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Benchmarking: An International Journal
Lean implementation in small- and medium-sized enterprises: An empirical study
of Indian manufacturing firms
Saumyaranjan Sahoo, Sudhir Yadav,
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Journal, Vol. 25 Issue: 4, pp.1121-1147, https://doi.org/10.1108/BIJ-02-2017-0033
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Lean implementation in small- and
medium-sized enterprises
An empirical study of Indian
manufacturing firms
Saumyaranjan Sahoo and Sudhir Yadav
School of Petroleum Management, Pandit Deendayal Petroleum University,
Gandhinagar, India
Abstract
Purpose –The purpose of this paper is to examine the extent to which lean management practices are
adopted by small- and medium-sized manufacturing organizations in India and their impact on firm’s
operational performance (OP). Also, the paper makes an attempt to identify the barriers and challenges faced
by Indian SMEs that are striving to succeed with improvement efforts based on lean manufacturing.
Design/methodology/approach –In this paper, acceptability and implementation of lean manufacturing in
Indian Manufacturing SMEs were analyzed using three constructs, namely, process improvement (PI), flow
management (FM) and waste minimization (WM). The responding firms were categorized into “lean-Beginners,”
“In-transition lean”and “lean”group based on their phases of lean implementation. Using a survey questionnaire,
data werecollected from 121 manufacturing SMEs in India. Lean tools and barriers, identified from the literature
review, were also included in the survey. The reliability and validity of the practice and performance measures
were evaluated. Correlation analysis was employed to investigate the effects of three constructs on OP.
Findings –The results indicate that all the three lean constructs are significantly related to OP. In the
context of Indian manufacturing SMEs, “PI”and “WM”practices have shown a higher level of significance on
OP, compared to “FM”practices. “5S -workplace organization”was found to be the most practiced lean tool.
“Attitude of workmen”was highlighted as the main obstacle in successfully implementing lean. The findings
suggest overall positive effects as a result of applying lean tools and philosophy in Indian SMEs.
Research limitations/implications –The research results may lack qualitative justification because of
the chosen research approach. Therefore, the researchers are encouraged to explore the inter-relationship
among various lean tools/practices and performance criteria by conducting a qualitative study in the form of
a case study or action research.
Practical implications –This paper is a beneficial source of information that highlights the contribution of
lean implementation in enhancing manufacturing productivity. The major tools and techniques used by
Indian SMEs have been highlighted and discussed; it could be a genuine source of motivation to lean
practitioner and entrepreneurs of SMEs to go in for lean implementation. The findings are also expected to
benefit the lean practitioners and entrepreneurs of SMEs to focus on vital issues to facilitate successful lean
implementation in an organization.
Originality/value –The paper demonstrates that practical implication of lean implementation can bring
real breakthroughs in productivity to small- and medium-scale manufacturing firms.
Keywords Small- to-medium-sized enterprises, Lean production, Manufacturing performance, Lean tools
Paper type Research paper
1. Introduction
In the present global scenario, manufacturing organizations are mainly facing challenges
from two directions. First, advanced manufacturing philosophies are emerging, while the
existing methods are becoming obsolete ( Jasti and Kodali, 2015). Second, consumer
thinking is changing and loyalty goes beyond a rational decision for a superior perceived
price-performance ratio. The customers have become more demanding for innovative
products and services within a very short period of time and at less price (Tersine and
Wacker, 2000; Lau et al.,2002;Hoet al., 2005). Essentially to cope up with such challenges,
the core idea behind strategy formulation by manufacturing firms nowadays is to
maximize customer value while minimizing waste. Hence, manufacturing firms operating
in such rapidly changing and highly competitive market, for the past two decades, have
Benchmarking: An International
Journal
Vol. 25 No. 4, 2018
pp. 1121-1147
© Emerald Publishing Limited
1463-5771
DOI 10.1108/BIJ-02-2017-0033
Received 24 February 2017
Accepted 6 May 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1463-5771.htm
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embraced the principles of lean thinking (Fullerton et al., 2014). The word “lean”refers to
lean manufacturing or lean production, as it uses less of everything, compared to
mass production (Wahab et al., 2013). It only uses half of the human effort in the factory,
half of the manufacturing space, half of the investments in tools, and half of the
engineering to develop a new product in half of the time (Liker, 1998; Womack et al., 1990).
Also, it requires keeping far less than half the inventory on site, results in fewer defects,
and produces a greater and ever growing quality of products (Womack et al., 1990).
Lean strategy is a management approach to manufacturing that strives to make
organizations more competitive in the market by increasing the efficiency and decreasing
costs through the elimination of non-value added steps (Garza-Reyes et al., 2012).
Lean manufacturing practices enhance manufacturing productivity by reducing setup
times and work in process inventory, improving throughput times, and thus improving
market performance (Tu et al., 2006). Various methods and tools that aim to improve
the performance of organizations are comprised under the lean strategy’sumbrella
(Bhasin, 2012). The expression of “continuous improvement”is quite popular in lean
manufacturing, and the concept is mainly associated with total quality management, total
productive maintenance, just-in-time, Six Sigma, pull flow, low setup, controlled processes,
human resource management and other approaches (McKone et al., 1999).
Several decades have passed since the initial conception of lean manufacturing
(Belekoukias et al., 2014). For decades now, the number of continuous improvement models
have been growing based on the concept of improved quality and/or processes aimed at
reducing waste, simplifying the production line, etc. (Drohomeretski et al., 2014).
In operation research, lean manufacturing practices have been found to have a positive
impact on firm’s performance (Belekoukias et al., 2014; Fullerton et al., 2014; Drohomeretski
et al., 2014; Kumar et al., 2014; Rahman et al., 2010). Nevertheless, a research study done by
other researchers (Marvel and Standridge, 2009) argued that few organizations attain
significant improvements by applying lean. In the last several years, scholarly journals have
published a number of articles that focus on the content of lean production in large
organizations or comprise of case studies that concentrate on individual firm experiences.
Several lean implementations have been developed (Åhlström, 1998; Hobbs, 2004, 2011;
Mostafa et al., 2013), but these methods are designed for mass production companies
(Deflorin and Scherrer-Rathje, 2012; Moeuf et al., 2016; White et al., 1999). Hence, the size of
the company is an influential factor in the lean implementation (Shah and Ward, 2003; Yang
et al., 2011; Moeuf et al., 2016). However, most of the manufacturing firms, which have
implemented lean manufacturing, have assessed lean practices in their own unique way.
Indeed, when compared to large companies, SMEs have distinct characteristics and specific
success criteria related to lean implementation, which differ from large manufacturing
setups (Achanga et al., 2006). Many SMEs in both developed and developing countries have
shown reluctance toward adopting lean manufacturing practices for numerous reasons
(Husband and Mandal, 1999). Also, SMEs that adopted lean have given up continuing
practicing lean at an early stage, as these firms are unable to identify and determine the
success indicators of the adopted lean implementation (Wahab et al., 2013). Some
manufacturing firms misapply the lean practices and the main reason for this scenario lies
in their internal issues such as the lack of knowledge and their understanding of lean,
cultures, skills and so on, leading to “use of the wrong tool to solve a problem,”“use of the
same tool to solve all of the problem,”and “use of the same set of tools on each problem”
(Pavnaskar et al., 2003; Wahab et al., 2013). Also, SMEs across various sectors are vulnerable
in any economic environment, where there are few barriers to new entrants and where they
have little power to dictate to suppliers about their needs (Achanga et al., 2006). Hence, as a
result of such vulnerability, an element of conflict with lean management principles
practices within SMEs is observed due to the lack of expertise that affects several fields like
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information flow (Iris and Cebeci, 2014), problem solving (Thomas et al., 2012) and even lean
tools (Kumar et al., 2009). According to a research study considering manufacturing SMEs
in the UK as a sample, the success rate of lean implementation in SMEs was found to be low,
since it reaches only 10 percent (Baker, 2002). This lack of clarity is evident from the
multiplicity of inferences drawn with respect to research studies on lean production.
Manufacturing has emerged as one of the high growth sectors in India. With “Make in
India”ambitious vision of our Honorable Prime Minister of India, small- and medium-sized
manufacturing firms have a golden chance to emerge from the shadow and seize more of the
global market. To achieve this objective, the Indian manufacturing sector needs to embark
on productivity and quality programs to be more competitive in global market. Adoption of
lean manufacturing practices is highly capital-asset intensive, and is largely adopted by
large organizations in India to reap the tangible benefits in the long run (Seth and Tripathi,
2006; Timan et al., 2012; Panizzolo et al., 2012). Ferocious challenges in the competition have
prompted many SMEs to adopt lean implementation to enhance firm’s efficiency and
competitiveness. With its proven success in large companies, lean has become more
attractive to many SMEs in the country. But still, the idea of applying lean manufacturing
strategy has not been adopted by meaningful numbers of SMEs in the country without any
convictions. There is (still) only limited insight into the successful implementation of lean
manufacturing practices in SMEs. Lean practices in SMEs have a relatively short history,
and a lot of important issues and areas are largely untouched in academic research (Zhou,
2012). As very few studies regarding lean implementation in SMEs have been done in the
past, thorough research needs to be carried out, to gauge how small and medium enterprises
in this country view it, adapt to it, and practice it. Hence, motivated by the research gap, this
paper makes an empirical attempt to examine the relationship between lean manufacturing
implementation practices and performance of small- and medium-sized Indian
manufacturing firms. This research investigated 121 SMEs across India which had
implemented lean manufacturing in their firms. Also, the paper provides evidences
regarding major lean implementation barriers that are encountered by SMEs in India.
The research paper is organized as follows. In Section 2, we review the literature about
lean barriers, lean manufacturing and its application in India. In Section 3, the research
methodology employed in the research study is presented. Section 4 is devoted to an
in-depth analysis and discussion of major research findings. Finally, Section 5 concludes the
paper. The practical implications of this study will be important for lean practitioners and
entrepreneurs of small- and medium-sized enterprises.
2. Literature review
Based on the objective of the paper, a literature review was conducted aiming to collect and
analyze all relevant papers in the field by means of a structured search for literature.
The same is presented under various focused themes/topics. We first describe briefly the
concept of lean manufacturing and its adoption and application in SMEs. Next, we move on
to the literature that specifically focuses on the implementation of lean manufacturing
practices in small- and medium-sized manufacturing enterprises in India. As we seek to
understand the adoption of lean manufacturing practices and its impact on Indian SMEs
performance over last few decades, we also review the literature about major lean barriers
encountered by SMEs. These articles are summarized in the following themes.
2.1 Lean in practice in SMEs
Since the 1980s, scholars have been engaged in research to better understand and predict
outcomes of lean transformation while practitioners continue their quest to operationalize and
apply lean concepts for process and business improvement (Stone, 2012). In the year 1988,
a researcher (Krafcik, 1988) initially proposed the term “Lean”based on the Toyota Production
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System (TPS) in his thesis at Massachusetts Institute of Technology (Shah and Ward, 2007;
Hu et al., 2015), which was then popularized by two books, namely “The Machine that changed
the World”(Womack et al., 1990) and “Lean thinking”(Womack and Jones, 1996). The main
goal of the lean concept is viewed as the reduction in waste and to achieve reduced lead times
(Hines et al., 2004; Andersson et al., 2006; Lyons et al., 2013; Manfredsson, 2016). The majority
of research studies on lean identify seven types of fundamental waste: correction,
overproduction, motion, material movement, waiting, inventory and processing (Filho et al.,
2016). Analysis of lean implementation effects on performance parameters concurs and states
that improvement on costs and lead time will occur (Narasimhan et al., 2006; Hallgren and
Olhager, 2009; Pullan et al., 2013; Wong et al., 2014), supporting the established main goal of
lean. Lean production is evidenced as a model where every person of the organization
assumes a role of a thinker, and their involvement promotes the continuous improvement
culture and gives companies the agility they need to face the market demands and
environment changes of today and tomorrow (Alves et al., 2012). Researchers have conducted
empirical studies to understand the relationship between lean implementation and
improvement in organizational performance of SMEs (Achanga et al., 2006; Antony et al.,
2008; Timan et al., 2012; Kumar et al., 2014). SMEs have not been given due attention for
developing their effective strategies in the past (Singh et al., 2010). However, there appears to
be little empirical evidence in publications on the implementation of lean practices and the
factors that influence them in SMEs (Bruun and Mefford, 2004; Achanga et al., 2006;
Marodin and Saurin, 2013; Bhamu and Sangwan, 2014; Hu et al., 2015; Manfredsson, 2016).
Majority of SMEs has simple systems and procedures which allow flexibility and quicker
response to customer needs than large organizations ( Jain et al., 2015). Lean manufacturing
is made up of several tools and techniques, which are used together as continuous
improvement devices to identify and eliminate waste while increasing flexibility (Mathur
et al., 2012). Some of these tools and techniques include value stream mapping, 5S workplace
organization, total productive maintenance, setup reduction, Kanban and pull production
methods, cellular manufacturing, visual signals and process standardization. Table I
provides a list of lean practices exercised in SMEs as found in the relevant literature.
Irrespective of how it is perceived, the concept of lean manufacturing has unarguably
been reasonably discussed in the context of SMEs in the past few decades by several
researchers to provide evidence on the implementation of lean manufacturing practices that
might influence the performance dimensions of SMEs. Unfortunately, many SMEs are still
reluctant to apply lean practices to improvise their manufacturing competencies, without
sufficient conviction (Achanga et al., 2006). These enterprises require that the
implementation costs and the subsequent benefits of lean manufacturing adoption be
projected upfront before they are able to commit. Therefore, this research paper aims to
outline some of the practices that are perceived to be critical in the successful application of
lean manufacturing within SMEs community.
2.2 Dissemination of lean activities and practices in Indian SMEs
SMEs in both developed and developing economies are defined by a number of factors and
criteria, such as location, size, age, structure, organization, number of employees, sales volume,
worth of assets, ownership through innovation and technology (Rahman, 2001). Indian
manufacturing sectors are classified into three categories based on their investment in plant
and machinery (original cost excluding land and building and the items specified by the
Ministry of Small Scale Industries). Enterprises having an investment of less than 25 lakh
rupees are categorized as micro enterprises, enterprises with investment between twenty-five
lakh rupees and five crore rupees are categorized as small enterprises, while the enterprises
with investment between five crore and ten crore rupees are classified as medium-scale
enterprises (Ministry of MSMEs, 2017). After the globalization of market, SMEs have got
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many opportunities to work in integration with large-scale organizations. SMEs perform a
critical role in most developing economies, as they are highly flexible and responsive suppliers
to large firms, customers of large firms and suppliers to end-user customers in their own right
(Aoki, 2008; Kumar et al., 2014). Any compromise in quality by SMEs could jeopardize
the whole manufacturing supply chain, resulting in raising costs because of poor quality
(Aoki, 2008; Dora et al., 2013; Kumar et al., 2014). Recent intense competition across the
manufacturing sector requires that firm must excel simultaneously in several areas without a
trade-off, including innovativeness and responsiveness to their customer (Singh et al., 2008).
Indian SMEs need to restore their competitiveness, as their contribution in India’sGDPis
about 22 percent, with a share of almost 40-45 percent of manufactured output and exports
(Ministry of MSMEs, 2017). Hence, small- and medium-sized enterprises are very important
within India’s economic structure, but they are facing significant challenges as present global
manufacturing environment is getting increasingly competitive than ever before.
To meet the challenges of offering high standards of quality, cost and delivery to several
multinational firms, Indian manufacturing SMEs must implement effective approaches,
such as lean manufacturing, to continually and systematically improve their operations
(Saboo et al., 2014). Today, India is the place to be for design, development and manufacturing
of innovative products, and major companies from Europe, USA and Japan are viewing Indian
industries as active participants in the entire value chain (Panizzolo et al., 2012). Application
of lean implementation for deploying continuous improvement is increasing largely in the
last decade and seems to have become the de-facto approach for industry (Hawkins, 2001;
Author(s) and year Lean practices
ABCDEFGHI J KLMNOP
Filho et al. (2016) * * * * * * * *
Thanki et al. (2016) * * * * * * * *
Manfredsson (2016) * * * * *
Hu et al. (2015) * * * * * * * * * * * * * *
Jain et al. (2015) * * *
Saboo et al. (2014) * * * * * * *
Kumar et al. (2014) * * * * * * * *
Powell et al. (2013) * * * *
Mathur et al. (2012) *
Timan et al. (2012) * * * * * * * * * * * *
Zhou (2012) * * * * * * * * * * *
Panizzolo et al. (2012) * * * * * * * * * * * * * * * *
Singh and Khanduja (2010) * * *
Anand and Kodali (2009) * * * * *
Singh et al. (2008) *
Chandandeep (2008) *
Real et al. (2007) * * * *
Bonavia and Marin (2006) * * * * * * *
Kumar et al. (2006) * * * * * * * * * * * * * *
Achanga et al. (2006) *
Hawkins (2001) * * * * * * * *
Gunasekaran et al. (2000) * *
Gunasekaran and Cecille (1998) * * * * * * *
Lee (1997) * * * * * * *
Notes: A–5S (Workplace Organization); B –SMED/Setup time reduction; C –Visual Control; D –Cellular
Layout; E –Total productive maintenance; F –Kanban (Pull production); G –Employee training & teamwork;
H–Heinjunka (Leveling the workload); I –Continuous flow; J –Lot size reduction; K –Kaizen; L –Value
Stream Mapping; M –Quality management programs; N –Jidoka (Automation); O –Standardized Work/
Process; P –Poka yoke (mistake proofing). *Tools and techniques reported in literature
Table I.
Lean manufacturing
practices in SMEs: a
literature review of
practices over
previous two decades
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Kumar et al., 2006; Anand and Kodali, 2009; Timan et al., 2012). Advancements in information
technology and business analytics technologies provide unprecedented opportunities for
designing, implementing, and expanding lean operation from global companies to small- and
medium-sized enterprises (Singh and Khanduja, 2010; Zhou, 2012; Powell et al., 2013).
Realizing the importance of manufacturing as a competitive weapon, the government of India
has instituted the lean manufacturing competitiveness scheme for micro, small and medium
enterprises to assist firms in reducing their manufacturing costs through improved process
flows, better space utilization, scientific inventory management and reduced engineering time
(Panizzolo et al., 2012).
Specifically, in relation to India, there are few empirical research studies that address
lean manufacturing and performance linkages in Indian SMEs. Evidence from such research
studies shown in Table II suggests that the dissemination of lean manufacturing in Indian
SMEs has been substantial in the automotive, pharmaceutical, metal die-casting and
component manufacturing sectors. Although lean is becoming a popular technique for
productivity improvement, SMEs are still not certain of the cost of its implementation and
the likely tangible and intangible benefits that they may achieve (Achanga et al., 2006).
Most of these enterprises fear that implementing lean manufacturing is costly and time
consuming. In the SMEs, the perceived benefits of lean are low and the management is often
reluctant to invest in consultants due to high consultancy fees (Panizzolo et al., 2012).
More generally from the reviewed literature evidence, it is observed that the dissemination
of lean manufacturing practices in Indian SMEs could be constrained by the lack of
in-depth training, an inadequate number of qualified lean thinkers and limited lean
education-industry association.
2.3 Obstacles to the implementation of lean improvement techniques for SMEs
The implementation of a lean strategy, like any other productivity improvement initiative, is
believed to harbor enormous difficulties (Denton and Hodgson, 1997). For SMEs, the change
from traditional manufacturing practices to lean is challenging from both internal and
external factors (Filho et al., 2016). Based on the literature review, major impeding factors
identified in implementing lean culture within SMEs are listed in Table III.
One of the main goals of implementing a lean strategy is the elimination of everything that
does not add value to product or services (Womack and Jones, 1996). Also, it has been proved
that not all lean improvement initiatives could be adopted by SMEs (Yusof and Aspinwall,
2000) due to high-cost investment factor in the technology. Small- and medium-sized
enterprises, by virtue of their size are likely to struggle with financial, technical and time
constraints, which are further amplified by a number of obstacles such as the lack of technical
and managerial expertise and human resources deficiencies (Achanga et al., 2006). Insufficient
expertise, unfortunately, often results in ad hoc adoption of individual practices, but fails to
establish the system-wide philosophy and culture necessary to support such practices
(Mathur et al., 2012). This lack of expertise could be overcome through the use of external
consulting, but this option is often not a possibility as organizations would require financial
resources to hire consultants, as well as to aid the actual implementation of such ideas.
Training of people to utilize the techniques also requires adequate financial resources. Most
SMEs are financially inept and harbor poor financing arrangements. Financial inadequacy is
therefore a major hindrance to the adoption and subsequent implementation of successful lean
manufacturing within SMEs (Achanga et al., 2006). Another complication in applying lean
principles is the relentless, rapid pace of change in technology in most SMEs as they add new
capacity and their product design evolve. To cope, companies must give lean initiatives
shorter time horizons than they have elsewhere and implement them more swiftly (Panizzolo
et al., 2012). In some cases, it is perceived by SMEs that application of lean may put their
current state of production at risk, resulting in financial losses.
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Most researchers suppose that human resources (people) are essential to the implementation
of lean, since people are often the key elements in operations (Zhou, 2012).
The organizational structures in SMEs are often flat and less hierarchical than in large
organization (Antony et al., 2005). Flat structure of SMEs and fewer departmental interfaces
normally result in a more flexible work environment. Indian small- and medium-sized
manufacturing industries have their own very special problem. The workmen employed in
these small industries come from a poor and uneducated background. They learn their work
by the informal apprenticeship route, and they grow in their skills by mistakes and practice.
Such home-grown workmen, with little or no formal technical training, are the backbone of
Author(s) and year Lean practices Industry type in India Impact on measures
Thanki et al. (2016) Total productive
maintenance
Work standardization (5S)
Kanban
Kaizen
SMED
visual control
Value-stream mapping
(VSM)
Cellular layout
Green Manufacturing
Indian manufacturing SMEs Quality
Cost and productivity
Lead time
Product design
Firm’s profitability
Brand value
Market position
Customer satisfaction
Jain et al. (2015) Total productive
maintenance
Work Standardization (5S)
Employee training
Irrigation pipe manufacturing Overall equipment
effectiveness
Machine availability
Quality rate
Cycle time
Saboo et al. (2014) VSM
Kanban
SMED
Cellular layout
Poka Yoke
Training
Continuous flow
Sheet metal and plastic injection
molding components Production lead time
Inventory
Changeover time
Cycle time
Panizzolo et al.
(2012) Lean manufacturing (as an
overall approach) Surgical disposable needles and
syringes
Bearing balls
Iron Handicraft
Automotive brakes and clutches
Overall equipment
effectiveness
Overall Plant Efficiency
Upstream value stream
performance
Downstream value
stream performance
Singh and
Khanduja (2010) SMED
5S
Poka Yoke
Cycle time reduction
Foundry (Metal Casting) Financial measures
Kumar et al. (2006) Lean manufacturing (as an
overall approach) Metal Die-casting Manufacturing
unit Machine downtime
Employee’s confidence
Overall equipment
effectiveness
Overall plant efficiency
Customer satisfaction
Machine set-up time
Number of accidents at
workplace
Financial measures
Table II.
Examples of
application of lean
practices in Indian
manufacturing SMEs
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the SMEs manufacturing ecosystem. More often than not, they are illiterate too, and the
work progresses more by verbal instructions, rather than relying on the written document
(Mathur et al., 2012). Also, workmen with low education background show an inherent
resistance to change and adapting to new organized work practices and routines, which
seriously affects the speed of lean implementation (Pingyu and Yu, 2010; Aspinwall and
Elgharib, 2013). Such an informal climate with flexible work planning (Antony et al., 2008)
could harm the standardization of process (Bakas et al., 2011). As shown by multiple annual
surveys by Lean Enterprise Institute, most enterprises employing lean had a tendency to
backslide to the old style of traditional practices, thereby further harming the
standardization process (Sproull, 2009).
In order to succinctly implement the concept of lean manufacturing successfully
within SMEs, the recipient company should harbor strong leadership traits capable of
exhibiting excellent project management styles (Achanga et al., 2006). Managing
organizational culture effectively requires clarity in the minds of senior management
about the type of culture and specific norms and values that will help the organizations
reach its objectives (Singh et al., 2008). Senior management and culture are also considered
an essential area and it is crucial for management to understand and provide ample
support to apply lean in the organization (Zhou, 2012). The challenge before senior
management is to cultivate an organizational culture that supports lean. Communication
and collaboration among employees at both similar and different hierarchical levels but
also from functional levels areas is very important and critical to ensure that the vision
and mission of lean are attainable and shared throughout the company. Many SMEs, by
default, reflect in their culture the personality of senior management personnel and are
constrainedbythisintermsofchanges they may be able to make (Achanga et al., 2006;
Nordin et al., 2010). Supportive culture and environment in an organization that brings
employees to work, communicate and grow together are essential to make lean initiative
successful (Zhou, 2012). This should go beyond a direct plan to improve operational issues
also to include more strategic organizational factors needed to support
lean implementation, such as empowering employees and their participation in decision
making and ensuring a supportive organizational culture for lean through rewards and
recognition (Hu et al., 2015). Good leadership ultimately fosters effective skills and
knowledge enhancement among its workforce.
Challenges/impeding factors Supporting literature
12345678910
Inadequate knowledge and Lean expertise * * * * * * * *
Lack of senior management commitment * * * * * * *
Organizational culture * * * *
Inability to quantify benefits * * *
Backsliding to old ways of working *
Lack of resources * * * * * *
Attitude of workmen * * * *
Internal resistance * * * * * * *
Risk of disruption in operations * * * *
Lack of budget * * * * *
Lack of clarity across functional groups * *
Poor training * * * *
Need of integration with business associates * * *
Notes: 1–Kumar et al. (2006); 2 –Nordin et al. (2010); 3 –Bakås et al. (2011); 4 –Timans et al. (2012);
5–Panizzolo et al. (2012); 6 –Mathur et al. (2012); 7 –Aspinwall and Elgharib (2013); 8 –Kumar et al. (2014);
9–Hu et al. (2015); 10 –Zhou (2012). *Challenges/impeding factors reported in literature
Table III.
Factors impeding
lean implementation
in SMEs
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Since the scope for improvement within the organizations with lean implementation is
evolving, for further effectiveness, an organization could think of newer alternatives of
integrating the business activities beyond the organizations’boundary. Particularly when
dealing with such external relationships, firms do face a challenge of influencing and
convincing business associates to restructure their business practices to lean, such as to
manage inventories in a new and innovative way (Li et al., 2006; Zhou, 2012). SMEs may lack
the market power to influence business associate networks, particularly suppliers in adopting
lean practices (Hu et al., 2015). For effective quality management of external supplier quality,
SMEs should reduce the number of suppliers in their supply base and purchasing department
should award contracts based on quality rather than strictly on cost (Stanley and Wisner,
2001). No further study was found within the terms of our literature search which investigates
the applicability of lean-based principles in SMEs in their supply chain.
3. Research methodology
3.1 Research design and assessment tool
The research methodology is typically based on the objectives of the research and type of
data collected through a semi-structured questionnaire survey. The basic objective of the
survey is to assess the present status of lean implementation and identify the challenges
faced during adoption and implementation of lean practices in small and medium
manufacturing enterprises. In this study, pre-tested constructs from past empirical studies
were adapted to ensure validity and reliability of survey instrument. The prime
consideration while developing the survey instrument was to keep it short and simple, such
that it is understood by entrepreneurs and managers of small- and medium-sized enterprises
in India, as most of them are not well versed with technicality aspect of lean practices.
The questionnaire consisted of three parts: the background information of the organization
and respondent, the lean manufacturing implementation practices and barriers, and the lean
assessment tool consisting of four constructs, namely process improvement (PI), waste
minimization (WM), flow management (FM) and operational performance (OP). The process
of developing a questionnaire also included a pilot survey. The measurement instrument
was developed from an extensive review of literature on lean manufacturing practices.
Experts from industries and academics were also consulted. Majority of the feedback from
experts gave positive remarks and certified that questionnaire was acceptable for data
collection. To access content validity, the instrument was pretested at several
manufacturing plants, before proceeding for final data collection phase.
As identified from the literature review, the lean practices and barriers constructs were set
up on a Likert scale to measure the extent of lean implementation or identification of impeding
factors to lean adoption in the organization. These measures also gave the flexibility to
respondents to consider the “Un-familiar”and “not-applicable”option against each lean
practice implementation and barrier, respectively. The PI, WM and FM constructs were
adapted from Shah and Ward (2003) and Rahman et al. (2010). PI construct included six items,
namely, reduction of inventory, preventive maintenance, cycle time reduction, use of new
process technology, use of quick changeover techniques and reduction of setup times. WM
construct included four items, namely, eliminating waste, use of error proofing techniques, use
of pull-based production systems and removal of bottlenecks. FM included three items,
namely, reducing production lot size, focus on single suppliers and continuous/one-piece flow.
TheOPwasadaptedfromCuaet al. (2006), Konecny and Thun (2011), Kumar et al. (2014), and
Bortolotti et al. (2015). The OP parameters included six items, namely, unit cost of
manufacturing, quality conformance, production rate, quick delivery, flexibility to change
product mix and flexibility to change volume. For the items measuring practices, the
respondents were asked to indicate their agreement or disagreement with the statements
provided using a five-point Likert scale, where a value of 5 indicates strong agreement and
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1 indicates strong disagreement. For the performance measure, the respondents were asked to
evaluate firm’s performance relative to its competitor. This research approach was adopted
to minimize the possibility of bias from subjective answers.
The respondent SMEs were at different stages of lean implementation. In order to
identify the lean status of each respondent firm, cluster analysis was performed to segment
the manufacturing SMEs into three groups, namely, “Lean beginners”group, “In-transition
Lean”group, and “Lean”group for further analysis. Cluster analysis was applied based
upon the period of implementation of lean practices. The effect of a period of implementation
of lean practices on OP has been assessed by many researchers (Seth and Tripathi, 2006;
Zhou, 2012; Singh and Ahuja, 2014; Sahoo and Yadav, 2017). Manufacturing firms with up
to three years of lean implementation are coded as “lean beginners”group. During this
period, initial investments and efforts are made to overcome initial resistance and to orient
organizations as per requirement of approaches (Ahire and Rana, 1995). Similarly, the
situation may require developing new performance indicators and various data capturing,
measuring and analyzing tools and concepts. This phase normally goes for three years since
the beginning of implementation (Ahire, 1996). Manufacturing firms with three to five years
of lean implementation are coded as “in-transition lean”group. Manufacturing firms in
this period move from early adoption phase to wide application in various areas, and the
firms start realizing the benefits of lean implementation practices. Manufacturing firms with
more than five years of lean implementation are coded as “lean”group. Manufacturing firms
in this phase, represent a high degree of implementation of lean practices. Over a long
period, the benefits accrued from lean implementation drives give a strategic and
competitive edge to the manufacturing firms in terms of cost, delivery, flexibility and
customer satisfaction in comparison to competitors (Seth and Tripathi, 2006). To analyze the
data, computer software SPSS for window package (Version 20.0) has been used.
3.2 Data collection and respondent profile
Survey data were collected from 121 small and medium manufacturing firms in India,
referring to database, which was obtained from the 2016 SME business directory
(manufacturing) of Small & Medium Business Development Chamber of India.
The snowball sampling technique was also used for the identification of respondents.
The data were collected by visiting the manufacturing firms and interviewing
entrepreneurs and managers at different organizational levels. Table IV shows general
background of the respondent companies. All the selected companies have implemented
lean manufacturing practices during the last one to ten years. Responses on the survey
questionnaire were collected personally through verbal interaction and personal meeting
with the respondent, explaining them the context of present research work, its significance
and to clarify any doubts/queries, such as to facilitate comprehensive and clear-cut
responses. Most of the respondents representing the firm were production and QC/QA
personnel. Most of them (69.4 percent) have been working for more than ten years in that
particular company. They were selected because they have first knowledge and
experience and they were directly involved in the implementation of lean manufacturing
program in their companies. As a result of cluster analysis, approximately 40 percent of
the respondents (48 firms) were identified as “lean”firms. Similarly, “lean beginners”firms
(n¼37) and “in-transition lean”firms (n¼36), each constituting approximately 30 percent
of the respondents’sample, were identified using cluster analysis.
3.3 Content and construct validity
Reliability tests were carried out to ensure that the questionnaire was reliable. Reliability
measurement is an indication of the stability and consistency of the instrument applied.
Cronbach’sawas used to test the reliability. The summary of the reliability and validity
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analysis of the lean assessment tool is presented in Table V. The Cronbach’sαscores for
each construct ranged from 0.71 to 0.77. Since the αvalues were considerably higher than
the 0.60 threshold level, all constructs exhibit a high degree of reliability.
In the validity test results, the KMO values of all four constructs were varying from
0.67 to 0.82, all exceeding the minimum score of 0.50, demonstrating that all these areas
and factors are valid. In summary, it can be concluded that all the areas of interests in the
study are reliable and valid.
4. Findings from the survey: analysis and discussions
4.1 Lean manufacturing implementation status in Indian SMEs
To accurately assess the extent of lean implementation in respondent SMEs, a list
of 16 lean tools and techniques were included in the survey. Respondents were asked to
indicate on a five-point scale, which tools have been implemented and their level of
adoption of lean practices in their organization. The scale ranged from 1 to 5, where 1 ¼no
implementation, 2 ¼little implementation, 3 ¼some implementation, 4 ¼extensive
implementation and 5 ¼complete implementation. Respondents were also given an
option of “un-familiar.”TableVIpresentsthemeanvalues and standard deviations
of these tools and techniques of all respondents divided into different clusters. Those lean
practices having a mean score less than 3.0 indicate some level of implementation in
the manufacturing firms.
Sample
characteristic Classifications Total Percent Sample characteristic Classifications Total Percent
Respondent
position President/COO/
director 24 19.8 Respondent’s years of
experience with the firm 0-3 years 10 8.3
Quality manager 29 23.9 4-9 years 27 22.3
Production
manager 42 34.7 10-15 years 26 21.5
Lean specialist 6 5.0 16-20 years 26 21.5
Others 20 16.6 21-48 years 32 26.4
Firm
employees
o50 37 30.5 Firm sales
(In Indian Rupees)
o25 lakhs 12 10.0
50-100 26 21.5 25-100 Lakhs 29 23.9
101-150 29 23.9 1-5 crores 57 47.1
151-200 8 6.7 5-10 crores 13 10.7
W200 21 17.4 W10 crores 10 8.3
Area of
industry Automotive 10 8.3 Ownership type of firm 100 percent
local 77 63.6
Electronics parts 21 17.4 100 percent
foreign 15 12.5
Electrical parts 15 12.5 Joint venture 29 23.9
Chemical 12 10.0 Number of operating
locations of the firm 1-3 58 47.9
Packaging 5 4.1 4-6 49 40.5
Food 14 11.6 7 and above 14 11.6
Polymer products 11 9.0 Years of Lean
implementation
o3 years 37 30.5
Metal components 8 6.7 3-6 years 36 29.8
Building
components 6 5.0
W6 years 48 39.7
Industrial
equipment 16 13.2 Quality management
system certification No
certification 47 38.8
Others 3 2.5 ISO 9001/
14001 74 61.2 Table IV.
Respondent profile
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During the early phase of adoption, organizations make an effort to integrate lean into
existing manufacturing framework. If lean is not introduced properly, then it can lead to
more pitfalls than successes. Total preventive maintenance initiative with the highest mean
value of 3.94 is the first step toward lean. Lean maintenance practices cut costs and improve
production by minimizing downtime. Followed by maintenance functions, many SMEs
manufacturing facilities opted the path toward 5S-workplace organization (mean
score ¼3.81), visual control (mean score ¼3.69) and housekeeping methodology as a part
of lean or continuous improvement philosophy. Conceptually, visual control is not the same
as 5S but the two ideas are closely linked as both of them are workplace organization
practices. Visual control is a lean technique where information is communicated by using
vital signals instead of texts or other written instructions. The design is deliberate in
allowing quick recognition of the information being communicated, in order to increase
efficiency and clarity. Other noticeable lean tools and techniques with a high mean value
include lot size reduction, kaizen and setup time reduction with respective mean scores of
3.50, 3.22 and 3.00, respectively. However, the least practiced tools by the “lean beginners”
SMEs in early adoption phase are value stream mapping (mean score ¼2.25), poka-yoke
(mean score ¼2.22), heijunka (mean score ¼2.14) and jidoka (mean score ¼2.08) with a
respective unfamiliarity level of 21.62, 37.83, 27.02 and 32.43 percent among respondents.
These results imply a low level of implementation among the respondent firms and also
clearly demonstrate the lack of knowledge of lean philosophy and its tool among
“lean beginners”manufacturing SMEs.
Similarly,for the second group of SMEs in transition phase of lean implementation, the top
five lean implementation tools and techniques include 5S-workplace organization, total
productive maintenance, kaizen (continuous improvement), visual control and SMED (set-up
reduction) with a respective mean score of 3.95, 3.92, 3.84, 3.81 and 3.68. There has been an
improvement in the rank of SMED, as reducing machine setup time in SMEs manufacturing
setting addresses delays and inefficiencies to enhance machine efficiency. This implies that
Construct Items Total variance
explained (%) Cronbach’sαKMO
Process improvement (PI) PI1: Reduction of inventory 47.23 0.77 0.82
PI2: Preventive maintenance
PI3: Cycle time reduction
PI4: Use of new process technology
PI5: Use of quick change-over
techniques
PI6: Reducing set-up times
Flow management (FM) FM1: Reducing production lot size 57.89 0.76 0.75
FM2: Focusing on a single supplier
FM3: Continuous/one-piece flow
Waste minimization (WM) WM1: Eliminate waste 63.01 0.71 0.67
WM2: Use of error proofing
techniques (Pokeyoke)
WM3: Using pull-based production
system (Kanban)
WM4: Removing bottlenecks
Operational performance (OP) OP1: Unit cost of manufacturing 43.86 0.74 0.80
OP2: Quality conformance
OP3: Production rate
OP4: Quick delivery
OP5: Flexibility to change product mix
OP6: Flexibility to change volume
Table V.
Reliability and
validity results of the
lean assessment tool
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No/little Lean n¼37 In-transition Lean n¼36 Lean n¼48
Tools and techniques Rank Mean SD Unfamiliar
(% respondent) Rank Mean SD Unfamiliar
(% respondent) Rank Mean SD Unfamiliar
(% respondent)
Kaizen (continuous improvement) 5 3.22 1.24 10.81 3 3.84 1.46 2.77 4 3.81 1.23 2.08
Quality function deployment 12 2.42 1.32 13.51 14 2.62 1.38 22.22 11 3.29 1.22 8.33
SMED (setup time reduction) 6 3.00 1.10 8.10 5 3.68 1.38 8.33 3 3.90 0.90 0
Continuous flow 9 2.67 1.26 16.21 15 2.43 1.01 19.44 14 3.13 1.33 6.25
Total Productive maintenance 1 3.94 1.12 0 2 3.92 1.44 0 2 4.04 1.25 0
Cellular layout 8 2.94 0.89 18.91 8 3.24 1.36 8.33 10 3.40 0.74 0
5S (workplace organization) 2 3.81 1.04 0 1 3.95 0.97 0 1 4.17 1.02 0
Lot size reduction 4 3.50 1.38 5.40 11 3.08 1.23 5.55 12 3.25 1.16 4.17
Standardized work/process 7 2.97 1.28 10.81 13 2.76 1.42 16.67 13 3.17 1.21 4.17
Poka Yoke (mistake proofing) 14 2.22 1.33 37.83 10 3.11 1.07 8.33 8 3.54 1.03 6.25
Kanban (pull system) 11 2.53 1.30 24.32 9 3.19 0.94 5.55 15 3.04 1.23 8.33
Employee training and team work 10 2.58 1.48 27.02 7 3.35 1.51 2.77 9 3.48 1.01 2.08
value stream mapping (VSM) 13 2.25 1.18 21.62 6 3.41 1.42 5.55 6 3.71 1.09 4.17
Jidoka (automation) 16 2.08 1.27 32.43 12 2.89 1.10 13.88 7 3.63 1.28 12.50
Visual control 3 3.69 1.43 5.40 4 3.81 1.15 5.55 5 3.73 1.32 2.08
Heinjunka (leveling the workload) 15 2.14 1.15 27.02 16 2.38 1.23 33.33 16 2.96 1.34 10.41
Table VI.
Lean tools and
techniques applied in
Indian SMEs
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“in-transition lean”firms have better product flexibility and manufacturing capability, as
compared to “lean beginners”firms. Manufacturing SMEs in the transition phase have also
shown the adoption of advanced lean tools and techniques that include value stream mapping,
employee training and team work, cellular layout, Kanban and Poka Yoke having a respective
mean score of 3.41, 3.35, 3.24, 3.19 and 3.11. However, the least practiced tools by the
“in-transition lean”SMEs in transition phase are standardized work/process
(mean score ¼2.76), quality function deployment (mean score ¼2.62), continuous flow
(mean score ¼2.43) and heijunka (mean score ¼2.38) with a respective unfamiliarity level of
16.67, 22.22, 19.44 and 33.33 percent among “in-transition lean”group respondents. It was
evident from the results that “in-transition lean”firms are moving from early adoption phase
and exploring the wide application oflean practices in various areas. These results imply that
the “in-transition lean”firms have shown a shift of focus toward long-term strategic
continuous improvement initiatives, which is evident from the comprehensive application of
lean tools,but at the same time mixed evidences alsoindicate limited dissipation of knowledge
of lean philosophy among “in-transition lean”manufacturing SMEs.
Among all of the lean manufacturing practices, 5S-workplace organization methodology is
found to be the leading lean practice among “lean”firms, with a mean score of 4.17. Other lean
practices that have been extensively implemented are the total productive maintenance (mean
score ¼4.04), SMED –set up time reduction (mean score ¼3.90), kaizen (mean score ¼3.81)
and visual control (mean score ¼3.73). However, the least practiced tools are the standardized
work/process (mean score ¼3.17), continuous flow (mean score ¼3.13), Jidoka (mean
score ¼3.04) and Heinjunka (mean score ¼2.96) with a respective unfamiliarity level of 4.17,
6.25, 12.50 and 10.41 percent. These least adopted lean tools and techniques demand large
investment in equipment and facilities, hence they are not widely adopted by “Lean”
manufacturing SMEs. As “lean”firms become more stable and knowledgeable, they tend to
apply more advance lean tools to support the end goal of a production system.
4.2 Impact of lean manufacturing practices on the performance measure of Indian SMEs
Pearson’s correlation coefficient “r”between organizational lean initiatives and OP
measures has been computed to ascertain the contribution of specific lean initiatives
towards the realization of various OP indicators. Analyzing the survey data, a correlation
analysis shown in Table VII, implied that most of the lean measures have the moderate and
significant relationship with OP studied. Only those pairs with Pearson correlation “r”⩾50
percent and statistically significant at 1 percent level of significance are considered as
having a high degree of association. The adoption of PI strategy has exhibited a high degree
of association (r¼0.594) with OP measures. The result highlights that all PI practices have
effectively contributed towards the competitive unit cost of manufacturing. Respondents do
not find the reduction of inventory (PI1) to affect the quality conformance (OP2) and
production rate (OP3) parameters. It has also been observed that preventative maintenance
(PI2) is found to be closely associated with the unit cost of manufacturing(OP1), quality
conformance (OP2) and quick delivery (OP4) performance parameters. Preventative
maintenance activities in any manufacturing firms improvise equipment reliability,
ensuring better upkeep of the production facilities, improving autonomous maintenance
capabilities of production operators which leads to streamlining of production system
performance, which further addresses major and minor losses/wastages associated with the
production system, resulting in improved machine availability and productivity, thereby
lowering the unit cost of manufacturing of end product. Such production system can
strategically lead to enhancement in the quality of end product and delivery to consumers,
which results in enhanced customer satisfaction. It appears that the preventive maintenance
(PI2) did not find a significant association with the flexibility to change product mix (OP5).
This is because preventive maintenance activities are most suited for the stable
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Lean manufacturing Operational performance parameters
Construct Construct parameter
OP1
Unit cost of
manufacturing
OP2
Quality
conformance
OP3
Production
rate
OP4
Quick
delivery
OP5
Flexibility to
change product
mix
OP6
Flexibility to
change
volume
OP
Operational
performance
Process
improvement (PI) PI1 Reduction of inventory 0.301** 0.167 0.074 0.239** 0.246** 0.279** 0.594**
PI2 Preventive maintenance 0.371** 0.357** 0.207* 0.355** 0.174 0.232*
PI3 Cycle time reduction 0.218* 0.317** 0.384** 0.264** 0.210* 0.268**
PI4 Use of new process technology 0.304** 0.287** 0.243** 0.346** 0.311** 0.221*
PI5 Use of quick change-over techniques 0.366** 0.313** 0.038 0.307** 0.206* 0.201*
PI6 Reducing set-up times 0.363** 0.394** 0.260** 0.347** 0.253** 0.326**
Flow management
(FM) FM1 Reducing production lot-size 0.342** 0.190* 0.367** 0.187* 0.136 0.334** 0.477**
FM2 Focusing on single supplier 0.248** 0.243** 0.271** 0.230* 0.223* 0.163
FM3 Continuous/one-piece flow 0.404** 0.222* 0.359** 0.167 0.255** 0.204*
Waste minimization
(WM) WM1 Eliminate waste 0.351** 0.227* 0.216* 0.303** 0.212* 0.288* 0.545**
WM2 Use of error proofing techniques 0.330** 0.370** 0.273** 0.217* 0.237** 0.203*
WM3 Use of pull-based production system 0.320** 0.261** 0.310** 0.316** 0.249** 0.289**
WM4 Removing bottlenecks 0.268** 0.249** 0.300** 0.260** 0.294** 0.256**
Notes: *,**Significant at 0.05, 0.01 (two-tailed), respectively
Table VII.
Correlation matrix of
observed measures
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manufacturing environment. There are several constraints associated with manufacturing
production scheduling with preventive maintenance in random flexible manufacturing
environments, which may affect several manufacturing key performance indicators. Again,
on analyzing the correlation matrix, the cycle time reduction (PI3) practices are found to be
significantly correlated with quality conformance (OP2) and production rate (OP3)
performance parameters. When a cycle time is too close to the takt time, there is little margin
for error. Most production processes have some inconsistency in them, resulting in people
falling behind the normal pace on occasion. This leads to them rushing, which, in turn, can
lead to mistakes, thereby affecting the production rate (OP3). Reducing cycle time is a
low-cost way to add a bit of a buffer to avoid these sorts of defects by workmen, thereby
improving both quality and productivity. Most lean manufacturing firms adopt a policy of
making the technology as flexible as possible, such as to ensure production and delivery of a
variety of products, to cater consumer changing needs. The same is also evident from the
analysis results, where the use of new process technology (PI4) is found to have a significant
association with the flexibility to change product mix (OP5) and quick delivery (OP4).
Both lean parameters, namely, usage of quick change-over techniques (PI5) and set-up time
reduction (PI6), have exhibited significant linkages with the unit cost of manufacturing
(OP1), quality conformance (OP2), and quick delivery (OP6). The lean production in SMEs is
dependent upon small lot sizes, which are dependent upon quick changeovers and setup
times reduction. If setups or changeovers are lengthy, then it is mathematically impossible
to run small lots of parts with low inventory because large in-process inventories must be
maintained to feed production during changeovers. It is also evident that the purpose of
reducing setup time is not for increasing production capacity, but to allow more frequent
changeovers in order to increase production flexibility (OP5 and OP6). These strategic
initiatives are perfectly suited for SMEs that allow them to produce reasonably priced
customized products of high quality that can be quickly delivered to customers.
It has been observed that the implementation of FM practices has been found to have a
moderate impact (r¼0.477) on OP (OP). Examining the results and based on respondent
interaction, it is evident that FM practices focus is found to be upon the improvement of
material flow or management co-ordination cost, with the use of small production run or lot
size and reduced coordination efforts by dealing with few suppliers. The adoption of
continuous/one flow (FM3) practices has exhibited significant linkage with the unit cost of
manufacturing (OP1). It means that production cost reduces as manufacturers attempt to
continually improve their processes in an attempt to get closer and closer to true one-piece
flow, resulting in an improvement in production rate (OP3). Small lot production (FM1) is an
important component of many lean manufacturing strategies, as it is found to be closely
associated with the unit cost of manufacturing (OP1), production rate (OP3) and flexibility to
change volume (OP6). Lot size directly affects inventory and scheduling, thereby improvising
rate of production resulting in reduced per unit product cost. Other effects identified from the
analysis are less obvious but equally important. Small lots reduce variability in the system
and hence results in smooth production. They enhance quality, simplify scheduling, reduce
inventory, enable Kanban and encourage continuous improvement. Focusing on a single
supplier (FM2) has been found to be moderately associated with all performance parameters
(OP1-OP5) expect for flexibility to change volume (OP6). A sourcing strategy focusing on a
single supplier can have many risks due to demand uncertainty and unexpected
unresponsiveness of the supplier. For manufacturing, SMEs focusing on flexibility in
manufacturing for competitive success should avoid dependenceon a single supplier (FM2) to
prevent out-of-stock conditions in case of demand shifts. Second, to reduce dependability on a
single supplier, firms should tend to focus on improving internal production capability by
investing in new technology, such that in case of demand surge, they do not have to be reliant
on a single organization.
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The result of correlation analysis indicates that the implementation of WM practices has
been found to have a strong impact (r¼0.545) on OP. Any initiative intended to move firms to
identify and eliminate wastes within a manufacturing system establishes a working
environment through self-managed project teams and problem-solving groups affecting
maintenance prevention improvements on production systems and also affecting
improvements in the reliability of manufacturing systems. This can be attributed to the
potential of lean initiatives in eliminating barriers between various organizational functions,
promoting a culture of continuous improvement resulting in the reduction of rejections
(wastage losses), thereby improving manufacturing capabilities leading to optimization of
operational cost and reduction of on-time delivery problems. A similar observation has been
observed in the correlation matrix in the context of Indian manufacturing SMEs, which
highlights that the adoption of elimination of waste core strategies (WM1) is found to have a
significant level of association with the unit cost of manufacturing (OP1) and quick delivery
(OP4) performance parameters. Error proofing is a structured approach to ensure quality all the
way through manufacturing processes through fact-based problem solving. The focus of error
proofing is not only on identifying and counting defects. Rather, it is on the elimination of their
cause: one or more errors that occur somewhere in the production process. With the use of
error-proofing technique (WM2), there is an assurance that the end product will be defect free,
resulting in improved quality conformance (OP2) and reduced cost of manufacturing (OP1).
Interestingly, the use of pull-based production system (WM3) and removing operational
bottlenecks (WM4) are found to have a significant and moderate level of association with OP
parameters being studied. Efficient operations within a small business are vital for ensuring
firm’s market competitiveness and financial gain. Anything that impedes the production flow
which threatens firm’s profitability should be identified and minimized to the best of interest.
Also, it would be imperative that production is being pulled by the customer rather being
pushed by the needs or capabilities of the production systems itself. The result is that right mix
of products are manufactured and provided in the exact amount needed and when and where
they are needed. Effective management of WM practices can maximize production system
efficiency by removing bottlenecks and adjusting system level planning to quickly respond to
customer needs without hurting the existing loaded customer orders.
In order to ascertain differences in means, “two-tailed t-test”has been deployed for
establishing the significant contributions by Indian SMEs adopting lean implementation over
significant periods of time, as shown in Table VIII. The table depicts average and standard
deviations of the extent of lean implementation and OP of manufacturing SMEs at different
levels of the implementation phase. The significant values of t (III/I) and t (III/II) have clearly
demonstrated that mean values of the organizational parameters of “lean”group are higher
than those of “In-transition lean”and “lean beginners”group. In case of t (II/I), all
organizational parameters of “In-transition lean”group have shown similar mean values as
the “lean beginners”group. This implies that the extent of lean practices are identically
No/little Lean
(I)
n¼37
In-transition Lean
(II)
n¼36
Lean
(III)
n¼48
“t”test (two-tailed)
α¼0.05
Construct Mean SD Mean SD Mean SD t(II/I) t(III/I) t(III/II)
PI 3.04 0.44 3.16 0.48 3.65 0.50 1.12 5.90* 4.51*
FM 3.03 0.43 3.14 0.68 3.83 0.64 0.84 6.57* 4.74*
WM 3.25 0.38 3.27 0.62 4.02 0.59 0.17 6.86* 5.62*
OP 3.06 0.47 3.14 0.44 3.64 0.42 0.80 6.00* 5.28*
Note: *t-value obtainedWtcritical at α¼0.05 (two-tailed)
Table VIII.
Results of two-tailed
“t”test for
organizational
parameters
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adopted by “lean beginners”group and “In-transition lean”group, as during both early
adoption and transition phase, most SMEs are focused upon improving manufacturing
processes and adopting maintenance-related practices. In summary, significant differences
were identified among clusters. As the results demonstrate, “lean”manufacturing SMEs have
statistically significant higher level of applications of all lean tools and programs as compared
to “lean beginners”and “In-transition lean”manufacturing SMEs, thereby indicating that
the implementation of lean manufacturing practices over reasonable period of time could be
instrumental in promoting efficiency and effectiveness.
4.3 Lean manufacturing barriers in Indian SMEs
To implement lean manufacturing system is not an easy task. For any change in the
organization to take hold and success, the impeding factors or barriers need to be identified
and understood. Failure to access organizational and individual change readiness may result
in the management to spend significant time, money and energy (Nordin et al., 2010). Dealing
with resistance to change requires a lot of risks and hard work (Barker, 1998; Stanleigh, 2008;
Nordin et al., 2010). To accurately identify the factors impeding lean implementation, a list of
13 impeding factors was included in the survey. Respondents were asked to rate the factors
that were considered as a barrier to lean implementation in their organization on a five-point
scale, with 1 referring to “not challenging at all”and 5 as “very challenging”. Respondents
were also given an option of “not-applicable.”Since the results of lean tools and techniques
show noticeable differences among different groups, cluster analysis was applied to examine
the challenges faced by each group. Table IX presents the mean values and standard
deviations of impeding factors faced during lean implementation of all respondents divided
into different clusters. Those lean impeding factors having a mean score higher than 3.0,
indicates being a significant barrier to lean adoption in the manufacturing firms.
The top five challenges faced by the first group of SMEs in their early phases of lean
implementation include the attitude of workmen, inadequate knowledge & lean expertise, lack
of budget, lack of senior management commitment and risk of disruption in operations having
a respective mean score of 4.08, 3.86, 3.70, 3.57 and 3.51. This group consisted of firms that
have used limited lean in their practices. Dealing with such initial obstacles is common to most
of the newly adopting small manufacturers, as they are likely to struggle with financial,
technical and time constraints. Similarly, for the second group of SMEs in the transition phase
of lean implementation, the top five challenges faced include the attitude of workmen, lack of
budget, internal resistance, inadequate knowledge and lean expertise and organizational
cultural changes having a respective mean score of 3.92, 3.69, 3.44, 3.31 and 3.22. This is the
period during which lean improvement drive get stabilized, but more investment and efforts
are made to overcome the initial resistance and to orient organization as per requirement of
lean approaches. For the lean firms, the major challenges to lean implementation include the
attitude of workmen, backsliding to old ways of working, internal resistance, the need of
integration with business associates and lack of resources having a respective mean score
of 3.52, 3.35, 3.31, 3.27 and 3.25. Over a long period of time, when the manufacturing firms
start realizing the benefits of lean implementation with entrenched network externalities
barriers and shop floor resistance, the management should focus upon the alignment of
management initiatives and organizational changes, and make efforts to facilitate better
communication and co-operation between all functional departments.
One of the major differences in the Japanese and the Indian industrial societies is the extent
of literacy and education of workmen (Mathur et al., 2012). The Indian industry is different in
its character compared to the western and Japanese industry, from where the lean philosophy
has originated. Most of the Indian SMEs employ people with low skill levels, and they do not
foster the ideology of skill enhancement (Achanga et al., 2006). Therefore, the attitude of
workmen is identified as the one of major barriers to the implementation of lean across all
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No/little Lean n¼37 In-transition Lean n¼36 Lean n¼48
Challenges to Lean implementation Rank Mean SD Not applicable
(% Respondent) Rank Mean SD Not applicable
(% respondent) Rank Mean SD Not applicable
(% respondent)
Inadequate knowledge and Lean expertise 2 3.86 1.21 8.10 4 3.31 1.28 5.55 7 3.19 1.25 2.08
Lack of senior management commitment 4 3.57 0.93 10.81 9 2.89 1.37 16.67 8 3.04 1.11 6.25
Organizational cultural changes 9 2.92 1.30 10.81 5 3.22 1.07 11.11 9 3.02 1.38 14.58
Inability to quantify benefits 8 2.97 1.28 13.51 7 3.08 1.30 5.55 13 2.48 1.34 18.75
Backsliding to old ways of working 10 2.84 1.26 16.21 8 2.94 1.12 2.78 2 3.35 1.08 12.50
Lack of resources 6 3.22 1.36 0 10 2.81 1.17 0 5 3.25 1.31 10.41
Attitude of workmen 1 4.08 1.16 0 1 3.92 1.20 0 1 3.52 1.50 0
Internal resistance 7 3.05 1.45 2.70 3 3.44 1.52 8.33 3 3.31 1.13 6.25
Risk of disruption in operations 5 3.51 1.15 5.40 11 2.69 1.24 11.11 12 2.69 1.36 4.16
Lack of budget 3 3.70 1.27 0 2 3.69 1.47 0 10 2.92 1.22 10.41
Lack of clarity across functional groups 11 2.70 1.02 8.10 6 3.11 1.37 5.55 6 3.21 1.29 8.33
Poor training 13 2.62 1.21 8.10 13 2.47 1.11 0 11 2.90 1.15 16.67
Need of integration with business associates 12 2.41 1.09 21.62 12 2.56 1.32 13.89 4 3.27 1.14 6.25
Table IX.
Challenges of lean
implementation faced
in Indian SMEs
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clustered groups. Most of lean tools and techniques are based on the collection and analysis of
data. Basic knowledge of mathematics and statistics is needed to effectively use any of these
techniques. This makes the adoption of these techniques in Indian small and medium
manufacturing industries very tricky and impractical (Mathur et al., 2012). The ability of
people to respond and adapt is critical when they face any change in situation (Nordin et al.,
2010). It is quite natural to encounter resistance from employees when introducing new lean
strategies into any organization due to thoughts that these new strategies could endanger
their job opportunities and poor performance may result in losing their jobs. Such thoughtful
threats of insecurities among employees result in resistance to change and adopt innovative
practices. Also, reverting to old ways of working may be due to thereason that lean initiatives
need additional work and responsibilities, hence employees could resist these changes even
after considerable phases of lean adoption. Lack of lean understanding among workmen is the
primary hurdle, which firms can overcome through providing a good level of education and
proper training regarding benefits of lean practices. Recognition and rewards will serve as
incentive and motivation for employee participation and continuous improvement
(Govindarajulu and Daily, 2004). But in most cases, the actual implementation of such
ideas for SMEs is not realized due to financial inadequacy.
Interestingly, “lean beginners”and “in-transition lean”firms recognize inadequate
knowledge and expertise as one of the major challenges as compared to “lean”firms where
adoption and dissemination of lean practices are relatively higher. This is because lean
manufacturing requires new knowledge and cultural change during both early adoption and
transition phase (Nordin et al., 2010). Also, a significant culture change appears as one of the
top challenges in the transition phase, as new practice adoption bythe workersis not simple to
set up and this is particularly true in labor contexts such as those of developing countries
where workers are frequently treated unfairly (Panizzolo et al., 2012). These results imply that
lean concepts and philosophy fundamentally transforms a firm operation, which leads to
shocking changes in organization’s culture (Zhou, 2012) during both early adoption and
transition phase. As firms are engaged in the new adoption of shop floor practices, many
senior management personnel do fear that thesemay lead to disruption in operations, resulting
in financial and market share loss. Also, senior management people do also feel that investing
in lean will increase the cost of production, which they cannot afford to do when facing stiff
challenges from its competitor. Lean implementation seems to act asa grassroots effort, and it
becomes incumbent upon the internal champion to educate and motivate the senior leadership
to adopt lean (Panizzolo et al., 2012) by citing examples of some Indian companies that have
reduced their production cost significantly and enhanced their bottom-line results using the
application of lean principles. Ample supports and active involvement ranging from upper
management to individual employees is crucial to the success of lean implementation (Zhou,
2012). The creation of a supportive organizational culture is an essential platform for the
implementation of lean manufacturing. High-performing companies are those with a culture of
sustainable and proactive improvement (Achanga et al., 2006).
After a considerable level of lean implementation, lack of resources was also identified as
one of the impeding factors. Lack of resources covers many aspects such as infrastructural
resources, human resources, financial resources, time, etc. Financial capacity is a crucial
factor in the determination of any successful project. During the early adoption phase and
transition phase, it is observed that SMEs lack the financial capacity to implement lean
production practices, which have surprisingly dropped to a much lower rank in “lean”group
firms. This is due to the\ fact that the benefits accrued through continuous lean efforts over
a reasonable period of time provide financial avenues, which result in improved financial
capacity in the long run.
As the firms become stable and more knowledgeable in the field of lean implementation,
they tend to apply more advance lean tools that tend to expand and go beyond the
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four walls of individual company and apply practices in a wider scope involving supply
chain partners, such as suppliers, distributors and customers (Zhou, 2012). Interestingly, the
need to integrate with other organization is one of the major challenges the “lean”group
faces, while it was ranked lower in the other two groups. Rather, a lean supply chain enables
a better understanding of the components, dependencies, and risks which enable improved
management of material, financial and information flows (Zhou, 2012). Firms do face
difficulty in implementing lean tools that concern convincing external business associates to
integrate lean into a business process (Nordin et al., 2010; Panizzolo et al., 2012). Lean
integration is a long-term strategy for improving data quality and organizational processes,
which helps the manufacturing firm to identify opportunities to improve business process
and performance in constantly changing environment. The reasons for these revelations in
this section need to be examined further by conducting a qualitative study in the form of a
case study or action research.
5. Conclusions
SMEs are commonly recognized as being critical to the health of global economy. The current
economic environment in the Indian manufacturing industry is offering a perfect opportunity
to SMEs of this country to develop and grow by acting as suppliers of large multinational
original equipment manufacturers. Given the importance of SMEs, it can be assumed that the
rapid adoption of lean practices by SMEs has become an important determinant of success in
the global market place. SMEs must be benchmarked with the best in industry practices for
continuous improvement (Jain et al., 2015). “Cost reduction without compromising on quality”
should be the motto of every manufacturing SMEs to survive in this competitive global
economy. To prosper in today’s economic environment, any manufacturing firm must be
dedicated to never-ending improvement, and more efficient ways to obtain products or
services that consistently meet customer’s need. Lean implementation practices can be
categorized as a roadmap, conceptual/implementation framework, descriptive and assessment
checklist initiatives by the manufacturing firms (Mostafa et al., 2013) to pursue operational
excellence and gain a competitive advantage over their competitors.
Evidence from the study suggests that implementing lean in small and medium
manufacturing firms is by no means an easy task, as it is heavily burdened by several internal
and external organizational barriers. In addition to the identification of the major barriers to
implementation of lean manufacturing in Indian SMEs, the paper also investigated the effect
of lean manufacturing implementation on Indian SMEs performance. The result provides
insights into the extent of lean manufacturing implementation in SMEs in the Indian context
and provides further evidence that lean practices are significant in enhancing OP. The results
show that all the three lean constructs are significantly related to OP. Both PI and WM
constructs show a high level of significance, whereas FM has shown a moderate level of
significance with OP. One possible reason could be that “PI”and “WM”lean implementation
in SMEs require less capital investment, and are focused upon hardcore maintenance and
quality improvement techniques that optimize equipment effectiveness, eliminate breakdown
and integrate the capabilities of the workforce for continuous improvement of production
parameters to attain excellence. There is no doubt about the similar relevance of FM practices
which have a moderate level of association with OP parameters. The reason could be the lack
of strategy for integration of information technology and traditional manufacturing processes
such as MRP (Material Requirement Planning), MRP II (Manufacturing Resource Planning)
and ERP (Enterprise Resource Planning), which are extensively used by large-scale
manufacturers. Nevertheless, the adoption of these systems could lead to a high production
cost, as a result of heavy investment in the IT infrastructure, internal training and after-sale
service, which is unaffordable to most SMEs. Lean manufacturing implementation requires
time, money, energy and full company commitment. The use of rigorous 5S and preventative
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maintenance appears to be a widespread practice among Indian SMEs. Due to limited
resources, it is not possible to apply all lean tools and techniques at one time.
Equally crucial to this study is also the outcome derived from the analysis of the behavior
pattern of certain characteristics of the investigated SMEs. A particular role is recognized to
top management commitment, which is instrumental in creating a performance culture to
encourage participation and performance of employees. Lack of skill and knowledge on lean
practices will cause misapplication, as a result it will fail to deliver expected results and
benefits. Securing the full benefits of lean manufacturing requires the organization to
concentrate on the entire value chain by specific lean comprehensive tools, wherever
applicable and necessary. The evidence of the study can encourage senior managers and
entrepreneurs in the process of understanding how lean principles can be practically applied
in their business. Further evidence needs to be provided through case studies from developing
economies on how effectively lean practices are being adopted and implemented in SMEs,
particularly in the case of adopting new technologies and dealing with workmen attitude.
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Further reading
Behrouzi, F. and Wong, K. (2011), “Lean performance evaluation of manufacturing systems: a dynamic
and innovative approach”,Procedia Computer Science, Vol. 3, pp. 388-395.
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business success in small and medium enterprises”,Journal of Operations Management, Vol. 20
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Dora, M., Goubergen, D.V., Kumar, M., Molnar, A. and Gellynck, X. (2008), “Adoptability of lean
manufacturing among small and medium food processing enterprises”,Proceedings of Industrial
Engineering Research Conference,Orlando, FL.
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sales volume in an automobile industry through TPM: a case study”,International Journal of
Production Research, Vol. 54 No. 10, pp. 2976-2988.
Karim, A. and Arif-Uz-Zaman, K. (2013), “A methodology of effective implementation of lean strategies
and its performance evaluation in manufacturing organizations”,Business Process Management
Journal, Vol. 19 No. 1, pp. 169-196.
Searcy, D. (2009), “Developing a Lean performance score”,Strategic Finance, Vol. 91 No. 3, pp. 34-39.
Thun, J.-H., Drüke, M. and Grübner, A. (2010), “Empowering Kanban through TPS-Principles –an
empirical analysis of the Toyota Production System”,International Journal of Production
Research, Vol. 48 No. 3, pp. 7089-7106.
Corresponding author
Saumyaranjan Sahoo can be contacted at: saumya8989@gmail.com
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