Imagine how effective a performance management program could be in an enterprise where every employee, regardless of level, department, locale, or job function, was focused on achieving performance targets that contributed to the same goals and objectives. Sophisticated performance management capability is one feature that differentiates the Computerized Maintenance Management System (CMMS) or Enterprise Asset Management (EAM) system of today from those of the past.
For years, CMMS was transaction-based (ie, recording and reporting on hours worked and material used to maintain equipment). The modern CMMS however, moves the focus from transactions by providing better planning and analysis tools. This leads to less fire-fighting and greater emphasis on performance management in a more planned environment.
There are three key components of a CMMS-based performance management program, and the steps required for a successful implementation. The components are:
- Data Collection, and
Develop a strategic plan
Proper performance-management starts with setting goals and objectives at the highest level of the enterprise. Drivers at this level are: improved financial performance, better management of risk, greater operational efficiency, increased employee satisfaction, and increased customer loyalty through an improved value-for-money proposition. From a quantitative perspective, sample objectives might be improved earnings per share, increased return on capital employed, and so on.
Cascade the strategic plan downwards
Develop a strategy for every strategic business unit, such as a group or division, that will deliver on the goals and objectives of the overall enterprise. Each functional area (marketing, operations, information technology, and human resources) can also develop a strategic plan in light of enterprise-wide goals and objectives. This will translate into functional strategic plans at the group, divisional and plant levels.
Some companies use tools such as the Balanced Scorecard to provide the strategic measurement framework at all levels in the enterprise. The scorecard approach starts with the strategy and vision for the enterprise and then breaks it down for each strategic business unit into four areas:
- Customer view (retention, customer satisfaction);
- Financial view (ROI, cost reduction);
- Internal business-process view (innovation, operations); and
- Learning and growth view (employee/IT capability).
Each level in the enterprise is responsible for developing performance measures and setting targets for each of these four views. Reports on progress in meeting targets are published on a monthly basis for each business unit. Most, if not all, of the relevant measures for maintenance operations can be tracked on the CMMS. Similarly, a good ERP system will track the measures relevant to production.
Set performance measures and targets — regardless of whether or not a scorecard model is used, each business unit should commit to qualitative goals and objectives, as well as quantitative measures and targets for each corporate-wide driver. Table 1 shows sample measures and targets for the asset management function, most of which can be tracked by the more sophisticated CMMS packages.
Develop action plans
To meet the targets set at all levels, you should identify action items. For example, if for the next 12 months you want to reduce the spare parts inventory level by 20 percent and cut the frequency of stockouts of critical spare parts by 10 percent, there needs to be a clearly defined plan as to how that will happen. Action items might include identifying and eliminating obsolete inventory items, classifying the inventory using the ABC and XYZ inventory classification model, tracking service levels by inventory class and adjusting inventory levels accordingly. Advanced features available on some CMMS packages will facilitate the collection and analysis of data for ensuring this is possible.
Formulate a long-range budget based on the action plan and targeted performance levels. This is followed by a more detailed mid-range budget for the next 12 to 18 months. Finally, very detailed budgets are required on a monthly or quarterly basis, down to line item account and/or activity codes. A CMMS equipped with activity-based costing can help tremendously in planning where costs should be incurred.
Develop personal plans
Many companies have discovered the tremendous value in integrating the performance management program described above, with the remuneration, career advancement, reward and recognition of employees. Performance measures and targets can be defined for each job function for which an employee is responsible.
For example, a stockkeeper should be clear on quality, service and performance expectations for managing the stockroom. This includes measures such as: order error rate, response rate, and orders filled per day. Better CMMS packages are capable of tracking measures by employee, but be wary of using the software for discipline purposes as this smacks of an Orwellian "Big Brother" mentality. The consequences might be employees entering incomplete or incorrect data.
2. Data collection
Once plans are set, the CMMS is used to collect actual data from many manual and automated entry points. The more progressive shop-floor data collection systems interface with wireless remote terminals, programmable controllers, barcode scanners, and so on. The key is collecting accurate and timely data at a sufficient level of detail.
As well, data should be captured once and only once, as close to source as possible in order to preserve a single version of the truth. This is more likely with a highly integrated CMMS and database. For example, hours worked by tradespeople should be recorded once, for both payroll and job costing purposes, even if the data feeds two distinct systems.
The modern CMMS has tremendous analysis tools available to help monitor progress in meeting performance targets, and assisting management in identifying further improvement opportunities. These include: reliability-centred maintenance, condition monitoring, knowledge-based diagnostics, economic order quantity modeling, service level simulation for spare parts inventory, supplier history analysis, workflow analysis, activity-based management, and many other tools.
The CMMS can also report on variances to budget in a variety of ways such as by work order, piece of equipment, location, shift, and tradesperson. Significant variances must be explained so that you can take corrective action, and/or the performance targets and budgets are modified.
By exploiting the power of today’s sophisticated CMMS, management can focus the energy of individuals and departments on meeting performance targets and ultimately the goals and objectives of the overall enterprise.
Surprisingly, studies show that only about 30 percent of the functionality of CMMS software is actually used. This is because the majority of companies are still transaction-focused. This is good news for those companies that do use the analytical features of a modern CMMS in support of a performance management program.
David Berger is the president of Lamus Consulting in Canada and the founding president of the Plant Engineering and Maintenance Association of Canada.
TABLE 1: Sample performance measures and targets
||Target — Year 1
|(Internal) Customer satisfaction
||Average cycle time (eg. repair time)
||Average response time for unplanned maintenance
||2 minutes or less
||Operator work effort (eg. machine adjustments
||17 minutes per operator per shift
||50% reduction in non-value added work effort
||5% of jobs have to be reworked
||Average time spent doing administrative work
||Reduce by 50%
||% of transactions requiring authorization by a supervisor
||Reduce by 50%
||Training dollars spent per employee
||Average tradesperson utilization
||Maintenance cost per ton of finished product output
||Average spare parts inventory turns
||Average mean-time between-failure