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.