This paper presents key performance indicator (KPI) concept for the implementation of Lean methodologies in large enterprises. Within ten case studies the concept is developed and improved. The purpose of the measurement system is to create a dashboard that provides at-a-glance views of indicators relevant to monitor the Lean implementation process. Considering the lack of research concerning a set of KPIs of Lean management valid in different industries, this paper proposes a model elaborated with the collaboration of large Italian manufacturing enterprises. Companies belong to both international groups and different industries. Finally, they are implementing lean applications for more than five years. In this way all the firms are in the maturity phase of the change process. The "culture" of lean is mature when it's more than an additional entity but as an entity impacted by elements of the organization, particularly attitudes or behaviours, structures and relationships. The main target of this paper is the determination of KPIs that are the most useable and most suitable in different industries to support and monitor lean implementations. The research has been conducted by the organization of meetings where all companies were represented by own managers. During the meetings, a list of indicators has been presented and a first selection has been operated by managers. After this first selection, the group have checked the validity, reliability, relevance and practicality of every parameter. Finally, they have made a selection of ten KPIs. At moment, companies are testing the usability of KPIs and use a dashboard to communicate the data to employees. Deploying visual performance dashboard to enterprise scale fosters a culture and environment of transparency and accountability. This paper contributes to the lean manufacturing theory because it proposes a theoretical way to measure the degree of implementation of the lean initiatives in the manufacturing companies. Also the survey results generate additional research material that could be used by other researchers to further explore the subject in the area. This paper is a first-stage analysis in the search to find which indicators are the most useful by manufacturing companies. Later another follow-up study will check the importance to use a benchmarking system to compare the results in different industries and it will try to define a rating model to express the “current state” and the “future state” in lean applications.

1. A DASHBOARD FOR LEAN COMPANIES.
A PROPOSED MODEL WITH THE
COLLABORATION OF TEN LARGE ITALIAN
Eurasia Business and Economics Society
(EBES 2015)
COLLABORATION OF TEN LARGE ITALIAN
ENTERPRISES
Andrea Payaro, Ph.D.
Anna Rita Papa
P&P Consulting & Services

2. Andrea Payaro
• 1999: Degree in Management Information System at University of
Padua
• 2002: Ph.D. in Business Management at University of Padua
• 2004: Post Doc. in Business Management at University of Padua
• 2004-2011: Visiting Professor at University of Padua
• Today:
– Consultant certified by European Logistics Association
– CEO of P&P Consulting & Services
– Teacher of lean management at “Cattolica” University in Milan, University of– Teacher of lean management at “Cattolica” University in Milan, University of
Verona and United Nations General Service Center in Brindisi.
– Marketing Researcher at Largo Consumo, Italian magazine of marketing and
economics
– Member of Board of SCM Academy (Supply Chain Management Academy),
Italian association of logistics and supply chain management.
• Author: Payaro, 2014. Help! How defend yourself from marketing and
its strategies. Aras Ed.
EBES 2015Payaro A., Papa A.R. 2

3. Agenda
• The lean philosophy
• Performance measure systems
• Research objectives and methodology
• The sample• The sample
• The dashboard
• Conclusions
Payaro A., Papa A.R. 3EBES 2015

4. The lean
• What is Lean?
– It is focused on eliminating waste in all processes
– It is about expanding capacity by reducing costs
– It is about understanding what is important to the
customer (e.g. value)customer (e.g. value)
– It is not about eliminating people
(Womach at al., 1990)
Payaro A., Papa A.R. 4EBES 2015

5. Lean Management
• A manufacturing system without waste. (Shahram, 2008)
• A systematic removal of waste by all members of the
organization from all areas of the value stream. (Worley and
Doolen, 2006)
• An approach to manufacturing that is aimed at the• An approach to manufacturing that is aimed at the
elimination of waste while stressing the need for continuous
improvement. (Papadopoulou and Ozbayrak, 2005)
• A multi-dimensional approach that include several
management practices .(Shah and Ward ,2003)
Payaro A., Papa A.R. EBES 2015 5

6. Lean Philosophy
• Lean manufacturing isn’t not only a manufacturing system but it is
a new management paradigm (Liker, 2004)
• Lean should be seen as a direction, rather than as a state to be
reached after a certain time; lean is thus a philosophy (Bhasin and
Burcher, 2006)Burcher, 2006)
• The lean practices focus on two main issues namely the elimination
of waste and respect for people (Womack et al., 1990; Monden,
1981)
• The core of lean production philosophy lies on the premise that it
has brought changes in management practices by enhancing the
production effectiveness and efficiency as well as improving
business performance (Ferdousi and Ahmed, 2009).
Payaro A., Papa A.R. EBES 2015 6

7. Measures
• Performance measurement as the quantification of the
effectiveness and/or efficiency of an activity over a given time
period . (Neely, 1994)
• Useful measures in industry are always compromises between
validity , reliability (consistency of measurement results),
relevance and practicality (Hannula, 2002)relevance and practicality (Hannula, 2002)
• A system responds to how it is measured (Senge, 1990)
• Inappropriate measures encourage dysfunctional behaviour,
fuzzy judgement, sub-optimization and manipulation (Senge,
1990)
• (Hiromoto, 1988) that it should play more of an “influencing”
role than an “informing” role and be subservient to corporate
strategy, not independent of it
Payaro A., Papa A.R. EBES 2015 7

8. Performance Measurement System
• Maskell (1991) postulates the following characteristics for a
performance measurement systems:
– They are intended to foster improvement.
– They change over time as needs change.
– They are simple and easy to use.– They are simple and easy to use.
– They provide fast feedback.
– They are directly related to the manufacturing strategy.
– Use non-financial measures.
Payaro A., Papa A.R. EBES 2015 8

9. Research Objectives
• The main target of this paper is the determination of KPIs that
are the most useable and most suitable in different industries
to support and monitor lean implementations.
Payaro A., Papa A.R. EBES 2015 9

10. Research Methodology
Phase 1:
1. The population sample included 22 North Italian companies
with more than 250 employees
2. Each company’s operation managers was contacted by
phone to explain the aim of the study.phone to explain the aim of the study.
3. Twelve companies declined to join the survey due to
confidentiality reasons
4. After a follow-up by phone and a second mailing, a total of
10 companies have participated to the project.
Payaro A., Papa A.R. EBES 2015 10

11. Research Methodology
Phase 2
1. Literature review and selection of over 30 KPIs.
2. Organization of meetings (8) where all the enterprises were
present.
3. Interviews and discussions with team leaders and managers3. Interviews and discussions with team leaders and managers
about indicators.
4. Selection of a first list of KPIs
5. Evaluation of existing data and procedures to check the
validity, reliability, relevance and practicality
6. Selection of final KPIs (10 indicators)
7. Testing of the usability of KPIs
Payaro A., Papa A.R. EBES 2015 11

12. Companies involved
• Ten large (>250 staff members) manufacturing firms
• The lean implementation has started over five years ago.
• They belong to international groups; Recent studies have
showed that the degree of implementation of the lean
practices by multinational companies was higher than that forpractices by multinational companies was higher than that for
the national firms. (Lucato et al, 2014)
• They belong respectively to different industries
• The companies are involved on voluntary basis
Payaro A., Papa A.R. EBES 2015 12

13. Industries of belonging
1. Manufacture and sale of construction and mining equipment, utilities,
forest machines and industrial machinery
2. Manufacture of brazing alloys and brazing fluxes
3. Development, manufacture, marketing and servicing of a vast range of
light, medium and heavy commercial vehicles.
4. Design and manufacture of industrial humidification and ambient air
control systemscontrol systems
5. Production of air conditioning plants for large spaces
6. Production of fillings and parts made of flexible and integral polyurethane,
and PVC, chairs.
7. Fastening systems
8. Complete plants for bricks and roofing tiles with particular focus on
preparation, storage and extrusion equipments
9. Manufacture of equipment for commercial refrigeration
10. Manufacture of laser and sheet metal working technology
Payaro A., Papa A.R. EBES 2015 13

14. The dashboard
Area Performance indicators
Quality
Number of complaints per unit of time or per units sold.
Number of finished goods without reprocessing divided by
total number of finished goods.
Efficiency
Value Stream Index
Percentage of increasing/ decreasing of Inventory.
Difference between promise date and delivery date.
Delivery
Difference between promise date and delivery date.
Difference between delivery date and the date requested by
customer.
Safety
Near miss, number of observations per year of an unsafe
condition with no consequences.
Lost time (in hours) due to accidents or injuries / total
workable hours per year.
People
Percentage of employees working in teams.
Total of Hours dedicated to lean project / total workable
hours.
Payaro A., Papa A.R. EBES 2015 14

15. Conclusions and further researches
• Deploying visual performance dashboard to
enterprise scale fosters a culture and environment of
transparency and accountability
• This paper is a first-stage analysis in the search toThis paper is a first-stage analysis in the search to
find which indicators are the most useful by
manufacturing companies.
• Later another follow-up study will check the
importance to use a benchmarking system to
compare the results to the same strategies in
different industries
Payaro A., Papa A.R. EBES 2015 15

16. Thanks for your attention!
Today we live the choices made in the past.
Now we can choose how to live in the future.
.
AndreaAndrea PayaroPayaro
andrea@payaro.itandrea@payaro.it
Anna Rita PapaAnna Rita Papa
annaritapapa@payaro.itannaritapapa@payaro.it
EBES 2015Payaro A., Papa A.R. 16
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