An Empirical Study of Lean Concept Manifestation - ScienceDirect

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ScienceDirect Procedia - Social and Behavioral Sciences 207 (2015) 225 – 233

11th International Strategic Management Conference 2015

An Empirical Study of Lean Concept Manifestation Ramunė Čiarnienėa, Milita Vienažindienėb, a a,b

Kaunas University of Technology, Kaunas, 44309, Lithuania

Abstract Lean is a prominent philosophy and a practice that assumes the expenditure of all types of resources for any purpose other than the creation of value for the end customer to be wasteful, and therefore a target for exclusion. This philosophy and the way of thinking expressed by a set of principles, supplemented by different tools and techniques helps for waste elimination, operational performance improvement, inventory reduction, and optimum quality level to the end customers. It is one of the paramount and wide-ranging concepts that contribute companies all over the world to gain competitive advantage and prosper in the world market. The purpose of the paper is to disclose the manifestation of multidimensional Lean concept in companies operating in Lithuania. © Published by Elsevier Ltd. Ltd. This is an open access article under the CC BY-NC-ND license © 2015 2015The TheAuthors. Authors. Published by Elsevier (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the International Strategic Management Conference. Peer-review under responsibility of the International Strategic Management Conference Keywords: Lean concept, manifestation, Lithuania, empirical research

1. Introduction Nowadays companies all over the world are facing with increasing pressure from customers and competitors. Customers have higher expectations, and manufacturers can meet these expectations by increasing product’s quality, reducing delivery time, and minimizing costs – or a combination of these three ranges (George, 2002). This forces business companies to implement new production strategies to enhance their competitiveness in the global market place (Chena, 2010). Lean is an integrated system of principles, practices, tools, and techniques which assumes the expenditure of all types of resources for any purpose other than the creation of value for the end customer to be wasteful, and therefore a target for exclusion. The elimination of non-value-added activities reduces costs and cycle time, which results in agile, customer-responsive and more competitive organizations (Alukal, 2003).

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1877-0428 © 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the International Strategic Management Conference doi:10.1016/j.sbspro.2015.10.091

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Ramunė Čiarnienė and Milita Vienažindienė / Procedia - Social and Behavioral Sciences 207 (2015) 225 – 233

Lean thinking increased in popularity in the 1990s. Several last decades scientists are actively discussing about lean manufacturing and lean concept implementation both on theoretical and empirical level. The results of retrospective scientific literature analysis draw attention to such names as: Womack et al. (1990), Womack and Jones (1996), Imai (1997), Monden (1998), Spear (2004), Howell (2001), George (2002), Shah and Ward (2003), Hines et al. (2004), Hopp and Spearman (2004), Narasimhan et al. (2006), Radnor and Boaden (2008), Pettersen (2009), Vendan and Sakthidhasan (2010), Chena et al. (2010), Staats et al., (2011), Bollbach (2012), Čiarnienė and Vienažindienė (2012), who have been analyzing the essence, main principles of Lean concept, tools and techniques. Chappell (2002) and Atkinson (2010) were analyzing cultural issues while implementing Lean concept. The main barriers to lean implementation have been researched by Bhatia and Drew (2007), Radnor and Walley (2008), Alinaitwe (2009), Brandão de Souza (2009), Pirraglia et al. (2009); Brandão de Souza and Pidd (2011), Bhasin (2012), Čiarnienė and Vienažindienė (2012), Bollbach (2012), Čiarnienė and Vienažindienė (2014). Readiness factors which increase the probability of success of Lean implementation have been analysed by Anchanga (2006), Antony (2013), Vienažindienė and Čiarnienė (2013), Antony (2014). The benefits of Lean in the industrial world ranging from automobiles and electronics to a wide range of service organizations have been highlighted by Shah and Ward (2007), Laureani and Antony (2012), Kumar et al. (2013). Despite a high number of significant studies and works related with Lean concept carried out by scientists of different foreign countries, this field lacks of empirical research works in Lithuania. The paper aims to disclose the manifestation of Lean concept in companies operating in Lithuania. The study begins by the analysis of Lean concept in a multidimensional approach. On the basis of conducted scientific literature analysis and synthesis the empirical research instrument in the form of a survey is created. The methodology of empirical research in details is presented at chapter 3.1. Results of an empirical research and recommendations are provided at the final section. 2. Literature Review 2.1. The multidimensity of Lean concept Although there are some a bit different opinions of what piece out Lean concept, the most of researches reflect the waste reduction nature of the Toyota production system and identify its roots in the Toyota production system (Womack et al., 1990; Womack and Jones, 1996; Monden, 1998). The term "Lean" was coined by Krafcik (1988) in order to highlight the principles of limiting inventory and excess workers, or waste, as opposed to other auto manufacturers’ “buffered” approaches (Hopp and Spearman, 2004; Staats et al., 2011). With the unique culture of continuous improvement, Toyota put together various tools, techniques and methodologies to eliminate waste and increase leanness of manufacturing systems (Monden, 1998). Herewith, Womack et al. (1990), Bhasin and Burcher (2006) defined Lean production as a business and production philosophy that shortens the time between order placement and product delivery by eliminating waste from a product’s value-stream. Howell (2001) defined it as a target to “give customers what they want, deliver it instantly with no waste”. Singh et al. (2011) emphasized Lean manufacturing as a multi-dimensional management practice including just in time, quality systems, work teams, cellular manufacturing, supplier management, etc. in an integrated system. Spear (2004), Womack and Jones (1996), Womack and Jones (2003) highlighted that the principle view of Lean production rests on a set of tenets. A clear understanding and application of these principles are essential to implement Lean successfully (Bollbach, 2012). Shah and Ward (2003), Narasimhan et al. (2006), Bicheno and Holweg (2009) had a dominant view in describing and measuring Lean production as a set of practices and tools for waste elimination. While researchers disagree on the exact practices and their number, there is a general consensus that there are four primary aspects of Lean production, and practices can be grouped into bundles. According to Cua et al. (2001) and Shah et al. (2008) these practices are associated with pull production, quality management, preventive maintenance, and human resource management. Hines et al. (2004), Radnor and Boaden (2008), Radnor and Walley (2008) emphasize strategic and operational levels of Lean concept. They state, that at a strategic level it focuses on the principles, and at an operational level focuses on the tools and techniques.


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Summarizing the analyzed research works it can be stated, that Lean concept has a multidimensional essence and can be characterized at different levels of abstraction. On the strategic level it represents a philosophy and the way of thinking; on the tactical level it is expressed by a set of principles, and on an operational level is realized through practices, techniques and tools (see figure 1).

Fig.1. Multidimensional Essence of Lean Concept

2.2. The Benefits of Lean Concept and Main Barriers to Lean Implementation Analysis of theoretical research works and empirical studies of Womack et al. (1990), Womack and Jones (1996), Monden (1998), Zimmer (2000), CITEC (2001), Duque and Cadavid (2007), Shah and Ward (2007), Pirraglia et al. (2009), Upadhye et al. (2010), Laureani and Antony (2012), Kumar et al. (2013), Antony (2013) reveals to the main benefits of Lean concept implementation for an organization. The benefits can be grouped and represent five improvement dimensions: waste elimination, continuous improvement, continuous flow and pull-driven systems, multifunctional teams, and information systems. The main benefits are related with reduction of different type of resources, reduced delivery time, increased productivity, higher quality, faster problem solving and decision making, and higher customer satisfaction. All these types of benefits help the company to gain a competitive advantage in the market. Despite the significant benefits from Lean concept implementation some barriers can emerge that make the process challenging. Summarizing research works of Bhatia and Drew (2007), Radnor and Boaden (2008), Radnor and Walley (2008), Alinaitwe (2009), Brandão de Souza (2009), Brandão de Souza and Pidd (2011), Čiarnienė and Vienažindienė (2012), Bhasin, S. (2012), Bollbach (2012), Čiarnienė and Vienažindienė (2014), authors of the paper distinguish two types of barriers: organizational barriers and people related barriers (see table 1).


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Table 1. The Benefits of Lean Concept and Main Barriers to Lean Implementation Improvement dimensions Removing non-value adding activities treated as waste: x inventory excess,

Benefits Inventory reduction, reduced delivery time, increased productivity, reduction in floor space, reduced cost, return on assets, higher customer satisfaction.

Organizational: x weak link between strategy and operational improvements, x high degree of compartmentalization and fragmentation into functional and professional units,

x machine setups and downtime, x motion excess, x waiting time,

x hierarchy and cultural issues,

x transportation,

x high cost of implementation,

x defects, and etc. Continuous improvement

Barriers

Less scrap and rework, quality improvement, reduced cost, increased productivity, increased customer satisfaction.

x difficulties in data collection and performance measurement, x lack of time and labour resources, x lack of capital funds,

Continuous flow and Pull-driven systems

Less work in process, reduction in floor space, shorter flow time and delivery time, better satisfaction of internal and external clients.

Multifunctional teams

More responsibility and autonomy for teams, improvement and problem-solving closer to the source.

People related:

Information systems

The reduction of vertical levels in the structure, timely access to necessary information, faster problem solving and decision making.

x negative staff attitudes,

x failure of past lean efforts.

x lack of perception and knowledge, x poor communication, x lack of top management support, x backsliding to the old ways of working.

The presented classification of benefits and barriers is quite a general one. It can be said that every case of lean concept implementation in practice is a long and more or less unique tour. The success and barriers can differ depending on the country, sector of economy and specific company. 3. Methodology 3.1. Research Goal and Design The goal of this research is to disclose the manifestation of Lean concept in Lithuania. To achieve this goal four aims were formulated: 1) to investigate how managerial employees in Lithuania perceive Lean concept; 2) to identify how widely this concept is spread between Lithuania’s companies; 3) to disclose the main reasons which stimulate Lean implementation; and 4) to determine the main barriers and challenges to Lean implementation. The framework of research design is presented on figure 2. On the basis of conducted scientific literature analysis and synthesis the empirical research instrument in the form of a survey was created. The questionnaire was designed as a combination of closed and open questions representing two building blocks. The first block of questions was devoted to disclose the manifestation of Lean concept in Lithuania’s companies. The second block consisted of questions that represented the respondents in the meaning of position, company type, activity duration, size and capital. The hypotheses of the research: H1: Lean concept manifestation is quite low. H2: Lean concept is implemented in large companies. H3: Lean concept manifestation is concentrated in foreign capital companies.


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Fig. 2. The Framework of Research Design

The questionnaire was delivered to the managerial employees representing 100 companies operating in different fields of activities such as manufacturing, wholesale, retail, catering, finance and real estate participated in the poll. From 100 contacted companies 72 questionnaires have been got completely filled in and appropriate for the analysis. 3.2. Analysis and Results The research has shown that managerial employees in Lithuania perceive Lean concept as a process of continuous improvement (36 %), flexible, cost-effective, and efficient process management (36 %), and philosophy and thinking that allow increasing efficiency and eliminating waste (33 %) (see figure 3). It links to a strategic level of Lean concept perception. This is a continuous improvement

36%

Flexible, cost-effective, and efficient process management

36%

Philosophy, thinking that allow to increase efficiency and…

33%

I do not know

17%

Non value-added activities elimination

11%

Set of methods, techniques and tools

11%

Orientation to customers' perceived value

Fig. 3. The Perception of Lean Concept

8%

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The results of Lean concept implementation are presented on figure 4. The most of respondents (53 %) stated that Lean concept is not applied in their companies, 22 % of respondents chose the answer “I don’t know”, and only 17 % of them indicated that concept is being applied. Such results show quite low level of Lean concept manifestation in Lithuania’s companies. This confirms hypothesis H1: Lean concept manifestation is quite low.

No, it is not applied

53%

I do not know

22%

Yes, is being applied Plans to apply in the future Yes, now is being implemented

17% 6% 3%

Fig. 4. Lean Concept Implementation

Figure 5 presents implementation of Lean concept in the companies according to the size. The results show that Lean concept is mainly applied in large companies. This confirms hypothesis H2. 50% 78% 73%

88%

It is not applied 50%

Plans to apply in the future Now is being implemented

13%

Yes, is being applied

11,1%

26,7%

Micro (under 10 employees)

Small (under 50 employees)

Medium size (under 250 employees)

Large (over 250 employees)

Fig. 5. Lean Concept Implementation According to the Company Size

Another interesting aspect is the relation between Lean concept manifestation and company capital origin. Results reveal that the concept is being applied, implemented and planned to implement mainly in Lithuanian and mixed capital companies. So hypothesis H3: Lean concept manifestation is concentrated in foreign capital companies can be rejected. There are many reasons why companies are implementing Lean methodology. Based on the data presented on figure 6 it can be stated that the main reasons, beliefs and expectations according to the respondents are the following: more efficient use of time (42 %), growth of efficiency and productivity (42 %), and continuous improvement (39 %). Positive experience of other companies is also an important indicator as a reason for Lean concept implementation. Unfortunately, such reasons as increased customer satisfaction and reduced delivery time were depicted by quite allow number of respondents (respectively 11 % and 14 %). This is probably due to the fact that the respondents lack knowledge and understanding about Lean concept in general.


More efficient use of time

42%

Growth of efficiency and productivity

42%

Continuous improvement

39%

Positive experience of other companies

33%

Waste minimization

25%

Increased competitiveness

25%

Inventory reduction

22%

Quality improvement

22%

Reduced delivery time

14%

Increased customer satisfaction

11%

Fig.6. Reasons for Lean Concept Implementation

After determining the main reasons why companies in Lithuania are applying Lean conception the next step is to analyze what barriers they face with. The results of this analysis are depicted on figure 7. Lack of knowledge and motivation

58%

I do not know

28%

The lack of support from the top management

25%

Resistance to change

22%

Unfavourable organizational management structure

11%

The negative approach of employees

11%

Lack of time

8%

Organizational culture does not encourage change and… Failure of past projects Poor communication High Cost of Implementation

8% 6% 6% 3%

Fig.7. Barriers to Lean Concept Implementation

According to the respondents’ opinion the main barrier is lack of knowledge and motivation (58 %). Other important barriers are the lack of support from the top management (25 %) and resistance to change (22 %). All these types of barriers represent people related barriers’ group. 4. Conclusion On the base of analysis of scientific research works Lean concept can be described in a multidimensional way and can be characterized by three interrelated levels. As a philosophy and thinking on the strategic level; a set of principles on the tactical level; and bundles of practices, techniques and tools on an operational level.

The results of conducted survey showed that Lean concept is still relatively new and unfamiliar to a wide number of employees. More than a half of all the respondents stated that Lean concept is not applied in their companies. This confirms hypothesis H1: Lean concept manifestation is quite low.

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The results of empirical research show that Lean concept is mainly concentrated in large companies of Lithuania. This confirms hypothesis H2: Lean concept is implemented in large companies. As results of conducted survey reveal that Lean philosophy is being applied, implemented and planned to implement mainly in Lithuanian and mixed capital companies, hypothesis H3: Lean concept manifestation is concentrated in foreign capital companies is rejected. The respondents identified the main reasons, beliefs and expectations regarding Lean concept implementation as following: more efficient use of time, growth of efficiency and productivity, continuous improvement, and positive experience of other companies. According to the respondents’ opinion the main barriers for Lean concept implementation are people related barriers: lack of knowledge and motivation, lack of support from the top management, and resistance to change. References Alinaitwe, H.M. (2009). 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