Subject Area: Spare Parts Metrics
Everyone reading this will have no doubt heard the expression, âwhat gets measured, gets managedâ â or something similar.
The original quote is usually attributed to Peter Druckerâs 1954 book âThe Practice of Managementâ.
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 wasnât 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 Druckerâs comment and we begin to see a picture emerging where we may very well be measuring things that donât really matter, simply because we can measure them, and that the act of measuring and managing those things may actually âharm the purpose of the organizationâ.
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, âthe trend is your friendâ 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 wonât “harm the organization” requires consideration of the consequences.
Ignore the guidance of Drucker and Ridgway at your peril.
It is precisely because the issues are many and the nuances subtle that here at SparePartsKnowHow.com we have developed as a platform to access a wide range of resources relating to spare parts inventory management and optimization.
Author: Phillip Slater