IE Research paper

Lean manufacturing : context, practice bundles, and performance

 Rachna Shah

Peter T Ward 

Carlson School of Management, University of Minnesota, Minneapolis, MN 55455, USA

Fisher College of Business, The Ohio State University, Columbus, OH 43221, USA

Introduction 

Heightened challenges from global competitors during the past 2 decades have prompted many US manufacturing firms to adopt new manufacturing approaches.Particularly salient among these is the concept of lean productionLean production is a multi-dimensional approach that encompasses a wide variety of management practices, including just-in-time, quality systems, work teams, cellular manufacturing, supplier management, etc. in an integrated system. The core thrust of lean production is that these practices can work synergistically to create a streamlined, high quality system that produces finished products at the pace of customer demand with little or no waste. Anecdotal evidence suggests that several organizational factors may enable or inhibit the implementation of lean practices among manufacturing plants. With the notable exception of  White et al. (1999), there is relatively little published empirical evidence about the implementation of lean practices and the factors that may influence implementation.

Implementation and contextual variables

 n general, the success of implementation of any particular management practice frequently depends upon organizational characteristics, and not all organizations can or should implement the same set of practices.Consideration of organizational contexts has been noticeably lacking in research on implementation of JIT and TQM programs or other leanmanufacturing practices. Perhaps because of the failure to consider organizational context, evidence on the impact of JIT and TQM programs on organizational performance has been mixed.In this study, we examine three organizational context characteristics—unionization, plant age and plant size—that may influence the implementation of manufacturing practices.

Unionization

It is often assumed that because implementation of most manufacturing practices requires negotiating changes in work organization, unionized facilities will resist adopting lean practices and thus lag behind non-unionized facilities. While there is some evidence that unionization is negatively associated with organizational performance.Unionization seems to be an important factor for implementation although the direction is not exactly clear. In addition, it hasn’t been empirically investigated in association with a wider set of lean manufacturing practices.

Age of the plant

Plant age may imply either a tendency toward resistance to change or a liability of newness. The “resistance to change” view is supported by the organizational sociology literature which suggests that the age of an establishment should inversely influence the rate of adoption of innovations, because organizational forms tend to be “frozen” at birth.Thus, irrespective of the theoretical perspective, plant age is found to impede adoption and implementation of new, innovative work practices. However, empirical evidence from industrial and labor relation literature indicates that age of an establishment is not a significant determinant of adoption of work practices.

Size of the plant

Several authors (e.g. [Chandler, 1962] and [Child, 1972]) have noted that since any administrative task tends to be more complicated in large firms, managers may not even attempt to change, instead they may allow existing systems to linger. This is equally true of implementation of new operational practices. That is, large organizations suffer from structural inertial forces (Hannan and Freeman, 1984) that negatively effect the implementation of lean manufacturing practices. Further, inertial effects of size are more prevalent in manufacturing industry than in service industry (Gopala krishnan and Damanpour, 1997). However, large size also implies the availability of both capital and human resources that facilitate adoption and implementation of lean practices as well as returns to scale for investments associated with lean practices. 

Bundles of lean manufacturing practices and operational performance

 Lean practices are generally shown to be associated with high performance in a number of studies of world-class manufacturing (e.g. [Sakakibara et al., 1997] and [Giffi et al., 1990]). Overall, review of related research indicates that implementation of lean practices is frequently associated with improvements in operational performance measures. The most commonly cited benefits related to lean practices are improvement in labor productivity and quality, along with reduction in customer lead time, cycle time, and manufacturing costs.Most of the empirical studies focusing on the impact of lean implementation on operational performance are constrained to one or two facets of lean, often JIT or TQM. Improved operational performance associated with JIT practices.Many researchers argue that a lean production system is an integrated manufacturing system requiring implementation of a diverse set of manufacturing practices (e.g. Womack and Jones, 1996). Further, they also suggest that concurrent application of these various practices should result in higher operational performance because the practices, although diverse, are complementary and inter-related to each other.

Methods

Instrument development and data collection

The study sample consists of approximately 28,000 subscribers to Penton Media Inc.’s manufacturing-related publications, and includes managers of plants belonging to manufacturing firms. Survey recipients hold titles such as plant manager, plant leader, and manufacturing manager.  

Sample characteristics

The sample resembles the population profile reported by US Census of Manufacturers (1997) and is not unlike those for similar studies of US manufacturers.

Lean manufacturing practices

Lean manufacturing practices are measured on a three-point scale 

((1) no implementation

(2) some implementation

(3) extensive implementation

Lean bundles

The 22 individual lean practices were combined into 4 lean bundles. For instance, all practices related to production flow were combined to form the JIT bundle. The underlying rationale is that JIT is a manufacturing program with the primary goal of continuously reducing, and ultimately eliminating all forms of waste (Sugimori et al., 1977). Two major forms of waste are work-in-process (WIP) inventory and unnecessary delays in flow time. Both can be reduced by implementing practices related to production flow such as lot size reduction, cycle time reduction, quick changeover techniques to reduce WIP inventory and by implementing cellular layout, reengineering production processes, and bottleneck removal to reduce unnecessary delays in the production process.

Operational performance

A six-item scale is used to measure the operational performance of a manufacturing plant. The items include 5-year changes in manufacturing cycle time, scrap and rework costs, labor productivity, unit manufacturing costs, first pass yield, and customer lead time. A scale was constructed for operational performance measure based on principal components analysis of these items and the factor scores were used as the dependent variable.

Conclusion

This research suggests two major findings. First, organizational context, i.e. plant size, unionization and plant age, matters with regard to implementation of lean practices, although not all aspects matter to the same extent. Second, applying synergistic bundles of lean practices concurrently appears to make a substantial contribution to operational performance over and above the small but significant effects of context. We discuss each of these findings in turn.

 

 

SUMMARY

Lean Manufacturing is an operational strategy oriented toward achieving the shortest possible cycle time by eliminating waste. It is derived from the Toyota Production System and its key thrust is to increase the value-added work by eliminating waste and reducing incidental work. The technique often decreases the time between a customer order and shipment, and it is designed to radically improve profitability, customer satisfaction, throughput time, and employee morale.

The benefits generally are lower costs, higher quality, and shorter lead times.  The term "lean manufacturing" is coined to represent half the human effort in the company, half the manufacturing space, half the investment in tools, and half the engineering hours to develop a new product in half the time.

The characteristics of lean processes are:

Single-piece production Repetitive order characteristics Just-In-Time materials/pull scheduling Short cycle times Quick changeover Continuous flow work cells Collocated machines, equipment,tools and people Compressed space Multi-skilled employees Flexible workforce Empowered employees High first-pass yields with major reductions in defects  The core thrust of lean production is that these practices can work synergistically to create a streamlined, high quality system that produces finished products at the pace of customer demand with little or no waste.