How to Optimize Profits for Your Maintenance Team Using a Maintenance Excellence Index

Effective maintenance improves profitability for a company by keeping various costs down. In particular, a maintenance team can use best practices to minimize costs associated with safety, accidents, equipment breakdowns, MRO inventory management, and routine upkeep. At the same time, production output quality is improved.

Unfortunately, many organizations see their maintenance processes as a drain on revenue, and they may cut budgets for those processes. To prevent this from happening—and to secure funding for improvements to the process—maintenance managers need to demonstrate how their departments can help optimize profits. A Maintenance Excellence Index (MEI) is an effective way to do that.

Here, we’ll discuss what a Maintenance Excellence Index is, why it’s helpful, and how to go about implementing one in your maintenance department.

What Is the Maintenance Excellence Index?

The Maintenance Excellence Index—or MEI—is a method for measuring the overall success of a maintenance department. It was created by Ralph W. “Pete” Peters as a way for maintenance managers to look at a variety of key metrics while at the same time focusing their efforts on optimizing profits for their organization.

Creating an MEI involves taking 10 to 15 metrics, benchmarking them, and measuring success against those benchmarks on a spreadsheet. The index is used to record individual scores for each metric, after which a composite score is generated. Since only the most relevant key performance indicators are tracked on the index, each one is tailored to the needs of the organization.

The key purpose of the MEI is to validate results and return on investment (ROI) for maintenance departments. By demonstrating exactly how specific maintenance metrics impact costs and profits for the organization as a whole, maintenance managers can use the index to justify to shareholders the resources spent on maintenance tasks.

Advantages of Using a Maintenance Excellence Index

Creating and using a Maintenance Excellence Index can be highly advantageous when it comes to maintenance planning and management. Some of the key advantages of the MEI are as follows.

Tailored to Your Operation

The MEI is something of a framework that can be used in tracking the metrics that are most important to your organization. Given that you choose 10 to 15 metrics to track on your spreadsheet, you can tailor the index to your specific operational context. For example, a maintenance team that has only a small amount of MRO inventory might not prioritize inventory metrics on its MEI.

Each item is also weighted, with a cumulative weight totalling to 100. This allows higher priority metrics to factor more into the final score than less important ones.

Tip: Whether or not you use the Maintenance Excellence Index, you should still prioritize your KPIs when measuring your effectiveness. Weighting metrics on reports can be a good way to do that.

Multiple Metrics in One Place

Success in maintenance can’t be measured through one single metric alone. You need to track multiple indicators to be able to accurately assess maintenance effectiveness, but it can be difficult to hunt those numbers down. Even if you use a CMMS, the sheer volume of data you have in your system needs to be organized in a way where you can see the most important items quickly.

While an MEI gives a single score, that score reflects multiple metrics, all of which are presented on a single spreadsheet. This gives your maintenance team the ability to check current progress at a glance simply by looking over your Maintenance Effectiveness Index. All you need to do is pull the metrics from your CMMS and plug them into the spreadsheet.

In a general sense, the metrics used in MEIs tend to cover the following areas:

• People and labor resources
• Budget dollars and monetary resources
• MRO
• Planning
• Customer service
• Physical assets, including their uptime, reliability, and availability
• Data resources

Keep Metrics Focused on Profit Optimization

Tracking your progress on a breadth of metrics through an MEI is helpful, but only if those metrics are actually focused on optimizing profits for your organization. The overall philosophy behind an MEI is to zero in on metrics that impact your organization’s ability to efficiently turn a profit and to make sure your team keeps eyes on those KPIs.

By keeping metrics focused on what’s most important, you get the most from your CMMS while creating a profit- and customer-centered process, all without sacrificing the maintenance of physical assets.

Connect Lofty Goals with Basic Actions

While your Maintenance Excellence Index will center on long-term goals—which are ultimately represented by your overall score—it does a decent job of connecting those goals with day-to-day actions. Many of the metrics you track can be directly impacted by everyday tasks, making it easier to take action instead of spending ages analyzing how to meet your lofty goals.

Inspire Maintenance Staff

As you connect goals with everyday actions, your MEI will effectively show whether your maintenance department is “winning.” It’s an easy way to make your success visible to your technicians, supervisors, planners, and operators, making it much easier to get them on board with improvements to processes and practices. As they see how their work affects your success, your maintenance team is more likely to buy in to needed changes, ultimately making them more engaged in continuous improvement.

Inform Senior Leadership About Importance of Maintenance

While your ultimate goal is to keep maintenance, repair, and operations costs down, that’s only truly possible if you have sufficient funding for effective preventive maintenance and planning. To make certain you get the budget dollars needed to accomplish your maintenance goals, you need to demonstrate how that funding will reduce costs and optimize profits over time.

Your MEI acts as a succinct way to show shareholders and senior executives the value of various maintenance tasks as reflected in your key indicators. Specifically, you’ll be able to show the profitability of maintaining, improving, renovating, and installing physical assets in a safe and effective way. The end result should be the prevention of untimely budget cuts.

Potential Metrics Used in an MEI

Maintenance managers should focus MEIs on whatever metrics are most important to their organization’s success. That said, some KPIs are more useful to track in this way than others. In particular, the following metrics are best suited to a Maintenance Excellence Index.

• Overall Maintenance Budget Compliance – Percent of variance from your planned maintenance budget.
• Actual Maintenance Cost per Unit of Production – Divide the cost of maintenance labor and materials by the number of units you produce.
• Consumer or Capital-Funded Jobs Completed – The percentage of all consumer/capital-funded jobs completed as scheduled within 5% of your cost estimate.
• Other Planned Work Orders Completed as Scheduled – Percentage of work orders completed as scheduled.
• Schedule Compliance – Percent of work completed on time.
• Planned Work Orders vs. True Emergency Work Orders – The percent of work orders that were planned versus those that were generated as emergencies.
• Craft Time to Work Order for Customer Charge Back – Percent of all craft work hours that were charged to the customer.
• Craft Time to Work Orders – The percentage of labor hours that were charged to work orders.
• Craft Utilization – The amount of “wrench time” charged to work orders as a percent of total labor hours.
• Craft Performance – A percentage showing how actual work hours on PM tasks and planned work compare to reliable estimates for those tasks.
• Craft Quality and Service Excellence – The percent of callbacks and the like out of total work orders completed.
• Overall Craft Effectiveness (OCE) – The cumulative positive impact of craft utilization, craft performance, and craft quality and service excellence. The three are multiplied together to get the OCE.
• Work Orders with Reliable Planned Times – The percent of work orders that have reliable planned times. Used to gauge planning effectiveness.
• Overall Preventive Maintenance Compliance – Percentage of PM work orders completed on time. May be divided by types of assets, departments, etc.
• Gained Value from Craft Utilization – Value of improvements in craft productivity, measured in dollars.
• Inventory Accuracy – Percent of variance of item counts and cost estimates from actual values.
• Actual MRO Inventory Reduction – Percent or value of inventory reduced from an initial baseline value.
• Number of Stockouts – Number of times inventory stockouts occur in a given period. May indicate negative impacts of inventory reduction.
• Value of Direct Purchasing Cost Savings – Cost savings from improved procurement practices.
• Overall Equipment Effectiveness (OEE) – Overall positive impact of availability, performance, and output quality of assets. The three are multiplied together to get OEE.
• Asset Availability/Uptime – Percent of hours assets are up and running out of all scheduled hours.

While this list may look a bit intimidating, remember that when creating an MEI, you’ll only choose 10 to 15 of these metrics. A modern CMMS will usually measure most—if not all—of these metrics for you based on work orders and MRO inventory data you put in.

Tip: If you’re not currently tracking these metrics, you might want to do so. That said, it may not always be useful to track everything, so choose carefully.

How to Use the MEI in Your Facility

To begin implementing an MEI in your facility, you’ll need to go through an implementation process as outlined below. The following steps will help you get the most out of a Maintenance Excellence Index.

1. Define Success

Before you do anything else, you need to have a clear picture of what success looks like in your facility. Focus on your company’s objectives, particularly when it comes to optimizing profit. From there, you’ll be able to get a clear idea of what your maintenance department can do to reach those objectives, which will in turn inform the kinds of metrics you’ll measure on your MEI.

2. Choose Metrics from Your CMMS

With some goals in mind—as well as maintenance tasks that can help reach them—choose the metrics that will best measure your success in performing those tasks. You can find these metrics in your CMMS and financial software. The best place to start is to choose 10 to 15 of the KPIs described in the previous section and pull those up on your CMMS.

Tip: If you don’t currently use a CMMS, UpKeep is a great option to get you started. Our Asset Operations Management platform allows you to track most maintenance metrics with minimal effort.

3. Set Goals for Each Metric

With a list of roughly a dozen metrics to track, you’ll need to know how well you’ll need to do with each of them. It’s best to benchmark your goals based on world-class standards, such as 85% for Overall Equipment Effectiveness. Benchmarking your goals with world-class standards will let you see how you’re progressing toward the most optimal maintenance processes possible.

4. Assign a Weight and Scores to Each Metric

While each of the metrics you choose should be important, you’ll still need to prioritize them based on how much they impact the cost efficiency and safety of your operations. As such, each metric should be assigned a weight. That weight will change how much each metric affects the final score on your MEI.

The weight of all your metrics combined should add up to 100, so it acts something like a percentage. For instance, your OEE might be weighted at 16, while your Schedule Compliance might be 4, meaning that they compose 16% and 4% of your final score respectively. These are just examples, of course, so make sure to weigh your metrics based on their actual importance to cost optimization in your facility.

In addition, you’ll need to know how each metric will be scored. Scoring goes from 0 to 10, with 10 being the best. Determine what performance level corresponds to each score. For instance, if you’re measuring OEE, a 10 would be 85%, while 0 might be 35%. The value would then increase incrementally for 1, 2, 3, etc. Conversely, if you’re measuring stockouts, higher stockout values would correspond to a lower score.

Create a Spreadsheet

With your chosen metrics, benchmarked goals, and weights, it’s time to create your spreadsheet. One axis will list your metrics, while the other will list the following for each KPI:

• Current monthly progress for the metric
• Performance goal
• Scores from 0 to 10 and corresponding performance levels
• Current performance level score
• Weighted value of each metric
• Weighted performance level score (Score x Weight)
• Total MEI value (sum of all weighted scores)

You’ll populate your current monthly progress with data from your CMMS, then do the math from there. You might also include a section recording progress over time with total scores for each month, quarter, etc.

Tip: A CMMS can let you generate custom reports with the exact metrics needed to populate your MEI scorecard. You might even want them reflected on your dashboard, making them visible to everyone in your maintenance department.

Track Your Progress

After creating your spreadsheet, it’s time to track your progress. Over time, monitor each metric through your CMMS and record your scores at regular intervals, such as every month. With each metric recorded, assign a score from 0-10, multiply that by the metric’s weighted value, and add them all up to get your total composite score.

The maximum score possible on a Maintenance Excellence Index is 1000, so the closer to 1000 you get, the better you’re doing.

It may be necessary to make adjustments to your MEI over time. For instance, if you find that one metric doesn’t actually seem to reflect in your organization’s profits, you might want to cut it out. Alternatively, you may need to add other metrics to flesh out your score.

Tip: It’s important to make your score visible to your maintenance department. If your team can see how well you’re doing—or in other words, if they can see whether you’re “winning”—they’ll be more likely to buy in to the changes you’ll make as you try to improve your score.

Take Action

As you track your progress and score your maintenance department in different areas, you’ll likely see metrics that need improvement. That’s largely the point of an MEI. With the insight you gain into your maintenance metrics, you’ll be able to take action to improve your score.

For example, if you notice that planned maintenance percentage is consistently low, you might want to take a look at the types of equipment failures you’re having and plan PM tasks that will prevent those. Your planning practices may also need improvement.

In addition to planning improvements to your processes, you’ll also be able to get shareholder buy-in when you need funding to make those improvements. Your scorecard shows how individual metrics can improve profitability, demonstrating the importance of improving those metrics through specific actions.

Conclusion: Optimize Profits with MEI

Ultimately, an MEI makes important metrics more visible while clearly establishing their relationship to profit optimization. With the information and scores on your index, you can keep your efforts focused on tasks that benefit your people, company, and customers while validating the investment made in your department.