Subject Area: Spare Parts Metrics
Everyone reading this will have no doubt heard the expression, “what gets measured, gets managed” – or something similar. The original quote is usually attributed to Peter Drucker’s 1954 book ‘The Practice of Management’.
Perhaps more interesting is the somewhat lesser-known full quote:
What gets measured gets managed, even when it is pointless to measure and manage it, even if it harms the purpose of the organization to do so.
Drucker wasn’t simply encouraging people to measure their actions and outcomes; he was warning us about the dangers of not being fully aware of the organizational impact of what we were measuring.
There is another famous maxim for management measurement:
Not everything that matters can be measured and not everything that we can measure matters.
This is attributed to V.F Ridgeway in a paper published in 1956.
Reading this in conjunction with Drucker’s comment and we begin to see a picture emerging where we may very well be measuring things that don’t really matter, simply because we can measure them, and that the act of measuring and managing those things may actually “harm the purpose of the organization”.
Use Spare Parts Metrics to Tell the Story
The key to managing spare parts inventory is to use a suite of metrics that will tell the story of what happened, not just the point-in-time result.
Like all good stories, we need continuity.
So, the spare parts metrics need to be reported monthly. And to borrow another phrase, ‘the trend is your friend’ so charts work better than just numbers.
Returning to the end of year example above, reporting the value of both inwards and outwards storeroom transactions each month, in addition to the actual value of stock on hand, helps tell the story of how the result was achieved.
If there is a sudden reduction in the value of inwards goods or a sudden surge in outwards goods while the stock on hand drops to the target level, then you know that while the goal was achieved at that point in time, it is probably not sustainable.
Goal setting and metrics is one of those tasks that can seem to be straight forward.
However, setting metrics that tell the story and direct people to actions that won’t harm the organization requires consideration of the consequences.
Ignore the guidance of Drucker and Ridgway at your peril.
For information on our Pro Level spare parts management online training please visit our Pro Level page.
Posted by Phillip Slater