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performance measurement
systems 173
J.M. Sharp
University of Salford, Salford, UK
Keywords Performance measurement, Maintenance, Quality function deployment
Abstract The role of maintenance in modern manufacturing is becoming ever more important,
with companies adopting maintenance as a profit-generating business element. As a result,
traditional terms used to describe maintenance such as ``necessary evil'' seem to be obsolete. It
would appear that the aim of the maintenance function is to contribute towards an organisation's
profit, clearly bringing the need for maintenance operations to be in harmony with corporate
business objectives. As the measurement activity provides the link between the actual output and
the desired results, performance measurement systems are crucial to those who have a stake in
maintenance, to ensure that they are not in conflict with the overall business needs. This paper
looks at the role of performance measurement systems (PMS) in maintenance, with particular
reference to developing a new PMS using the quality function deployment (QFD) technique. First,
a literature review on performance measurement is presented, in which the key factors for an
effective PMS are identified. Second, common PMSs for maintenance are examined. Then, based
on the principles of an effective PMS a discussion on PMSs is presented, when applied to the
maintenance function. Next, a framework is developed to embrace these key facets, which is
followed by a discussion of its practical implications, in the light of its application within a SME.
Introduction
Over the past decade, plant maintenance has evolved to be one of the most
important areas in the business environment. Dramatic changes in the way
manufacturing companies operate, caused by increased global competition,
have affected maintenance, and made its role in business success ever more
crucial. Today it has been acknowledged by many authors and practitioners
that maintenance is a major contributor to the performance and profitability of
manufacturing systems (Maggard and Rhyne, 1992; Pehanich, 1995; Coetzee,
1998). Furthermore, Maggard and Rhyne (1992) relate the increasing
importance of maintenance to the performance criteria of world-class
manufacturing systems. Hartmann (1992) talks of major challenges that
confront maintenance, some of which are quality improvement, cycle time, International Journal of Operations &
set-up time and cost reductions, capacity expansion and related environmental Production Management,
Vol. 21 No. 1/2, 2001, pp. 173-194.
issues. Despite this broad scope of influential factors, there is evidence that # MCB University Press, 0144-3577
IJOPM suggests the lack of linkage between maintenance objectives and the overall
21,1/2 corporate strategy of manufacturing companies. Riis et al. (1997) report two
benchmarking studies conducted by EUREKA (1993) and Wireman (1990),
which reveal a lack of linkage between maintenance and quality improvement
strategies, together with an overall neglect of maintenance as a competitive
weapon. Nakajima (1988) and Hirano (1997) in Japan, and their Western
174 counterparts Hartmann (1992) and Willmott (1994) showed that some
companies have enhanced their competitiveness through the applications of
total productive maintenance and 5S (a Japanese housekeeping activity) and
accomplished an improved maintenance function. On the other hand, Coetzee
(1997) reports that maintenance costs are still on the rise, and that service
availability of systems being maintained is often unacceptably low. Clearly,
there is still much to be done in order to achieve the harmony between the
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176
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Figure 1.
Translating vision and
strategy: four
perspectives
Figure 2.
Managing strategy: four
processes
In summary, the balanced scorecard provides managers with a balanced A framework for
presentation of both financial and operational measures, on the basis that no managing
single measures can provide a clear performance target or focused attention on maintenance
critical areas of the business. It also lets managers introduce four new
management processes that, separately and in combination, contribute towards
linking long-term strategic objectives with short-term actions.
In line with Kaplan and Norton's work, Chenhall (1997) shows that 177
performance evaluation systems should include direct measures of the
manufacturing processes, in addition to financial measures.
In furtherance to the work published by Kaplan and Norton (1992), Brown et
al. (1994) emphasise various perspectives of performance measurement, and
identify six types of performance measures:
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Objective measures have the advantage of not being biased by whomever is providing the
opinion. Conversely, subjective measures provide a wealth and variety which is not
obtainable from objective measures alone. . .
Sinclair and Zairi (1996) highlight the need to involve employees in the
development of performance measurement. Employees are the individuals who
operate the processes and who know the task best and thus, getting them
involved will not only result in commitment toward efficient performance
measurement, but also influence the actual performance too.
In summary the literature on performance measurement suggests that an
effective PMS should include the following features:
. recognise different performance hierarchies;
. present a balanced view of the system being measured;
. recognise multiple dimensions of performance measures;
. relate the measures to the relevant goals;
. link performance measures to strategy;
. involve employees to ensure that it gets their support;
. include subjective measures as well as objective ones;
. address cross-functional issues.
Total production time Number of tasks Time planned for Total maintenance
Downtime completed scheduled tasks cost
Number of breakdowns Number of tasks Time planned for Cost of lost
Production received overdue production
Number of tasks scheduled tasks Value of stock at
overdue Time spent on the end of period
Clocked time scheduled tasks Plant investment
Time allowed on Time spent on value
tasks breakdowns
Time spent on tasks Cost of breakdowns
Total direct Table I.
maintenance costs Performance
parameters in
Source: Derived from Coetzee (1998) maintenance
IJOPM Pintelon and Van Puyvelde (1997) argue that maintenance performance will
21,1/2 depend on the perspective applied: accountants will think of maintenance in
terms of costs, top management often is only interested in budget performance,
engineers will focus on techniques, production will see performance in terms of
equipment availability and support responsiveness.
It is apparent that maintenance has many interfaces with other functions. In
180 most cases, machines and equipment are designed and supplied by an outside
organisation. With so many customers and suppliers both internally and
externally, the objectives of the maintenance function have to be clearly defined
in order to avoid the functional suboptimisation. Riis et al. (1997) provide a
framework showing the horizontal and vertical integration levels and
highlighting the significance of cross-level maintenance integration to avoid
creating maintenance islands. Figure 3 attempts to relate maintenance to
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Figure 3.
Cross levels and
functional integration of
maintenance
management
From the review of PM literature and its specific implications for maintenance, A framework for
as discussed above, performance measures for a balanced view of the managing
maintenance system can be classified into five categories: maintenance
(1) equipment related performance;
(2) task related performance;
(3) cost related performance; 181
(4) immediate customer impact related performance;
(5) learning and growth related performance.
Indicators
Global PI Very popular (compact!) Tricky because of (too) strong
aggregation
Set of PIs More complete Clear evaluation not always possible
Structured PI list Standardised Follow-up not always easy
Reference numbers
Checklists Quick insight Only rough insight ± setting general
``ideal'' values is impossible
Surveys OK. if available To be handled with care
Graphs
Diagrams Popular Easily manipulated (misuse)
Multi-index profile Actual is target performance Often subjective
Radar graph Insight Limited number of PIs
More elaborate
models
Hibi Global, complete Rigid, time-consuming
Luck Rather complete Complex Table II.
MMT Complete, handy Critical implementation step Performance
measurement systems:
Source: Pintelon et al. (1997) an overview
IJOPM indicators and the way of presentation. Although most of them include a
21,1/2 comprehensive view of operational aspects of maintenance, they are not
particularly designed in a way that maintenance measures are linked to
corporate strategy.
Sharp et al. (1997) adapted the total quality management philosophy to
improve maintenance performance. In a case study, the authors identified
182 critical success factors (CSFs) associated with maintenance. Then they broke
down these CSFs into various critical processes and defined individual roles.
Sharp et al. (1997) reported a case study that achieved dramatic improvements
through performance measurement in all aspects of maintenance. Furthermore
Sharp et al. (1998) showed that improved maintenance performance can be
achieved through the complementary use of total productive maintenance and
total quality management. Dwight (1995) states the properties of a ``good''
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performance measure:
. an agreed standard exists for which there is generally commitment from
those required to control to it, or improve by it;
. there is a known cause and effect relationship between the measure and
a retained or improved business performance; and
. there is an understanding of the various influences on the measure
proposed.
Dwight also explains two other approaches to performance measurement that
are ``the system audit approach'' and ``incident evaluation approach''. These
approaches are based on the idea that definition of performance can be stated in
terms of the change in value of the system. Value is defined here as the
probable future earnings of the system. One favourable aspect of such systems
might be that they capture the impacts of maintenance actions on future
periods.
Das (1994) reports on a different PMS for maintenance developed and used
at the Johnson Space Centre. A performance objective matrix covering selected
performance indicators has been established and shown an overall monthly
project performance score. For each of the selected indicators, the matrix gives
its relative weight within the overall measuring system, the baseline, the target
and current levels of performance, corresponding current performance score
and its weighted total score.
Tsang (1998) adapted the balanced scorecard developed by Kaplan and
Norton (1992) to bring a strategic approach to maintenance performance
measurement. Tsang argues that considering maintenance as a purely tactical
matter is myopic. Maintenance also has a strategic dimension covering issues
such as design of facilities and their maintenance programmes, upgrading the
knowledge and skills of the workforce, and deployment of tools and manpower
to perform maintenance work. Tsang (1998) advocates that the balanced
scorecard, as specifically applied in maintenance, should consist of a mix of
both outcome measures and performance drivers. Outcome measures reflect the
outcome of past decisions, performance drivers have the power to predict A framework for
future outcomes. managing
Based on the principles of an effective PMS system and the present view of maintenance
PMSs in maintenance, the key design features of a quality performance
measurement system have been identified and presented below:
. Appropriateness of the performance indicators in relation to the
strategic objectives of an organisation. (Selection criteria): each
183
performance measure should have an organisational goal or objective to
feed back.
. Vertical alignment of performance indicators to translate the strategic
objectives into different levels of hierarchy. (Deployment criteria):
Recognition of different hierarchies.
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Stage 1
(1) Form a team of engineers, maintainers, supervisors, users, designers (if
available).
(2) Brainstorm strategic objectives (SO) and sublevel goals related to
maintenance considering the three levels of performance.
(3) Draw up three matrices to match the three levels of performance based
on Figure 4.
A framework for
managing
maintenance
185
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Figure 4.
Identification and
alignment of key
performance indicators
IJOPM
21,1/2
186
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Figure 5.
Selecting measurement
unit specific measures
A framework for
managing
maintenance
187
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Figure 6.
Measurement and
evaluation
IJOPM (4) Brainstorm the relevant PIs at each hierarchy (organisation, process,
21,1/2 job/performer) by considering the strategic objectives and the
classification for the maintenance performance indicators.
(5) Place the strategic objectives and goals defined into the matrixes and rank
them according to their importance: 1 to 5 (importance rank column).
188 (6) Place the PIs into the appropriate classes and matrices.
(7) Using the bottom left hand of each cell in the central matrix assign
weights of 0, 1 , 3, 9 according to the extent the individual indicator
reflects the achievement of the strategic objectives or goals.
(8) For each cell, multiply the weights in step 6 by the weight for the
strategic objective or the goal in the row. Place the score in the top right
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Stage 3
(1) Define the interrelationships between various PIs.
(2) Set realistic targets for each measure.
(3) Conduct measurements.
(4) Evaluate results (feed back to the individuals, teams who are involved
and own the measures).
(5) Draw an action plan.
All these figures should be used on the three levels of performance, which are
organisation, process and job/performer levels. At the organisation level, PM
should include the maintenance organisation's basic functions in relation to A framework for
their interfaces with other departments and the relevant external environment. managing
Maintenance strategies, organisation structure and deployment of resources maintenance
are some examples of areas of concern of PM in maintenance at this level. At
the process level, the maintenance organisation should employ and measure all
the value adding processes that are required to achieve organisation level
goals. Cross-functional processes are the main concern at this level. At the job/ 189
performer level, PM should look at the individuals who perform various
maintenance duties and who own and control the processes.
The matrices provided in the figures are general examples of the use of the
system. Specific and complete examples can be created for situation specific
cases in maintenance.
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Case experience
A case study has been conducted to reveal the practical implications of the
framework presented above. In an SME (small and medium enterprise) in the
North West, which manufactures cable management products, interviews have
been carried out with the maintenance personnel, operations manager and the
quality manager. The interviews were designed to assess the validity of the key
features of an effective PMS in maintenance, which were identified earlier in
this paper. The framework has been shown to the interviewees to get their
feedback.
In 1996, the company, under a newly appointed director, realised that they
needed to improve the organisation in terms of market share and overall
performance in order to face the increasing market pressures and competition.
As the framework suggested, they started with developing a mission
statement. The management, aiming to create a ``world class manufacturing''
organisation, started various performance improvement projects, during 1996
onwards.
Organisational level
In line with their mission, they listed their ``organisational level'' objectives as
follows:
. reduce variation within a process;
. increase capacity;
. achieve quick response/global products;
. provide high variety/special products;
. conform to environmental laws/legislation.
The company has a history of financially driven performance management
systems. Because of this, at the time of identifying their organisational level
objectives, they had difficulties in setting non-financial goals for the individual
measures above.
IJOPM The project team consisted of quality, operations and health and safety
21,1/2 managers at the organisational level; maintenance manager and operators at
the process level; workshop supervisors, maintenance manager and operators
at the job/performer level. The project team identified the paint shop as one of
the most critical activities and therefore chose it as the pilot area for
performance improvement. Although this project was not particularly a
190 maintenance improvement project, they soon realised that many activities
resulting in a low performance were rooted in maintenance. To meet the
organisational level objectives, they identified a number of critical performance
indicators, which are presented in Figure 7. (Figure 7 is the adapted form of the
PMS framework by the company to suit their needs/conditions.)
In the light of the knowledge derived from the literature, clearly it is vital for
any company to identify the value adding processes to achieve its strategic
objectives. Prior to this project, the company had difficulties in identifying
what a successful maintenance organisation should include. The company
recognised and adapted the performance hierarchies with the introduction of
the framework. Through the cross-functional structure of the framework, they
managed to translate the strategic goals and measures into process and job/
performer level PMs and succeeded in establishing top-down, bottom-up
communication as suggested in the framework. The process and job/performer
level performance indicators are given in Figure 7 as identified by the project
team. The company, over the first six months period, achieved an average of
25 per cent improvement in the stated performance measures such as downtime
and waste/rework. However, these improvements in the individual
performance attributes have remained confined to the paint shop area and
therefore have not altogether produced business benefits at the corporate level,
with particular reference to the bottom line of the company, mainly because the
improvement efforts were fragmented and not integrated. Careful examination
of the company's current PMS practice in comparison to the suggested
framework revealed the following points:
. The company successfully implemented most of the elements of stage 1
of the framework.
. It can be suggested that the PMS system within the company provides a
balanced view except for the learning and growth aspect (see Figure 7).
The problem is that efforts to improve these measures under different
categories are fragmented and not integrated.
. The focus is on specific machines and processes only. Although there is
a team effort, the performance of the team is not measured or
appreciated which reduces the level of employee involvement.
. Although most of the improvements and activities under this project are
maintenance related, the project has never been recognised and treated
as such. Rather, it is seen as a general production project. Therefore
A framework for
managing
maintenance
191
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Figure 7.
Deployment of goals/
performance measures
in the case study
company
IJOPM results have not been fed back to maintenance. The framework suggests
21,1/2 maintenance should own and act on the related measures (stage 3).
. Most maintenance improvements are too subtle to be seen in the bottom
line especially in the short term. However, as long as the improvements
are linked to strategic objectives, the company ensures the contribution
of maintenance to the long-term success.
192
The framework helped the company realise the flaws in their current system. In
this sense, it has been a benchmarking tool. The company is improving their
PMS practice in the light of the points revealed above. They are also
considering the use of a similar PMS for the turret presses, which feed the
entire workshop.
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Concluding comments
This paper emphasised the strategic importance of maintenance. The
examination of the PM literature and the current PMS systems in maintenance
showed that the current features of the PMS system for maintenance do not
meet the requirements of an effective PMS system. It also showed that
implementation of such systems in maintenance has never been easy because
of the complex nature of this function. Developing a thorough and effective
PMS for maintenance cannot be achieved with the traditional and narrow view
of PM. Such an effort requires the combination of different tools, discipline and
ideas.
In this paper, a framework for managing maintenance performance has been
introduced to eliminate the difficulties identified in the literature. A case study
has been conducted to show the practical implications of the framework. The
use of the framework in the case study company proved to be useful in two
aspects:
(1) Although the framework might be complicated and may demand extra
resources for small and medium sized companies, the application
showed that it could easily be adapted for the needs of a company (see
Figure 7).
(2) The framework can be used as a benchmarking tool and therefore help
identify weak points in current practices.
From the case study, it can be suggested that some companies may find this
three-stage matrix approach complicated and demanding. However, this
framework has been devised to be a comprehensive PMS that can be used in
maintenance. Since the nature and the organisation of maintenance function
may greatly vary from company to company, this framework should be
regarded as a guide and adapted to the needs of organisations.
The framework has been designed with the nature of maintenance activities in
mind. This does not mean that it can only be used for maintenance PM. On the
contrary, the case study shows that it would be more productive to have an
integrated PMS in which all related functions are considered only if everybody
understood that this production-led project is also greatly related to maintenance. A framework for
The fact that most organisations cannot afford a separate PM effort for managing
maintenance also justifies the use of this framework in an integrated manner. maintenance
In the light of the case study experience, the framework substantially
contributes to the area of maintenance management by incorporating the key
features of a successful PMS, namely goal deployment, cross-functional structure
and a balanced view of a system. The framework also serves as a guide for the 193
adaptation of such a system for maintenance. The complex appearance of the
framework should not discourage small and medium sized companies from
using it as it can be modified and simplified easily for the needs of different
organisations. The framework can only be as good as the will of the individual
organisation to implement such a system. It can be concluded that such a
framework would be more beneficial for those organisations where company
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