Lean manufacturing: context, practice bundles, and performance

Lean manufacturing: context, practice bundles, and performance

· Lean 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

· there is varying degree of frequency that each of the items selected is considered in the studies reviewed.

· JIT/continuous flow production and quick changeover methods are included most frequently, while safety improvement methods are referenced least frequently in the literature.

Implementation and organizational context

· In 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

· Perhaps because of the failure to consider organizational context, evidence on the impact of JIT and TQM programs on organizational performance has been mixed

· the business press has often asserted that unionization prevents the adoption of some "Japanese" manufacturing practices in US manufacturers.

· there are also instances in which unions have been cooperative and helpful in the implementation process

· Proposition 1: Unionized plants are less likely to implement lean manufacturing practices than non-unionized or partially unionized plants .

· 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, The evolutionary perspective suggests that organizations develop a set of organizational routines (manufacturing practices) over a period of time and these practices change infrequently

· Proposition 2: Older plants are less likely to implement lean manufacturing practices than newer plants.

· Proposition 3: Large manufacturers are more likely to implement lean practices than small manufacturers.

· 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

· Proposition 4: Implementation of lean bundles, each representing groups of related lean practices, will have a positive impact on operational performance.

Lean bundles

JIT:

· 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

TPM

· The TPM bundle includes practices primarily designed to maximize equipment effectiveness through planned predictive and preventive maintenance of the equipment and using maintenance optimization techniques.

· More generally, emphasis on maintenance may also be reflected by the emphasis given to new process equipment or technology acquisition (Cua et al., 2001).

TQM

· Practices related to continuous improvement and sustainability of quality products and process were combined to form the TQM bundle.

· It includes practices such as quality management programs, formal continuous improvement programs and process capability measurement capability.

HRM

· The most commonly cited practices are job rotation, job design, job enlargement, formal training programs, cross-training programs, work teams, problems solving groups, and employee involvement (Ichniowski et al., 1994; MacDuffie, 1995; Osterman, 1994).

· We include two practices in the HRM bundle—flexible, cross-functional work force, and self-directed work teams.

· Flexible, cross - functional work force, and self-directed work teams are higher level practices that include many lower level practices.

· Conceptually, in order for an organization to have a flexible cross-functional work force, it needs to have a job-rotation program, it needs to consider job design, and formal, cross-functional training programs have to be in place. Similarly, self-directed work teams require that employees are organized in work teams and involved in problem solving groups.

Operational performance

Results of Propositions 1&2&3

· Union representation

o Of the 22 lean manufacturing practices, 6 are significantly associated with unionization.

o These practices are cellular manufacturing, cross-functional work force, cycle time reduction, maintenance optimization, process capability measurements, and self-directed work teams.

o Each of the six practices indicates that unionization is negatively related to implementation.

o It is interesting to note that both practices related to managing work force (i.e. cross-functional work force and self-directed work teams) are negatively related to unionization.

o No statistically significant relationship was found for the other 16 practices. Contrary to popular belief, the results show that unionization status does not have a significant impact on extensive implementation of most lean practices

· Age of plant

o 8 out of the 22 lean practices are significantly influenced by age of the plant.

o Five of the eight have a significant negative association between age of plant and implementation of the practice, implying that old plants are less likely to implement these practices than newer plants.

o These five practices include cross-functional work force, cycle time reduction, JIT/continuous flow production, maintenance optimization, reengineered production process and self-directed work teams.

o Three lean practices, planning and scheduling strategies, safety improvement programs, and total quality management programs have significant positive association with age of plant.

o This implies that old plants are more likely to implement these practices relative to new plants.

· Size of the plant

o Of the 22 lean practices examined, plant size significantly impacts all but two practices

o No significant relationship was found between size and implementation of two practices: cross-functional work force, quality management programs.

o large plants are likely to implement the twenty practices more extensively compared to small plants

Conclusion

· 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. The importance of context for 16 out of 22 lean practices there was no significant difference in the likelihood of implementation between union and non-union plants

· However, the six practices that unionized plants are less likely to implement include "cross-functional workforce,"

· The findings that we report suggest that having a unionized workforce is generally not a good reason for neglecting lean practices

· Older plants are less likely to implement only five practices relative to newer plants. Included in this list are such important elements of a lean production system as cross-functional work force, cycle time reduction, JIT/continuous flow production, maintenance optimization, reengineered production process and self-directed work teams.

· However, likelihood of implementation of 14 of the lean practices is unaffected by plant age, and older plants are actually more likely to implement three practices relative to newer plants.

· Larger plants are more likely than smaller plants to extensively implement all but five of the lean practices under study.

have to understand manufacturing issues

The way forward for operations strategy." The Financial Times,

The first is that food and machine tools are fundamental to national security. Without an industry that manufactures and distributes food, a nation is very vulnerable if it is isolated due to a conflict; and in such situations, without machine tools (machines that make machines), the hardware that drives the economy will grind to a halt.

Even if you are not in the manufacturing business yourself, it is important that you understand manufacturing issues so you will be successful with your suppliers, clients, or others who might be in the manufacturing sector.

What are our customers' most important requirements? Of course, efficiency does matter in the end, but it does not come first: the task of the manufacturer is not efficiency per se, it is efficiency in delivering what the customer wants.

TQM implementation elements for manufacturing excellence

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• The concept of TQM provides the approach to realize the manufacturing strategy leading to fulfillment of corporate strategy.
• TQM principles support the business practices of cost reduction, enhanced productivity and improved quality of products/outputs.
• There are many quality awards that includes elements for TQM implementation such as: Malcolm Baldrige National Quality Award
• The comparative analysis among the academic and award based implementation elements is made in the study to determine the most common elements used, as follows:
• Supplier focus/ management (included in 40% TQM implementation techniques): supplier relationships are a major component in attaining competitive advantage.
• Leadership (included in 80% TQM implementation techniques): top management element is the first step for successful implementation of TQM through leadership strategy and policies; quality planning; management by facts; and managing innovation.
• People/Change management ( included in 54% of frameworks and models) : The most important element for any organization's TQM program is people. People not the techniques or technologies determine the success or failure of any company. The way the employees are hired, trained, treated nurtured, recognized, rewarded and involved is the key for achieving total quality.
• Process management: (included in 60% of frameworks) : the emphasis is on having a systems' perspective and the effective use of all technical systems
• Knowledge management: organizational excellence can be achieved through incorporating KM concepts into the TQM process.
• Societal impact / responsibility
• Continuous improvement: improve quality of product/service, achieve customer satisfaction and reduce costs. Many frameworks have considered the concept of CI as an important element. Tools and techniques such as 5S, quality control circles; benchmarking; and the seven quality tools are also a means to implement and incorporate CI.
• Performance measures: the first and immediate goal of most quality management practices is to improve internal quality performance measures. Measures insure that each employee contribution is aligned to the goal of the organization as a whole.
• Customer focus : customer feedback, monitoring satisfaction levels, responding to complaints and evaluating the responsiveness. Customer satisfaction is the ability and the success of an organization to understand the expectations of its customers and exceeding these expectations the first time and every time.

Complementarity and lean manufacturing bundles ; an empirical analysis

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  · A JIT bundle includes practices aimed at reducing or eliminating waste along the value steam such as lot size reduction, cycle time reduction, quick changeover and production process reengineering

  · TQM improves and sustains the quality of the products and processes in order to meet or exceed customer expectations

  · HRM is a set of practices that shape the organizational environment in which the basic techniques are implemented.

  · TQM has been enriched by peculiar lean practices geared at reducing manufacturing process variance

  · those practices include poka-yoke, standard operation procedure and problem solving teamwork, statistical process control, visual display, cleanness and order

  · Lean HRM relies on employees' commitment and involvement

  · this is achieved through a streamlined organizational structure with decentralized authority, muli-functional training programs and collaboration between the whole workforce

  · productivity improvement teams are more effective when a firm adopts a set of complementary practices including employment security, flexible job assignments, skills training and communication procedures

  · TQM leads to stability of the production processes thus providing the basic for the implementation of pull systems

  · JIT practices make problems visible thus forcing the implementation of scientific problem solving, the very nature of the TQM practices.

Best practice interventions: Short-term impact and long-term outcomes

Best practice interventions: Short-term impact and long-term outcomes

• successful short-term outcomes may be a major contribution to the visibility and acceptance of new practices in the long term
• Short-term benefits must be created but it is still mostly a long-term journey. How do companies handle this dilemma
• A BPI can be defined as an activity designed to introduce new practices through a series of short focused activities in the organization. These interventions are typically composed of two parts. The first part aims for dramatic improvements within a focused operational area in a very short time. The second part focuses on the introduction of new (often seen as either “best” or promising) practices or processes and on preparing the organization for the ‘journey’ required for widespread adoption of these practices by transferring and building skills through action learning and applying lessons learned in practice
• The desired performance outcomes of BPIs are in two areas ,Firstly, they can be expected to influence operational performance in areas such as cost quality, flexibility, lead times, inventory, transport, delivery time and delivery dependability in .the short term. These, in turn, can potentially lead to improved financial performance
• The second desired impact is concerned with the long-term embedding of the practices
• Only two out of the five organizations had persisted with their quality programs five to ten years later despite initial effort and short-term benefits
• It has been widely argued that this process of integrating immediate successes with long-term objectives requires longer programs of change to introduce new practices effectively
• Government and professional bodies that promote such programs of change also find it difficult to fund long-term support The result has been a tendency towards development and implementation of short programs or interventions designed both to make a quick impact and to develop the base from which new practices can be adopted throughout the organization in the long term
• Intervention context
• Clearly communicated strategy and objectives for change
• Clearly communicated strategy and objectives for change prior to the intervention will lead to short-term improvement and long-term sustained change
• Organizational readiness for change
• Without leadership ability and explicit efforts by company leaders to promote organizational readiness for change, only a few plants or divisions will attempt change
• Key performance indicators (KPIs) aligned to the program of change objectives
• Such performance cultures are based upon the implementation, capture and analysis of appropriate performance measures in order to drive behavior and commitment towards different assignments
• Reward and recognition of positive short-term results
• In Japanese companies, it has been reported that long-term commitment of stakeholders to improvement initiatives may be attained through reward and recognition mechanisms in the form of security through lifetime employment, gainsharing through the complex compensation systems and the joint commitment to team-oriented annual targets
• Of course, rewards and recognition can only be given to those involved after short-term results have been obtained
• Intervention design and implementation
• Tailoring the BPI format to the specific context
• there are strong arguments for the need to tailor the planning and preparation of the intervention to suit the company context
• (Brunet and New )argue in favor of a tailored approach in that transformational practices should be based on reinterpretation and reinvention in each new context
• Organization and provision of intervention resources
• BPIs typically compete with ongoing daily operations and other parallel projects for .stakeholder attention and limited resources This competition for limited resources is often not limited to financial resources but may also include, for example, a limited number of highly skilled personnel
• Unless the BPI is well organized and given sufficient priority over other activities, with adequate provision of resources, it is likely to suffer both in terms of short-term outcomes and long-term sustainability of improvement
• In order to increase chances of short- and long-term success, deliberate efforts may be taken to buffer BPIs and subsequent consolidation exercises from daily operations or other simultaneous improvement initiatives
• Intervention implementation
• Change which is delayed may not deliver“ ,benefits. Change which is rushed may not allow time to adapt, and create initiative fatigue ”encouraging decay
• in order to develop successful results, a well-managed BPI implementation will unfold in a coherent planned sequence with an appropriate duration and pace
• The individual events of such a well-managed intervention ,implementation are also linked together so that they appear as a coupled set of initiatives display continuity in discussions and actions and encourage gradual and appropriate involvement of different stakeholder groups step-by-step in the process
• Stakeholder management
• it is critical to get top management ,support the role of middle management cannot be neglected
• communication across the organization is an important part of the BPI process
• the role of middle management is often critical: “It is in the middle levels of management that real, unanticipated problems arise ”
• Developing internal facilitators and change “champions”
• an overall change process needs a kind of ”leadership which fosters change capacity at the grassroots’ level: “capacity-building leaders”
• The development and presence of one or more motivated internal stakeholders, or change
• champions’, that commit to an improvement initiative and lead by example can be seen as an important contributor to success
• Change-agent approach
• Change agent’s overall knowledge and competence
• The outcomes of BPIs depend much on the skills, competencies and behavior of consultants, facilitators or change agents leading them
• An ideal consultant would show self-confidence but also be modest and listen carefully to signals of his “client” organization
• the success of a BPI consultant may not only be related to specific practice-related knowledge but may also relate to the broader business of the organization
• BPI consultants/facilitators who are not only skilled in the relevant practices but who also have broader business skills from prior industry experience and/or similar projects are likely to increase the chances of short- and long-term success for BPIs
• Plan for ongoing activities and consultant support
• The adoption of specific (lean) improvement practices is often viewed as “a journey” requiring a “reliable map and frequent checks on .”progress along the way
• Post-event planning for ongoing activities with the BPI consultant can benefit from analysis of the short-term outcomes