In order to improve their team, a sports team’s coaches and general manager, among other things, study various types of statistics and performance metrics. Performance metrics enable coaches to hold specific players accountable for addressing their areas of weakness. They also let them know what abilities their team needs to work on. Additionally, they help the team’s general manager identify areas for development. For instance, if a team excels on offense but struggles on defense, they may look to add a player with strong defensive skills. Â.
Whether it’s a sports team or a digital asset management (DAM) program, statistics and performance metrics are crucial to managing any system well. However, not all measurements are equal. The world is rife with “vanity statistics,” or data that appears impressive on paper but provides very little useful information. You must choose metrics that are truly valuable to your organization, just like a good coach who wants to get the most out of their players and practices. These statistics are often called key performance indicators, or KPIs. KPIs vary by industry and circumstance, but identifying and monitoring them successfully will revolutionize the way you oversee and manage your DAM system. Â.
Just like in sports, statistics and performance metrics can’t capture all the information you need to know, but they can give your team useful data they can quickly refer to. For your DAM system to be successful, you must also create connections with DAM stakeholders and end-users, SMAART objectives, and written standards and workflows.
Why are key performance indicators for asset management important?
It’s possible to put strategies into place to achieve those targets when you have clear, attainable goals. KPIs can assist a company in identifying the aspects of asset management that need to be improved. It’s critical to understand what KPIs you should track for asset management because tracking the wrong KPI for the wrong industry or the wrong reason can give analysts, stockholders, or decision-makers an inaccurate picture of business management.
9 key performance indicators for asset management
Consider using the following KPIs to assess the success of your asset management:
1. Mean time to repair (MTTR)
The amount of time needed to repair an asset is shown by the mean time to repair. This KPI can be used to comprehend the asset or the repair procedure. When repair times dramatically increase in comparison to historical levels, it might be time to replace the product. If maintenance crews lack the necessary tools or training, it may also indicate that the company needs to look into its staffing or inventory management procedures. The formula to calculate MTTR is:
MTTR = maintenance time / number of repairs
2. Mean time between failures (MTBF)
The MTBF, which is typically expressed in hours, calculates how long an asset will last before failing. Analysts can decide to increase maintenance by using the likelihood of failure at any given time to inform their business decisions. Regular preventative maintenance, for instance, could stop a product from malfunctioning and causing a bigger issue. On the other hand, if MTBF rates are low, a business can look into whether it is wasting money on pointless maintenance. The formula to determine MTBF is:
MTBF is calculated as follows: assets’ total operational hours / assets’ total failures
3. Mean time to failure (MTTF):
This calculation determines how long until an asset completely fails. This metric is typically used for items that need to be replaced because they can’t be repaired, like light bulbs. It is employed to make sure that assets are set up properly and are operating in accordance with specifications. It might also suggest that the supplier is of poor quality or that the storage conditions are inappropriate. Using light bulbs as an example again, if half of the supply fails 50% earlier than predicted by MTTF calculations, it can indicate that the manufacturer may have had a quality control issue To calculate MTTF, use this formula:
MTTF = total operational hours / total assets in use
4. Annualized failure rate (AFR)
The AFR displays the likelihood that a device or component will malfunction due to a flaw within a year of use. Technology companies frequently use this metric, which provides a rate rather than an average, to pinpoint performance issues. A hard disk drive manufacturing facility, for instance, notices a high AFR that is affecting business performance. Following an investigation, they identify a quality control problem that is the source of the product’s flaw. They improve the process and their AFR percentage drops dramatically. The formula for AFR can be approximated as:
AFR = hours per year / mean time between failures
5. Average occupancy rate (AOR)
The percentage of real estate assets that are utilized and paid for over a given time period is called the occupancy rate. The asset manager generates more money the higher the occupancy rate. Due to the management’s obligation to cover utility costs regardless of occupancy, unoccupied rooms also generate negative revenue. Additionally, decisions about staffing, inventory, and availability can be made using the AOR. For instance, the manager of a hotel can prepare by increasing staff if the AOR is higher during the summer. You can calculate AOR with this formula:
AOR is the sum of the number of rooms that are occupied and those that are available.
6. On-time delivery (OTD) rate
On-time delivery is a performance indicator that shows a company’s capacity to ship a product by a specific deadline. Traditionally associated with tangible goods, it can also refer to a business’s capacity to timely deliver digital goods like reports or videos. This performance indicator can be used to find inefficiencies in the delivery process, such as a delivery subcontractor, a warehouse, or manufacturing, or it can be used to find problems with customer satisfaction. A low OTD for digital goods could be a sign of staffing issues, technical difficulties, or time constraints. To calculate OTD, use this formula:
OTD = (total deliveries – delayed deliveries) / total deliveries
7. Overall equipment effectiveness (OEE)
A measure of an asset’s productivity over a specified time period is overall equipment effectiveness. It serves as the industry standard for measuring manufacturing because it helps increase the productivity of manufacturing equipment by identifying losses, comparing progress, and measuring gains. A score of 100% means a plant is only manufacturing good parts, as fast as possible, with no stop time The formula for OEE can be simplified to:
OEE = availability x performance x quality
8. Inventory turnover ratio (ITR)
The number of times a business has sold and refilled its inventory over a predetermined period of time is known as the inventory turnover ratio. It gauges how effectively a business turns its inventory into sales. A higher ratio is preferred over a low one because it denotes strong sales. First, calculate average inventory:
Average inventory = (beginning inventory + ending inventory) / 2
Then, you can calculate the ITR with this formula:
ITR = cost of goods sold / average inventory
9. Days sales of inventory (DSI)
Days sales of inventory calculates how long it might take to sell every item currently being stored. It represents how often inventory is exchanged. Physical resource storage is expensive in terms of both money and storage space, and unsold inventory only adds to costs. The purchasing manager can more accurately make decisions about purchases by keeping track of the days sales of inventory because it gives information about customer purchasing patterns. Use the formula for average inventory provided above along with the following formula to determine DSI:
DSI equals (average inventory / cost of goods sold) multiplied by 365
04 Multifamily Asset Management – Key Performance Indicators
FAQ
What are the KPIs for asset management?
- Mean time to repair (MTTR) …
- Mean time between failures (MTBF) …
- Mean time to failure (MTTF): …
- Annualized failure rate (AFR) …
- Average occupancy rate (AOR) …
- On-time delivery (OTD) rate. …
- Overall equipment effectiveness (OEE) …
- Inventory turnover ratio (ITR)
What are the 5 key performance indicators?
- Revenue growth.
- Revenue per client.
- Profit margin.
- Client retention rate.
- Customer satisfaction.
What are the 6 key performance indicators?
- Customer satisfaction. At the end of the day, we serve our clients and customers.
- Productivity. …
- Cost efficiency. …
- Time. …
- Return on investment (ROI) …
- Alignment with goals of the organization.
