E. Whitley, L2L, Salt Lake City, Utah
Modern petrochemical processing facilities are blessed with overwhelming quantities of data, given the digital transformation taking place throughout the manufacturing industries.1 However, many fail to gather meaningful and actionable insights, becoming data rich but information poor.
While correctly specified key performance indicators (KPIs) are critical to measure organizational performance, the term KPI is all too often misunderstood and poorly applied. Understanding what a KPI is, how to apply it, and using a layered and targeted approach in its development improves plant efficiency and substantially increases business competitiveness.
Defining the term and what to measure. KPIs allow the comparison of actual performance against clearly stated and quantifiable strategic objectives. Although they support strategic initiatives, KPIs are an aggregation of data from many organizational layers, starting at the shift level, using very granular figures to inform short-time-scale operational decisions.
As KPIs aggregate at the plant, facility and business unit levels, they become less operational and more tactical, supporting medium-term decision horizons before feeding into the corporate strategic KPIs, having lost the detail from the lower levels but allowing high-level data interpretation. Such tiered integration is critical for KPIs to assist in achieving business goals.
There are no fixed rules on KPI development—every plant uses different equipment and pursues different strategies—but some business fundamentals are common regardless of the context. These simple examples will assist you in focusing on relevant measures for your business, using generic taxonomies like efficiency, effectiveness, time, quality and compliance.
PRODUCTION AND MAINTENANCE EXAMPLES
KPI is a generic term, but contextual relevance can be added using terms like process performance indicators (PPIs) or maintenance performance indicators (MPIs) to assist in understanding the applicability of the metrics. Where possible, use the power of digital monitoring and data capture to ensure data accuracy and timeliness.
Production KPI examples. The following examples indicate where KPIs can increase profitability and safety while assisting process optimization.
Effectiveness—Refineries use KPI targeting to set an aspirational percentage of unaccounted losses while measuring actual performance, with the goal of improving a refinery mass balance and loss control program.
A case study presented at the 2019 AFPM Operations & Process Technology Summit described a 20-yr journey for a refinery with unaccounted losses of 5%, affecting profitability, process optimization and health, safety and environmental (HSE) performance. Targeted KPIs and improved measurement of gas inflows, storage and mass flow measurements for custody transfer drove a continuous improvement cycle, bringing average monthly unaccounted losses down to between 0% and 0.05% from the original 5%.
Compliance—Offshore oil and gas regulators require comprehensive KPIs to measure asset integrity while evidencing effective actions for major hazard management. These KPIs might include metrics for safety-critical maintenance backlogs, verification of non-compliance or hydrocarbon release.
In the UK, companies have a regulatory obligation to report certain hydrocarbon releases and measure asset integrity management. The industry agreed to a cross-country industry KPI to provide visibility into hydrocarbon release (HCR) reduction. A baseline year was chosen, having recorded 187 releases, and an aggressive but voluntary 50% reduction within 3 yr was promulgated. The visibility provided by the KPI succeeded in significantly reducing major releases, with the industry on target to meet the KPI in the second year.
In the U.S., the Chemical Safety and Hazard Investigation Board (CSB) issued a recommendation concerning process safety following its investigation of the BP Texas City incident. The recommendation called for the USW and API to create a standard for process safety performance indicators in the refining and petrochemical industries. The result was Recommended Practice 754, “Process safety performance indicators for the refining and petrochemical industries.” The standard uses four tiers of leading and lagging indicators: two for external publication, and two for internal use. Ninety-eight refineries contributed, with the collected data reported as a 5-yr rolling average showing a steady reduction in reported events.
In Europe, most oil companies are members of the Concawe industry association. Concawe's mission includes assisting regulators in cost-effective policy development and legislation, while promoting members' cost-effective legislative compliance. In 2009, the association began compiling process safety performance indicator (PSPI) data that captures all loss of primary contaminant events (LOPCs), including causal factors. More than 95% of members supply the data, which largely correlates to the guidelines in RP754. Concawe expects that focusing on process safety KPIs—in parallel with personal safety—will further reduce serious injury rates.
Efficiency—The petrochemical and refining industries have highly elaborate energy systems burning multiple fuels, using cogeneration for steam and electricity, and importing and exporting electricity. Optimizing such systems relies on multiple KPIs to monitor system performance and populate the site information system to provide operational and management insight, allowing real-time optimization and waste mitigation.
Maintenance KPI examples. Maintenance directly impacts plant productivity, safety and efficiency, with KPIs assisting in focusing attention on critical areas for improvement.
Efficiency—Maintenance departments use KPIs to indicate acceptable steady-state operation vs. deterioration below a nominated threshold. Threshold operation will trigger a maintenance intervention to return the asset to design or operational specification.
Monitoring a furnace coil inlet temperature to ensure preheat exchangers are functioning correctly is an example of an efficiency KPI. As the exchangers foul, the temperature will decrease, indicating sub-optimal energy use. Once the temperature reaches a predetermined limit, a work order will be raised for planning and scheduling a cleaning task.
Effectiveness—Maintenance effectiveness translates to operational effectiveness, maximizing revenue, quality and productivity while reducing costs. The maintenance department provides major input into overall equipment effectiveness (OEE), a key KPI of interest to management, operations and maintenance departments.
OEE is a calculation over a specific period. It captures the total percentage of the scheduled operation time, the percentage of equipment uptime during this period, how much of production was operating at the maximum rate, and what percentage of quality resulted. Trending the OEE KPI benchmarks the improvement progress, identifying losses, prompting action and improving productivity.
Time—Asset-intensive industries rely on achieving equipment design life to remain competitive and optimize operations. An important maintenance KPI measures the mean time between failure (MTBF) of critical equipment; another captures the percentage of work orders completed as scheduled or within the required date.
Knowledge of critical equipment MTBF supports industry benchmarking, initiatives for constant reliability improvements, capital planning and process redesign. Work order completion is a measure of either plant state or maintenance department efficiency. Both KPIs optimize equipment uptime through an improved focus, which drives continuous improvement and reliability strategies.
Takeaways. KPIs are valuable only as far as they focus on improving or maintaining issues critical to increased plant safety, productivity, product quality or financial health. Link your KPI development to business strategies and identify critical process or maintenance functions using the taxonomies of efficiency, effectiveness, time, quality and compliance to aid you in KPI relevance and specificity. Careful KPI development and the harnessing of digital transformation to capture your KPI data are key to maintaining a safe, efficient and competitive operation. HP
LITERATURE CITED
For more than 30 yr, ERIC WHITLEY has been a noteworthy leader in the manufacturing space. In addition to the many publications and articles he has written on various manufacturing topics, he is known for his efforts leading the Total Productive Maintenance effort at Autoliv ASP and from his involvement in the Management Certification programs at The Ohio State University, where he served as an adjunct faculty member.
After an extensive career as a reliability and business improvement consultant, Whitley joined L2L, where he serves as the Director of smart manufacturing. His role is to help clients learn and implement L2L’s pragmatic and simple approach to corporate digital transformation. Whitley lives with his wife of 35 yr in Northern Utah, and when he is not working, he can usually be found on the water with a fishing rod in his hands.