there by helping the managers to take care of the pitfalls of the MPM system and
advocates that managers should focus on measuring the total effectiveness of maintenance process.
Originality/value – The paper presents a concept of total maintenance effectiveness with focus on
both internal and external effectiveness, and integration of the hierarchical levels and multi-criteria
maintenance performance indicators of MPM system.
Keywords Maintenance, Performance measures, Employee involvement
Paper type Research paper
Figure 1.
Paradigm shift in
maintenance
target or standard data and points out what actions should be taken and where they MPM: issues and
should be taken as corrective and preventive measures. This is extremely difficult challenges
without adequate data to develop models for supporting the decision-making process
(Wealleans, 2000). The characteristics of performance measures include relevance,
interpretability, timeliness, reliability and validity (Al-Turki and Duffuaa, 2003). An
operational PM system acts like an early-warning system.
Several frameworks have been developed for measuring performance over the 241
years. Till 1980, the PM was based on mostly on financial measures. The balanced
scorecard, with its four perspectives, focuses on financial aspects, customers, internal
processes, and innovation and learning (Kaplan and Norton, 1992). It looks into both
tangible (financial) and intangible aspects of the business process. Subsequently,
various researchers have developed frameworks considering non-financial
measurements and intangible assets to achieve competitive advantages (Kaplan and
Norton, 2001). It is observed that companies using an integrated balanced PM system
perform better than those that do not measure their performance (Kennerly and Neely,
2003; Lingle and Schiemann, 1996). The issues and challenges associated with MPM
system concern relevance, interpretability, timeliness, reliability, validity, cost and
time effectiveness, and ease of implementation, updating and maintenance for regular
use by stakeholders at various levels.
MPM
Maintenance works as an important support function in business with significant
investment in physical assets and plays an important role in achieving organizational
goals (Tsang, 2002). Cross (1988) reported that, in the UK manufacturing industry,
maintenance spending ranges from 12-23 percent of the total factory operating costs. In
refineries, the maintenance and operations departments are very large and each
department often consists of up to 30 percent of the total staffing (Dekker, 1996). A
study by the Swedish mining industry shows that the cost of maintenance in a highly
mechanized mine can be 40-60 percent of the operating cost (Danielson, 1987). Some of
the important factors behind demands on maintenance performance measures are:
.
Measuring value created by the maintenance. The most important reason for
implementing maintenance performance system is to measure the value created
by maintenance process. As a manager, one must know that what is being done
is what is needed by the business process, and if the maintenance output is not
contributing/creating any value for the business, it needs to be restructured. This
brings the focus on doing right things keeping in view the business goal of the
company.
.
Justifying investment. The second basic reason for measuring maintenance
effectiveness is to justify the organization’s investment made in maintenance
organization; not so much as to whether you are doing the right thing, but
whether the investment they are making is producing a return on the resources
that are being consumed.
.
Revising resource allocations. The third basic purpose for measures of
effectiveness is to determine if additional investment is required and to justify
the investment if, management needs more of what you are doing. Alternatively,
such measurement of activities also permit you to determine whether you need to
JQME change what you are doing or how you are doing it more effectively by using the
12,3 resources allocated.
.
Health safety and environmental (HSE) issues. The fourth reason can be to
understand the contribution of maintenance towards HSE issues. A bad
maintenance performance can lead to accidents (safety issue) and pollutions
(health hazards and environmental issues), besides encouraging an unhealthy
242 work culture and environment.
. Focus on knowledge management. Many companies especially those involved in
delivery of maintenance and product support services are focused on effective
management of knowledge in their companies. Furthermore, technology is ever
changing and is changing faster in the new millennium. This has brought in new
sensors and embedded technology, information and communication technology
(ICT) and condition-based inspection technology such as vibration, spectroscopy,
thermography and others, which is replacing preventive maintenance with
predictive maintenance. This necessitates a systematic approach for the
knowledge growth in the field of specialization.
.
Adapting to new trends in operation and maintenance strategy. New operating
and maintenance strategy is adopted and followed by industries in quick
response to market demand, for the reduction of production loss and process
waste. MPM measures the value created by the maintenance.
.
Organizational structural changes. Today organizations are trying to adopt a flat
and compact organizational structure, a virtual work organization, and
empowered, self-managing, knowledge management work teams and
workstations. All these innovations need to integrate the MPM system to
provide a rewarding return for maintenance services.
MPI
MPIs are utilized to evaluate the effectiveness of maintenance carried out (Wireman,
1998). An indicator is a product of several metrics (measures). A performance indicator
is a measure capable of generating a quantified value to indicate the level of
performance, taking into account single or multiple aspects. The selection of MPIs
depends on the way in which the MPM is developed. MPIs could be used for financial
reports, for monitoring the performance of employees, customer satisfaction, the HSE
rating, and overall equipment effectiveness (OEE), as well as many other applications.
When designing MPIs, it is important to relate them to both the process inputs and the
process outputs. If this is carried out properly, then MPIs can provide or identify
resource allocation and control, problem areas, the maintenance contribution,
benchmarking, personnel performance, and the contribution to maintenance and
overall business objectives (Kumar and Ellingsen, 2000).
Figure 2.
Questions involved in the
development and
implementation of MPM
and modify the MPM strategy and system at regular intervals? How to develop MPM: issues and
and build trust in MPIs and MPM system at various levels. challenges
The SMART test is frequently used to provide a quick reference to determine the
quality of the performance metrics (Department of Energy, 2002). SMART stands for:
.
S. Specific – clear and focused to avoid misinterpretation. Should include
measure assumptions and definitions and be easily interpreted, e.g. maintenance 245
cost/ton.
.
M. Measurable – can be quantified and compared to other data. It should allow
meaningful statistical analysis. Avoid “yes/no” measures except in limited cases,
such as start-up or systems-in-place situations.
.
A. Attainable – achievable, reasonable, and credible under the conditions
expected.
.
R. Realistic – fits into the organization’s constraints and is cost-effective.
.
T. Timely – obtainable within the time frame given.
The MPM system for the total maintenance effectiveness
Often an MPM system implemented in companies’ deals with internal effectiveness of
the maintenance system that is all these measures are focused on measuring the
productivity in terms of maintenance cost per unit or maintenance productivity in
terms of work order executed per unit of time. The development and implementation of
an MPM system should normally be focused on measuring total maintenance
effectiveness, reflecting the contribution of maintenance process to the companies’
business goal. It is difficult to develop an MPM that incorporates metrics for measuring
the external effectiveness. Currently, the most challenging issue for the maintenance
managers is to develop and implement a system that measures both the external and
internal effectiveness of maintenance process.
The total maintenance effectiveness based on an organizational effectiveness model
considering both the external effectiveness and the internal effectiveness is given in
Figure 3. The concept of total maintenance effectiveness envelops the entire
organization. The total effectiveness is a product of the internal effectiveness measured
through internal efficiency, which is characterized by issues related to effective and
efficient use of resources. These facilitate the delivery of the maintenance and related
Figure 3.
Total effectiveness based
on an organizational
effectiveness model
JQME services in the most effective way characterized by the engineering and business
12,3 processes related to the planning and resource utilization; and external effectiveness
characterized by customer satisfaction, growth in market share, etc. (Bruzelius and
Skärvad, 2004; Ahlmann, 2002). The performance measures for internal effectiveness is
concerned with doing things in right way and can be measured in terms of cost
effectiveness (maintenance costs per unit produced), productivity (number of work
246 orders completed per unit time) etc. and deals with managing resources to produce
services as per specifications.
The performance measures for external effectiveness deals with measures that have
long term effect on companies profitability and is characterized by delivering right
type of maintenance services the customer wants. From customers’ perspective quality
and timeliness of service delivery is often of utmost importance. Here the concept of
delivering is not only the services required by customers, but also helping them in their
other business process related to their own services. Such an attitude often helps in
market growth, innovative service and service delivery; and capturing or creating new
markets.
For measuring the total maintenance effectiveness, a balanced, multi-criteria and
hierarchical MPM system is considered to be effective, which considers both the
external effectiveness and internal efficiency (Parida et al., 2005). There is a need to
workout an overall total maintenance effectiveness considering all the factors and
criteria. In general measures for total maintenance effectiveness must be combined
with process owners’ capability to change maintenance and service processes and
adapts to new technology and work practices without any major involvement of
resources and at right time.
Before implementation, the MPIs need to be tested for; reliability; that is, the ability to
provide the correct measures consistently over time, and, for, validity, which is the
ability to measure what they are supposed to measure.
Conclusion
In this paper, the need for maintenance PM is analyzed and a brief review of existing
maintenance performance measures is provided. Measurement of maintenance is a
complex issue, and when it comes measuring the external effectiveness, it becomes
more difficult in linking the objective outcome at operational level to corporate
strategic level. The issues and challenges involved in developing and implementing an
effective MPM system is discussed. MPM model can facilitate the correct estimation of
the contribution of maintenance to the business goal. There is enough scope for future
work in this research area. The authors are currently working on development of a
multi-criteria hierarchical model for maintenance PM with two industries and the
results will be published in the future.
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Corresponding author
Aditya Parida can be contacted at: [email protected]