KPIs (key performance indicators) are all about setting goals and tracking progress. Basically, the key building blocks of success. But how do they work and which ones should you use?
Before you have a KPI, you need a goal. Once you have the goal, you can decide which KPIs to use to measure how well you’re doing. But be careful. It’s worth taking time to look closely at the whole idea of “how well you’re doing.” It’s often not as simple as just “good” or “bad.”
KPIs for far and fast
For example, you might be tracking time on wrench, with a goal of having technicians spending at least 50% of their day actively closing out work orders. Looking at the numbers, you see that you’re currently at 45%; you’re doing well, right? You’re close to your goal. But how long did it take you to get there? What if you’re only gaining a percentage a year? You’ve made progress, but it’s taken you a really long time, and looking forward, are you willing to wait five years to finally reach your goal?
When determining how well we’re doing, one type of KPI is generally not enough. In this example, we have something to tell us how close we are to our goal and something else to tell us how quickly we’re moving toward it. It’s like you’re on a road trip. One type of KPI tells you how far you’ve gone. It’s your odometer. But another type of KPI tells you how quickly you’re moving toward your destination. That one is your speedometer. And you need both of them to really understand how your trip is going.
KPIs that lag and lead
Broadly, there are two categories of performance indicators, lagging and leading. The first is the kind that springs to mind when you think of KPIs; the second is maybe a little less obvious but just as important.
Here you’re using historical data to see if you’re moving toward or away from a goal. So, if your goal is to lose weight or increase how many pushups you can do, you’re going to look at your weight or personal pushup records over the last few months, plot them on a graph, and look at the trend line.
Things are looking up! Light blue trend line shows an overall increase.
For losing weight, you’ll want a line pointing down, but for increasing max pushups, you’ll want one pointing up. Using lagging indicators, you can sort of predict when you’re going to hit your goal. It’s not going to be exact, but if everything remains generally the same, you’ll have a good idea of what the future looks like. Remember, for lagging KPIs, you’ve got one per goal. You want to lose weight, the KPI is your weight. You want to do more pushups, the KPI is your max number of pushups.
Here, you’re tracking all the things you should be doing to reach your goal. Unlike lagging KPIs, where it’s generally one per goal, now we have a collection. For losing weight, we can include KPIs on calories consumed and burned, time in the gym, which we can then subdivide into KPIs for cardio and weights, and even one for hours of sleep per night. We’re not tracking absolute movement toward the goal. Instead, we’re looking at the things we know help us get there.
Because it’s unlikely your job is to watch your waistline and get really good at pushups, it’s worth looking at a quick, specific example from manufacturing. Your goal is to have the smallest number of unscheduled work orders possible for your large, critical press. Your lagging KPI is simple: the number of on-demand work orders on that press. The lower that number gets, the better you’re doing. For leading KPIs, you can track the number of missed PMs. How many times were scheduled visual inspections missed? How many times did you skip testing and changing out the lubrication? It could be the case technicians require specific training before they can do PMs on the press. Another leading KPI could be the number of technicians who have completed that training.
KPIs that really matter
Which are the KPIs that matter most? Depends on what you care about and want to improve. In the end, a good KPI is one that improves people’s behavior. It gets people to re-evaluate how they do their work, moving them from common practices to best practices.
Just don’t get carried away. At first, you might have a long list, but you’ll want to narrow it down a bit. With a good CMMS software, KPIs are easy to set up, but in some cases, tracking a KPI may mean setting up new ways of collecting data. One example: you want to lose weight, but before you can set up a KPI to track your progress, you first need to go to the store and buy a scale. Another example: you want a KPI related to a pump’s number of cycles. Do you have a reliable and accurate way of collecting that data, or are you going to have to invest in new equipment?
If you can’t decide or are unsure which ones are going to work best for your operations, you can always start with some of the more standard KPIs.
KPIs, the “classics”
Your final list of KPIs will be determined by your industry and specific circumstances and needs. And it might change over time as you fine-tune it, reach goals, and set new ones. But when starting, it might be best to go with some of the more common KPIs. One of the advantages is there’s a “world-class” standard for the more common ones that have been established over time through direct practical experience. You don’t have to use “world-class” standards as your goals starting out, but it’s good to keep them in mind as a way to benchmark.
For this one and the next, there’s a whole blog post that explains the differences between them, how to use them, and why they’re important.
For a quick summary: mean time to between failures is how long an asset will run before it needs to be fixed. Not replaced, fixed. That’s important because it’s only ever used for assets that can be repaired.
Take the total number of hours the asset was in operation, the number of times it failed, and the amount of time it took to repair after each failure. Then take the total number of hours of operation and divide it by the total number of failures. Don’t include the time it was offline for preventive maintenance. If this seems like a lot to hold in your head, it’s because it can be. For a more comprehensive explanation, see the original blog post. And to actually set up and track this KPI, get a good CMMS.
MTBF tells you a lot, including:
how well technicians are making repairs
how carefully operators are using an asset
how effectively your PM are catching issues early
How long will a light bulb last? That’s the mean time to failure: how long something goes before it needs to be replaced. Unlike with MTBF, here we’re only looking at assets that cannot be fixed, only replaced. To get the MTTF we need a bunch of the same item. So, let’s say you have five light bulbs and they last 30, 31, 30, 35, and 25 hours. The MTTF is all those numbers added up and divided by five: a little over 30 hours.
MTTF tells us we should switch to another brand of light bulbs. Those numbers are terrible. Generally, if you want to improve this KPI, you need to buy better quality items. The best line from the old blog post is “This is your you-get-what-you-pay-for KPI.”
The ever-growing pile of work orders your technician needs to close out. It might at first seem like you’d want zero backlog, but a really low KPI here actually suggests you’re likely overstaffed.
Planned maintenance percentage (PMP)
Maintenance departments have a lot of good reasons to want to move away from the uncertainty of reactive, on-demand work orders and all the stress and costs that come with them. Preventive maintenance ensures issues get discovered and fixed before they have a chance to grow into budget-busting problems.
PMP shows you what percentage of all your work orders are preventive maintenance. The higher the number, the better. The world-class standard is around 80%.
Preventive maintenance compliance (PMC)
Similar to PMP but a bit different. Here you’re looking at how many of your PMs are getting closed out. If your number is high, it means your preventive maintenance program is being followed. If you’re at 100%, it could mean it’s time to add some more PMs to the schedule; you appear to have the resources for it.
A low number means your preventive maintenance program is not being followed, and down the road, this is going to drag PMP down, too.
If you don’t have a CMMS, get one. Nothing is going to make tracking KPIs easier than an intuitive, user-friendly CMMS. Not sure a CMMS is going to be worth it? You can calculate your CMMS ROI using our ROI calculator. You’ll get a good idea of how the math is going to work in your favor. If you already have a CMMS, but it’s not delivering what you were promised, get a new one. In either case, make sure when you’re talking with providers that you ask about KPIs. You want a solution that makes tracking and reporting them easy.
If you already have a CMMS, KPIs are a great way to leverage your investment. If you love your CMMS but aren’t sure how to use it for KPIs, call up your provider and ask for extra training. Don’t be shy about it. A good provider wants you to get the most out of their product.