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Procedia CIRP 11 (2013) 99 – 104

2nd International Through-life Engineering Services Conference

Key performance indicators for assessing the planning and delivery of

industrial services
Horst Meier, Henning Lagemann*, Friedrich Morlock, Christian Rathmann
Ruhr-Universität Bochum, Universitätsstraße 150, 44801 Bochum, Germany

* Corresponding author. Tel.: +49-234-32-29848; fax: +49-234-32-09848. E-mail address: [email protected]

Abstract

The effective delivery of industrial services requires systematic approaches for planning and organizing delivery processes and network
partners. In order to be able to assess the performance of the service organization, significant key performance indicators are needed. The
performance of the service organization is defined by its ability to effectively assign resources such as service technicians, tools and spare parts
to service tasks and its ability to implement and deliver the service processes as planned. Thus, important key performance indicators for
assessing the delivery and delivery planning of product-related industrial services are presented in this paper. The relevant performance
indicators are classified based on their importance for measuring planning performance and delivery performance.

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Engineering Services Conference” and the Programme Chair – Ashutosh Tiwari

Keywords: service delivery planning; key performance indicators

1. Introduction past and current data. Appropriate metrics are needed to

quantify and help understand the status quo, to become aware
For machinery and equipment industry, services become of deficits within the organization in order to deduce
increasingly important. Today industrial services offer means measures, and finally to evaluate the effects of measures
to achieve higher revenue and profit compared to new which have been implemented for the improvement of the
machine businesses. In addition, industrial services provide a service organization [4]. Performance indicators, which can be
chance to differ from competitors [1]. Since industrial services defined as “item[s] of information collected at regular
in the machinery and equipment industry become more and intervals to track the performance of a system” [5], are the
more important and the companies depend on turnovers from basis for evaluating and benchmarking the performance of
their service businesses, the provision of industrial services organizations and processes within organizations.
over the entire life cycle should be closely examined with Performance indicators help to control the service delivery
regard to time, cost and quality. During service delivery, many by enabling the comparison of planned and achieved results.
influences and disruptions affect the delivery process [2]. Both Different approaches are used to classify service performance
demand and supply of industrial services are exposed to indicators. For example, there are classifications by service
various types of uncertainty [3]. dimensions (process, potential and result) [6], performance
Thus, companies are forced to monitor their service dimensions (quality, costs, time, customer satisfaction,
delivery concerning effectiveness and efficiency. For this flexibility) [7] or by types of delivery (e.g. maintenance,
purpose, methods such as performance measurement need to scheduling, repair, spare part logistics) [8]. Such
be developed and implemented [2]. Measuring the classifications help to define performance indicators which are
performance of service delivery is required to determine well suited as metrics for analysis and control with a special
potential improvements for the service organization based on focus on particular aspects of service delivery. However, in

2212-8271 © 2013 The Authors. Published by Elsevier B.V.

Selection and peer-review under responsibility of the International Scientific Committee of the “2nd International Through-life
Engineering Services Conference” and the Programme Chair – Ashutosh Tiwari
doi:10.1016/j.procir.2013.07.056
100 Horst Meier et al. / Procedia CIRP 11 (2013) 99 – 104

practice and science there are no classifications of

Key performance
performance indicators providing differentiated information indicator
about the root cause of a bad performance. In this paper, the
presented performance indicators will be distinguished and
rated based on their applicability for assessing (a) service Absoulte number Relative number
delivery and (b) service delivery planning. Accordingly, the
ƒ Individual
paper is structured as follows: In Section 2, some basics on number Reference Index
key performance indicators are presented. In Section 3, the ƒ Sum Quotas
numbers numbers
challenges of service delivery assessment are discussed ƒ Difference
ƒ Mean
considering the interrelated phases of service delivery
planning and service delivery. An overview of relevant key Fig. 1. Types of key performance indicators. [11, 12]
performance indicators for evaluating delivery planning and
service delivery is given in Section 4. These performance 2.2. Functions of key performance indicators
indicators will be classified according to their ability to
evaluate the delivery planning performance respectively the In today’s economic world KPIs are an important tool to
service delivery processes. This classification scheme is manage companies, because they separate important
presented in Section 5. Finally, the results presented within information from unimportant, simplify complex subject
this paper are summarized and discussed in the conclusion in matters and create transparency. Various authors [8, 10, 11,
Section 6. 17] stated that KPIs are the basis for analyzing and improving
processes as well as benchmarking. Furthermore, KPIs fulfill
the following functions:
2. Basics on key performance indicators x Support planning in various areas, e.g. strategy and
budget [10]
Indicators or key performance indicators (KPIs) in business x Requirement to set goals and to control the
environment are mostly quantitative information, which implementation [12]
illustrates structures and processes of a company [9]. In x Basis for decision making within a company [9]
today’s world KPIs are essential for planning and controlling
x Incentives especially for the top management, but for
[10] through consolidating information [11], creating
transparency and thereby supporting decision making of the employees as well [9]
management [12, 13].
3. Assessing service delivery
2.1. Types of key performance indicators
3.1. Process measures
Regarding indicators in general, a distinction between
absolute numbers and relative numbers has to be made, which The performance of a process can be defined as the extent
is illustrated in Fig. 1. According to [12], absolute numbers to which the outcome of the process is able to fulfill the
are independent from other indicators. They cover individual requirements of the internal or external customers of this
number, sum, difference and mean. Only by comparison with process [8]. Within a company as a system of various
other indicators they gain significance. In contrast, relative departments, interconnected material and information flows
numbers link information, e.g. indicators, through ratios [11]. and complex process chains, the performance of a particular
The relative number can be broken down into quotas, process cannot be measured independently. In this context,
reference numbers and index numbers. Quotas are the ratio of interdependencies with upstream supplying processes,
one indicator in relation to the whole and thus important disturbances and the setting of control variables or parameters
indicators can be compared [14]. Reference numbers are the are important factors of influence which need to be taken into
ratio of equal indicators with different content [15]. Last but consideration when the performance of a process is assessed.
not least, index numbers compare time series. These basic categories of influence factors (supplier
[16] concludes that most publications’ origin is in finance performance indicators, disturbance variables and control
and production management. Thus, literature focuses more on variables) are shown in Fig. 2 [8].
financial KPIs and less on non-financial. Important non- Disturbance variables
financial KPIs are productivity, quality, time and immaterial
assets [9]. Nevertheless, only by considering both financial
and non-financial KPIs it is possible for a company to Supplier
Performance
holistically gain information about business issues. performance Process indicators
indicators
Additionally, important characteristics for good KPIs are that
they are measureable, unambiguous, understandable and
comparable [17].
Control variables
(parameters)
Fig. 2. Process influence factors and performance indicators. [8]
 Horst Meier et al. / Procedia CIRP 11 (2013) 99 – 104 101

As will be seen in the following section, this understanding resources and future demand, complicate the planning task.
of process measures and influence factors is also relevant for Planning performance indicators are needed in order to be
service delivery planning and for service delivery, which are able to evaluate the quality of the delivery plan.
interconnected processes within a service organization. During service delivery, disturbances occur regularly and
necessitate changes to the delivery plan. Various reasons for
3.2. Delivery planning and service delivery these changes are possible, ranging from missing or
incomplete information regarding the state of the machine
During the delivery of industrial services, various partners which requires service to the unavailability of resources.
(e.g. service providers, subcontractors and customers) need to Thus, the actual service delivery usually deviates from the
be coordinated within a service network. Regardless of planned service delivery.
whoever of the network partners initiated the delivery process, Deviations between planning objectives, planning
delivery planning involves the definition of specific tasks and performance indicators and delivery performance indicators
the scheduling of available resources disposed by different can be detected with the help of target-performance
actors of the service network [18]. The phase of delivery comparisons. Hence, diagnostically conclusive performance
planning is preliminary to each service delivery process. indicators which are derived from a sound database are
Delivery planning relies on planning input in the form of needed (cp. Fig. 3).
planning objectives regarding the result of the service delivery In summary, it can be stated that it is crucial to distinguish
process and planning parameters. Planning parameters include between the performance of the delivery planning and the
process parameters and resource parameters. Some examples performance of the service delivery itself in order to be able to
for each of these dimensions are given in Table 1. take the right measures for optimizing the service
organization. Since service delivery planning provides the
Table 1. Input parameters for service delivery planning. input for service delivery processes, both activities need to be
Resource parameters Availability, location, quality/qualification, closely analyzed. Not only the actual service delivery, but also
resource costs, … the planned service delivery defines the assignment of
Process parameters Duration, location, … resources to service delivery processes or missions, which
Planning objectives Response time, time to fault clearance, cost should take place at a given location within a specific time
minimization, … window to generate value for the customer. In other words,
the actual service delivery is the implementation of the
Based on these input parameters, a service delivery plan is delivery plan. Therefore, the evaluation of planning
generated during delivery planning. The delivery plan needs performance and delivery performance might to some extent
to be altered each time additional service processes are be based on similar or partly identical metrics. However, the
requested or planning parameters change, e.g. when the value of the metrics might be significantly different,
availability of resources changes. Therefore, delivery depending on the deviations from the delivery plan during
planning is an ongoing complex task which involves service delivery.
assignment problems, route planning with heterogeneous, The most important key performance indicators for
capacitated resources and time windows. Furthermore, delivery planning and service delivery will be presented in the
various stochastic influences, e.g. uncertainties related to following Section 4. A proposal for a possible classification
process duration, availability of internal and external of planning performance indicators and delivery performance
indicators will be presented in Section 5.

INPUT Planning objectives Planning parameters disturbances

Customer Customer
needs Delivery planning Service delivery satisfaction

Target-
performance
comparison

Planning performance indicators Delivery performance indicators OUTPUT

Target-performance comparison

Fig. 3. Parameters and performance indicators for service delivery.

102 Horst Meier et al. / Procedia CIRP 11 (2013) 99 – 104

4. Key performance indicators for delivery planning and On time delivery (OTD) Proportion of delivery processes, which could be
service delivery [%] completed within the time window promised to
the customer.

In this paper, a key performance indicator (KPI) is Mean time to problem Only relevant for time critical repair activities:
solution (MTPS) Average time from the moment of arrival of the
understood as any kind of metric to quantitatively measure the [hours] fault report until the moment of function check-
performance of a system or the processes within an out. (According to [19], function check-out
organization. The purpose of collecting data and calculating describes an “action taken after maintenance
KPIs is to measure and assess the performance of the service actions to verify that the item is able to perform
organization and to analyze the effectiveness and efficiency of as required”, which is usually carried out after
down state.)
measures which have been taken to improve the planning and
delivery of industrial service processes within the Costs [€] Incurred overall costs for service delivery.
organization. Consequently, those KPIs need to fulfill some Revenue [€] Revenue achieved by service delivery
fundamental requirements [11]: (depending on business and revenue model [21]).
x Goal congruence and operationalization: The KPIs must Mean time between Average time between failures.
reflect and operationalize the overall objectives of the failure (MTBF) [days]
organization. Thus, in the context of industrial service Mean down time Average breakdown time of the equipment
delivery, KPIs must be able to quantitatively measure the (MDT) [days] within a specific time period, e.g. a year.
extent to which the customers’ requirements and needs Travel time proportion The average travel time of service technicians in
have been fulfilled and at which costs or with which effort [%] relation to the total working time (including
operating and travel time).
this could be achieved.
x Measurability: The KPIs must be clearly defined and Resource utilization [%] Resource working time (including operating and
travel time) in relation to the overall availability
quantitatively measurable without inordinate expenses. time of the resource.
That means that required data should be available or
Rescheduling quota [%] Number of delivery processes that were
obtainable without laborious investigation or surveys. rescheduled after the customer has been notified
x Precision and tamper-proofness: The definition and or after required resources have been booked in
calculation of KPIs must not leave any room for relation to the total number of delivery processes.
interpretation or manipulation. Reactivity [hours] Only relevant for time critical repair activities:
x Controlability: The KPIs should be the cause of conscious Average time from the moment of fault
decisions, i.e. endogenous variables which can be notification until the scheduled begin of repair
controlled by the service manager through qualified activities.
decisions. Therefore, KPIs which must be considered Acceptance rate [%] Number of times that the customer’s desired date
exogenous variables for the delivery planning and service for the delivery process could be accepted,
related to the total number of delivery processes.
delivery processes will not be used to measure the
performance of delivery planning and service delivery (e.g.
the qualification level of service technicians as part of the
input parameters, cp. Table 1). 5. Classification scheme for key performance indicators

Based on these requirements, the KPIs presented in Table 2 In Table 3, the KPIs presented in the previous section are
have been selected for assessing delivery planning and service classified qualitatively regarding their applicability for
delivery. For each KPI a short description and a reference to measuring planning performance and delivery performance.
the unit or dimension in which the KPI is typically measured Depending on whether they are of low, moderate or high
are given. The listed key performance indicators are a importance for measuring planning performance respectively
representative selection, but they are not to be understood as a delivery performance, they are sorted in the most appropriate
comprehensive compilation of all relevant KPIs; this would sector of the matrix. The classification has been conducted
be impossible within the scope of this paper. Furthermore, based on a review of relevant literature and a workshop with
each service organization should define a specific selection of an industrial partner, who is world market leader in the
those KPIs fitting in optimization objectives and data machine tool industry with a globally operating service
availability. organization.

Table 2. Key performance indicators. [6, 8, 10, 19, 20] Table 3. Classification scheme for performance indicators.
KPI Description Delivery planning performance
low moderate high
First time fix rate (FTF) Proportion of service delivery processes that
[%] could be completed at the first attempt. Process stability OTD
MTPS
high

3-1 2-3 3-3 Costs

Delivery performance

Operating time [hours] The operating time needed for the completion of Operating time FTF
Revenue
the service task on site, excluding preparatory
moderate

activities.
2-1 MTBF 2-2 MDT 2-3
Process stability [%] The operating time for all delivery processes of
the same type minus the average standard
deviation of the operating time in relation to the Travel time proportion
Reactivity
low

1-1 1-2 1-3 resource utilization

operating time. Acceptance rate
rescheduling quota
 Horst Meier et al. / Procedia CIRP 11 (2013) 99 – 104 103

6. Conclusion
For the denotation of each of the matrix fields, two
numbers in the x-y form are used. The first number (x) Performance indicators can be of great importance for
expresses the planning relevance while the second number (y) assessing the delivery of industrial services. They are the
describes the service delivery relevance. The relevance is basis for revealing ineffective or inefficient service delivery
expressed by ordinal numbers from 1 to 3, representing low planning or service delivery and should be closely analyzed in
(1), moderate (2) and high (3) relevance for the respective case optimization measures need to be taken to improve the
performance dimension. performance of a service organization.
The represented scheme enables the user to cluster his Service performance indicators can be classified by their
performance indicators on the basis of planning and service planning or service delivery relevance. This classification
delivery relevance. This helps the management to select helps both management and planner to identify the root causes
appropriate performance indicators for assessing delivery for problems or inefficiencies. For this purpose, a list of
planning and/or service delivery. In the following, some relevant performance indicators has been presented, which
important fields of the matrix will be explained exemplarily. have been differentiated according to the two dimensions
A classification in the field 3-1 shows that the contained planning relevance and delivery relevance. Companies or
KPIs are pure planning performance indicators. For example, other users should select their individual service performance
the rescheduling quota quantifies the rearrangement of indicators with caution. The performance indicators referred
appointments, which have already been communicated to to in this paper serve as a good starting point for companies
customers or service technicians. Hence it is an important that are launching a KPI-system for the first time within a
performance indicator for the quality of a planning process or service organization, but should by no means be considered to
a planning solution. A high rescheduling quota means that the be complete or universally valid.
customer needs to adapt his production program more often Hereby, the first step on the way to a KPI-system is done.
due to changing service dates. Another example of high Future works should address the underlying interdependencies
planning relevance (3-1) is capacity utilization. A balanced between the KPIs and the influences on KPIs, so that
and high capacity utilization can serve as proof for a good profound recommendations for improvement measures can be
planning result while this performance indicator is of less derived from the examination of the performance indicators.
significance to the evaluation of service delivery. In order to be able to do this, the determining factors such as
The field 1-3 contains service delivery performance control variables and disturbance variables have to be
indicators. The operating time, for example, is an input to identified. Their impact on important performance indicators
delivery planning which can only be influenced during service should be qualitatively and quantitatively examined in order
delivery. Deviations from the planned operating time and to develop a decision-support-system for managing the
strong variations of operating times for the same process (low service delivery organization.
process stability) are indicators for poor standards in service
delivery. Acknowledgements
The field 3-3 is also of particular interest, because it
expresses a high planning and service delivery relevance at We express our sincere thanks to the German Research
the same time. These are often derivative or compound KPIs Foundation (Deutsche Forschungsgemeinschaft, DFG) for
influenced by other performance indicators. Monetary KPIs financing this study within the Collaborative Research Center
such as cost and revenue of service operations are typical Transregio 29 (CRC/TR 29) on Industrial Product-Service
examples. High costs can be due to an ineffective and Systems – dynamic interdependencies between products and
inefficient planning and scheduling of resources, but it might services in the production area.
also result from unstable processes or poor process quality. Furthermore, we acknowledge funding of the hyProFGA
Here, a further examination or an analysis of project by the NRW.BANK through Ziel2.NRW-program
interdependencies between different KPIs is required to draw Automotive+Produktion.NRW.
sophisticated conclusions.
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