Measuring maintenance performance using a balanced scorecard approach

Abstract

PurposeThe purpose of this paper is to develop a strategic maintenance performance measurement system.Design/methodology/approachIn response to this purpose, a balanced scorecard framework was adopted to assess the contribution of support functions (such as maintenance) to strategic business objectives. A case study approach was used to test the suggested framework at a Swedish paper mill.FindingsIt was found that by using the suggested framework it was possible to measure and identify the cause‐and‐effect relationship of using an effective maintenance strategy, and assess its impact on the company's competitive advantages. For example, it was found that there is potential to, ideally, improve the company's return on investment (ROI) by 9 per cent. This figure represents a projected US$8.4 million in lost profits, which are caused by planned inoperative time and overall equipment effectiveness (OEE) elements. At least 14 per cent of the ROI potential improvements are directly related to the maintenance function as lost profit, which is due to unplanned stoppages and bad quality caused by maintenance‐related problems.Practical implicationsUsing the modified BSC provides a framework whereby the contribution of support functions (for example, maintenance) to the strategic business objectives can be assessed. The modified BSC makes it easier for the maintenance and production staff who are technically oriented to communicate with top management in terms that managers understand, i.e. in terms of money. Furthermore, this approach facilitates the making of cost‐effective decisions.Originality/valueThe present study contributes to our knowledge of this process by changing the status of the “maintenance function”. This is done by showing that maintenance is no longer a cost centre, but should be regarded as a profit generating function.