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WHAT GETS MEASURED, GETS DONE:
PRELIMINARY RESULTS FROM THE AEMP JOINT TASKFORCE BY GEORGIA KRAUSE
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applying materials, labor, and capital effectively. We have noticed a severe shortfall in most fleet organizations in measuring performance and cost. Most fleets only measure the cost of their efforts, with only a few showing their net benefits or returns on investment. We ask senior leadership to pour millions of dollars in CAPEX and OPEX investments with little to show for that investment. Imagine spending a large sum on a stock purchase with no feedback on that investment. The only measure you have is the amount of money spent on acquiring the stock but no information on its yield or performance. As outrageous as that may sound, many fleet organizations do just that. Download Preliminary Report
o be successful, you need to have a set of measurements to evaluate the effectiveness of your enterprise’s progress. Working without that information is like driving a car without an instrument panel. Progress is made when you know the vehicle’s speed, fuel needs, temperature, etc. Business has the same requirements. You must constantly monitor and measure your progress to ensure you are
What Gets Measured, Gets Done: Preliminary Results from the AEMP Joint Taskforce
“Measurement is the first step that leads to control and
AEMP’s CEO, Donte Shannon eventually to improvement. , FASAE, CAE, AEMP created has been champio youa bold can’tand measure something, ambitiou ning the importa equipmentIf manage s strategic plan, nce of envisioning an rs with new educatio you can’t understand it. Ifn you evolved organiza partnerships in AEMP’s growth. offerings, training, “Data is gold and tion which prepare Recently, To be successful, you need to have a set of measurements to evaluate the and most importa can’tAEMP understand can’t is strivingit,toyou s future professi ntly, data. be the premier onal effectiveness of your enterprise’s progress. Working without that information is performance and increase e resource for control it. If you the can’t bottomcontrol line for it, like driving a car without an instrument panel. Progress is made when you knowlaunch a study on mainten company owners,” the data that helps our member ance you can’t improve practiceit.” s and their says Shannon equipme and nt management the vehicle’s speed, fuel needs, temperature, etc. . Addition ally, when thinking teams enhance The follo and construction costs, partnering with CFMA is an ideal choice about how best wing grap financial manage Preston Ingalls, –H. James Harrington, IBM Business has the same requirements. You must constantly monitor and measure to manager, author, because of ment. Richproject hicthe Donte Shannon show strong National Account King, s the link between , and CEO of Harrington your progress to ensure you are applying materials, labor, and capital effectively. vario s Manage r for United Rentals, the AEMP Board, initiated us met goals and poll Institute rics and a project a and select task force led Randy group of AEMP We have noticed a severe shortfall in most fleet organizations in measuring performance the resp by members of also by Dennis and CFMA member Bosman, CEM, Equipment onse perc both associat Walker, Senior Manager with and cost. Most fleets only measure the cost of their efforts, with only a few showing their s to determine ions, and to test benchm entage GRANITE, ark comparisons. what the waters for for each net benefits or returns on investment. overall interest in participa current levels of measurement to define : Answ The taskforce are being ting in a more er Cho used polled ices comprehensive Maintena We ask senior leadership to pour millions of dollars in CAPEX and OPEX investments with little to 143 showparticipa for thatnts, investment. percent) came survey to use nce cost with an from for When Main percentage of the s highway Imagine spending a large sum on a stock purchase with no feedback on that investment. The only measure you have is theequal amount heavy responses from tenance cost as a percent segment as the ParticipantAs respo asked ifPerc of estim both Main emphasis of the as a perc joboutrageous associations. of money spent on acquiring the stock but no information on its yield or performance. as that may sound, many titles ranged surenta tena nd ated repla The majority vey ge of nce study was primarily from ent of annu Number Executive VP, having entsresp onde of responses Total plan onlabo would r cost fleet organizations do just that. nts with Production Manage CEO, CFO, Fleet Manage heavy al revenue(74cement valu s as a perc responde of equipme r, Director, VP ned main almost KPI beInter nt aka r, Director of Finance e (ERV) in ue “Yellow Asset Tota nts nch estval ent topic The tena Manage Iron.” survey l prevment, of annu answering participa nce Instead, business owners can ensure the maximum return on their investment with a strong set ofnts Keywere Performance Indicators (KPIs)., and Shop Manage entiveVice Presiden yes, the all - 92 pe marks, al revenue asked to identify r. and Total perc t, Equipm operations. The question rcent which metrics survey presente ent of eme predictive main ent Manager, of com y saw the 23.0 It goes back to the classic three bodies of knowledge: or KPIs they were Main other metrics d participants 8%- said tenance rgency tenance if theirs were currently with 42 metrics nefi bench mon and be work (EM usingover as not listed. 1. There are things we know we know, to measure 54.5 t developed by Main time % their 33 ) as % of % of maintena tenance the subgrou fleet manage measu mark me consist5% The largest respons ent p. nce Participa main ment labo tric 34.9 2. Things we know we don’t know and, hours Maintena nts also had the re act tenance r dolla s to 7% 78 rs as equipment utilizatioe was option to ivity 38.4 nce store hours Respo and res6% Pieces 3. Things we don’t know we don’t know. n, with 74 value as a percent of main add 50 ndent of equi percent of the ults a if perc pment s we 26.57% . they The dilemmarespond is that measurements fall into the third Contract ent of estim tenance mate ents 55 per mec saying they used asked or cost partici would be re 16.7 rial dolla ated repla hanic body of knowledge - we metrics as a perc Inventor Leading indicators (measuring the process) are typically input oriented, 8% rs tojust didn’t know what we 38 cement track equipme ling to y turns ent of tota (mobile fleet and anopate in a wil25.8 value (ERV didn’t know.nt uptime or ratio Inventor hard to measure, and easier to influence. Leading indicators change l maintena only) 7% 24 nymous confidentia usage. Next was ) help y service nce cost 11.19% l est Inventor level ance gap, you need a good before lagging ones do and usually result in lagging indicator actions. 37 themainten information s costToasremedy to tra ablish KP survey to y stockout a percenta ge ofand ck 2.80% Stores annual balance leading lagging KPIs focusing on 16 revenue and cos fleet pe I bench value per percentage withof55 ma percent rform20.98% Percent stores pers measuring equipment maintenance effectiveness and/ stating 4 perce ts. The ance rks they tracked of ma 13.2 nt- sai this cost Lagging indicators (measuring the results) are typically output-oriented metric. Total num man hours char on or asset management. This means indicators or metrics 30 d yes jority - 9% The third ged to The tas ber of store 74 highest . 17.41% measuring results. Lagging indicators are often easy to measure but Average work thatenot only show your activity but also the results respons 19 kfo line item hours was a tie between rce wil expand backlog s per hard to improve or influence. 5.59% Percent per mec of that activity that answer the question, “Are we preventi 25 ve mainten commit ed into l be of hanic (wee attendant ance as a 6.99% Maintena maintenance overseeing management of our assets prudently?” a percenta ks) 8 will mo tee of explarger ge of the hour total nce hour 2.10% The problem withhours many indicator measurements are Training and off-road ly to main ly employees 10 the nex ve to the erts wh equipment idling dollars to tota A good way to think of the balance between the two is cause and effect. hoursthey focus om tenance spen only on financials and arrive too late to l plan Maintena at 41 percent and eve t level of study27.2 3 to 7% nce mec t per year per supervisor ratio t hourly pers each. affect the results and focus on the future. 1.40% Maintena onnel stand ntually research hanics 39 Maintenance to main mechanic nce mec de ardiza tenance ics Training hanics The Society for Maintenance and Reliability Professionals (SMRP), a trade associationmechan for maintenance and reliability professionals 9% tion liver 11.1 2 to enginee planner to main hours per produ a4.90 r ratio received The tas tenance ratio Annual across all industries, advocates measuring at least 15-20 leading and lagging metrics to track both performance and cost. mechani ct. % 16 no respons kforce CAPEX engineer es. Similarly, c 1. ’s ob as a perc Decid s ratio Prevente storeroom perform 7 jec 8.39% SMPR’s Body of Knowledge basic set of measures includes: business management, process reliability, equipment reliability, ent of annu e on d ance 2. De s are 13.2 which tive & Planned (PM) and pred 9%: al sales costs was focus 12 cide organization & leadership, and work management. Collectively these measures onby capital, labor and materials (CLM). chosen me icted main wh trics tenance (PdM) sche 3. De Inventor 4 percent of participaless than or%KP 19 velop at constit 4.90 sche y price dule com The Association for Equipment Management Professionals (AEMP) and the Construction Financial Management Association ute0% nts. guide 4. De data curre dule complian Equipme s tha Is for tracki 7 pliance Interesti ngly, this lowpractices and costs. Up to this point, velop line ce t spe ncy (per nt ng bo (CFMA) have long recognized the need for commonality in how we measure response criteria s to16.0 cifi 5. Ad Equipme utilization cent) validatemaintenance acq8% 0 th perfo s what consulta min nt to sel39.8 uire tha c metric (ho there have been several efforts but no definitive list of metrics to serve as a standard. This is changing. nts Idling perc availability perc often ect 6% Subgro ister a sur t observe - despite 23 w is it rmance and vey to41.2 the ind informatio the calcul large sums of mainta up (appro Idling perc entage for off-r entage to sche ust n. a 0% ated— costs sho money spent dule oad equi xim 31.4larger gro ry’s Best 57 in con on 6. Co the num uld be purchases of Correctiv entage for on-r of the pment 7% fidentia ate ly 220 59 up inc llect direct buy and recom e oad equi Best erator and lud com lly of 7. Usi replenishment 4.90 Planned maintenance (top www.aemp.org 45 all and de mended the%num panies ing of stock items, ng cor compile (CM) from pment 5 to maintena of )— . nom few metrics are 74.8 res rela 8. par Perc be nce prev Devel ults3% 7 ticipanAEMP me 10 perce inator entage tive ana rs. accuracy used entive . nt). op a mb Main ). storeroom efficienc to track percenta ts wil lysi28.6 Root caus of rework / SMRP report 7% 107 s, ide l be anoership (wi call back ies. ge estim tenance (PM) e of anal ’s mu ntif s ated to Overall lti-ind showin41.2 nymous th hea 6% y the top We are 41 g the actual equipme ysis (RCA) to ustry 25.1 and ref vy equip RCFA com Return nt effec WC me to tra all excited 7% results of 5 to5910 pe on net erred ment) and tiveness pleted ck tric the rce by bo asse 20.28% s). (OEE) to as Return nt ind th lea this stu t (RON 36ust The be on an alp CFMA’s A) ding ry ave to classif dy and 13.9 Mean time capital employe hanum Highw nefits y as Be (measu 9% loo rage 29 1. A sta for bo d com eric de ay Heavy st ring betw k (ROC of the een failu pared Mean time E) nd th org 18.18%the pro forward20 signat Best. re (MTB 2. A sta ard on to hav to the ani to repa cess) or to 17.4 zat8% how F) www.aempFuel ir (MTT nd Best ions and26lag ing a com burn to tra .org R) 3. A sta ard to of the ck 9% include: 11.1 track Total resp & downtime Best nd 25 ging (me mon or intenan mainte ma ondents 4. A me ard to compar asuring stand 30.7 ide nan7% - 143 ed to the res ard set ce-rela ce activit 17 5. A me ans to com ntify RO14.6 world y and of ults) ted I from 9% pare class practic metric metrics the the ass costs. 44 6. A me ans to com metric (using 11.1 s. e 9% con effo 21 et s par agains manag structio rts. e to 7. A pro ans to com the5.59 ement n ind Best% t others wit 16 pare cess ustry functio of the to the38.46% to me h Famed can sim 8 ilar n. Best be asure use writer opera in the progre st across and 55 ind tions. all ss of MA areand engine www.aem measuCFrem improv industries ustry, and er, Ro the ement (W p.org ent. extremely exc bert efforts orld Class) potential ited Heinlein, return and mo onc or cos tivated e said, “If ts sav it to mo ings if abl ve this can’t be exp e to projec res close t forwa sed in figu that gap. rd and res, it set the is not stand science. ard for It is www. fleet opinion.” aemp. perfo rmanc AEMP org e and cost
By Preston Ingalls, President/CEO, TBR Strategies LLC Edited by Donte Shannon, FASAE, CAE, CEO of AEMP
20 2 1 | A E M P .O R G
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98
Journal of Equipment Management
