research article implementing lean practices:...

Hindawi Publishing CorporationJournal of Industrial EngineeringVolume 2013, Article ID 790291, 19 pageshttp://dx.doi.org/10.1155/2013/790291

Research ArticleImplementing Lean Practices: Managingthe Transformation Risks

Antony Pearce and Dirk Pons

Department of Mechanical Engineering, University of Canterbury, Private Bag 4800, Christchurch 8020, New Zealand

Correspondence should be addressed to Dirk Pons; [email protected]

Received 20 May 2013; Revised 15 October 2013; Accepted 28 October 2013

Academic Editor: Eleonora Bottani

Copyright © 2013 A. Pearce and D. Pons. This is an open access article distributed under the Creative Commons AttributionLicense, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properlycited.

Insightful implementation of lean is necessary for high-value manufacturing and is complementary to strategic decision makingregarding manufacture. However lean can be difficult to implement in specific organisations. One of the difficulties is decidingwhich of themany lean tools to apply andwhen to apply them.A complicating factor is changemanagement. Lean implementation isa transformational process and needs to support organisational development alongside process improvement.We develop amethodbased on risk management to identify which lean tools are most appropriate for a specific organisational setting. This permits thesituational and contingency variables to be accommodated in the lean transformation.The method is demonstrated by applicationto a small manufacturing organisation with a high-variety low-volume business model. Thus it is possible, given contextualknowledge of the organisation, to predict which lean methods are most important in the situation. This enables the prioritisationof organisational effort towards lean methods that are relevant to the organisation at that particular time in its development.

1. Introduction

Lean is considered an essential attribute of a successfulmanufacturing endeavour [1]. The underlying principle ofminimisation of waste for maximisation of productivity hasbecome profoundly influential since being developed intothe lean construct [2–4]. As lean has matured, it has beenapplied ever wider [5, 6]. This includes industries other thanmanufacturing and into manufacturing industries that werenot natural early adopters. It is this latter category that is thefocus of the present paper.

There is no doubt about the general relevance of leanprinciples. However the implementation in specific organi-sations is not straightforward and is not always successful.Sometimes this is because the principles were sound but theimplementation failed [7–9], that is, a change managementproblem. But in the more general case, removing changemanagement issues from consideration, there is still thedifficulty of deciding which of the many lean tools to apply inthe situation. This is important because lean includes manymethods, and the relevance thereof is situationally specific.Implementing lean therefore requires some specific decisions,and the outcome has an element of risk: the implementation

could succeed or fail. Unfortunately there are no specifictools for the selection and prioritisation of methods duringimplementation.

This paper explores the implementation of lean, witha particular focus on the choice of lean tools that arerelevant to specific situations. We apply a risk managementperspective, in the sense that the implementation of lean canbe an opportunity for the organisation (if implementationsucceeds) or a threat (failed implementation and wastedorganisational effort, and resistance against future attempts).Thus we explore the intersection between strategic riskmanagement and lean implementation. We show how riskconsiderations can be built into a method that can helpidentify which lean tools are most appropriate for a givensituation. We close with a case study demonstrating themethod for a small manufacturing organisation.

2. Existing Approaches toLean Implementation

Lean implementation involves selecting appropriate toolsfrom the lean arsenal to achieve process excellence. However

2 Journal of Industrial Engineering

Lean methods

Nemawashi A3 management

5S

TPM

Kanban

Poka-yoke

JITSMED

5 whys

Heijunka

CellularMfg.

VS map

Big P. map

Figure 1: Lean methods or tools: a selection of some (not all) of lean methods indicating the importance of having a selection criteria andprioritisation method for implementation.

there is a danger of focusing overly on the tool benefit andstriving for process excellence but neglecting the sustainabil-ity of the lean tool within that specific work culture. Everytime a new method is implemented there is risk introducedto the organisation: both an opportunity and a threat. On theone side is the benefit of the technique and on the other sideare the detriments. Relevant questions are:

(1) What is the benefit of the lean technique underconsideration and how likely or difficult is it toachieve? (Is it worth doing this?)

(2) How do the usage of the lean technique and itsbenefits relate to the sustainability of the change inter-vention? (Would doing this have long-term benefits?)

In this paper we are particularly interested in the situationalapplicability of lean tools and specifically the organisationaldecision making that precedes the implementation of lean.There are three issues: which of the many lean tools toimplement in a specific situation; how to make a balancedevaluation of the risks (opportunities and threats) for eachcandidate tool; and how organisational culture affects thesuccess (or otherwise) of the changemanagement implemen-tation.

2.1. Lean Management, Its Principles, and Methods. Lean is astrategy developed for production improvement. It originatedin the mass production setting of the automobile industry,specifically the Toyota Production System. It is primarily

focussed on the minimisation of waste of any form [2, 3,5, 7]. When wasteful action is eliminated the result is thatless effort, space, and capital are required and lead timeis reduced whilst quality increases and the cost of qualitydecreases [5, 10]. From its manufacturing roots, lean hassubsequently expanded to business practice generally [11, 12].Lean management is becoming the standard for systematicproductivity improvement [1].

2.1.1. Lean Tools. Superficially, lean comprises a set of toolsand techniques (kanban, 5S, TPM, SMED, etc.), and the naiveimplementation decision is simply which tools to implement.Figure 1 illustrates the multiplicity of tools available. Workhas been done on the classification of tools [13–15] andthe relevance of tools to specific wastes [16]. These go partway to addressing the problems with implementation, butsituation specificity has not been achieved; that is, it is stillnot possible to identify which tools are most appropriate inwhich situation. Consequently practitioners frequently lackthe means to make informed decisions about which tools toimplement in their situation.

2.1.2. A Typical Implementation. A typical lean implementa-tion involves an initial value stream mapping (VSM) whichdefines the journey of improvement. Next there is the organ-ising of the house. This might involve flexible work systemsand (especially) 5S (sorting, straightening, systematic clean-ing, standardizing, and sustaining). Thereafter other specific

Journal of Industrial Engineering 3

tools are implemented as relevant. These include standardwork, single minute exchange of dies (SMED), total produc-tivity maintenance (TPM), and mistake proofing (Jidoka).Further advancements might involve supply and demand,through just in time (JIT) pull systems and Heijunka (levelscheduling) [17]. Also relevant is the integration betweenlean and production planning and control systems such asmaterials resource planning (MRP). This is not always easydue to the lean emphasis on pull, whereas the reality is thatmany manufacturers benefit from hybrid production flowcontrol [18]. Systems are being developed to operationalisethis [19], though a detailed explanation is beyond the presentscope.

Therefore weaknesses in a typical lean approach can bein fixation on tools as an end in themselves. This promotesisolated improvement rather than optimisation of the entireproduction system and an incomplete appreciation of the roleof leadership for organisational development.

2.1.3. Organisational Culture and Change Leadership. In thecontext of organisational change we look for methods thatwill support sustainability, that is, obtaining enduring ben-efits. The decision to implement lean is typically a decisionof senior management, that is, a top-down change initiative.While there are many models of the change managementprocess [20–24], the process is not always as successful asintended [25, 26]. As change management shows, abruptchanges result in resistance [21, 27, 28]. At the deeper levellean is a culture, that is, a set of organisational attitudes, ratherthan a mere use of tools [29, 30]. The sustainability dependson organisational culture and the collective response to thechange. Furthermore, many of the lean tools are sophisti-cated in their requirement for a particular type of culture,including strong intrinsic motivation at the shop-floor levelfor the processes (e.g., kaizen, 5S, quality circles, work cells,and six sigma). Thus implementing lean requires a changemanagement process that fosters the outcomes, hence changeleadership through coaching [21, 27] as opposed to merelydirective top-down change. In a lean system the respect forhumans principle is equally important as the elimination ofwaste [2, 11]. Lean is commonly associated with the latterand the respect for humans component is largely neglected.True lean involves a focus on the people of an organisation,creating a culture that empowers staff at all levels to makeinnovative changes that improve productivity by reducingwasteful action (muda). This creates dynamic and flexiblelearning organisations of emergent change [7, 31, 32]. Efficientand effective communication processes enable collaborationand consensus along with shared vision and engagement[7, 32]. In this way “respect for humans” works synergeticallywith and for “waste elimination.” Neglecting the human com-ponent jeopardises the sustainability of the change andmakesit difficult to reach the level of cultural excellence for contin-uous improvement [7, 8, 30]. A popular representation of thisis the iceberg model of Hines et al. [7], with the lean tools, pro-cesses, and techniques being the visible component above thewaterline, with the unseen supporting functions being strat-egy, leadership, and employee behaviour and engagement.

This introduces a time dimension to the implementation,since culture is not instant. Consequently it may be necessaryto build that culture. Specifically, lean is implemented instages over time, by selecting tools that are appropriate tothe organisation at that point in time. It may be wiser to firstimplement simplermethodswith the viewof engagement andacceptance of staff as opposed to attempting to immediatelyintroduce the more complex lean tools. These become small“wins” that build momentum and staff confidence [7, 27, 28].Employees need to be engaged to support a difficult method(like JIT). Thus, even though certain lean tools may hold thepromise of high returns, theymay also be risky to implement.Failure could ruin future chances of success and engagement.

Implementation of lean is therefore an organisationalstrategy regarding the changing of culture over time, bythe selective and progressive implementation of lean toolsthat are situational relevant for that organisation at thattime, followed by further implementation later when theculture has caught up. Practitioners typically describe thisdeliberate temporal progression as the lean journey [7, 12, 33].Thus the concept of continuous improvement (CI) appliesnot only to the technical operations but also the strategicimplementation at organisational level.The residual difficultyis that of deciding which lean tools are relevant for theorganisation at that point in its journey. This is a questionto which we return, and in the next section we show howconsideration of organisational risk can lead to a solution.

2.2. Risk Management. All ventures that an organisationundertakes have risk, that is, uncertain opportunity andthreat. The risk management (RM) methods encourage adeliberate and integrated consideration of both these out-comes. Various standards have defined risk in the sense ofboth negative and positive aspects, for example, [34–36].Other core concepts in the RMmethod are the partitioning ofthe problem into two variables, consequence and likelihood.Thus the analysis task reduces to determining first themagni-tude of the outcome,whichmay be positive or negative, corre-sponding to opportunity or threat, respectively, and then thelikelihood of that outcome. The magnitude of the outcomemay be represented quantitatively or qualitatively. Likewisethe likelihoodmay be quantified in a probability or expressedas a subject qualitative statement (very rare. . .almost certain).These two variables are then combined to give an overall scorefor the risk. If the variables are all quantitative then a simpleproduct operation is used, but qualitative variables require amapping process.Theprocess is repeated for several scenariosunder consideration and the RMmethod assists the decisionmaking by identifying the scenario with the highest risk (orlowest as the case may be).

The risk management method is particularly effective forquantitative variables and has therefore found widespreadadoption in engineering, finance (particularly insurance),and project management situations. Although the method asa whole claims to be applicable to strategic decision makingeven at the highest level of the organisation and examples ofthis are available [37], this is not a particularly well-developedcapability of RM.


In lean implementation we are particularly focused onwhat is desirable in terms of lean success and sustainabilityand undesirable in terms of failure of the implementation.

2.3. Intersection between Lean Implementation and Risk Man-agement. There has been some prior work at the intersectionof these two bodies of knowledge. One line of enquiry,although perhaps not risk management per se, has beento identify critical success factors for lean implementation[7, 38–40]. Innovative frameworks and manufacturing tech-niques, for example, core competency based framework[41] and emergent manufacturing methods [42], have beenapplied to reduce specific “risks.”The twomethodologies havebeen compared [43] and applications in lean itself have beenused to identify and treat uncertainties (risks) in constructionprojects [44, 45]. Processes including supply chain modellinghave been used to support mitigation of risks [46–49]. Theapplicability of RM in selecting lean six sigma projects hasbeen identified [50].

Regarding the specific question of how to manage therisks in the implementation of lean, there has been workon matching of lean systems strategy to risk identification,using a systems engineering approach [51], and use of projectmanagement methods [52]. It has been suggested to mergelean thinking and “high reliability” [53] to balance thenonbuffered, “fragile” nature of lean [54]. There is lack ofmethods to improve the reliability of lean implementation[55]. In summary, reviewing the literature we found little tono application of a standardised risk assessment to a leanimplementation project.

Two other methodologies have some relevance. Theseare Agile manufacturing and Theory of Constraints. Howeverneither of these have shown any major integration with riskmanagement, though somemovement has been made in thatdirection examples: for JIT see [56], for TOC see [57].

While the lean and risk management practices each havewell-established literature, there is currently no integrationbetween the two. This is despite the fact that the implemen-tation of lean is full of risks: both the opportunities thatthe managers seek to capture, and the threats and failedimplementations that too frequently result.

The purpose of this paper is to develop amethodology forassessing the risks—both the threats and the opportunities—of the lean methods. The particular area of interest is con-textual decision-making: we wish to be able to better identifythe lean tools that are relevant to specific situations. The areaunder examination is SMEmanufacturing firms, because leanis particularly difficult to implement in such organisations.This is worth attempting, for the potential to avoid failed leanimplementation, the attendant wasted organisational effort,resistance against future attempts.

3. Approach

Our approach to this problem was to reconceptualise thedecisions surrounding lean implementation as a risk man-agement problem. We consequently developed a conceptualframework for treating lean in this way. From this we created

amethod for assessing the risks of lean practices. Importantly,this method is able to accommodate a specific organisationalcontext. We then applied the method to a case study firm.

4. Results

4.1. Conceptual Model for the Integration of Risk and Lean.We start with the principles of risk management (RM) andlean. RM has a clear set of principles [35], whereas theseare more tacit in lean. We therefore recast the contemporaryunderstanding of lean into a set of principles and thencompare and contrast these with those from RM.

The results are shown in Figure 2. The major differencein the function of risk management is to explicitly addressuncertainty, whereas lean explicitly addresses wasted effortthrough the optimisation of flow. Nonetheless there is a clearfit between the principles. Both lean and risk managementfocus on “value”. The risk approach protects value and leansupports this by focusing on providing customer value. Bothare systematic and data driven. Both implementations aretailored to the organisation, take into account human andcultural factors, aim to be inclusive of the entire system(not compartmentalised or locally focused), and includeall stakeholders in the processes. Both are dynamic andresponsive to change and facilitate continual improvement ofthe organisation.

Next we compare the frameworks. Again, RM is moreorganised in this regard and already has a framework and wecreate a comparative one for lean. To do this we merge thelean iceberg model [7] and the 5 principles of lean [12]. Theresults are shown in Figure 3.

The lean concepts are synonymous to those of the riskmanagement strategic process. The mandate and commit-ment of the framework is synonymous with managementcommitment, strategy, leadership, and alignment within theorganisation. This is made more clear from the detaileddefinition in the standard [35] (cf. [7]). The cycle itself,design, implement,monitor, review, and continually improve,is a simple PDSA (or PDCA). This cycle came out of thequality and continuous improvement field [58, 59] whichare consolidated in lean thinking. The five key principles oflean [5] can be shown to relate to the PDSA cycle althoughpossessing specific meaning to lean thinking, that is, definingvalue and planning for the flow of value with as little waste aspossible and the goal of perfection in view.

The final part of the conceptual model is creating anintegrated process model. This is achieved by overlaying thelean processes on the risk management process; see Figure 4.Theongoing communication process indicated as key to goodrisk management is very much a part of continuous improve-ment and lean. Toyota developed particularly efficient andeffective means of communication to allow consensus andcollaboration throughout along with the engagement andinput from all staff. Techniques such as A3management, withthe catchball process or nemawashi, are integral to the TPSand lean learning organisations; see [7, 32]. Establishing thecontext is synonymous to defining value from the customerviewpoint. The context in risk management strictly is both


(1) Creates and protects value.

(2) Is an integral part of all organisational processes.

(3) Is part of decision making.

(4) Explicitly addresses uncertainty.

(5) Is systematic, structured, and timely.

(6) Is based on the best available information.

(7) Is tailored.

(8) Takes human and cultural factors into account.

(9) Is transparent and inclusive.

(10) Is dynamic and iterative.

(1) Focuses on creating customer value.

(2) Integral part of organisations processes and procedures.

(3) Lean thinking and techniques support decision making.

(4) Addresses waste through optimisation of flow.

(5) Has structured yet dynamic processes and methods.

(8) Involves respect for humans and an enabling culture.

(10) Enables dynamic learning organisations of emergent change.

(11) Facilitates continuous improvement for perfection.

(6) Improvements based on review of current conditions and value in eyes of customer.

(7) Implementation tailored to the organisation based on key lean principles.

(9) Inclusive of entire system (not compartmentalised or focused on local efficiencies).

Risk management principles Learn summary of principles

Figure 2: Principles of risk management [35] besides recast principles of lean thinking on the right, showing mutually supportive andcomplementary nature of risk management and lean management.

Mandate and commitment

Design of framework

Monitoring and review of framework

Implementing Continual improvement of framework

Study (review/ measure)

Do (implement /flow)

Act (continue to perfection)

Plan (value, VSM)

Management commitment, leadership, strategy, and alignment

Risk management strategic process (framework)

Lean management strategic process

Continuous improvement

Continuous improvement

Figure 3: Risk management framework [35] compared with lean management.

internal and external looking and so in reality crosses withthe mapping of the value stream. For simplicity sake we haveincluded VSM in the risk assessment area, that is, lookingat the current state and opportunities for improvementsto get to a desired future state. In the assessment analysisstep we have identified the 5 whys tool for root causeanalysis (RCA). Other tools could similarly be used (e.g.,Ishikawa fish bone diagram). Evaluation of risk has beenoverlaid with A3management.This an A3 sheet for reporting

and formulating ideas and passing into the communicationprocess for consensus. Risk treatment is the appropriateapplication of various lean methods chosen through theassessment process. The PDSA cycle is built into the processfor monitoring and review.

In someways it is not surprising that the riskmanagementapproach matches with lean management, since both hadroots in the quality and continuous improvement systems[4, 6].


Com

mun

icat

ion

and

cons

ulta

tion

Lean communication processes:catchball, A3 management,and nemawashi

Mon

itorin

g an

d re

view

Lean:PDSA cycles

Establish context

Risk analysis

Risk evaluation

Risk treatment

Methods

Define value

Risk assessment

Risk identification VSM

5 whys

A3 manag-ement

Organisational development

∗Leadership∗Culture

development∗Change

management/leadership

Figure 4: Lean processes overlaid on risk management process as per the ISO standard [35].

4.2. Developing a Mechanism for Implementation. Havingachieved a broad conceptual integration of risk and lean, thenext step is to develop an operational method, a mechanismfor the application of RM to lean decision making. Thisneeds to be suitable for practitioners. We assume that some-one contemplating implementing lean has already acquiredbackground knowledge of various lean tools (see Table 1)and focus our method on supporting the decision-making,identifying the factors that could be considered.We do this byfollowing the risk management process taking particular careto represent the organisational factors, as these are knownto be crucial for successful implementation. The results areshown in Table 1.

4.2.1. Process. Standard tools for the strategic scanning ofrisks are PESTEL and SWOT. These are for environmentalscanning and identification of risks in the form of inter-nal strengths and weaknesses and external opportunitiesand threats (hence SWOT) and may be characterised bypolitical, economic, and other variables (hence PESTEL).The integration of these with strategic risk managementhas already been demonstrated [37]. The strategic risks areprimarily qualitative, as opposed to quantitative, and hencea matrix mapping is appropriate (as opposed to quantitativetreatment).

We therefore apply qualitative graphical techniques torepresent the risk for lean implementation. We plot, asorthogonal variables, the impact of each specific lean tool,and the likelihood of achieving that impact; see Figure 5.In this regard we use impact where the RM method usesconsequence, but the two are comparable. The impact is theeffect on the organisation in regard to lean transformation.

The chart aids in identifying where initial wins or easyimplementations can be targeted. Note that high likelihood(low difficulty) events can be critical even if the immediateimpact is not high. This is because gaining small wins is

Impact on

Low impact

Medium impact

High impact

Like

lihoo

d of

Low likelihood

High likelihood

Medium likelihood

Impact-likelihood qualitative assessment

X

Z

Q

Y

W

X is a high likelihood but has low impact event.Y is high likelihood with high impact event.Z is a low likelihood with low impact event.W is a low likelihood with high impact event.Q is a medium likelihood with medium impact event.

Figure 5: Likelihood-Impact qualitative assessment example plot.

particularly important at the outset of an implementation toensure momentum and sustainability [7, 27, 28].

In summary, we have established a method whereby theimplementation of lean can be considered a type of risk, withpotential positive and negative outcomes. We have createda method that is able to identify the risk associated with aspecific aspect or tool of lean. The next section illustrates theapplication to a case study.

5. Application to Case Study

5.1. Characteristics of the Firm. The case study is a smallto medium enterprise (SME) that is a make-to-order anddesign-build manufacturer specialising in complex parts and


Table 1: Summary of process for lean implementation risk management according to ISO 31000:2009.

Risk management processAS/NZS ISO 31000

Lean implementationApplication

Set contextLean systems reduce waste activities and increase value to customers, therebyincreasing productivity and profitability. Internal context of resources and staff cultureand sustaining the change. External context of market conditions.

Perform risk assessment by: (see (1)–(3))(1) identification of sources, areas,impacts, and events,

Lean methods have risk associated with their use, benefits, and detriments impactingvarious areas.

(2a) analysis to understand the riskits causes, sources, (see (2b)) and otherpertinent factors,

Qualitative discussion of detriments or risks of sustainability of lean method (source)or entire lean implementation in context of the tools and consequences of tool use.

(2b) consequences and likelihoods,confidence sensitivity, and otherpertinent factors,

Expert opinion (qualitative) is incorporated as charts. The chart shows our qualitativeassessment of likelihood and consequence for various tools; refer to Figure 5.

(3) evaluation for assisting the decisionmaking process including risk toleranceof parties.

In the context of organisational change we look for methods that will supportsustainability. There is a decision from management (a mandate) to support lean tomeet business goals but wisdom is required in the lean implementation for building aculture for sustainability. This involves selecting the right methods at the right time. Itis necessary to get “wins” in the view of the staff up front. This is not necessarily thebiggest wins but small wins to gain momentum and staff confidence. We cannottolerate high risk even when high return is possible at the start of an implementationthat is, where staff are not yet engaged to support a difficult method (like JIT). Failurecould ruin future chances of success and engagement.Communication at the start of an implementation, is key to impart the vision andbreak down goals to give critical steps for change.

Prescribe treatment of riskTo maximise benefits and minimisedetriments, increase the positive anddecrease the negative likelihood andconsequences.

Treatments we prescribe in general cover the following:adequate communication with development of new identity for staff; prioritisation oftime for business running and improvement activity; and prior conditions metadequately (including previous methods, training of and engagement of staff) for anymethods implemented.

assemblies. It is representative of the many SMEs that areactively trying to decide which parts of lean are relevantto them and how to implement them. The firm (“SI”) isbased in New Zealand and has 20 employees. Typicallyproduction is of small to medium size runs, high-varietylow-volume (HVLV). The firm possesses an advanced CNCequipped plant, has precision assembly capability, and takespride in project management, that is, providing the fullsolution including concept and design development, build,commissioning, delivery, and after-sales support.

Historically lean has been the preserve of the large high-volume manufacturers typified by the automotive industry.However as the lean method has matured and spread toother industries, it has been applied to smaller and morespecialised firms, like that considered here. Lean adoption isalso driven by competitive pressure, particularly the openingof global markets and the resulting exposure tomore efficientcompetitors. Therefore even the small firms have to considerhow they preserve competitive advantage and deliver value tocustomers. These firms, being small, typically cannot affordto employ specialised staff for this purpose. They also havelimited resources for implementing new programmes likethis.

5.1.1. Strategic Mandate. In the case of this firm, the needto adopt lean was identified at board level, that is, was

a strategic decision. To compete within the internationalmarket the firm needed to show the value of a local supplierby reducing lead time and manufacture costs and developingability to handle demand variability (e.g., achieving flow andeliminating wasted effort including reducing run setups) aswell as increasing quality. Lean methods can be used to treatthese areas and therefore lean was considered a strategicpriority.

At the strategic level the firm needed to treat key factorsfor success and sustainability of lean.These factors have beenidentified [7, 12, 27, 32, 60] and summarised in Table 2.

5.2. Evaluating Risk within the Lean Strategic Principles. Oneof the authors (AP) worked half-time for six months in thefirmas part of a government-industry-university partnership.This provided the contextual knowledge for our analysis. Wethen took each of the strategic principle tools and evaluated,for this firm’s context, the impact and ease of implementation(see Tables 3 and 4). We then plotted these on the risk chart;see Figure 7.

All the principles in this first set are of higher level andseen as critical to lean success and sustainability; however itis important to understand the challenges or level of difficultyfaced. In our representative case we see particular areas ofdifficulty for SI around process flow, for example, flow andvalue stream analysis and application of pull systems. This


Impact on success and sustainability

Low impact

Medium impact

High impact

H

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Lo

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Med

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and

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abili

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Flow

Pull

Allstaff

VSM

Com.pro.

Definevalue

Lean strategic principles: impact-difficulty qualitative assessmentfor lean practice success and sustainability

Culture building

More difficult but still necessary.Pull: understand

principle, be careful with tools

all staff involved in CI (kaizen)

Hig

h “li

kelih

ood”

Low

“li

kelih

ood”

CI: continuous improvementAll staff:VSM: analysis of value streamCom. pro.: communication process

Figure 6: Strategic principles: lean key principles and higher order processes qualitatively assessed for impact and difficulty (likelihood) ofsuccess and sustainability (reference case SI).

Table 2: Lean risk treatment at a strategic level.

Changeleadership

Leadership commitment with the vision and itscommunication for engagement of staff. Theinitial steps of change and ongoing “wins” formomentum of change. The development of a neworganisation identity.

Managinginternalresources

Physical, human (availability and capability), andfinancial resources need to be managed foramounts of training, learning, and implementingchanges.

Managingexternalresources

Use of consultant (sensei) or other externalresource for training.

Other factorsMarket conditions and forecasts (risk), demandvariability, and expected product mix (variety),among others.

is because of the make-to-order nature and complicatedprocesses of their business.This is reflected in the Likelihood-Impact chart for these factors.

In Figure 6 we see the medium level difficulty but highimpact of defining value, and having all staff involved inenterprise wide continuous improvement. Defining value iskey to understanding what the customer desires and whatwasted effort is that is, what should be eliminated throughimprovement. The communication process presents thevision of value and continuous improvement to all staff andallows for staff engagement and development of a learningorganisation and hence also high impact. This suggests thatthe big wins for a make-to-order enterprise like SI would bein the culture excellence for continuous improvement and

not so heavily in the process flow tools (although processimprovement would occur as a result).

For the same reasons, value stream and flow are assessedas having onlymedium/high impact in the SI case. In contrastthese would have high impact in a continuous productionfacility.

Pull is very difficult in SI’s case and would need particularadaption as suggested in the table. SI may need to use pullof order to pull paperwork but push material to the processfor flow.Thiswould changewhere higher quantity productionpermitted and even temporary or isolated flow lines could beintroduced.

5.3. Prioritising LeanMethods: SI Case Study. There aremanydifferent methods or tools of lean. These were each evaluatedfor the SI case, in a way complementary to the strategicprinciples. The likelihood and impact of these methods isplotted in Figure 8.

We do not attempt to justify the implicit judgements inFigure 7 whereby a particular method is given the impactand difficulty scores shown. Instead we suggest that thisrequires a contextual knowledge by the person performingthe assessment. In this particular case the first author wasseconded to the firm as part of the research project and spentconsiderable time learning the context in which Shamrockoperated.The assessment presented as Tables 3 and 4 provideinsight to the process.

The purpose here is to identify small wins (sometimescalled “low hanging fruit”) to increase chances of sustain-ability. Here the tools more applicable to the make-to-orderbusiness are featured in the top right corner. In contrastthe tools for fine improvement of production efficiency,


Table3:Strategicp

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andhigh

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riskanalysistable(referencec

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(A)5

Strategic

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value

Lean

begins

with

defin

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valuefrom

thec

ustomers

pointo

fview,

thatis,

whatis

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iswasteto

eliminate.

Gives

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strategicfocus

basedon

whatthe

custo

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“pay

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Requ

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Take

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(VSM

)(diffi

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Sham

rock

case)

Analysin

gof

processesa

ndwastethereinby

mapping

currentand

thed

esire

dstate.

Com

plexity

depend

sonneed.

Inprinciples

tartwith

core

process.

This,

together

with

defin

ing

value,setsthev

ision

and

course

ofactio

n.

Gives

ahealth

checkon

now

andidentifi

eskeyprocesseso

rfaultswith

asystem.G

ives

future

goalanddirection.

Requ

irestrainingandathigh

erlevelsallstaffareinvolved.Ca

nbe

simplified

processw

here

improvem

entsandwasteare

moreo

bvious

butasm

ored

etail

isrequ

ireditisan

involved

and

timec

onsumingexercise.

Thisisdifficultin

theS

hamrock

case

duetothec

omplicated

jobbingprocessesthatrarely

repeat.

Training

andprioritizingarek

ey.

Take

onlyto

thee

xtentrequired

forthe

currentstateof

operations.Involve

keyperson

sfro

mfunctio

nalgroup

srather

than

allstaffexcept

where

keyto

generaltrainingor

staffidentity

developm

ent.

AtSham

rock

initially

concentrateo

ninform

ationflo

w(ratherthancellu

larlayou

t)and

tryto

identifycore

processesfor

mapping

andim

provem

ent.

Valuem

ustb

ecle

arlydefin

ed.

(3)F

low/one

piece

flow

(diffi

cultfor

Sham

rock

case)

Flow

isak

eyconcepttolean.

Itisseen

idealtoapproach

one

piecefl

ow.P

rocessflo

ws

shou

ldbe

madea

svisu

alas

possible.

Con

ceptslikeF

IFOare

intro

duced.

Lean

is“not

trying

toop

timise

theu

tilizationof

peop

leand

equipm

entb

utop

timise

the

flowof

material;”

[2]includes

inform

ation.

Redu

cesleadtim

es,m

akes

prob

lemsv

isible(bringing

them

tothes

urface)a

ndsupp

ortsqu

ality

atthes

ource

(see

belowun

derT

ools).

Takesskillandtraining

toun

derstand

flowandadjustthe

syste

ms,fore

xample,to

make

flowlogicaland

visib

le.Ty

pically

involves

changing

ofhabits(e.g.,

FIFO

)and

takesrearrangement

ofph

ysicalandhu

man

resources

(e.g.,cells).

Again

thisisdifficultin

the

Sham

rock

case

duetothe

complicated

jobb

ingprocesses

thatrarelyrepeat.

Training

inlean

“flow

thinking”—

tryreadingTh

eGoal

[62]

andLean

Thinking

[12].

Prom

otetosta

ffther

easonwhy

itisnecessaryandeducatethem

abou

tthe

benefitso

fflow

.

AtSham

rock

initially

concentrateo

ninform

ationflo

w(ratherthancellu

larlayou

t)and

tryto

identifycore

processesfor

mapping

andim

provem

ent.

VSM

done

adequately.


Table3:Con

tinued.

Briefd

escriptio

nBe

nefitssou

ght

Detrim

ents/

barriers

Analysis

ofris

kto

sustainability

ofmetho

dor

entire

implem

entatio

neffort

Treatm

ents

Tomaxim

isebenefits,and

elim

inateo

rminim

isedetrim

ents

Dependants

(4)P

ull

(diffi

cultfor

Sham

rock

case)

Processinitia

tedby

the

custo

mer’sorder“pu

ll.”Th

egoalistoredu

cebatch

sizetoapproach

onep

iece

flow/JI

Tmanufacture.See

also

“JIT”b

elow.

Powerfulinredu

cing

waste

andlead

time.Inventory

storesh

avea

llsortso

fprob

lems(space,qu

ality,

damagetosto

redgood

s,superseded

parts,sales

pushingon

oldsto

ck).

Takesskillandtraining

toun

derstand

prop

erly.

Prom

otes

alackof

stability

becauseb

uffers

redu

ced—

difficultforjob

shop

andprojectb

ased

style

organisatio

ns.

Again

thisisdifficultin

the

Sham

rock

case

duetothe

complicated

jobb

ingprocesses

thatdo

notrepeat.

Aprogressionfro

mhigh

erendof

flowthinking

toensure

flowis

welld

evelop

ed.

Canuseb

ufferstosupp

ort

stabilitybu

tnot

ideal.

Use

training

ofsta

ffto

overcome

resistance(seeF

lowabove).

May

need

tousep

ullofo

rder

topu

llpaperw

orkandpu

shmaterialtoflo

w.

Flow

(5)Jou

rney

toperfe

ction

Con

tinuo

usim

provem

entvia

PDCA

(plan,

do,check,act

cycle

)ofabo

veste

ps.

Driv

escontinuo

usim

provem

ent.

Needs

Perseverance/sustainability

Build

into

processes(and

cultu

re).Targetsm

allw

insa

tthe

beginn

ing,maintainmom

entum,

andleverage

anew

staffidentity.

Value,VS

M,flow

(B)E

ffective

commun

ication

processes

Use

ofA3managem

ent,

nemaw

ashi,and

catchb

all—

thatis,

concise

repo

rtingandfeedback

for

consensusthrou

ghsim

plea

ndeffectiv

ecom

mun

ication.

Con

sensus

reached,sta

ffengaged,visio

nshared.A

llcontrib

utingto

theo

negoal

andvisio

n.

Develo

pmento

fthe

processis

requ

irede.g

.,training

inA3

managem

ent.Sustainabilityand

disciplin

erequiredforregular

butn

otexcessive

commun

ication.

Training

,persis

tence,bu

ilding

into

procedures

processesa

ndregu

larity;tryweeklymeetin

gs,

tailo

rprocessto

busin

ess

situatio

n.

(C)A

llstaff

kaizen

Lean

engagesa

llsta

ffin

continuo

usim

provem

ent.

Emergent

change

from

all

adding

upto

significant

change.A

lsopo

sitivec

ulture.

Training

andengagemento

fstaff

requ

ired.Meetsresistance“

not

myjobdescrip

tion.”

Createnewem

ployee

identity

andtrainthem

insim

plep

roblem

solvingtechniqu

esfore

xample,5

Whys.Assessw

hether

toremove

negativ

einfl

uences

amon

gsta

ff.


Table4:Metho

ds:selectio

nof

lean

andcomplem

entary

metho

dsris

kanalysistable(referencec

aseS

I).

Briefd

escriptio

nBe

nefitssou

ght

Detrim

ents/

barriers

Analysis

ofris

kto

sustainability

ofmetho

dor

entire

implem

entatio

neffort

Treatm

ents

Tomaxim

isebenefits,and

elim

inateo

rminim

isedetrim

ents

Dependants

(A)L

eanmetho

ds5S—sift

,sort,

sweep,sta

ndardise,

susta

in

Generalorganisatio

n,cle

anlin

ess,andmaintenance.

Generaleffi

ciency

andbasis

foro

n-goingim

provem

ents.

Training

requ

ired(to

low/m

edium

level).

Needs

susta

inability.

Develo

pnewcultu

reand

expectation,

usev

isualcues,

developnewidentity.

5Whys—

root

causea

nalysis

Basic

root

causea

nalysis

tool;

askwhy

5tim

es.G

etto

the

root

oftheissue

soitdo

esno

trepeat.

Simplee

ffectivew

ayof

doing

root

causea

nalysis

andsim

ple

way

togetp

eoplethink

ing

abou

tanalysis

.

Training

requ

ired(to

lowlevel).

Oncetrained

ifno

tusedand

ideasn

otactedon

canbe

anegativ

eexp

erience,andreason

ford

isinterestand

failu

rein

future.

Find

amechanism

todriver

oot

causea

nalysis

ofissues/events

andaskwhy

ford

ailyactiv

ities.

Implem

entsug

gestions

toget

mom

entum

andshow

commitm

ent(maybe

even

when

notideal).

Visualsyste

ms

Emph

asison

visualisa

tionof

flowandsyste

mso

fcon

trol

andrepo

rting.Partof

5s,flow

andallaspectsof

lean.

Visualise

sprocesses,m

akes

wastevisib

le.Seeo

ther

aspects,fore

xample,

5sandFlow

.

Seeo

ther

aspects,fore

xample,5s

andFlow

.Seeo

ther

aspects,fore

xample,5s

andFlow

.

Qualityatthe

source,Jidoka,and

Poka-yoke

Qualityatsource

means

controlisg

iven

tothew

orker

atthes

ourceo

fthe

issue—for

exam

ple,on

thep

rodu

ction

line.Jid

okaisthe

respectfor

humansp

rinciplew

hich

inclu

desm

istakep

roofi

ng(Poka-yoke)a

ndin

cases

extend

sworkerc

ontro

lto

even

shut

downthe

prod

uctio

nlin

e.

Qualityprob

lemsa

reno

trepeated,eng

agem

ento

fworker.

Training

requ

ired(to

medium/highlevel).

Ifigno

red,mom

entum/m

orale

lost.

Maketrainingap

rioritywith

key

staff

andthen

build

training

into

daily

activ

ities.

Syste

msfor

capturingideasfor

poka-yokea

ndensurin

gthey

get

implem

ented.

SMED

—sin

gle

minutee

xchangeo

fdies

(partic

ularly

beneficialto

Sham

rock)

Redu

cedsetuptim

efor

machinery.O

nlyessential

internalsetups

made.Ex

ternal

setups

preferredto

redu

cedo

wntim

e.

Setuptim

edow

n,shorterrun

spo

ssibleandecon

omically

viable,

enablesreduced

lead

times

andultim

ately

JIT.

(partic

ularlybeneficialto

Sham

rock

duetoshortrun

s).

Training

requ

ired(to

medium/highlevel).

Dow

ntim

ewhilst

working

onim

provem

ents.

Maketrainingandkaizen

aprioritywith

keysta

ffandthen

build

training

into

daily

activ

ities

foro

thers.

Balancea

ndmakep

rioritiesc

lear

(how

muchto

spendon

initiatives

versus

dayjob).

Flexiblework

syste

ms

Flexibilityof

employeesa

ndequipm

entp

referred

over

complicated

rigid

orautomated

machinery.

Quick

changeover

andeasily

expand

edsyste

ms,resources

where

requ

ired

Training

ofsta

ffandtheir

engagementrequired(to

medium

level).

Lossof

specific

staffrolesa

ndrespon

sibilitie

s.

Com

mun

icationprocessfor

change

andbenefits.Develo

pnewidentity.


Table4:Con

tinued.

Briefd

escriptio

nBe

nefitssou

ght

Detrim

ents/

barriers

Analysis

ofris

kto

sustainability

ofmetho

dor

entire

implem

entatio

neffort

Treatm

ents

Tomaxim

isebenefits,and

elim

inateo

rminim

isedetrim

ents

Dependants

Totalprodu

ctive

maintenance

(TPM

)

Ensurin

gmachines

maintainedto

secure

against

unnecessarydo

wntim

eand

catastroph

icfailu

re—shou

ldincorporatec

ontin

uous

improvem

entalso

.

Lessdo

wntim

e.Health

andsafetyim

proved.

Training

ofsta

ffandtheir

engagementrequired(to

medium/highlevel).

Skill

ofsta

ff.

Selectrig

htpeop

le,trainin

approp

riateskills,andgive

understand

ingto

staff(build

new

identity).

Kanb

an

Simpletoo

lfor

replenish

ment/p

ullsystem.

Typically

acard(e.g.,kanb

ancard)b

utcouldbe

abin

oranotheridentifier

thatflags

for

replenish

mentand

specifies

details

(sup

plier,qty,locatio

n).

One

ruleof

kanb

anisto

review

itssiz

e(i.e.,redu

cethe

buffertow

ards

onep

iece

flow

aspartof

continuo

usim

provem

ent).

Link

sseparated

processes

together

forp

seud

oflow

where

idealfl

owisno

tpossib

le.Needs

setupandorganisatio

n.Visualsyste

msa

ndno

shortcuts

helpto

enforcethe

documented

procedures.

5S

Justin

time(

JIT)

manufacture.

(diffi

cultfor

Sham

rock

case)

Goo

dsarriv

ejustintim

efor

processin

gor

assembly.

WIP

andlead

timed

own,

quality

up.

Lack

ofsta

bilitybecauseb

uffers

removed.

Processtakes

muchplanning

,training

,and

teething

durin

gim

plem

entatio

n.Negativer

esultsto

cultu

repo

ssibledu

ringteething

.Again

thisisdifficultin

the

Sham

rock

case

duetothe

complicated

jobb

ingprocesses.

Suggestedto

hold

finish

good

son

ly(in

prod

uctio

nsituatio

ns)o

rpu

shandflo

wused.B

othatpu

llof

orderb

ycusto

mer.

Mustb

ewellpreparedfor

implem

entatio

n:Staff

training

fortheirun

derstand

ingand

engagement,otherp

rocess

prepared

asmuchas

possible,

readyforo

n-goingteething

internallyandwith

supp

liers.U

sepilotand

positives

taffmem

ber

willingto

try.Con

sider

carefully

before

implem

entatio

n.

Flow

achieved,

needsH

eijunk

a(le

velscheduling)

Heijunk

a(level

schedu

le)&

takt

time(

pulse

)(diffi

cultfor

Sham

rock

case)

Levelschedulingissm

oothing

demand—

weinclude

also

takt

timeh

erew

hich

iseasie

stun

derstood

asaverage

demandin

time(e.g

.,2parts

perm

inuteo

rtwoqu

otes

per

day,twoinvoices

perw

eek).

Thisiskeyto

enableJIT

/one

piecefl

oweffectiv

elywith

out

excessiveidletim

eoro

vertim

ein

prod

uctio

n.

Diffi

cultin

Sham

rock

scenarios

duetohigh

fluctuatin

gdemand,

fore

xample,jobshop

smake-to-order

andprojectb

ased

manufacture.

Levelsellin

g/marketin

g.Ke

eping

buffero

ffinished

good

stohelp

(but

notp

artsthroug

hout

entire

syste

m).

Und

ersta

ndin

term

softhe

specificb

usinessa

ndwhere

itis

mostapp

licablethere.

Flow

achieved


Table4:Con

tinued.

Briefd

escriptio

nBe

nefitssou

ght

Detrim

ents/

barriers

Analysis

ofris

kto

sustainability

ofmetho

dor

entire

implem

entatio

neffort

Treatm

ents

Tomaxim

isebenefits,and

elim

inateo

rminim

isedetrim

ents

Dependants

(B)C

omplim

entary

Metho

dsBu

sinesssystems

softw

area

ndprod

uctio

ncontrol

techno

logy

e.g.,

ERP

(partic

ularly

beneficialto

Sham

rock)

InteractiveITdatabasesw

hich

may

incorporatelogarith

ms

forschedulingandfin

ancial

managem

ent.

Inform

ationcollabo

rativ

eredu

ceddataentryand

codificationof

know

ledge.

Particularlyuseful

atSham

rock

becauseo

fhigh

administrativ

edem

ands

oncomplicated

processesa

ndcusto

mer

requ

irements

Typically

implem

entatio

ntim

es,

cultu

rechange,and

custo

misa

tionrequ

irementsall

extensive.Ca

nbe

expensivea

ndrestr

ictiv

e.

Ensure

thes

olutionisrig

htfor

your

environm

ent(manymay

bebette

rwith

simplek

anban

planning

boards

and

replenish

mentsystems).

Getwellpreparedandensure

tohave

ther

ight

skill,resou

rces,

andtechnicalsup

porton

hand

.

Theory

ofconstraints(TO

C)

TOCisin

itself

astand

alon

eprocessimprovem

ent

techniqu

ewith

itsow

noverarchingph

ilosoph

y.It

identifi

esbo

ttlenecks

“capacity

constrainedresources”that

need

tobe

targeted

toim

prove

flow.

Greatfortrainingand

supp

ortin

gflo

wthinking

.Re

adtheb

ookTh

eGoal[62]

Doesn

otim

plicitlyinclu

deph

ilosoph

yandcultu

reof

staff

engagementand

empo

werment—

typically

consultant

driven

andno

tsusta

ined

asas

tand

alon

e.

Incorporatefor

flowtraining

and

usea

ssuitablea

sacomplim

entary

metho

dbu

tbe

carefuln

otto

affecto

verarching

strategy.

Sixsig

ma

Sixsig

maisinitself

astandalone

process

improvem

enttechn

ique

with

itsow

noverarching

philo

soph

y.Itismostw

ell

know

nas

astatistic

almetho

dof

processa

nalysis

and

improvem

ent,Sixsig

mac

anbe

appliedas

atoo

lwith

ina

lean

philo

soph

y.

Fine

improvem

ento

fprocessesa

fterb

asicob

viou

swasteeliminations

ismade.

Highleveltrainingandhigh

lytim

econ

sumingexercise

touse.

Workerscanbecometoo

narrow

lyfocusedon

statistic

altoolsw

hensim

plep

roblem

solvingisallthatisrequired.

Use

andtrainon

lyas

requ

iredin

them

eantim

e;useV

SMand5

whysfor

early

results.

Other

simpler

metho

dsexhausted.



More diffcult, hold off till culture built

Last on the list, exhaust other avenues first

These activities have low resource needs,

readily give early results and build a culture

in readiness for future lean activities

Diffi

culty

of s

ucce

ss an

d su

stai

nabi

lity

Low impact

Medium impact

High impact

Hig

h di

fficu

lty

Low

di

fficu

ltyM

ediu

m

diffi

culty

Lean methods: impact-difficulty qualitative assessmentfor lean practice success and sustainability

Sixsigma

JIT

5whys

SMED

VS

TPM

Hig

h “li

kelih

ood”

Low

“li

kelih

ood”

5S

Qual.

Kanb.

T H and

TOC

ERP

VS: visual systemsquality tools—quality at the source, Jidoka, and Poka YokeQual.:

SMED: total productive maintenanceTPM:

just in time manufactureKanb.: kanban JIT:

Heijunka (level schedule) and takt time (pulse)H and T:ERP: business systems softwareTOC: theory of constraints

single minute exchange of dies/reduced setups

Figure 7: Methods: selection of lean and complementary methods with a qualitative assessment of impact and difficulty (likelihood) ofsuccess and sustainability (reference case SI).

for example, six sigma and JIT, are in the bottom left.These were assessed as particularly difficult to implement inthis particular situation, and the benefits would be limited.Implementation of TOC thinking would be more beneficialthan six sigma or JIT in this case. Kanban is positioned in themiddle, and while (in this situation) it may not be relevantfor pulling production, it could still be useful for orderingconsumables. Managers and business owners at SI broadlyendorsed the validity of this analysis of the situation.

5.4. Implications for SI. Of interest is the high impact of ERPin SI’s case. This is something difficult to implement but ifimplemented right could have great effect.This is particularlybecause at SI production was partially being constrainedby flow in the office. ERP implemented right would sim-plify quoting, planning, purchasing, and general data entryrequirements which are identified as serious bottlenecks atSI (more so than specific physical production processes). Itcould also give other benefits such as business reporting. SIhas much to benefit in understanding the holistic nature ofits systems and the interaction between the factory and officeprocesses.

Resource constraints are significant in SMEs and deter-mine how much the organisation can achieve at any onetime. In this particular case SI had just embarked on anERP implementation that is somewhat separate from anenterprise wide lean journey. Because of the difficulty of ERPimplementation our suggestion would be to hold off all other

lean initiatives (except for some higher order principles) untilERP is well achieved and the resources are freed to focus onother lean implementation activities. This also implies thatif they had a clean slate and had not begun implementingERP it may have been more beneficial to consider some ofthe simpler tools first. This could have benefited them withfurther staff engagement and built culture excellence andstaff engagement before implementing ERP with its higherrequirements on resources and perceived level of change.

5.4.1. Beyond Production. We have noted that lean has beenapplied effectively beyond manufacturing or productionbusinesses. Although SI is a manufacturing business weobserved they had many gains to be made in their admin-istration centre (hence a high priority for ERP). Whether ornot the physical transformation of goods took place in theirown workshop there was much waste to be eliminated intheir office. These lean office gains illustrate the competitiveadvantage of lean beyond manufacturing businesses.

5.5. Application to Other Manufacturers. The implicationswould be similar for other make-to-order, design to order,job shop SMEs, although ERP requirements may drop whereproducts do not demand a lot of records and data entry orprocess control (as comparedwith SI’s high tech andprecisionengineering customers).

For firms of higher production (e.g., low-variety high-volume) we would see more relevance in the emphasis on



Low impact

Medium impact

High impact

H

igh

diffi

culty

Lo

w

diffi

culty

Med

ium

di

fficu

lty

CI

Diffi

culty

of s

ucce

ss an

d

s

usta

inab

ility

Flow

Pull

Allstaff

VSM

Com.pro.

Definevalue

Lean strategic principles impact-difficulty qualitative assessmentfor lean practice success and sustainability

Culture building

CI: continuous improvementAll staff: all staff involved in CI (kaizen)VSM: analysis of value streamCom. pro.: communication process

Hig

h “li

kelih

ood”

Low

“li

kelih

ood”

(a)


These activities have low resource needs,

readily give early results and build a culture

in readiness for future lean activities

Diffi

culty

of s

ucce

ss an

d su

stai

nabi

lity

Low impact

Medium impact

High impact

Hig

h di

fficu

lty

Low

di

fficu

ltyM

ediu

m

diffi

culty

Lean methods: impact-difficulty qualitative assessmentfor lean practice success and sustainability

Sixsigma

JIT

5whys

SMED

VS

TPM

H

igh

“like

lihoo

d”

Low

“li

kelih

ood”

5S

Qual.

Kanb.

T H and

TOC

ERP

VS: visual systemsquality tools—quality at the source, Jidoka, and Poka YokeQual.:

SMED:total productive maintenanceTPM:

just in time manufactureKanb.: kanban JIT:

Heijunka (level schedule) and takt time (pulse)H and T:ERP: business systems softwareTOC: theory of constraints

single minute exchange of dies/reduced setups

(b)

Figure 8: Methods and strategic principles for alternative (volume manufacture) scenario: indicative qualitative assessment of impact anddifficulty (likelihood) of success and sustainability for “higher” production volumes as depicted by arrows.


process flow principles and tools. We have illustrated theseand other likely changes by placing arrows overtop of theprevious charts; see Figure 8.

6. Discussion

6.1. Outcomes: What Has Been Achieved? This work encom-passes lean thinking and methods, lean implementation,organisational change, and risk management. Exploring theliterature at the intersection between risk management andlean transformation we found no application except forpiecemeal usage of methods and aspects of lean loosely tiedto risk.There was little evidence of riskmanagement and leanimplementation being integrated by practitioners.

The present work makes several novel intellectual contri-butions. The first is methodological, in that it demonstratesa way to integrate risk management into decision makingwhen implementing lean.This method makes the detriments(the threat component of the risk)more explicit and thereforeamenable to treatment. The method achieves a high level ofintegration between the two management methods. We didthis by comparing leanmanagementwith riskmanagement ascodified in the ISO standard [35] and developing a commonframework with lean.

A second contribution is that the method provides a wayto explicitly identify the organisation difficulty of implement-ing lean practices. This is important, because although theseorganisational difficulties have previously been identified ingeneral terms (e.g., the lean iceberg model), it has up tonow been difficult to determine how those apply to specificsituations. Thus variables that were once general situationalvariables (or contingency factors to use the change manage-ment term) can now be included in the decision-making.Themethod, while not specifically providing a temporally phasedapproach to lean implementation, encourages the decision-maker to explicitly evaluate which lean methods are relevantto the organisation at the time under consideration.

The third contribution is that we have piloted a methodfor applying lean to organisations other than high-volumemanufacturers. In particular, the method was developed ina challenging type of organisation: an SME involved in high-variety low-volume manufacturing.This type of organisationhas otherwise found it difficult to implement lean, as seen inthe late adoption. The method and the case study bring outimplications and provide solutions that could be relevant toother types of organisation too.The case study showed that itis possible, given contextual knowledge of the organisation,to predict which lean methods are most important in thesetting.This enables the prioritisation of organisational effort,something that is relevant to all organisations but particularlyto SMEs with their limited resources for such endeavours.

A fourth contribution is that we have now built anotherconceptual component in a model for high-value manu-facturing. This is of national strategic importance to smallcountries like New Zealand, whose manufacturing industriescannot easily compete with other countries that have lowlabour costs and high production volumes. We suggest thatintelligent implementation of lean is necessary for high-value

manufacturing and is complementary to strategic decisionmaking regarding manufacture [3] and environmental con-siderations [61], among others.

6.2. Implications for Practitioners. For practitioners, that is,those managers in organisations that are considering whatparts of lean to implement, the primary implication is thatthey should not only focus on the high impact lean methodsbut also consider a staged approach. We recommend theydeliberately select lean methods that will build lean culturethrough small wins and staff engagement, before progressingto more overly lean methods. Lean implementation involvesa transformation of the organisation, and initially the journey(i.e., the human dimension of the change process) is asimportant as the destination.

In making the decisions about lean, our suggestion isthat managers consider applying the method given here, byevaluating the impact of each of the lean principles andtools and the difficulty of implementing them in that specificorganisational context. We suggest that the organisationalcontext is very important, and that the analysis is bestdone by someone who has deep understanding of how theorganisation operates. At the same time it is also importantthat the analyst understands the capabilities of the variouslean principles and tools. In this paper we have only identifiedthese by name, as a full description would overwhelm thepresent paper. However we recommend practitioners gainthe necessary lean knowledge by consulting one of the manyexcellent texts or employing an expert.

Another implication for practitioners is that the methodwe propose here is closely aligned to the risk managementmethod. Consequently there should be no impediment toincluding the lean risk assessment alongside other riskmanagement practices. Alternatively, if the risk managementframework [35] is not already part of the organisation’spractices, thenwewould suggest that consideration should begiven to exploring that too, since it is not much more effortthan to do so. The management approaches are complemen-tary and mutually supportive having synonymous principles,framework, and process.

6.3. Limitations and Implications for Further Work. A lim-itation of this work is that the case study was more of across-sectional rather than longitudinal design and on onlyone firm. This naturally limits the external validity (limitsthe ability to generalise to other situations). It would beinteresting to apply the method to a firm or multiple firmsover time to assess how well the predicted lean methodsactually performed andhowdecisionmaking priorities adjustin time.

Another limitation is that the analyst needs both con-textual knowledge of the firm and knowledge of the leanmethods. We have explicitly identified that need in ourrecommendations to practitioners. It would be interestingto know just how much knowledge practitioners really haveabout lean. The root of failed implementations of leanmight be ignorance, which would also limit our method.It would be interesting to do a widespread survey of the


extent of lean knowledge and check whether that causes poorimplementation.

7. Conclusions

The objective of this work was to explore how risk man-agement methods are applicable to and supportive of leanimplementation success. Risk analysis and management arecritical to all serious decision making processes. Howeverthere has been little to no documented application or studyof risk management in the lean implementation field. Wehave shown that it is possible to integrate risk managementand lean management. We further developed a qualitativemethod where lean tools may be prioritised for a specificorganisational setting.We applied thismethod to a case study.The case study provided implications for similar high-varietylow-volume manufacturers as well as alternative operationmodes (e.g., low-variety high-volumemanufacturing, serviceorganisations, and administration). The ongoing efficacy oflean tools and methods is very much dependent on thesituational variables of the organisation. We believe that eachaspect should pass through a risk assessment and analysis ofsome kind to determine treatments necessary. Our approachfocused on treating lean failure by prioritising the tools thatnot only will deliver performance gains but also are culturebuilding.

Authors’ Contribution

All authors contributed to the conceptual and intellectualdevelopment of the ideas in this work and to their expressionin this paper. Antony Pearce performed the detailed lean riskassessments and spent the time embedded in the case studyfirm.

Acknowledgments

The authors acknowledge with gratitude the willingness ofShamrock Industries Ltd. (New Zealand), particularly Mr. P.Fogarty, to support this research project and provide casestudy material. A portion of this work was supported bythe Ministry of Science and Innovation Education Fundingthrough the New Zealand Government, and this is acknowl-edged and appreciated.

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