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Five mistakes companies make when setting up KPIs

Source | SKF

Key to effective predictive maintenance programs, KPIs monitor a process in a way reveals improvement opportunities. KPIs also facilitate comparison with past performance, and the performance of other organizations. But when KPIs are set up improperly, they cannot deliver their full potential value. Here are five common pitfalls to avoid:

1. Selecting a single KPI to monitor

KPI Infographic Step 1
Selecting a single KPI to monitor instead of a family of interrelated KPIs that represent the full business hierarchy

A single KPI will be hard pressed to monitor performance and trends effectively enough to reveal required improvements. Instead, an organization needs to formulate a family of relevant and interrelated KPIs that operate at various levels of hierarchy to meet the total needs of the business. For the maintenance industry, standard means of quantifying overall maintenance performance often include:

  • Measurements of OEE (Overall Equipment Effectiveness),
  • Maintenance cost as a percentage of estimated replacement value (% ERV)

2. Not connecting KPIs to larger business goals

KPI Infographic Step 2
Not connecting KPIs to larger business goals to align maintenance and corporate objectives (financial, inventory management, personnel development, etc.)

Ultimately, all KPIs in use should relate to larger corporate goals. Accordingly, the setting of organizational KPIs should be a “top-down” process. When lower level KPIs used to monitor individual departments and processes are derivatives of corporate indicators, they assume improved relevance and understanding.

Some argue that essentially all maintenance managers perform the same tasks. Typically these involve:

  • Statutory checks
  • Breakdowns
  • Time-based maintenance
  • Life cycle-based maintenance
  • Condition monitoring (subjective/objective)
  • Safety issues
  • Environmental issues
  • Inventory control

3. Not knowing what “good” looks like

KPI Infographic Step 3
Not knowing what “good” looks like – an over emphasis on metrics may cause benchmarking to lose focus

Benchmarking is a continuous improvement process through which an organization attempts to identify “world class” or “best in class” practices by objectively studying other organizations and their procedures. Benchmarking projects cannot be quantified unless performance is measured and improvements are tracked. But there is more to benchmarking than just metrics. In fact, an over emphasis on metrics may cause benchmarking to lose focus.

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