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Running Head: LEAN OPERATIONS

LEAN OPERATIONS

TOC

Abstract

1. Introduction

The lean management is an operational approach to the business for enhancing the efficiency of every stage of the working in practice. According to Mackelprang & Nair (2010), the main goal of this lean operation can reduce the waste of manufacturing and maximise the values created for the customers. The core idea o0f lean is to the reduction of waste or defective production in the process of manufacturing. The researched data shows that almost 60% of production activities create waste (Douglas & Judge, 2001). Therefore, the lean operation is an important aspect in production management for delivering high-quality products. Moreover, this operation management process helps to apply such techniques to reduce the production at cost and improve the quality of the products at the same time (Fullerton et al. 2014).

The historical evolution of lean operation is observed since the time of Henry Ford of Ford Motors. The founder of Ford Motors introduced a continuous assembly line, which was popularly known as Ford Model T (Harvey et al. 2016). The author had also found that before Ford, Eli Whitney and Frederick W. Taylor tried to apply a similar concept in interchangeable parts in production. However, according to this author, the modern concept of lean operation management was introduced in Toyota (popularly known as Toyota Production system (TPS)). The system of TPS has provided the world JIT (just in time) production system where the manufactured products are not piled up in the warehouse. The process of TPS has shown the connection between financial management and operation. Hence, this process of operation management has effectively enhanced the lean system to meet the organisational objectives of higher profitability than previous systems (Hendricks &Singhal, 2001). However, this process obtained the recognition in 1990 after one of the former employees of Toyota coined the term lean for his master\'s paper in MIT Sloan.

Overview of lean operation

The current practice of lean operation constitutes of work teams, JIT, TQM and supplier management procedure. As stated by Mackelprang & Nair (2010), the current process of lean management uses several tools to improve the operational process for aligning with the operational and business objectives of the firms. The operation managers have started to reduce waste for achieving excellent manufacturing with effective usage of resources. Such implication of operation management indicates that lean manufacturing process is adding value at every stage by reducing waste in production (Nair, 2006). In this manner, the companies can reduce the human effort, capital investment, area of work and time of manufacturing. Moreover, this process also enhances the ratio of high-quality production to cost of production. The author has argued that lean manufacturing process has changed its objective in the current organised way of business operation. The author has investigated this issue and has revealed the truth of changing nature of lean management. The customer centric business environment has changed the objectives of lean manufacturing towards value creation from reducing waste. However, has observed that reduction of waste is a means of a way to implementing the lean operation. In this case, lean thinking has developed five steps process for transforming a general production into lean operation (Womack & Jones, 2010). In these five steps, the lean thinking has provided with a continuous cycle of improvement of the entire operation. The first step is to identify the specific value of a product from customer's perspective. According to Nicoletti (2013), the value of a product can be defined by a customer only, which is to be created by the producer at the end. The next step to this transformation is to recognise value stream of the entire production facility. In this way, the production can reduce the steps of the operational process by spotting three types of actions in manufacturing – creating values, creating no values but unavoidable and non-value steps, which can be eliminated. The elimination of the third step reduces the production time as well as the cost of operation as a whole (Hendricks &Singhal, 2001). The third step is to create a continuous flow of work in the manufacturing process. This process f continuous workflow reduces the working time as the product process has to wait for a minimum time in the queue. This transformation helps to adopt the lean management in practice by avoiding rework or stoppage of production. In the next step, the management must create a pull for the customers. The responsiveness of the organisation towards the customers' needs can be obtained by allowing them to pull the product. The last step is to seek perfection of the finished product after obtaining feedbacks from the customers. Hence, in this step, the management modifies the process of manufacturing to eliminate the waste in production.

The lean manufacturing process normally starts with elimination of waste in production, which is the basic as per the TPS built by Toyota. In this context, the management of Toyota has identified seven different types of wastes of production activities, which are nonvalue-adding events. These seven deadly wastes hinder profitability of a firm in practice by lowering the efficiency of the manufacturing. The first waste is waiting for supplies of materials in production activity, which hampers the continuous process of activity (Hendricks &Singhal, 2001). The second waste is the unnecessary motion of people in the manufacturing that does not create any value for the operation. The next waste is overprocessing of an activity where more energy is consumed than that of a standard process. The fourth waste is waiting for others that enhances the production time. The transportation issue is the next waste that enhances the excessive movement of goods from one unit to another in a facility. Overproduction is another waste where finished goods are stacked in the warehouse and does not generate any revenue to the firm. The last waste of production activity is fixing defects of the products where quality becomes a concerning issue for the management (Nair, 2006).

2. Analysis on lean management

The lean operation is not a method to apply some tools in the manufacturing process as the legacy of lean management is used by the companies with accumulating the same in the culture of the organization (Hendricks &Singhal, 2001). This cultural concept is viewed by the author as both essential and influential to the company from production level to C-level management. Several lean tools can help the companies to attain the lean operation in practice. Hence, the majority of the management accommodates four tools with their processes for obtaining the lean process – cellular manufacturing, 5s workplace organization, in-line inspection and kaizen (Nair, 2006). The internal factors of the firms can change the performance primarily. Hence, the management targets to change the structure and infrastructure of the business to attain the selected goals of the performance. The performance curve of the business can be shifted due to changing manufacturing technologies, implementing TQM (Total quality management), JIT (Just in Time) (Hendricks &Singhal, 2001). Thereby, the link between lean management can be observed due to implementing the new managerial process of operation such as JIT and TQM in practice. The following section has provided with the link between lean operation management and change in firms'' operations.

2.1 Link between lean management and firm operation

According to Nicoletti (2013), the layout of a production facility must be in line with the smooth flow of materials and components during a production process. The operation manager must ensure to reduce the transport delay of materials from every stage of activity to another. This layout of workplace helps the firms to shift from traditional batch and queue mass production system to a single flow production system. This is known as a cellular production system, which eliminates the overproduction of a company. Further, Mackelprang & Nair (2010) has argued that cellular production facility reduces the defects of overall production. The batch queue system enhances the slack time of the operation whereas cellular system allows the management to reduce slack and thus, increasing the productivity. The 5s workplace organization is based on five constructs – simplification of necessities, organizing the necessary items (straighten), cleaning the facility (scrubbing), maintaining the first threes and discipline action to achieve such manufacturing process (sustain) (Nair, 2006). The operating cost of overall production can be reduced by eliminating separate quality checking division for every category of product. In such cases, the operation process involves with in-line inspection process to maintain the accuracy of the production in practice. As Nicoletti (2013) has argued that verification of product quality as well as measuring the accuracy of the activities on the line of the production process can reduce defects in overall production. Additionally, in-line inspection of the quality of product reduces the capital expenditure of laboratory as well as improves the quality consciousness among the workers as a whole. The Kaizen is a cost-effective project in operation to improve productivity consistently. The process of kaizen is applied for sustainability of improvement in targeted processes (Hendricks &Singhal, 2001). The firms used to involve a separate team for working in kaizen method for investigating the problems. This team normally finds the answer of 5 ‘Whys' by analyzing the issues with value-stream mapping for eliminating the waste quickly. The team investigates to find the root cause of the issue in production so that this team can take corrective measures for eliminating the waste (Nair, 2006). The team can plan and implement – both the activities to improve scrap rate, work-in-progress and product quality in practice. The activity of Kaizen is involved with monitoring the changes in activity for ensuring the sustainability of improvement of operation.

2.2 Quality and performance practice

TQM is a management process for integrating operation with the philosophy of improving the quality of the production and products. Nicoletti (2013) has argued that TQM is a tool of lean operation management that enables the company to place the products competitively in a sustained manner. The practice of TQM can attempt to influence the performance of an organization on three levels – operational, marketing and financial. According to Mackelprang & Nair (2010), few of the TQM practices have shown real impact over operational as well as other types of performances of the firms. Moreover, the author has stated that positive impact on the operation of the firms changes the financial and marketing performance of a firm. Nicoletti (2013) has observed that majority of the firms do not show similar responses with respect to profitability and market value of a business while quality is used a tool to change the performance. However, the author has mentioned that quality is directly related profitability by influencing the later in the overall business process. The impact of quality on growth is indirect as innovation acts as a mediator in such case (Nair, 2006). The recent studies on the impact of TQM on the performance of the organization have shown that TQM can affect the activity efficiency of a firm directly (Hendricks &Singhal, 2001). However, the authors have found no direct influence of TQM over the financial or marketing performance. The above studies have provided ample information on the influence of TQM over the overall performance of a firm and conclude mixed impact on performance.  

2.3 JIT and performance practice

The theoretical interpretation of JIT states that production of goods and services do not hold any expense or cost due to inventory holding of a company. According to Nicoletti (2013), holding charge of the inventory is considered as one of the important waste that does not create any value to the business either, or to the customers. The main objective of JIT is to remove slack time in operation and effectively using the available resources in an organization. Mackelprang & Nair (2010) has argued that JIT is a technique to reduce the operating cost of the production for the large-scale processing industry. Further, the management seeks for JIT operational system in practice for reducing the capital expenditure on warehouse and non-value transportation. Further, JIT is a tool to reduce the waste such as operating time as well as human resources for enhancing financial performance.

2.3 Evidence of lean management

3.1 The impact of TQM program on performance

4.1 Summary and conclusion

References

Douglas, T. J., & Judge, W. Q. (2001). Total quality management implementation and competitive advantage: the role of structural control and exploration. Academy of Management Journal, 44(1), 158-169

Fullerton, R., Kennedy, F., & Widener, S. (2014). Lean manufacturing and firm performance: The incremental contribution of lean management accounting practices. Journal Of Operations Management, 32(7-8), 414-428.

Harvey, J., Heineke, J., & Lewis, M. (2016). Editorial for Journal of Operations Management special issue on “Professional Service Operations Management (PSOM)”. Journal Of Operations Management, 42-43, 4-8.

Hendricks, K. B., &Singhal, V. R. (2001). Firm characteristics, total quality management, and financial performance. Journal of Operations Management,19(3), 269-285

Mackelprang, A. W., & Nair, A. (2010). The relationship between just-in-time manufacturing practices and performance: A meta-analytic investigation. Journal of Operations Management, 28(4), 283-302.

Nair, A. (2006). Meta-analysis of the relationship between quality management practices and firm performance-implications for quality management theory development. Journal of Operations Management, 24(6), 948-975.

Nicoletti, B. (2013). Lean Six Sigma and digitise procurement. International Journal Of Lean Six Sigma, 4(2), 184-203.

Womack, J. P., & Jones, D. T. (2010). Lean thinking: banish waste and create wealth in your corporation. Simon and Schuster.

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