Lean Information Management: Criteria For Selecting Key Performance Indicators At Shop Floor

Abstract

IntroductionNowadays organizations place a lot of focus on not only creating scaling opportunities but also on creating and constantly increasing the performance of their units. Whether this means increasing sales performance, manufacturing performance or creating highly efficient internal processes, successful companies have long reached the conclusion that in order to reach their organizational objective and goals a performance management is indispensable. Fundamentally, a performance system points out whether the organization is going in the right direction for achieving its goals. Through measuring performance, organizations manage to establish the extent to which activities within a specific process achieve their specified goals. Mainly this happens by calculating the deviation of the actual results and the desired outcome, which is the set goal. The level of performance is mostly expressed through a quantitative standard, value or rate. Like any other system though, in order to manage and measure performance key metrics are needed. Therefore, key performance indicators (KPIs) are needed. When selecting KPIs, successful organizations ensure that these are a good fit with their competitive environment and strategy.More and more organizations use strategically driven performance management systems that integrate actions across functional boundaries and focus on strategic results: integrated performance measurement [1]. Within the automotive industry, the performance measurement is built as a process for developing a performance direction. Thus many researchers have dedicated their research towards finding the most appropriate criteria for efficient KPI selection.This study further concentrates on finding the best criteria for finding, selecting and implementing the optimal KPIs at shop floor. For this purpose, first it offers a preview of the best practices and criteria used to select KPIs. Therefore this paper offers a preview of the most often KPIs encountered and discussed in previous research. Moreover, the study suggests defining KPI selection criteria starting with the fundamental idea of the seven wastes. Within the third chapter, six KPI selection criteria are proposed. Further on, identified research gaps are discussed and recommendations on how to fill these gaps are provided.

Identification of Key Performance Indicators in Project-Based Organisations through the Lean Approach

“…It also focuses on waste elimination by improving process performances and value creation [5,8,18]. The term waste in lean context is defined as an event or process that does not reflect customers value or generate any added value to the final output [2]. Seven types of waste are usually described in lean literature: Transport, inventory, motion, waiting, over-processing, overproduction, and defects [19].…”

“…Seven types of waste are usually described in lean literature: Transport, inventory, motion, waiting, over-processing, overproduction, and defects [19]. Other researchers include an eighth kind of waste, the unused people's creativity [2]. Cherrafi et al [19] highlighted another concept to be considered, which is sustainability (economic, social, and environmental concepts) due to an increase in the environmental and social awareness.…”

“…Addressing these challenges would be impossible without noticeable management of the performance of their business. It is essential to every business, no matter the size, scope, or resources to identify, measure, understand, and control the progress of that performance [1,2]. Measurement systems are needed to set organisational goals and to control the improvements by monitoring the effectiveness and efficiency [3].…”

“…A common approach to carry out these measurements is through the use of KPIs metrics. KPIs provide an objective criterion for measuring business activities and project success [4] and are a remarkably important part of corporate strategy for forecasting, measuring and planning business [2].…”

“…Therefore, different methodologies are used to define and select the business KPI's, to make sure that they match the competitive environment and strategy. According to Iuga et al [2], three important criteria need to be taken into account for the optimal selection: Validity, helpfulness, and relevance; and to ensure that the measurement system is under control a disciplined methodology is needed.…”