Research Article Implementing Lean Practices: Managing...
Transcript of Research Article Implementing Lean Practices: Managing...
Hindawi Publishing CorporationJournal of Industrial EngineeringVolume 2013, Article ID 790291, 19 pageshttp://dx.doi.org/10.1155/2013/790291
Research ArticleImplementing Lean Practices: Managingthe Transformation Risks
Antony Pearce and Dirk Pons
Department of Mechanical Engineering, University of Canterbury, Private Bag 4800, Christchurch 8020, New Zealand
Correspondence should be addressed to Dirk Pons; [email protected]
Received 20 May 2013; Revised 15 October 2013; Accepted 28 October 2013
Academic Editor: Eleonora Bottani
Copyright © 2013 A. Pearce and D. Pons. This is an open access article distributed under the Creative Commons AttributionLicense, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properlycited.
Insightful implementation of lean is necessary for high-value manufacturing and is complementary to strategic decision makingregarding manufacture. However lean can be difficult to implement in specific organisations. One of the difficulties is decidingwhich of themany lean tools to apply andwhen to apply them.A complicating factor is changemanagement. Lean implementation isa transformational process and needs to support organisational development alongside process improvement.We develop amethodbased on risk management to identify which lean tools are most appropriate for a specific organisational setting. This permits thesituational and contingency variables to be accommodated in the lean transformation.The method is demonstrated by applicationto a small manufacturing organisation with a high-variety low-volume business model. Thus it is possible, given contextualknowledge of the organisation, to predict which lean methods are most important in the situation. This enables the prioritisationof organisational effort towards lean methods that are relevant to the organisation at that particular time in its development.
1. Introduction
Lean is considered an essential attribute of a successfulmanufacturing endeavour [1]. The underlying principle ofminimisation of waste for maximisation of productivity hasbecome profoundly influential since being developed intothe lean construct [2–4]. As lean has matured, it has beenapplied ever wider [5, 6]. This includes industries other thanmanufacturing and into manufacturing industries that werenot natural early adopters. It is this latter category that is thefocus of the present paper.
There is no doubt about the general relevance of leanprinciples. However the implementation in specific organi-sations is not straightforward and is not always successful.Sometimes this is because the principles were sound but theimplementation failed [7–9], that is, a change managementproblem. But in the more general case, removing changemanagement issues from consideration, there is still thedifficulty of deciding which of the many lean tools to apply inthe situation. This is important because lean includes manymethods, and the relevance thereof is situationally specific.Implementing lean therefore requires some specific decisions,and the outcome has an element of risk: the implementation
could succeed or fail. Unfortunately there are no specifictools for the selection and prioritisation of methods duringimplementation.
This paper explores the implementation of lean, witha particular focus on the choice of lean tools that arerelevant to specific situations. We apply a risk managementperspective, in the sense that the implementation of lean canbe an opportunity for the organisation (if implementationsucceeds) or a threat (failed implementation and wastedorganisational effort, and resistance against future attempts).Thus we explore the intersection between strategic riskmanagement and lean implementation. We show how riskconsiderations can be built into a method that can helpidentify which lean tools are most appropriate for a givensituation. We close with a case study demonstrating themethod for a small manufacturing organisation.
2. Existing Approaches toLean Implementation
Lean implementation involves selecting appropriate toolsfrom the lean arsenal to achieve process excellence. However
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Lean methods
Nemawashi A3 management
5S
TPM
Kanban
Poka-yoke
JITSMED
5 whys
Heijunka
CellularMfg.
VS map
Big P. map
Figure 1: Lean methods or tools: a selection of some (not all) of lean methods indicating the importance of having a selection criteria andprioritisation method for implementation.
there is a danger of focusing overly on the tool benefit andstriving for process excellence but neglecting the sustainabil-ity of the lean tool within that specific work culture. Everytime a new method is implemented there is risk introducedto the organisation: both an opportunity and a threat. On theone side is the benefit of the technique and on the other sideare the detriments. Relevant questions are:
(1) What is the benefit of the lean technique underconsideration and how likely or difficult is it toachieve? (Is it worth doing this?)
(2) How do the usage of the lean technique and itsbenefits relate to the sustainability of the change inter-vention? (Would doing this have long-term benefits?)
In this paper we are particularly interested in the situationalapplicability of lean tools and specifically the organisationaldecision making that precedes the implementation of lean.There are three issues: which of the many lean tools toimplement in a specific situation; how to make a balancedevaluation of the risks (opportunities and threats) for eachcandidate tool; and how organisational culture affects thesuccess (or otherwise) of the changemanagement implemen-tation.
2.1. Lean Management, Its Principles, and Methods. Lean is astrategy developed for production improvement. It originatedin the mass production setting of the automobile industry,specifically the Toyota Production System. It is primarily
focussed on the minimisation of waste of any form [2, 3,5, 7]. When wasteful action is eliminated the result is thatless effort, space, and capital are required and lead timeis reduced whilst quality increases and the cost of qualitydecreases [5, 10]. From its manufacturing roots, lean hassubsequently expanded to business practice generally [11, 12].Lean management is becoming the standard for systematicproductivity improvement [1].
2.1.1. Lean Tools. Superficially, lean comprises a set of toolsand techniques (kanban, 5S, TPM, SMED, etc.), and the naiveimplementation decision is simply which tools to implement.Figure 1 illustrates the multiplicity of tools available. Workhas been done on the classification of tools [13–15] andthe relevance of tools to specific wastes [16]. These go partway to addressing the problems with implementation, butsituation specificity has not been achieved; that is, it is stillnot possible to identify which tools are most appropriate inwhich situation. Consequently practitioners frequently lackthe means to make informed decisions about which tools toimplement in their situation.
2.1.2. A Typical Implementation. A typical lean implementa-tion involves an initial value stream mapping (VSM) whichdefines the journey of improvement. Next there is the organ-ising of the house. This might involve flexible work systemsand (especially) 5S (sorting, straightening, systematic clean-ing, standardizing, and sustaining). Thereafter other specific
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tools are implemented as relevant. These include standardwork, single minute exchange of dies (SMED), total produc-tivity maintenance (TPM), and mistake proofing (Jidoka).Further advancements might involve supply and demand,through just in time (JIT) pull systems and Heijunka (levelscheduling) [17]. Also relevant is the integration betweenlean and production planning and control systems such asmaterials resource planning (MRP). This is not always easydue to the lean emphasis on pull, whereas the reality is thatmany manufacturers benefit from hybrid production flowcontrol [18]. Systems are being developed to operationalisethis [19], though a detailed explanation is beyond the presentscope.
Therefore weaknesses in a typical lean approach can bein fixation on tools as an end in themselves. This promotesisolated improvement rather than optimisation of the entireproduction system and an incomplete appreciation of the roleof leadership for organisational development.
2.1.3. Organisational Culture and Change Leadership. In thecontext of organisational change we look for methods thatwill support sustainability, that is, obtaining enduring ben-efits. The decision to implement lean is typically a decisionof senior management, that is, a top-down change initiative.While there are many models of the change managementprocess [20–24], the process is not always as successful asintended [25, 26]. As change management shows, abruptchanges result in resistance [21, 27, 28]. At the deeper levellean is a culture, that is, a set of organisational attitudes, ratherthan a mere use of tools [29, 30]. The sustainability dependson organisational culture and the collective response to thechange. Furthermore, many of the lean tools are sophisti-cated in their requirement for a particular type of culture,including strong intrinsic motivation at the shop-floor levelfor the processes (e.g., kaizen, 5S, quality circles, work cells,and six sigma). Thus implementing lean requires a changemanagement process that fosters the outcomes, hence changeleadership through coaching [21, 27] as opposed to merelydirective top-down change. In a lean system the respect forhumans principle is equally important as the elimination ofwaste [2, 11]. Lean is commonly associated with the latterand the respect for humans component is largely neglected.True lean involves a focus on the people of an organisation,creating a culture that empowers staff at all levels to makeinnovative changes that improve productivity by reducingwasteful action (muda). This creates dynamic and flexiblelearning organisations of emergent change [7, 31, 32]. Efficientand effective communication processes enable collaborationand consensus along with shared vision and engagement[7, 32]. In this way “respect for humans” works synergeticallywith and for “waste elimination.” Neglecting the human com-ponent jeopardises the sustainability of the change andmakesit difficult to reach the level of cultural excellence for contin-uous improvement [7, 8, 30]. A popular representation of thisis the iceberg model of Hines et al. [7], with the lean tools, pro-cesses, and techniques being the visible component above thewaterline, with the unseen supporting functions being strat-egy, leadership, and employee behaviour and engagement.
This introduces a time dimension to the implementation,since culture is not instant. Consequently it may be necessaryto build that culture. Specifically, lean is implemented instages over time, by selecting tools that are appropriate tothe organisation at that point in time. It may be wiser to firstimplement simplermethodswith the viewof engagement andacceptance of staff as opposed to attempting to immediatelyintroduce the more complex lean tools. These become small“wins” that build momentum and staff confidence [7, 27, 28].Employees need to be engaged to support a difficult method(like JIT). Thus, even though certain lean tools may hold thepromise of high returns, theymay also be risky to implement.Failure could ruin future chances of success and engagement.
Implementation of lean is therefore an organisationalstrategy regarding the changing of culture over time, bythe selective and progressive implementation of lean toolsthat are situational relevant for that organisation at thattime, followed by further implementation later when theculture has caught up. Practitioners typically describe thisdeliberate temporal progression as the lean journey [7, 12, 33].Thus the concept of continuous improvement (CI) appliesnot only to the technical operations but also the strategicimplementation at organisational level.The residual difficultyis that of deciding which lean tools are relevant for theorganisation at that point in its journey. This is a questionto which we return, and in the next section we show howconsideration of organisational risk can lead to a solution.
2.2. Risk Management. All ventures that an organisationundertakes have risk, that is, uncertain opportunity andthreat. The risk management (RM) methods encourage adeliberate and integrated consideration of both these out-comes. Various standards have defined risk in the sense ofboth negative and positive aspects, for example, [34–36].Other core concepts in the RMmethod are the partitioning ofthe problem into two variables, consequence and likelihood.Thus the analysis task reduces to determining first themagni-tude of the outcome,whichmay be positive or negative, corre-sponding to opportunity or threat, respectively, and then thelikelihood of that outcome. The magnitude of the outcomemay be represented quantitatively or qualitatively. Likewisethe likelihoodmay be quantified in a probability or expressedas a subject qualitative statement (very rare. . .almost certain).These two variables are then combined to give an overall scorefor the risk. If the variables are all quantitative then a simpleproduct operation is used, but qualitative variables require amapping process.Theprocess is repeated for several scenariosunder consideration and the RMmethod assists the decisionmaking by identifying the scenario with the highest risk (orlowest as the case may be).
The risk management method is particularly effective forquantitative variables and has therefore found widespreadadoption in engineering, finance (particularly insurance),and project management situations. Although the method asa whole claims to be applicable to strategic decision makingeven at the highest level of the organisation and examples ofthis are available [37], this is not a particularly well-developedcapability of RM.
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In lean implementation we are particularly focused onwhat is desirable in terms of lean success and sustainabilityand undesirable in terms of failure of the implementation.
2.3. Intersection between Lean Implementation and Risk Man-agement. There has been some prior work at the intersectionof these two bodies of knowledge. One line of enquiry,although perhaps not risk management per se, has beento identify critical success factors for lean implementation[7, 38–40]. Innovative frameworks and manufacturing tech-niques, for example, core competency based framework[41] and emergent manufacturing methods [42], have beenapplied to reduce specific “risks.”The twomethodologies havebeen compared [43] and applications in lean itself have beenused to identify and treat uncertainties (risks) in constructionprojects [44, 45]. Processes including supply chain modellinghave been used to support mitigation of risks [46–49]. Theapplicability of RM in selecting lean six sigma projects hasbeen identified [50].
Regarding the specific question of how to manage therisks in the implementation of lean, there has been workon matching of lean systems strategy to risk identification,using a systems engineering approach [51], and use of projectmanagement methods [52]. It has been suggested to mergelean thinking and “high reliability” [53] to balance thenonbuffered, “fragile” nature of lean [54]. There is lack ofmethods to improve the reliability of lean implementation[55]. In summary, reviewing the literature we found little tono application of a standardised risk assessment to a leanimplementation project.
Two other methodologies have some relevance. Theseare Agile manufacturing and Theory of Constraints. Howeverneither of these have shown any major integration with riskmanagement, though somemovement has been made in thatdirection examples: for JIT see [56], for TOC see [57].
While the lean and risk management practices each havewell-established literature, there is currently no integrationbetween the two. This is despite the fact that the implemen-tation of lean is full of risks: both the opportunities thatthe managers seek to capture, and the threats and failedimplementations that too frequently result.
The purpose of this paper is to develop amethodology forassessing the risks—both the threats and the opportunities—of the lean methods. The particular area of interest is con-textual decision-making: we wish to be able to better identifythe lean tools that are relevant to specific situations. The areaunder examination is SMEmanufacturing firms, because leanis particularly difficult to implement in such organisations.This is worth attempting, for the potential to avoid failed leanimplementation, the attendant wasted organisational effort,resistance against future attempts.
3. Approach
Our approach to this problem was to reconceptualise thedecisions surrounding lean implementation as a risk man-agement problem. We consequently developed a conceptualframework for treating lean in this way. From this we created
amethod for assessing the risks of lean practices. Importantly,this method is able to accommodate a specific organisationalcontext. We then applied the method to a case study firm.
4. Results
4.1. Conceptual Model for the Integration of Risk and Lean.We start with the principles of risk management (RM) andlean. RM has a clear set of principles [35], whereas theseare more tacit in lean. We therefore recast the contemporaryunderstanding of lean into a set of principles and thencompare and contrast these with those from RM.
The results are shown in Figure 2. The major differencein the function of risk management is to explicitly addressuncertainty, whereas lean explicitly addresses wasted effortthrough the optimisation of flow. Nonetheless there is a clearfit between the principles. Both lean and risk managementfocus on “value”. The risk approach protects value and leansupports this by focusing on providing customer value. Bothare systematic and data driven. Both implementations aretailored to the organisation, take into account human andcultural factors, aim to be inclusive of the entire system(not compartmentalised or locally focused), and includeall stakeholders in the processes. Both are dynamic andresponsive to change and facilitate continual improvement ofthe organisation.
Next we compare the frameworks. Again, RM is moreorganised in this regard and already has a framework and wecreate a comparative one for lean. To do this we merge thelean iceberg model [7] and the 5 principles of lean [12]. Theresults are shown in Figure 3.
The lean concepts are synonymous to those of the riskmanagement strategic process. The mandate and commit-ment of the framework is synonymous with managementcommitment, strategy, leadership, and alignment within theorganisation. This is made more clear from the detaileddefinition in the standard [35] (cf. [7]). The cycle itself,design, implement,monitor, review, and continually improve,is a simple PDSA (or PDCA). This cycle came out of thequality and continuous improvement field [58, 59] whichare consolidated in lean thinking. The five key principles oflean [5] can be shown to relate to the PDSA cycle althoughpossessing specific meaning to lean thinking, that is, definingvalue and planning for the flow of value with as little waste aspossible and the goal of perfection in view.
The final part of the conceptual model is creating anintegrated process model. This is achieved by overlaying thelean processes on the risk management process; see Figure 4.Theongoing communication process indicated as key to goodrisk management is very much a part of continuous improve-ment and lean. Toyota developed particularly efficient andeffective means of communication to allow consensus andcollaboration throughout along with the engagement andinput from all staff. Techniques such as A3management, withthe catchball process or nemawashi, are integral to the TPSand lean learning organisations; see [7, 32]. Establishing thecontext is synonymous to defining value from the customerviewpoint. The context in risk management strictly is both
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(1) Creates and protects value.
(2) Is an integral part of all organisational processes.
(3) Is part of decision making.
(4) Explicitly addresses uncertainty.
(5) Is systematic, structured, and timely.
(6) Is based on the best available information.
(7) Is tailored.
(8) Takes human and cultural factors into account.
(9) Is transparent and inclusive.
(10) Is dynamic and iterative.
(1) Focuses on creating customer value.
(2) Integral part of organisations processes and procedures.
(3) Lean thinking and techniques support decision making.
(4) Addresses waste through optimisation of flow.
(5) Has structured yet dynamic processes and methods.
(8) Involves respect for humans and an enabling culture.
(10) Enables dynamic learning organisations of emergent change.
(11) Facilitates continuous improvement for perfection.
(6) Improvements based on review of current conditions and value in eyes of customer.
(7) Implementation tailored to the organisation based on key lean principles.
(9) Inclusive of entire system (not compartmentalised or focused on local efficiencies).
Risk management principles Learn summary of principles
Figure 2: Principles of risk management [35] besides recast principles of lean thinking on the right, showing mutually supportive andcomplementary nature of risk management and lean management.
Mandate and commitment
Design of framework
Monitoring and review of framework
Implementing Continual improvement of framework
Study (review/ measure)
Do (implement /flow)
Act (continue to perfection)
Plan (value, VSM)
Management commitment, leadership, strategy, and alignment
Risk management strategic process (framework)
Lean management strategic process
Continuous improvement
Continuous improvement
Figure 3: Risk management framework [35] compared with lean management.
internal and external looking and so in reality crosses withthe mapping of the value stream. For simplicity sake we haveincluded VSM in the risk assessment area, that is, lookingat the current state and opportunities for improvementsto get to a desired future state. In the assessment analysisstep we have identified the 5 whys tool for root causeanalysis (RCA). Other tools could similarly be used (e.g.,Ishikawa fish bone diagram). Evaluation of risk has beenoverlaid with A3management.This an A3 sheet for reporting
and formulating ideas and passing into the communicationprocess for consensus. Risk treatment is the appropriateapplication of various lean methods chosen through theassessment process. The PDSA cycle is built into the processfor monitoring and review.
In someways it is not surprising that the riskmanagementapproach matches with lean management, since both hadroots in the quality and continuous improvement systems[4, 6].
6 Journal of Industrial Engineering
Com
mun
icat
ion
and
cons
ulta
tion
Lean communication processes:catchball, A3 management,and nemawashi
Mon
itorin
g an
d re
view
Lean:PDSA cycles
Establish context
Risk analysis
Risk evaluation
Risk treatment
Methods
Define value
Risk assessment
Risk identification VSM
5 whys
A3 manag-ement
Organisational development
∗Leadership∗Culture
development∗Change
management/leadership
Figure 4: Lean processes overlaid on risk management process as per the ISO standard [35].
4.2. Developing a Mechanism for Implementation. Havingachieved a broad conceptual integration of risk and lean, thenext step is to develop an operational method, a mechanismfor the application of RM to lean decision making. Thisneeds to be suitable for practitioners. We assume that some-one contemplating implementing lean has already acquiredbackground knowledge of various lean tools (see Table 1)and focus our method on supporting the decision-making,identifying the factors that could be considered.We do this byfollowing the risk management process taking particular careto represent the organisational factors, as these are knownto be crucial for successful implementation. The results areshown in Table 1.
4.2.1. Process. Standard tools for the strategic scanning ofrisks are PESTEL and SWOT. These are for environmentalscanning and identification of risks in the form of inter-nal strengths and weaknesses and external opportunitiesand threats (hence SWOT) and may be characterised bypolitical, economic, and other variables (hence PESTEL).The integration of these with strategic risk managementhas already been demonstrated [37]. The strategic risks areprimarily qualitative, as opposed to quantitative, and hencea matrix mapping is appropriate (as opposed to quantitativetreatment).
We therefore apply qualitative graphical techniques torepresent the risk for lean implementation. We plot, asorthogonal variables, the impact of each specific lean tool,and the likelihood of achieving that impact; see Figure 5.In this regard we use impact where the RM method usesconsequence, but the two are comparable. The impact is theeffect on the organisation in regard to lean transformation.
The chart aids in identifying where initial wins or easyimplementations can be targeted. Note that high likelihood(low difficulty) events can be critical even if the immediateimpact is not high. This is because gaining small wins is
Impact on
Low impact
Medium impact
High impact
Like
lihoo
d of
Low likelihood
High likelihood
Medium likelihood
Impact-likelihood qualitative assessment
X
Z
Q
Y
W
X is a high likelihood but has low impact event.Y is high likelihood with high impact event.Z is a low likelihood with low impact event.W is a low likelihood with high impact event.Q is a medium likelihood with medium impact event.
Figure 5: Likelihood-Impact qualitative assessment example plot.
particularly important at the outset of an implementation toensure momentum and sustainability [7, 27, 28].
In summary, we have established a method whereby theimplementation of lean can be considered a type of risk, withpotential positive and negative outcomes. We have createda method that is able to identify the risk associated with aspecific aspect or tool of lean. The next section illustrates theapplication to a case study.
5. Application to Case Study
5.1. Characteristics of the Firm. The case study is a smallto medium enterprise (SME) that is a make-to-order anddesign-build manufacturer specialising in complex parts and
Journal of Industrial Engineering 7
Table 1: Summary of process for lean implementation risk management according to ISO 31000:2009.
Risk management processAS/NZS ISO 31000
Lean implementationApplication
Set contextLean systems reduce waste activities and increase value to customers, therebyincreasing productivity and profitability. Internal context of resources and staff cultureand sustaining the change. External context of market conditions.
Perform risk assessment by: (see (1)–(3))(1) identification of sources, areas,impacts, and events,
Lean methods have risk associated with their use, benefits, and detriments impactingvarious areas.
(2a) analysis to understand the riskits causes, sources, (see (2b)) and otherpertinent factors,
Qualitative discussion of detriments or risks of sustainability of lean method (source)or entire lean implementation in context of the tools and consequences of tool use.
(2b) consequences and likelihoods,confidence sensitivity, and otherpertinent factors,
Expert opinion (qualitative) is incorporated as charts. The chart shows our qualitativeassessment of likelihood and consequence for various tools; refer to Figure 5.
(3) evaluation for assisting the decisionmaking process including risk toleranceof parties.
In the context of organisational change we look for methods that will supportsustainability. There is a decision from management (a mandate) to support lean tomeet business goals but wisdom is required in the lean implementation for building aculture for sustainability. This involves selecting the right methods at the right time. Itis necessary to get “wins” in the view of the staff up front. This is not necessarily thebiggest wins but small wins to gain momentum and staff confidence. We cannottolerate high risk even when high return is possible at the start of an implementationthat is, where staff are not yet engaged to support a difficult method (like JIT). Failurecould ruin future chances of success and engagement.Communication at the start of an implementation, is key to impart the vision andbreak down goals to give critical steps for change.
Prescribe treatment of riskTo maximise benefits and minimisedetriments, increase the positive anddecrease the negative likelihood andconsequences.
Treatments we prescribe in general cover the following:adequate communication with development of new identity for staff; prioritisation oftime for business running and improvement activity; and prior conditions metadequately (including previous methods, training of and engagement of staff) for anymethods implemented.
assemblies. It is representative of the many SMEs that areactively trying to decide which parts of lean are relevantto them and how to implement them. The firm (“SI”) isbased in New Zealand and has 20 employees. Typicallyproduction is of small to medium size runs, high-varietylow-volume (HVLV). The firm possesses an advanced CNCequipped plant, has precision assembly capability, and takespride in project management, that is, providing the fullsolution including concept and design development, build,commissioning, delivery, and after-sales support.
Historically lean has been the preserve of the large high-volume manufacturers typified by the automotive industry.However as the lean method has matured and spread toother industries, it has been applied to smaller and morespecialised firms, like that considered here. Lean adoption isalso driven by competitive pressure, particularly the openingof global markets and the resulting exposure tomore efficientcompetitors. Therefore even the small firms have to considerhow they preserve competitive advantage and deliver value tocustomers. These firms, being small, typically cannot affordto employ specialised staff for this purpose. They also havelimited resources for implementing new programmes likethis.
5.1.1. Strategic Mandate. In the case of this firm, the needto adopt lean was identified at board level, that is, was
a strategic decision. To compete within the internationalmarket the firm needed to show the value of a local supplierby reducing lead time and manufacture costs and developingability to handle demand variability (e.g., achieving flow andeliminating wasted effort including reducing run setups) aswell as increasing quality. Lean methods can be used to treatthese areas and therefore lean was considered a strategicpriority.
At the strategic level the firm needed to treat key factorsfor success and sustainability of lean.These factors have beenidentified [7, 12, 27, 32, 60] and summarised in Table 2.
5.2. Evaluating Risk within the Lean Strategic Principles. Oneof the authors (AP) worked half-time for six months in thefirmas part of a government-industry-university partnership.This provided the contextual knowledge for our analysis. Wethen took each of the strategic principle tools and evaluated,for this firm’s context, the impact and ease of implementation(see Tables 3 and 4). We then plotted these on the risk chart;see Figure 7.
All the principles in this first set are of higher level andseen as critical to lean success and sustainability; however itis important to understand the challenges or level of difficultyfaced. In our representative case we see particular areas ofdifficulty for SI around process flow, for example, flow andvalue stream analysis and application of pull systems. This
8 Journal of Industrial Engineering
Impact on success and sustainability
Low impact
Medium impact
High impact
H
igh
diffi
culty
Lo
w
diffi
culty
Med
ium
di
fficu
lty
CID
ifficu
lty o
f suc
cess
and
sus
tain
abili
ty
Flow
Pull
Allstaff
VSM
Com.pro.
Definevalue
Lean strategic principles: impact-difficulty qualitative assessmentfor lean practice success and sustainability
Culture building
More difficult but still necessary.Pull: understand
principle, be careful with tools
all staff involved in CI (kaizen)
Hig
h “li
kelih
ood”
Low
“li
kelih
ood”
CI: continuous improvementAll staff:VSM: analysis of value streamCom. pro.: communication process
Figure 6: Strategic principles: lean key principles and higher order processes qualitatively assessed for impact and difficulty (likelihood) ofsuccess and sustainability (reference case SI).
Table 2: Lean risk treatment at a strategic level.
Changeleadership
Leadership commitment with the vision and itscommunication for engagement of staff. Theinitial steps of change and ongoing “wins” formomentum of change. The development of a neworganisation identity.
Managinginternalresources
Physical, human (availability and capability), andfinancial resources need to be managed foramounts of training, learning, and implementingchanges.
Managingexternalresources
Use of consultant (sensei) or other externalresource for training.
Other factorsMarket conditions and forecasts (risk), demandvariability, and expected product mix (variety),among others.
is because of the make-to-order nature and complicatedprocesses of their business.This is reflected in the Likelihood-Impact chart for these factors.
In Figure 6 we see the medium level difficulty but highimpact of defining value, and having all staff involved inenterprise wide continuous improvement. Defining value iskey to understanding what the customer desires and whatwasted effort is that is, what should be eliminated throughimprovement. The communication process presents thevision of value and continuous improvement to all staff andallows for staff engagement and development of a learningorganisation and hence also high impact. This suggests thatthe big wins for a make-to-order enterprise like SI would bein the culture excellence for continuous improvement and
not so heavily in the process flow tools (although processimprovement would occur as a result).
For the same reasons, value stream and flow are assessedas having onlymedium/high impact in the SI case. In contrastthese would have high impact in a continuous productionfacility.
Pull is very difficult in SI’s case and would need particularadaption as suggested in the table. SI may need to use pullof order to pull paperwork but push material to the processfor flow.Thiswould changewhere higher quantity productionpermitted and even temporary or isolated flow lines could beintroduced.
5.3. Prioritising LeanMethods: SI Case Study. There aremanydifferent methods or tools of lean. These were each evaluatedfor the SI case, in a way complementary to the strategicprinciples. The likelihood and impact of these methods isplotted in Figure 8.
We do not attempt to justify the implicit judgements inFigure 7 whereby a particular method is given the impactand difficulty scores shown. Instead we suggest that thisrequires a contextual knowledge by the person performingthe assessment. In this particular case the first author wasseconded to the firm as part of the research project and spentconsiderable time learning the context in which Shamrockoperated.The assessment presented as Tables 3 and 4 provideinsight to the process.
The purpose here is to identify small wins (sometimescalled “low hanging fruit”) to increase chances of sustain-ability. Here the tools more applicable to the make-to-orderbusiness are featured in the top right corner. In contrastthe tools for fine improvement of production efficiency,
Journal of Industrial Engineering 9
Table3:Strategicp
rinciples:leankeyprinciples
andhigh
erorderp
rocesses
riskanalysistable(referencec
aseS
I).
Briefd
escriptio
nBe
nefitssou
ght
Detrim
ents/
barriers
Analysis
ofris
kto
sustainability
ofmetho
dor
entire
implem
entatio
neffort
Treatm
ents
Tomaxim
isebenefits,and
elim
inateo
rminim
isedetrim
ents
Dependants
(A)5
Strategic
principles
(1)D
efining
value
Lean
begins
with
defin
ing
valuefrom
thec
ustomers
pointo
fview,
thatis,
whatis
notvalue
iswasteto
eliminate.
Gives
clear
strategicfocus
basedon
whatthe
custo
mer
iswillingto
“pay
for.”
Requ
iressurveyof
custo
mers,
may
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etraditio
nal
thou
ghto
fwhatthe
company
shou
ldbe
focusin
gon
and
thereforec
reatec
onflictof
identityandresistance.
Take
tother
equiredextent
only—depend
ento
nsiz
eand
custo
mer
poolandcurrent
situatio
n;fore
xample,need
topu
llin
morec
ustomersm
ayneed
wider
survey.
Beprepared
todevelopnew
identitybasedon
outcom
es.
Voiceo
fthe
custo
mer.
(2)P
rocess/value
stream
mapping
(VSM
)(diffi
cultfor
Sham
rock
case)
Analysin
gof
processesa
ndwastethereinby
mapping
currentand
thed
esire
dstate.
Com
plexity
depend
sonneed.
Inprinciples
tartwith
core
process.
This,
together
with
defin
ing
value,setsthev
ision
and
course
ofactio
n.
Gives
ahealth
checkon
now
andidentifi
eskeyprocesseso
rfaultswith
asystem.G
ives
future
goalanddirection.
Requ
irestrainingandathigh
erlevelsallstaffareinvolved.Ca
nbe
simplified
processw
here
improvem
entsandwasteare
moreo
bvious
butasm
ored
etail
isrequ
ireditisan
involved
and
timec
onsumingexercise.
Thisisdifficultin
theS
hamrock
case
duetothec
omplicated
jobbingprocessesthatrarely
repeat.
Training
andprioritizingarek
ey.
Take
onlyto
thee
xtentrequired
forthe
currentstateof
operations.Involve
keyperson
sfro
mfunctio
nalgroup
srather
than
allstaffexcept
where
keyto
generaltrainingor
staffidentity
developm
ent.
AtSham
rock
initially
concentrateo
ninform
ationflo
w(ratherthancellu
larlayou
t)and
tryto
identifycore
processesfor
mapping
andim
provem
ent.
Valuem
ustb
ecle
arlydefin
ed.
(3)F
low/one
piece
flow
(diffi
cultfor
Sham
rock
case)
Flow
isak
eyconcepttolean.
Itisseen
idealtoapproach
one
piecefl
ow.P
rocessflo
ws
shou
ldbe
madea
svisu
alas
possible.
Con
ceptslikeF
IFOare
intro
duced.
Lean
is“not
trying
toop
timise
theu
tilizationof
peop
leand
equipm
entb
utop
timise
the
flowof
material;”
[2]includes
inform
ation.
Redu
cesleadtim
es,m
akes
prob
lemsv
isible(bringing
them
tothes
urface)a
ndsupp
ortsqu
ality
atthes
ource
(see
belowun
derT
ools).
Takesskillandtraining
toun
derstand
flowandadjustthe
syste
ms,fore
xample,to
make
flowlogicaland
visib
le.Ty
pically
involves
changing
ofhabits(e.g.,
FIFO
)and
takesrearrangement
ofph
ysicalandhu
man
resources
(e.g.,cells).
Again
thisisdifficultin
the
Sham
rock
case
duetothe
complicated
jobb
ingprocesses
thatrarelyrepeat.
Training
inlean
“flow
thinking”—
tryreadingTh
eGoal
[62]
andLean
Thinking
[12].
Prom
otetosta
ffther
easonwhy
itisnecessaryandeducatethem
abou
tthe
benefitso
fflow
.
AtSham
rock
initially
concentrateo
ninform
ationflo
w(ratherthancellu
larlayou
t)and
tryto
identifycore
processesfor
mapping
andim
provem
ent.
VSM
done
adequately.
10 Journal of Industrial Engineering
Table3:Con
tinued.
Briefd
escriptio
nBe
nefitssou
ght
Detrim
ents/
barriers
Analysis
ofris
kto
sustainability
ofmetho
dor
entire
implem
entatio
neffort
Treatm
ents
Tomaxim
isebenefits,and
elim
inateo
rminim
isedetrim
ents
Dependants
(4)P
ull
(diffi
cultfor
Sham
rock
case)
Processinitia
tedby
the
custo
mer’sorder“pu
ll.”Th
egoalistoredu
cebatch
sizetoapproach
onep
iece
flow/JI
Tmanufacture.See
also
“JIT”b
elow.
Powerfulinredu
cing
waste
andlead
time.Inventory
storesh
avea
llsortso
fprob
lems(space,qu
ality,
damagetosto
redgood
s,superseded
parts,sales
pushingon
oldsto
ck).
Takesskillandtraining
toun
derstand
prop
erly.
Prom
otes
alackof
stability
becauseb
uffers
redu
ced—
difficultforjob
shop
andprojectb
ased
style
organisatio
ns.
Again
thisisdifficultin
the
Sham
rock
case
duetothe
complicated
jobb
ingprocesses
thatdo
notrepeat.
Aprogressionfro
mhigh
erendof
flowthinking
toensure
flowis
welld
evelop
ed.
Canuseb
ufferstosupp
ort
stabilitybu
tnot
ideal.
Use
training
ofsta
ffto
overcome
resistance(seeF
lowabove).
May
need
tousep
ullofo
rder
topu
llpaperw
orkandpu
shmaterialtoflo
w.
Flow
(5)Jou
rney
toperfe
ction
Con
tinuo
usim
provem
entvia
PDCA
(plan,
do,check,act
cycle
)ofabo
veste
ps.
Driv
escontinuo
usim
provem
ent.
Needs
Perseverance/sustainability
Build
into
processes(and
cultu
re).Targetsm
allw
insa
tthe
beginn
ing,maintainmom
entum,
andleverage
anew
staffidentity.
Value,VS
M,flow
(B)E
ffective
commun
ication
processes
Use
ofA3managem
ent,
nemaw
ashi,and
catchb
all—
thatis,
concise
repo
rtingandfeedback
for
consensusthrou
ghsim
plea
ndeffectiv
ecom
mun
ication.
Con
sensus
reached,sta
ffengaged,visio
nshared.A
llcontrib
utingto
theo
negoal
andvisio
n.
Develo
pmento
fthe
processis
requ
irede.g
.,training
inA3
managem
ent.Sustainabilityand
disciplin
erequiredforregular
butn
otexcessive
commun
ication.
Training
,persis
tence,bu
ilding
into
procedures
processesa
ndregu
larity;tryweeklymeetin
gs,
tailo
rprocessto
busin
ess
situatio
n.
(C)A
llstaff
kaizen
Lean
engagesa
llsta
ffin
continuo
usim
provem
ent.
Emergent
change
from
all
adding
upto
significant
change.A
lsopo
sitivec
ulture.
Training
andengagemento
fstaff
requ
ired.Meetsresistance“
not
myjobdescrip
tion.”
Createnewem
ployee
identity
andtrainthem
insim
plep
roblem
solvingtechniqu
esfore
xample,5
Whys.Assessw
hether
toremove
negativ
einfl
uences
amon
gsta
ff.
Journal of Industrial Engineering 11
Table4:Metho
ds:selectio
nof
lean
andcomplem
entary
metho
dsris
kanalysistable(referencec
aseS
I).
Briefd
escriptio
nBe
nefitssou
ght
Detrim
ents/
barriers
Analysis
ofris
kto
sustainability
ofmetho
dor
entire
implem
entatio
neffort
Treatm
ents
Tomaxim
isebenefits,and
elim
inateo
rminim
isedetrim
ents
Dependants
(A)L
eanmetho
ds5S—sift
,sort,
sweep,sta
ndardise,
susta
in
Generalorganisatio
n,cle
anlin
ess,andmaintenance.
Generaleffi
ciency
andbasis
foro
n-goingim
provem
ents.
Training
requ
ired(to
low/m
edium
level).
Needs
susta
inability.
Develo
pnewcultu
reand
expectation,
usev
isualcues,
developnewidentity.
5Whys—
root
causea
nalysis
Basic
root
causea
nalysis
tool;
askwhy
5tim
es.G
etto
the
root
oftheissue
soitdo
esno
trepeat.
Simplee
ffectivew
ayof
doing
root
causea
nalysis
andsim
ple
way
togetp
eoplethink
ing
abou
tanalysis
.
Training
requ
ired(to
lowlevel).
Oncetrained
ifno
tusedand
ideasn
otactedon
canbe
anegativ
eexp
erience,andreason
ford
isinterestand
failu
rein
future.
Find
amechanism
todriver
oot
causea
nalysis
ofissues/events
andaskwhy
ford
ailyactiv
ities.
Implem
entsug
gestions
toget
mom
entum
andshow
commitm
ent(maybe
even
when
notideal).
Visualsyste
ms
Emph
asison
visualisa
tionof
flowandsyste
mso
fcon
trol
andrepo
rting.Partof
5s,flow
andallaspectsof
lean.
Visualise
sprocesses,m
akes
wastevisib
le.Seeo
ther
aspects,fore
xample,
5sandFlow
.
Seeo
ther
aspects,fore
xample,5s
andFlow
.Seeo
ther
aspects,fore
xample,5s
andFlow
.
Qualityatthe
source,Jidoka,and
Poka-yoke
Qualityatsource
means
controlisg
iven
tothew
orker
atthes
ourceo
fthe
issue—for
exam
ple,on
thep
rodu
ction
line.Jid
okaisthe
respectfor
humansp
rinciplew
hich
inclu
desm
istakep
roofi
ng(Poka-yoke)a
ndin
cases
extend
sworkerc
ontro
lto
even
shut
downthe
prod
uctio
nlin
e.
Qualityprob
lemsa
reno
trepeated,eng
agem
ento
fworker.
Training
requ
ired(to
medium/highlevel).
Ifigno
red,mom
entum/m
orale
lost.
Maketrainingap
rioritywith
key
staff
andthen
build
training
into
daily
activ
ities.
Syste
msfor
capturingideasfor
poka-yokea
ndensurin
gthey
get
implem
ented.
SMED
—sin
gle
minutee
xchangeo
fdies
(partic
ularly
beneficialto
Sham
rock)
Redu
cedsetuptim
efor
machinery.O
nlyessential
internalsetups
made.Ex
ternal
setups
preferredto
redu
cedo
wntim
e.
Setuptim
edow
n,shorterrun
spo
ssibleandecon
omically
viable,
enablesreduced
lead
times
andultim
ately
JIT.
(partic
ularlybeneficialto
Sham
rock
duetoshortrun
s).
Training
requ
ired(to
medium/highlevel).
Dow
ntim
ewhilst
working
onim
provem
ents.
Maketrainingandkaizen
aprioritywith
keysta
ffandthen
build
training
into
daily
activ
ities
foro
thers.
Balancea
ndmakep
rioritiesc
lear
(how
muchto
spendon
initiatives
versus
dayjob).
Flexiblework
syste
ms
Flexibilityof
employeesa
ndequipm
entp
referred
over
complicated
rigid
orautomated
machinery.
Quick
changeover
andeasily
expand
edsyste
ms,resources
where
requ
ired
Training
ofsta
ffandtheir
engagementrequired(to
medium
level).
Lossof
specific
staffrolesa
ndrespon
sibilitie
s.
Com
mun
icationprocessfor
change
andbenefits.Develo
pnewidentity.
12 Journal of Industrial Engineering
Table4:Con
tinued.
Briefd
escriptio
nBe
nefitssou
ght
Detrim
ents/
barriers
Analysis
ofris
kto
sustainability
ofmetho
dor
entire
implem
entatio
neffort
Treatm
ents
Tomaxim
isebenefits,and
elim
inateo
rminim
isedetrim
ents
Dependants
Totalprodu
ctive
maintenance
(TPM
)
Ensurin
gmachines
maintainedto
secure
against
unnecessarydo
wntim
eand
catastroph
icfailu
re—shou
ldincorporatec
ontin
uous
improvem
entalso
.
Lessdo
wntim
e.Health
andsafetyim
proved.
Training
ofsta
ffandtheir
engagementrequired(to
medium/highlevel).
Skill
ofsta
ff.
Selectrig
htpeop
le,trainin
approp
riateskills,andgive
understand
ingto
staff(build
new
identity).
Kanb
an
Simpletoo
lfor
replenish
ment/p
ullsystem.
Typically
acard(e.g.,kanb
ancard)b
utcouldbe
abin
oranotheridentifier
thatflags
for
replenish
mentand
specifies
details
(sup
plier,qty,locatio
n).
One
ruleof
kanb
anisto
review
itssiz
e(i.e.,redu
cethe
buffertow
ards
onep
iece
flow
aspartof
continuo
usim
provem
ent).
Link
sseparated
processes
together
forp
seud
oflow
where
idealfl
owisno
tpossib
le.Needs
setupandorganisatio
n.Visualsyste
msa
ndno
shortcuts
helpto
enforcethe
documented
procedures.
5S
Justin
time(
JIT)
manufacture.
(diffi
cultfor
Sham
rock
case)
Goo
dsarriv
ejustintim
efor
processin
gor
assembly.
WIP
andlead
timed
own,
quality
up.
Lack
ofsta
bilitybecauseb
uffers
removed.
Processtakes
muchplanning
,training
,and
teething
durin
gim
plem
entatio
n.Negativer
esultsto
cultu
repo
ssibledu
ringteething
.Again
thisisdifficultin
the
Sham
rock
case
duetothe
complicated
jobb
ingprocesses.
Suggestedto
hold
finish
good
son
ly(in
prod
uctio
nsituatio
ns)o
rpu
shandflo
wused.B
othatpu
llof
orderb
ycusto
mer.
Mustb
ewellpreparedfor
implem
entatio
n:Staff
training
fortheirun
derstand
ingand
engagement,otherp
rocess
prepared
asmuchas
possible,
readyforo
n-goingteething
internallyandwith
supp
liers.U
sepilotand
positives
taffmem
ber
willingto
try.Con
sider
carefully
before
implem
entatio
n.
Flow
achieved,
needsH
eijunk
a(le
velscheduling)
Heijunk
a(level
schedu
le)&
takt
time(
pulse
)(diffi
cultfor
Sham
rock
case)
Levelschedulingissm
oothing
demand—
weinclude
also
takt
timeh
erew
hich
iseasie
stun
derstood
asaverage
demandin
time(e.g
.,2parts
perm
inuteo
rtwoqu
otes
per
day,twoinvoices
perw
eek).
Thisiskeyto
enableJIT
/one
piecefl
oweffectiv
elywith
out
excessiveidletim
eoro
vertim
ein
prod
uctio
n.
Diffi
cultin
Sham
rock
scenarios
duetohigh
fluctuatin
gdemand,
fore
xample,jobshop
smake-to-order
andprojectb
ased
manufacture.
Levelsellin
g/marketin
g.Ke
eping
buffero
ffinished
good
stohelp
(but
notp
artsthroug
hout
entire
syste
m).
Und
ersta
ndin
term
softhe
specificb
usinessa
ndwhere
itis
mostapp
licablethere.
Flow
achieved
Journal of Industrial Engineering 13
Table4:Con
tinued.
Briefd
escriptio
nBe
nefitssou
ght
Detrim
ents/
barriers
Analysis
ofris
kto
sustainability
ofmetho
dor
entire
implem
entatio
neffort
Treatm
ents
Tomaxim
isebenefits,and
elim
inateo
rminim
isedetrim
ents
Dependants
(B)C
omplim
entary
Metho
dsBu
sinesssystems
softw
area
ndprod
uctio
ncontrol
techno
logy
e.g.,
ERP
(partic
ularly
beneficialto
Sham
rock)
InteractiveITdatabasesw
hich
may
incorporatelogarith
ms
forschedulingandfin
ancial
managem
ent.
Inform
ationcollabo
rativ
eredu
ceddataentryand
codificationof
know
ledge.
Particularlyuseful
atSham
rock
becauseo
fhigh
administrativ
edem
ands
oncomplicated
processesa
ndcusto
mer
requ
irements
Typically
implem
entatio
ntim
es,
cultu
rechange,and
custo
misa
tionrequ
irementsall
extensive.Ca
nbe
expensivea
ndrestr
ictiv
e.
Ensure
thes
olutionisrig
htfor
your
environm
ent(manymay
bebette
rwith
simplek
anban
planning
boards
and
replenish
mentsystems).
Getwellpreparedandensure
tohave
ther
ight
skill,resou
rces,
andtechnicalsup
porton
hand
.
Theory
ofconstraints(TO
C)
TOCisin
itself
astand
alon
eprocessimprovem
ent
techniqu
ewith
itsow
noverarchingph
ilosoph
y.It
identifi
esbo
ttlenecks
“capacity
constrainedresources”that
need
tobe
targeted
toim
prove
flow.
Greatfortrainingand
supp
ortin
gflo
wthinking
.Re
adtheb
ookTh
eGoal[62]
Doesn
otim
plicitlyinclu
deph
ilosoph
yandcultu
reof
staff
engagementand
empo
werment—
typically
consultant
driven
andno
tsusta
ined
asas
tand
alon
e.
Incorporatefor
flowtraining
and
usea
ssuitablea
sacomplim
entary
metho
dbu
tbe
carefuln
otto
affecto
verarching
strategy.
Sixsig
ma
Sixsig
maisinitself
astandalone
process
improvem
enttechn
ique
with
itsow
noverarching
philo
soph
y.Itismostw
ell
know
nas
astatistic
almetho
dof
processa
nalysis
and
improvem
ent,Sixsig
mac
anbe
appliedas
atoo
lwith
ina
lean
philo
soph
y.
Fine
improvem
ento
fprocessesa
fterb
asicob
viou
swasteeliminations
ismade.
Highleveltrainingandhigh
lytim
econ
sumingexercise
touse.
Workerscanbecometoo
narrow
lyfocusedon
statistic
altoolsw
hensim
plep
roblem
solvingisallthatisrequired.
Use
andtrainon
lyas
requ
iredin
them
eantim
e;useV
SMand5
whysfor
early
results.
Other
simpler
metho
dsexhausted.
14 Journal of Industrial Engineering
Impact on success and sustainability
More diffcult, hold off till culture built
Last on the list, exhaust other avenues first
These activities have low resource needs,
readily give early results and build a culture
in readiness for future lean activities
Diffi
culty
of s
ucce
ss an
d su
stai
nabi
lity
Low impact
Medium impact
High impact
Hig
h di
fficu
lty
Low
di
fficu
ltyM
ediu
m
diffi
culty
Lean methods: impact-difficulty qualitative assessmentfor lean practice success and sustainability
Sixsigma
JIT
5whys
SMED
VS
TPM
Hig
h “li
kelih
ood”
Low
“li
kelih
ood”
5S
Qual.
Kanb.
T H and
TOC
ERP
VS: visual systemsquality tools—quality at the source, Jidoka, and Poka YokeQual.:
SMED: total productive maintenanceTPM:
just in time manufactureKanb.: kanban JIT:
Heijunka (level schedule) and takt time (pulse)H and T:ERP: business systems softwareTOC: theory of constraints
single minute exchange of dies/reduced setups
Figure 7: Methods: selection of lean and complementary methods with a qualitative assessment of impact and difficulty (likelihood) ofsuccess and sustainability (reference case SI).
for example, six sigma and JIT, are in the bottom left.These were assessed as particularly difficult to implement inthis particular situation, and the benefits would be limited.Implementation of TOC thinking would be more beneficialthan six sigma or JIT in this case. Kanban is positioned in themiddle, and while (in this situation) it may not be relevantfor pulling production, it could still be useful for orderingconsumables. Managers and business owners at SI broadlyendorsed the validity of this analysis of the situation.
5.4. Implications for SI. Of interest is the high impact of ERPin SI’s case. This is something difficult to implement but ifimplemented right could have great effect.This is particularlybecause at SI production was partially being constrainedby flow in the office. ERP implemented right would sim-plify quoting, planning, purchasing, and general data entryrequirements which are identified as serious bottlenecks atSI (more so than specific physical production processes). Itcould also give other benefits such as business reporting. SIhas much to benefit in understanding the holistic nature ofits systems and the interaction between the factory and officeprocesses.
Resource constraints are significant in SMEs and deter-mine how much the organisation can achieve at any onetime. In this particular case SI had just embarked on anERP implementation that is somewhat separate from anenterprise wide lean journey. Because of the difficulty of ERPimplementation our suggestion would be to hold off all other
lean initiatives (except for some higher order principles) untilERP is well achieved and the resources are freed to focus onother lean implementation activities. This also implies thatif they had a clean slate and had not begun implementingERP it may have been more beneficial to consider some ofthe simpler tools first. This could have benefited them withfurther staff engagement and built culture excellence andstaff engagement before implementing ERP with its higherrequirements on resources and perceived level of change.
5.4.1. Beyond Production. We have noted that lean has beenapplied effectively beyond manufacturing or productionbusinesses. Although SI is a manufacturing business weobserved they had many gains to be made in their admin-istration centre (hence a high priority for ERP). Whether ornot the physical transformation of goods took place in theirown workshop there was much waste to be eliminated intheir office. These lean office gains illustrate the competitiveadvantage of lean beyond manufacturing businesses.
5.5. Application to Other Manufacturers. The implicationswould be similar for other make-to-order, design to order,job shop SMEs, although ERP requirements may drop whereproducts do not demand a lot of records and data entry orprocess control (as comparedwith SI’s high tech andprecisionengineering customers).
For firms of higher production (e.g., low-variety high-volume) we would see more relevance in the emphasis on
Journal of Industrial Engineering 15
Impact on success and sustainability
Low impact
Medium impact
High impact
H
igh
diffi
culty
Lo
w
diffi
culty
Med
ium
di
fficu
lty
CI
Diffi
culty
of s
ucce
ss an
d
s
usta
inab
ility
Flow
Pull
Allstaff
VSM
Com.pro.
Definevalue
Lean strategic principles impact-difficulty qualitative assessmentfor lean practice success and sustainability
Culture building
CI: continuous improvementAll staff: all staff involved in CI (kaizen)VSM: analysis of value streamCom. pro.: communication process
Hig
h “li
kelih
ood”
Low
“li
kelih
ood”
(a)
Impact on success and sustainability
These activities have low resource needs,
readily give early results and build a culture
in readiness for future lean activities
Diffi
culty
of s
ucce
ss an
d su
stai
nabi
lity
Low impact
Medium impact
High impact
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Lean methods: impact-difficulty qualitative assessmentfor lean practice success and sustainability
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VS: visual systemsquality tools—quality at the source, Jidoka, and Poka YokeQual.:
SMED:total productive maintenanceTPM:
just in time manufactureKanb.: kanban JIT:
Heijunka (level schedule) and takt time (pulse)H and T:ERP: business systems softwareTOC: theory of constraints
single minute exchange of dies/reduced setups
(b)
Figure 8: Methods and strategic principles for alternative (volume manufacture) scenario: indicative qualitative assessment of impact anddifficulty (likelihood) of success and sustainability for “higher” production volumes as depicted by arrows.
16 Journal of Industrial Engineering
process flow principles and tools. We have illustrated theseand other likely changes by placing arrows overtop of theprevious charts; see Figure 8.
6. Discussion
6.1. Outcomes: What Has Been Achieved? This work encom-passes lean thinking and methods, lean implementation,organisational change, and risk management. Exploring theliterature at the intersection between risk management andlean transformation we found no application except forpiecemeal usage of methods and aspects of lean loosely tiedto risk.There was little evidence of riskmanagement and leanimplementation being integrated by practitioners.
The present work makes several novel intellectual contri-butions. The first is methodological, in that it demonstratesa way to integrate risk management into decision makingwhen implementing lean.This method makes the detriments(the threat component of the risk)more explicit and thereforeamenable to treatment. The method achieves a high level ofintegration between the two management methods. We didthis by comparing leanmanagementwith riskmanagement ascodified in the ISO standard [35] and developing a commonframework with lean.
A second contribution is that the method provides a wayto explicitly identify the organisation difficulty of implement-ing lean practices. This is important, because although theseorganisational difficulties have previously been identified ingeneral terms (e.g., the lean iceberg model), it has up tonow been difficult to determine how those apply to specificsituations. Thus variables that were once general situationalvariables (or contingency factors to use the change manage-ment term) can now be included in the decision-making.Themethod, while not specifically providing a temporally phasedapproach to lean implementation, encourages the decision-maker to explicitly evaluate which lean methods are relevantto the organisation at the time under consideration.
The third contribution is that we have piloted a methodfor applying lean to organisations other than high-volumemanufacturers. In particular, the method was developed ina challenging type of organisation: an SME involved in high-variety low-volume manufacturing.This type of organisationhas otherwise found it difficult to implement lean, as seen inthe late adoption. The method and the case study bring outimplications and provide solutions that could be relevant toother types of organisation too.The case study showed that itis possible, given contextual knowledge of the organisation,to predict which lean methods are most important in thesetting.This enables the prioritisation of organisational effort,something that is relevant to all organisations but particularlyto SMEs with their limited resources for such endeavours.
A fourth contribution is that we have now built anotherconceptual component in a model for high-value manu-facturing. This is of national strategic importance to smallcountries like New Zealand, whose manufacturing industriescannot easily compete with other countries that have lowlabour costs and high production volumes. We suggest thatintelligent implementation of lean is necessary for high-value
manufacturing and is complementary to strategic decisionmaking regarding manufacture [3] and environmental con-siderations [61], among others.
6.2. Implications for Practitioners. For practitioners, that is,those managers in organisations that are considering whatparts of lean to implement, the primary implication is thatthey should not only focus on the high impact lean methodsbut also consider a staged approach. We recommend theydeliberately select lean methods that will build lean culturethrough small wins and staff engagement, before progressingto more overly lean methods. Lean implementation involvesa transformation of the organisation, and initially the journey(i.e., the human dimension of the change process) is asimportant as the destination.
In making the decisions about lean, our suggestion isthat managers consider applying the method given here, byevaluating the impact of each of the lean principles andtools and the difficulty of implementing them in that specificorganisational context. We suggest that the organisationalcontext is very important, and that the analysis is bestdone by someone who has deep understanding of how theorganisation operates. At the same time it is also importantthat the analyst understands the capabilities of the variouslean principles and tools. In this paper we have only identifiedthese by name, as a full description would overwhelm thepresent paper. However we recommend practitioners gainthe necessary lean knowledge by consulting one of the manyexcellent texts or employing an expert.
Another implication for practitioners is that the methodwe propose here is closely aligned to the risk managementmethod. Consequently there should be no impediment toincluding the lean risk assessment alongside other riskmanagement practices. Alternatively, if the risk managementframework [35] is not already part of the organisation’spractices, thenwewould suggest that consideration should begiven to exploring that too, since it is not much more effortthan to do so. The management approaches are complemen-tary and mutually supportive having synonymous principles,framework, and process.
6.3. Limitations and Implications for Further Work. A lim-itation of this work is that the case study was more of across-sectional rather than longitudinal design and on onlyone firm. This naturally limits the external validity (limitsthe ability to generalise to other situations). It would beinteresting to apply the method to a firm or multiple firmsover time to assess how well the predicted lean methodsactually performed andhowdecisionmaking priorities adjustin time.
Another limitation is that the analyst needs both con-textual knowledge of the firm and knowledge of the leanmethods. We have explicitly identified that need in ourrecommendations to practitioners. It would be interestingto know just how much knowledge practitioners really haveabout lean. The root of failed implementations of leanmight be ignorance, which would also limit our method.It would be interesting to do a widespread survey of the
Journal of Industrial Engineering 17
extent of lean knowledge and check whether that causes poorimplementation.
7. Conclusions
The objective of this work was to explore how risk man-agement methods are applicable to and supportive of leanimplementation success. Risk analysis and management arecritical to all serious decision making processes. Howeverthere has been little to no documented application or studyof risk management in the lean implementation field. Wehave shown that it is possible to integrate risk managementand lean management. We further developed a qualitativemethod where lean tools may be prioritised for a specificorganisational setting.We applied thismethod to a case study.The case study provided implications for similar high-varietylow-volume manufacturers as well as alternative operationmodes (e.g., low-variety high-volumemanufacturing, serviceorganisations, and administration). The ongoing efficacy oflean tools and methods is very much dependent on thesituational variables of the organisation. We believe that eachaspect should pass through a risk assessment and analysis ofsome kind to determine treatments necessary. Our approachfocused on treating lean failure by prioritising the tools thatnot only will deliver performance gains but also are culturebuilding.
Authors’ Contribution
All authors contributed to the conceptual and intellectualdevelopment of the ideas in this work and to their expressionin this paper. Antony Pearce performed the detailed lean riskassessments and spent the time embedded in the case studyfirm.
Acknowledgments
The authors acknowledge with gratitude the willingness ofShamrock Industries Ltd. (New Zealand), particularly Mr. P.Fogarty, to support this research project and provide casestudy material. A portion of this work was supported bythe Ministry of Science and Innovation Education Fundingthrough the New Zealand Government, and this is acknowl-edged and appreciated.
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