3 KPIs to Measure CMMS ROI

Editor’s note: This is part three of Maintenance Connection’s CMMS ROI series. Read part one and two for more ROI content.

Maintenance managers know the day-to-day hiccups that accompany the job that ultimately throws off the team’s productivity. Factors like unscheduled downtime, technician inefficiencies and out-of-stock products can turn a well-oiled maintenance plan upside down.

While there are plenty of issues that influence a manager’s day, nothing is worse than hearing the dreaded words: budget cut. Petrochemical Maintenance recommends working the following into maintenance budgets:

  • Labor
  • Materials
  • Resources
  • Contracted services

But where does technology fall into these categories? While maintenance budgets are being slashed, it’s the job of a manager to quickly boost team efficiencies while keeping costs down. And that’s where a CMMS comes into play. 

Check out these three KPIs to prove the value of your CMMS—in keeping budgets down and productivity up.

KPI #1: Downtime & Overtime Loss

In a 2014 maintenance study by Plant Engineering, aging equipment was found to be the leading cause of downtime (45%), followed by equipment upgrades (20%), better or more training (14%), and better or more monitoring (8%). Based on these challenges and others your company may be facing, you can determine the average cost of downtime.

Assess your average downtime and overtime costs to find a bottom-line budget effect.

Calculate Downtime Costs

  1. Determine how much downtime occurred.
  2. Calculate the total approximate revenue loss from this downtime.

Calculate Overtime Costs

  1. Determine how much overtime occurred.
  2. Calculate how much revenue was lost to overtime costs.

With a CMMS, you can view labor availability, managing labor assignments and track labor costs right from a single solution. Also, your CMMS helps you to schedule automated preventative maintenance assignments. In turn, you’ll avert unnecessary emergency maintenance before it occurs, and keep your employee workflow moving seamlessly.

Related Resource: How to Use a CMMS to Create an Asset Downtime Report.

KPI #2: Inventory Tracking & Organization

In a maintenance management study, one of the top maintenance management priorities that many companies named was to, “improve inventory tracking and organization in order to transition from corrective to preventive maintenance.” Inventory can be difficult to track from one department to the next, leading to unnecessary last-minute order charges or overstocked items.

Determine how much under stocking and overstocking occurs on average to find out if disorganized inventory tracking is costing you excessive profit loss.

  1. Identify overstock instances.
  2. Identify any time your company has had to make emergency inventory purchases at a higher cost.
  3. Calculate revenue loss affected by both unexpected inventory under and overstock.

With the help of a CMMS, you can pull inventory reports from one place, so there’s no miscommunication or missed orders in any department. Also, set automated functions in your management systems, such as assigned minimum and maximum reorder values, so there is no over or under purchasing. Or, if you frequently place the same order, arrange your CMMS to automatically place orders when the stock is low.

KPI #3: Reduced Asset/Machinery Lifespan Loss

Also included in Plant Engineering’s study, 31% of respondents mentioned plans to implement preventive maintenance to avoid downtime. Preventive maintenance is important to keep the different areas of your business running seamlessly. With aging equipment being the leading cause of downtime (45%), this can put a halt to other efforts company-wide. CMMS implementation helps keep all of the cogs turning.

Determine the cost of retroactive maintenance to measure potential dollars saved by preventive measures.

  1. Assess any maintenance tasks have been missed or overlooked.
  2. Calculate how much revenue was lost based on early asset replacement or additional emergency maintenance.

These systems have asset management capabilities that allow you to easily create, search for, and supervise your preventative maintenance tasks across the company.

You also have scheduling frequency options and automatic assignments for preventative maintenance with a CMMS, so no asset goes overlooked, no matter how busy you are.

Proper CMMS implementation can lead to a drastic ROI increase when used to reduce downtime, reactive maintenance and inventory costs. Plus, your maintenance team will be more productive thanks to a top-notch solution, which will drive down inefficiency costs.

Related Resources: The Definitive guide to  Maintenance Software ROI ebook

Are you ready to see how a CMMS can improve your business operations?   Try our new Cost Savings Calculator to see how much you could be saving.