Asset performance metrics

Simply stated, OEE measures the plant s performance compared to the theoretical maximum production rate for the assets. It is a powerful metric that gives management an overall look at production effectiveness and eliminates the practice of hiding reliability shortcomings into scheduled downtime. 

The overall craft effectiveness (OCE) factor The OCE factor relates to craft labor assets, as compared to the metric for OEE, which measures the combination of equipment asset availability, performance, and quality output. The OCE factor focuses upon measuring and improving the value-added contribution that people assets make to total asset management. Section 7.5 includes more detailed information about the OCE factor. 

The Maintenance Excellence Index (MEI) The sample MEI shown in Table 8 provides a composite index that integrates a number of key metrics. Each metric can also be monitored and trended individually. The MEI helps keep in focus the fact that the success of maintenance operations depends on many factors. Therefore, one or two metrics can t provide the total performance picture. The MEI concept provides a complete approach to maintenance performance measurement. If a maintenance process improvement has been justified on craft productivity increases, parts inventory reduction, maintenance cost per unit of output reduction, or value of increased asset uptime, the original projection of benefits and savings can be validated with the MEI. 

We will demonstrate in this section that improvement in some selected supply chain metrics also results in improvements in some important financial metrics of the firm, which should, of course, be closely correlated with its overall business performance. To illustrate this relationship, let us consider several interrelated inventory measures—inventory turns, days of inventory, and inventory capital— and how they affect some important financial measures—return on assets, working capital, and cash-to-cash cycle. 

The Supply Chain Council (www.supply-chain.org/) recommends a metric system for performance covering the four areas of customer satisfaction/qual-ity, time, cost and assets. They provide a range of measures for each category and also provide benchmarking for their members. A sample measure is supply chain response time (SCRT). 

SCOR model provides a set of five metrics for process level, called SCORCard, for evaluating supply chain performance. The five metrics are rehability, responsiveness, flexibility, cost and assets. 

Railway industry concerns the performance of railway system and railway assets management tries to reduce the railway accidents and the maintenance cost. Derailment is one of railway accidents leading to fatalities and a high corrective maintenance cost. On plain line, derailment may occur when a train travels along a poor condition track. Track inspections and maintenances should be carried out to maintain track condition. Traffic control such as speed restriction cooperates with track maintenance to decrease accident frequencies or reduce accident consequences. Track maintenances cost a lot of money and traffic controls always reduce line availability. System risk metrics, railway line availability and management cost are required to decide when and how to maintain the track and when to perform speed restriction to get fewer accidents with higher availability and lower cost. 

FACILITY-RELATED METRICS Facility-related decisions affect both the financial performance of the firm and the supply chain s responsiveness to customers. On the financial side, faciUties decisions have an impact on the cost of goods sold, assets in PP E (if facilities are owned), and... 

INVENTORY-RELATED METRICS Inventory-related decisions affect the cost of goods sold, the C2C cycle, the assets held by the supply chain, and its responsiveness to customers. A manager should track the following inventory-related metrics that influence supply chain performance ... 

Table 3-7 contains the financial results for Walmart and Macy s for 2012. Evaluate the financial performance of each company based on the various metrics discussed in Section 3.1, such as ROE, ROA, profit margin, asset turns, APT, C2C, ART, INVT, and PPET. Can you explain the differences you see in their performance... 

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