1. Rhys Watson, Damien Power, Danny Samson
An Analysis of International Lean Plant Manufacturing Practices and Performance
Rhys Watson, Damien Power, Danny Samson

2. Introduction
Lean manufacturing practice is an integrated system that is intended to maximize the performance of the production and delivery process in providing customer value while minimizing waste.

3. A philosophy of general principles and practices for organizing and managing an enterprise which fosters and promotes continuous learning and improvement.
(Liker 2008)

4. Performance Dimensions
Conformance quality
Low costs
Low variability in processing times
Delivery reliability
(Womack 1990, Liker 2008)

5. Research Questions
Does investment in lean practice improve
plant performance when tested against a global sample of manufacturing plants?
Are plants that invest in lean practices better performers than plants that choose not to invest in lean?

6. An international analysis of Lean manufacturing practices
Contribution
An international analysis of
Lean manufacturing practices
and contextual factors will assist in a
better understanding of the evolving
nature of lean and its relationship
to plant performance.

7. Investment in lean practices positively influences plant performance
Hypotheses
Hypothesis 1:
Investment in lean practices positively influences plant performance
Hypothesis 2:
Lean plants characteristically perform better than non-lean plants

8. Resource Based View (RBV)
Theory Base
Resource Based View (RBV)
A competitive advantage may be developed from resources that are specific to a firm, that are rare, or produce superior value compared to competitors and are difficult to replicate
(Peteraf and Barney 2003: Hoopes, Madsen et L 2003)

9. Multi-national community of researchers
Data Set
Global Manufacturing Group (GMRG)
Survey
Multi-national community of researchers
Data gathered from manufacturing plants
1072 plants
22 countries

10. Unit of Analysis
Plant
Actions taken at the plant level are central to establishing competitive practices
(McLauchlin 1997; Boyer 1998; Liker 2008)

11. Focus on Actual Lean Practices
Individual practices can be predictors of plant
Performance.
(Samson Tereziovski 1999)
Capabilities are developed through a dynamic
evolution of practices in response to
competitive priorities.
(Phil and Fujimoto 2007)

12. Investment in lean indicators
over a two year period.
Cellular Manufacturing
Process Redesign
Manufacturing Throughput Time Reduction
Setup Time Reduction
Supplier Certification
Statistical Process Control

13. Investment in New Equipment International Ownership
Contextual factors
Plant Size
Equipment Age
Investment in New Equipment
International Ownership

14. Measures of Plant Performance
Established competitive measures
of plant performance
Quality
Cost
Flexibility
Delivery
(Hayes and Wheelwright 1984; Boyer 1998)

15. Factor. VariableQuestion CG:
Factor VariableQuestion CG: How does your plants performance compare with your competitors?
Quality CG05 Product Features CG06 Product Performance CG07 Perceived Overall Product Quality
Cost CG02 Direct Manufacturing Costs
CG03 Total Production Costs CG04 Raw Material Costs
Flexibility CG12 Flexibility to Change Output Volume
CG13 Flexibility to Change Product Mix
CG14 Manufacturing Throughput Time
CG15 New Product Design Time
Delivery CG08 Order Fulfillment Speed
CG09 Delivery Speed
CG10 Delivery as Promised
CG11 Delivery Flexibility

16. Rotated Component Matrixa
Factor Analysis
Rotated Component Matrixa
How does your plants performance compare with your competitors?
Component 1 2 3 4
Delivery speed
.885
.105
.136
.223
Order fulfillment speed
.863
.101
.139
.183
Delivery as promised
.843
.188
.125
Product performance
.880
.132
.117
Product features
.043
.857
.175
.120
Product quality
.253
.801
.114
.118
Product costs
.135
.084
.883
Manufacturing costs
.862
.090
Raw material costs
.094
.179
.734
.062
Flexibility to change product mix
.164
.192
.119
.866
Flexibility to change output
Volume
.296
.115
.830
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 5 iterations.

17. Regression Analysis Independent Variables Dependent Variable Quality
Cost
Flexibility
Delivery
Adj. R2
R 2
Change
Total Plant
Employees
0.000
0.004
0.005*
0.003
0.004*
Average Age
Equipment
0.011
0.007**
0.001
Invested in New
0.002
0.031
0.021***
0.006
0.005
International
Ownership
0.030
0.009
Lean Indicators
0.052
0.057***
0.106
0.081***
0.065
0.062***
0.066
0.067***
Significance: *<.05, **<.01, ***<.001

18. Co efficient Analysis Factor Beta Sig. Delivery
New Equipment
Manufacturing Throughput Time Reduction Waste Reduction
Quality
New Equipment
Process Redesign
Cost
Total Plant Employees
Equipment Age
New Equipment
Cellular Manufacturing
Process Redesign
Waste Reduction
Flexibility
Total Plant Employees
Cellular Manufacturing

19. Stratification of Data
Plants were split into three groups
based on their level of investment in
lean indicators
- High-Lean
- Medium-Lean
- Non-Lean

20. Breakdown of GMRG database
GMRG Database Cases
Medium-Lean Plants 814 Cases
Lean Plants 1022 Cases
Non-Lean Plants 50 Cases
High-Lean Plants 208 Cases

21. ANOVA was used to test the Hypothesis:
ANOVA Analysis
ANOVA was used to test the Hypothesis:
Lean plants characteristically perform better than Non-Lean plants

22. number of dependent variables of plant performance across the
Post hoc tests
There was a statistically significant variance at the p< .05 level in a
number of dependent variables
of plant performance across the
High, Medium and Non-Lean Groups

23. ANOVA Mean Plots

24. Investment in lean practices positively influences:- Quality Cost
Results
Investment in lean practices positively influences:-
Quality
Cost
Flexibility
Delivery

25. Plant Size Equipment Age New Equipment
Results
Plant Size
– extremely weak positive influence on Cost and Flexibility
Equipment Age
– extremely weak positive influence on Cost
New Equipment
- positive influence on Cost.
- extremely weak positive influence on Quality and Delivery

26. Results
High-Lean plants have characteristically better performance than Medium and Non-Lean plants.
The performance of the Medium-Lean Group was not significantly different from the Non-Lean Group.

27. Investment in lean practices
Results
Investment in lean practices
has a positive influence on plant performance when tested over a global sample

28. A High level of commitment to lean is required to achieve results.
Conclusions
A High level of commitment to lean is required to achieve results.
Results are weak
ROI will be important in determining which practices to invest in.

29. In the context of Resource Based View
Conclusions
In the context of Resource Based View
Investment in Lean through continuous improvement and internal learning
can build a competitive advantage that is rare and difficult for competitors to duplicate.

30. Conclusions
Hypothesis 1 was accepted that investment in lean practices positively influences plant performance.
Hypothesis 2: Lean plants characteristically perform better than Non-Lean plants was partly accepted.

31. The End
Thank You

32. © Copyright The University of Melbourne 2008

34. Theoretical Lens
Resource Based View of the firm (RBV)
(Barney 2003)
Why is there inequality of performance between firms?
What are the implications inequality of outcomes?
Each firm utilizes its own unique set of resources.

35. APPENDIX 8
Lean Practices
McLachlin 1997 Shah / Ward Kojima / Kaplinsky 2004 GMRG Survey
Lean Practices Practice Bundles Lean Production Index Lean Indicators
Question
Bundle Index IP Indicator
Small lot sizes Lot size reductions JIT
JIT continuous flow JIT continuous flow JIT JIT continuous flow Flexibility
Pull system / kanban Pull system / kanbanJIT Pull system / kanban Flexibility
Equipment layout Cellular manufacturing JIT Cellular manufacturing Flexibility 18 Cellular manufacturing
Cycle time reductions Cycle time reductions JIT
Focussed factory production Focussed factory production JIT Self-directed work teams Flexibility HRM 24 Manufacturing throughput time
Manufacturing throughput time reduction
reduction Agile manufacturing JIT Flexible, cross functional
work force Flexibility HRM
Setup time reduction Quick changeover techniques JIT Setup time reduction Flexibility 25 Setup time reduction
Statistical process control Bottleneck constraint removal JIT Stock levels Flexibility 29 Statistical process control
Re engingeering prod. process JIT (Days WIP finished goods) 20 Process redesign
Preventive maintenance Preventive maintenance TPM
Maintenance optimisation TPM
Safety improvement program TPM
Planning and scheduling TPM
New process equipment TPM
technologies
Competitive benchmarking TQM ISO 9000 Quality
Quality management Quality management programs TQM
Total Quality Management TQM Customer returns Quality
Process capability TQM Set up time reduction) Continuous 28 Supplier Certification
Continuous improvement TQM External quality performance) Improvement 35 Waste Reduction
programs Use of suggestion schemes )
Self-directed work teams HRM
Flexible, Crossfunctional HRM
workforce