These often precede a visit to the personal physician, which begins with a lengthy lifestyle questionnaire — more information to be factored in. Hopefully, everything leads to a relatively happy assessment. “You are doing well, my friend. Keep doing what you are doing. Be careful during exercise, and try to increase your daily steps to 10,000.” And so on. Back home, everyone is happy and can relax until the following year’s check-up. The home management team, one might say,  is satisfied with what has been measured and the results.  

The exercise and experience of the medical check-up can serve as an analogy for the measuring of finished lubricant blending plant operational performance, but probably only a superficial one. Conducted as they are by modern professional organizations, measurements of plant performance are much more demanding. Often they involve a variety of different stakeholders — from internal groups such as management teams, plant supervisors, operations staff members, human resources and unions, to external parties including shareholders, and customers. Often the different groups want different measures and are looking for different results, which may contradict each other and complicate life for the reporting party. 

My career in the lubricant industry has included much experience in measuring plant performance. Processes, and levels of detail varied widely depending on the life stages of the businesses they were part of. I share those experiences here to show how metrics can be developed and to illustrate how operational measurements can contribute to organizational excellence. 

Stage 1: Start-up Metrics – Declaring First Success  

The information in this article draws on my own experiences following the openings of two particular blending plants more than a decade apart. In the first example, the plant had been successfully commissioned, first blends had been made, first fills of containers had been completed, and customers had received their first deliveries of product. After one month of operation there was great relief and a sense of achievement. I was ready to celebrate with my teams, but I received a call from my boss requesting a performance report for the month. I was certainly familiar with such reports, but personally had never conducted one and until had not put in thought do making one for that plant. As such, that first hurriedly prepared report covered just a few metrics: metric tons of product blended, tons of product packaged, number of batches blended and the number of packaging runs.  

In hindsight it is worth noting that all numbers reported were lag indicators, meaning they documented past performance but did not attempt to anticipate future performance. In addition, production and filling data were reported only as raw numbers – not as ratios of capacity. The importance of ratios to tracking progress was realized later and was a key lesson for me in learning to measure performance effectively. Thankfully, my boss and the stakeholders were satisfied with this report as a starting point.   

In the following months we continued making regular reports and began working to incorporate lead indicators.   

A decade later I was involved in opening another blending plant. This time I knew in advance that reports would be expected, but our operation was not overly obsessed about it. We decided that initial reporting would be limited to basic lag indicators and not worry about analysis. I recommend this approach for that stage. 

Stage 2: Running Along Metrics – Performance-focused Processes  

Around three to six months after start-up, plant operators should be testing processes to confirm they are performing as promised. Similar checks should be performed on service providers. Achieving this is an accomplishment worth celebrating. 

After this period, operations enter the business-as-usual phase. Now, comes the demands from the business management teams especially to the operations teams and leaders. Requests pour in for information of how each process is performing. This leads to publishing of what I call running along metrics. Performance should be reported in terms of ratios against capacity, in order to indicate efficiencies and effectiveness.  Leadership should also develop lead indicators to measure factors that will affect future performance 

The number of parameters reported therefore increases and should include the following:  

• Amount blended, amount filled, the number of blends, number of fill runs — still reported because they are fundamental to the operation;  
• Ratio of amount blended versus capacity;  
• Ratio of amount filled versus capacity; 
• Percentages of batches blended and fills conducted right the first time, as a measure of quality;
• Logistics counts such as deliveries received and trucks of outgoing product loaded, all given as ratios versus capacity; 
• Similar measures of bulk deliveries, for example amounts discharged per hour and demurrage incurred; 
• Maintenance indictors including number of breakdowns and preventive tasks completed.

Gathering these metrics is necessary if internal teams and service providers are to be challenged. The pressure of such challenges can be frustrating and de-motivating. Unfortunately, some people give up or give in under such pressure, and metric reporting can become skewed. Leadership should be vigilant to ensure reporting remains accurate. 

Stage 3:   Take-off Metrics – Strategy-focused Organization  

Around one to two years after start-up, it is common, based on business evolution, for companies to consider capital investments either to improve processes or to expand operations. These are positive developments, but they demand clear measures to prove the need for additional resources. Entering this master planning phase transitions the company to a strategy-focused organization and requires development of metrics to measure performance against business strategy. 

One possible course is a balanced scorecard approach, which would add metrics such as those in Figure 1.

Figure 1.

During this stage of development, it is key to recognize conflicting strategies and prevent any party from skewing metrics against their interest. Allowing this would burden the performance management process and drain resources. 

Stage 4:  Integrating Metrics – End-to-end Supply Chain Focus  

Hopefully operations are now running successfully. Business as usual may seem the order of the day, but it should not — not until cross-functional teams such as sales, supply chain and logistics are permitted to challenge the true efficiency of operations. This should lead to introspection of the process-balanced metrics and then to development of lead indicators measuring interdependent processes. Figure 2 offers examples. On time in full (OTIF) is a key measurement to demonstrate that operations are delivering to promised performance. Also helpful is inventory performance. It clearly impacts OTIF, but there is a common misconception that achieving high OTIF requires keeping inventories high. In my experience high inventories can be counterproductive to OTIF.

Figure 2.

Stage 5: Competition Metrics – Benchmarking Focus  

Now, we have reached a stage when the entire supply chain is well aligned and integrated. If not, misalignment or problems are clearly visible thanks to the measuring being done, so issues can be addressed. This is a wonderful position to be in and results from multiple people working as a team, looking beyond personal goals to view the organization as a whole.   

Now, we have reached a stage where the internal organization is challenged to demonstrate how well it is performing to the overall industry and beyond. Competing with the global companies and winning will soon become the need — not just satisfying internal measures and improving. The goal post again has been moved! The repeated raising of expectations may sound frustrating, but not for hard-core professionals thriving to be recognized.   

One potential course at this point is to join a benchmarking program – where an unaffiliated organization gathers performance data from companies in a sector, ranks performance, then shows participants how they compare to unidentified peers. Participants do not see data on individual peers. Industry-specific benchmarks are available, and that was the route my company took in our quest for excellence. A global benchmark of lubricant supply chains helped us compare our plant operation in terms of cost per ton, clearly telling us what we should change or improve and by how much to reach top-quartile ranking. We also took part in regional and global business excellence programs such as EFQM competitions. The recognition that they provide was great motivation as we strove to improve operations. 

Stage 6: Re-jigging Metrics – Challenges and Breakthroughs   

Your business has performed, it has stabilized, it has outperformed, is winning awards and has become a strategy-focused organization. What more is needed? Maybe nothing — just keep this ongoing and that’s it!   

But doing so is not as simple as it may sound. External circumstances often change, as seen in the crises we have witnessed the past decade. When such events happen, all performance measures seem challenged, and short-term or day-to-day indices become necessary to maintain operations. Or an opportunity for a merger may arise, whether your company is the one acquiring or being acquired. 

I am once again reminded of a famous book I referred to in a previous article – “It’s Not Luck” by Eliyahu Goldratt. It recounted a director tasked with reviewing the performance and turnaround of his three companies. Ultimately he sold off two and retained the one that had performed better. Measures and indices played key roles to evidence the strategic improvements made to those companies. 

My passion for this measuring performance is perhaps evident. As discussed, I believe businesses are wise to incorporate extensive metrics, but I would avoid packaging them as set of key performance indicators. Although they may sound similar, the measurements and processes I propose are more purposeful and evolutionary. I would strongly advocate the gradual evolution in stages of the measurement management process and underscore that they are not absolutely necessary in the same chronological sequence or stages stated here. Applying a set of scorecards from one business unit to another, because they succeeded for the first, will not necessarily lead to success for the second. Teams and people have to experience the sense of purpose in the evolution and learn, in some ways, from their own pitfalls and mistakes. Of course, the leader and management team will know the end goal, but the teams have to play a hands-on role in development of metrics and processes. Nothing is easy, simple or short term; the evolution takes time, but that will lead to long-term satisfaction and winners. 

The journey goes on, and my passion for the blossoming of best-performing lubricant plants is ever green. Best of luck to you in your endeavors.  

Ganesan Ganapathi has 40 years of experience as a supply chain and manufacturing professional with leading oil companies such as BP, Shell, Total and Bharat Petroleum. While leading operations, supply chain and plant management with these companies, Ganesan has noteworthy contributions in the space of Strategic and Master Planning of Supply Chain and Manufacturing. He can be contacted via LinkedIn.