Lean performance measurement system for an Indian automotive supply chain

Abstract

PurposeThis paper aims to present a simple and innovative fuzzy methodology-based lean performance measurement system (L-PMS) for an Indian automotive supply chain. The paper also enlightens the influence of coronavirus disease 2019 (COVID-19) on supply chains and the practical implications of the unprecedented disruptions on the performance measurement systems.Design/methodology/approachThe L-PMS is divided into three phases. In the first phase, the key performance indicator (KPI) list, as deemed fit by the organization, is prepared using literature and suggestions from the case organization. The list contains 61 KPIs measuring 24 performance dimensions in seven functional areas of the supply chain. In the second phase, the KPI performance data (actual, best and worst) are collected using the enterprise resource planning (ERP) system. In the last phase, the leanness score of the case organization is calculated at four levels – KPI, dimension, functional area and overall organization.FindingsThe overall leanness score of the case organization is 60%. The case organization uses KPIs from all seven functional areas, but it needs to improve the number of KPIs in administration and supplier management functional areas. The case organization uses only quantitative KPIs. However, the performance dimensions at the middle level are adequate. The leanness level of the case organization in different areas is highly variable (ranges from 45% to 91%).Research limitations/implicationsThe major limitation of the study is that the case study is done at a single organization.Practical implicationsThe managers at the different levels of the hierarchy can use the lean performance measurement score to leverage the better performing areas/dimensions/KPIs and improve poor performing areas/dimensions/KPIs. The lean performance measurement at functional area level can help leadership to give responsibility to different people for the improvement of leanness with respect to different dimensions/functional areas. The disruptive impact of COVID-19 should clearly be understood by the managers to make appropriate decisions based on the severity as measured at different levels.Originality/valueAccording to the authors' best knowledge, this is the first lean performance measurement application at the four hierarchical levels (KPI, performance dimension, functional area and overall organization).