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Bachelor thesis Organization and Strategy
Implementing lean management globally
“Lean around the world!”
Tilburg University
June 2010
Name: Bjorn Froon
ANR: 219987
Supervisor: Dr. Ir. C.M.H. Kuijpers
Number of words: 7891
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Executive summary
Lean is a focus of the company on what matters, namely customer satisfaction and getting
rid of all wasteful activities in the supply chain. The benefits of lean can be high with
disadvantages which can be countered.
Researchers in the field of lean are in agreement that lean is and has been the most
successful when implemented in the country of origin, Japan. There have been only half the
amount of successes outside of Japan and there are numerous examples of failed
implementations outside of Japan. How is this possible and what can companies outside of
Japan do about it. The literature does not provide a guideline or roadmap towards a
successful implementation.
In order to assist managers considering lean to make their choice, even if they are in a
different country, this thesis provides two new models to help them choose. The first model
(web of factors) displays the most important success factors and rates the performance in
three countries (Japan, United States and the United Kingdom). Managers can see what the
strong and weak points of companies from their country are. The second model provides a
roadmap towards successful implementation, listing the important factors and how these can
be supported with secondary factors like support systems.
It turns out that companies from Japan have a high rate of success due to their approach to
lean. The lean culture is the most important aspect and Japanese companies use the other
factors to facilitate the transformation of the culture. For example; leadership & management
are very important in order to create commitment & dedication in the workforce, a manager
should be a motivator.
Companies from the United States and the United Kingdom are behind on three out of four
factors. They only perform better on the finance factor, the Japanese score highest on
leadership & management, commitment & dedication and culture of recipient organization.
The roadmap shows which process managers should follow if they want to achieve a
successful implementation. It displays the important success factors and their individual
linkages. A manager can follow the roadmap and check if his company has all the factors
covered, which it should still work on and what are pitfalls which should be avoided.
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Table of contents
Executive summary.................................................................................................................. 2
Chapter 1: Introduction............................................................................................................ 5
1.1 Introduction .................................................................................................................. 5
1.2 Problem indication ....................................................................................................... 5
1.3 Problem statement....................................................................................................... 6
1.4 Research questions ..................................................................................................... 6
1.5 Research design .......................................................................................................... 6
1.5.1 Data collection............................................................................................................ 7
1.6 Academic and managerial relevance .......................................................................... 7
1.7 Structure ...................................................................................................................... 7
Chapter 2: Principles of lean.................................................................................................. 8
2.1 Introduction ....................................................................................................................... 8
2.2 Origin and definitions of lean ............................................................................................ 8
2.3 Process of lean ................................................................................................................. 9
2.4 Lean and waste .............................................................................................................. 10
2.5 Tools of lean ................................................................................................................... 12
2.6 Lean bundles .................................................................................................................. 13
2.7 Advantages of lean ......................................................................................................... 15
2.8 Disadvantages of lean .................................................................................................... 16
2.9 Summary......................................................................................................................... 18
Chapter 3: Critical success factors of lean ......................................................................... 19
3.1 Introduction ..................................................................................................................... 19
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3.2 Example of an unsuccessful implementation of lean..................................................... 19
3.3 Success factors .............................................................................................................. 19
3.3.1 Leadership and management .................................................................................. 20
3.3.2 Finance..................................................................................................................... 20
3.3.3 Skills and expertise .................................................................................................. 21
3.3.4 Culture of recipient organization .............................................................................. 21
3.4 Summary......................................................................................................................... 22
Chapter 4: Country performance & improvement options................................................ 23
4.1 Introduction ..................................................................................................................... 23
4.2 Country influence............................................................................................................ 23
4.3 New models .................................................................................................................... 25
4.3.1 Web of factors .......................................................................................................... 25
4.3.2 Road to successful implementation ......................................................................... 27
Chapter 5: Conclusion ........................................................................................................... 30
5.1 Introduction ..................................................................................................................... 30
5.2 Conclusion ...................................................................................................................... 30
5.3 Limitations & recommendations ..................................................................................... 31
References .............................................................................................................................. 32
Appendix ................................................................................................................................. 35
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Chapter 1: Introduction
1.1 Introduction
This research provides a detailed view into the application and implementation of lean
management in a wide range of companies. This view is established from the geographical
areas of Japan (the origin of lean) and the traditional counterparts; the United States and the
United Kingdom. The following sections discuss the research subject and the way this
research has been set up and conducted.
1.2 Problem indication
In the 1970s and 1980s Japanese companies took the lead in the world economy due to lean
management (Cusumano, 1994). The first industry using lean in Japan was the automobile
manufacturing industry. Lean management is a business discipline which is built around
obeying only the customers demand signals and getting rid of waste everywhere in the
supply chain (Kerr, 2006). The Japanese automobile manufacturers used their lean
manufacturing to change the car industry. At first the automobile industry was completely
focused on manufacturing capacity and mass production in order to reduce costs and work
as efficient as possible (Clark and Fuijimoto, 1991). The Japanese car manufacturers then
shifted the focus on product development, meaning being able to introduce new models at a
faster rate than the competition (Clark and Fujimoto 1991; Cusumano, 1994). The Japanese
automobile manufacturers could produce a new car model every four years, while the U.S.
and European automobile manufacturers could only change a car model every six to eight
years (Cusumano, 1994). These developments provided the Japanese automobile industry
with world dominance well into the 1990s and are still going strong today.
Womack et al. (1990) claimed that there was a gap regarding the success of lean between
Japan and the rest of the world, a 2:1 relation meaning for every successful implementation
of lean in the U.S. or Europe there were two successful ones in Japan. In 2002, Oliver et al.,
conducted a study to the effects of lean in different countries, namely the U.K., U.S. and
Japan. They concluded that the Japanese gained significantly more benefits from the
implementation of lean than their American or European counterparts. The studies of
Cusomano (1994) and Clark & Fuijimoto (1991) provide insights in the development of lean
in Japan. Oliver et al. (2002) provided evidence that there are differences in the success of
lean when implemented in a different country than Japan. Therefore it is interesting to know
what the difference of lean implementation in different countries is, what the various factors
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are when facing a implementation of lean management outside of Japan and how these
factors can be utilized. This thesis investigates these issues.
1.3 Problem statement
The area of this research is the concept of lean and its implementation aspects, with the
main focus on the different countries in which to implement. This results in the following
research question:
“What are the success factors companies should consider when implementing lean in
different countries and how can they make the implementation successful?”
1.4 Research questions
In order to provide an answer to the problem statement and to be sure that all aspects are
covered, several research questions need to be answered. The following three sub-questions
provide partial answers in order to provide a complete answer to the problem statement:
1. What are the principles of lean management?
2. What are the success factors concerning the implementation of lean?
3. How do countries perform on the factors and how can they make the implementation
successful ?
1.5 Research design
The type of research can be described as causal (Sekaran, 2003, pp.126), this research
wants to find out whether a different country causes a successful or failed implementation of
lean. This research discusses the possible differences and problems a decision maker might
face when trying to implement lean in Japan itself or in another country. This type of research
is called a literature study (Sekaran, 2003, p. 66-67). The dependant variable in this research
is the implementation of lean and the independent variable is country (Japan, the United
States and the United Kingdom) in figure 1.
Country
(Japan / U.S. / U.K.)
Implementation of
lean
Figure 1: Conceptual model
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1.5.1 Data collection
The research uses information gathered by other researchers to collect the necessary data
to provide answers to the research questions, this is called making use of secondary
sources (Sekaran, 2003, pp. 222-223). Secondary sources like publications are collected
through the University of Tilburg library facilities and the various official websites of the
journals using keywords (e.g. lean, determinants of lean, success factors, lean thinking,
country effects and other combinations). Databases provided by the University of Tilburg only
contain scientifically validated and peer reviewed articles, this is also true for the official
websites of the journals. This research also uses scientific books from the library of the
University of Tilburg; the same validation aspects of the journals apply. The internet (world
wide web) is used for gathering additional information to complete case studies or provide
practical examples of applications of scientific concepts or studies.
1.6 Academic and managerial relevance
From a managerial perspective the relevance of this research could be of a high value. When
the decision whether to implement lean has to be made within a company, it is crucial for a
manager to have an indication of the rate of success. Academic articles are diversified on the
subject of lean, some are pro lean and argue that Japan is still ahead in competition on the
West due to lean management while some disagree, there is a lot of discussion. This thesis
provides more insight in the position of Japan and adds to the discussion.
1.7 Structure
Prior to answering the research questions it is very important to know what all the aspects of
lean are and which theories are its basis to understand the issue. Therefore the principles of
lean will be explained in Chapter 2. A clear understanding on the success factors, which
come into play when implementing lean in a company is described in Chapter 3. In Chapter
4 the performance of countries on the factors is explained with a new model, while a second
new model provides a roadmap towards successful implementation. In the end the
conclusion will be constructed based on Chapter 2, 3 and 4.
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Chapter 2: Principles of lean
2.1 Introduction
In order to answer the research questions it is important to know what lean really is. First the
origin of lean is explained in the first part after which the concept of lean is explained. After a
description of lean is provided, the tools and bundles are described followed by the
advantages and disadvantages.
2.2 Origin and definitions of lean
Lean originates from the country of Japan and was pioneered by the automobile
manufacturer Toyota (Wu, 2003). Toyota developed the so called Toyota production system
(TPS). The basis of this system was creating flow in the manufacturing process and reduce
wasteful activities in production (Ohno, 1998). Toyota and other Japanese automobile
manufacturers suffered from shortages and a lack of resources, which resulted in the
development of production processes which worked with a minimization of waste in all
aspects of a business namely; lean (Harrison & Van Hoek, 2008). Lean was made
internationally known for the various applicable businesses by Womack & Jones (1996), they
explained the applications of lean and how it could be transferred to other industries.
Lean assumes that the production process consists out of two types of activities, value
adding activities are only 5% of the total activities while 95% are non-value adding or
wasteful activities (Wood, 2004). Value adding activities are for example to create flow and
flexibility (Wood, 2004). Non value adding activities are day to day work activities which do
not add value to the end product, they can be called waste (Wood, 2004; Hines & Taylor,
2000). Waste is called is called „muda‟ in Japanese and concerns any human activity, which
absorbs resources but creates no value (Wood, 2004). The main reason for eliminating
waste is improving customer value and increase profitability in the products and services an
organization provides to customers (Burton & Boeder, 2003).
Kerr (2006) described lean as a focus of the company on what matters, namely customer
satisfaction and getting rid of all wasteful activities in the supply chain. Lean is not just waste
removal in production processes. Lean is a process improvement tool in transportation,
accounting and not just production (Kerr, 2006). Lean techniques can be applied in any
business process, hospitals and banks for example (Hettler, 2008).
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Lean functions as a foundation of business strategies, in the entire company. The Toyota
Production System (TPS) discussed earlier is the basis for a generic process management
philosophy which is lean (Womack & Jones, 2003). This philosophy reduces the time from
customer order to delivery by eliminating sources of waste in the production flow when
implemented (Bashin & Burcher, 2006; Liker, 1996). Lean can be viewed as a
counter‐intuitive alternative to traditional manufacturing models which solely focus on mass
production to achieve economies of scale (Womack et al., 1990).
2.3 Process of lean
The process of lean consists out of five principles which should be followed if the aim is
waste elimination and are displayed in Figure 2 (Wood, 2004; Tracy & Knight, 2008; Nave
,2002; Womack & Jones, 1996).
5. Perfection4. Let customers
pull
2. Identify value
stream
1. Specify value
3. Create product
flow
Figure 2: Lean Principles by Womack & Jones (1996)
1. Specify value by product: This principle focuses on the identification of the need of
the customer. What does the customer want? (Wood, 2004). The determination of value can
both be from the perspective of the ultimate customer or a subsequent process (Nave, 2002);
2. Identify the value stream: In step two the value stream needs to be identified for each
product. Steps which do not create value whenever possible need to be eliminated. The
value stream consists out of all value creating and non value creating actions, which are
needed to bring a product from concept to launch and from order to delivery (Womack &
Jones, 1996; Kerr, 2006);
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3. Make the product flow: Product flow is the uninterrupted movement of a product or a
service through the system to the customer (Nave, 2002). When analyzing processes a
manager should always look for existing bottlenecks and the places a bottleneck might
appear in the future. Fixing bottlenecks and prevention of future bottlenecks are key activities
in creating flow (Wood, 2004). A major bottleneck which is very common and requires
attention in companies is the buffer-stock (Nave, 2002). The value creating steps should
occur in tight sequence in order to make the product flow to the customer smoothly (Kerr,
2006);
4. Supply at the pull of the customer: After step 3, removal of bottlenecks and creation of
flow, focus should transfer to letting the customer pull the product through the process (Nave,
2002). This means giving the customer control, only make what the customer wants when he
wants it (Wood, 2004);
5. In pursuit of perfection: Perfection in lean can only be achieved when all waste is
completely eliminated, all activities are renewed to only create value for the customers
(Wood, 2004). An important addition is the fact that status quo is not enough, there
should be continuous improvement (Wood, 2004). Step 1 to 5 should be repeated until there
is no more waste. And even then there should be regular checks and improvements of the
process to make sure it is running perfectly (Kerr, 2006).
These five principles and the concept of waste removal are not only applicable for production
processes but as well for service providers, for example banks and hospitals. For service
providers with the customer inside the process it is important to use a view from the
customers perspective (Hettler, 2008).
2.4 Lean and waste
The five principles described in section 2.3 are the roadmap towards perfection of the
processes. Lean is a cyclical route to seeking perfection by eliminating waste (Harrison &
Van Hoek, 2008). When the first four principles constructed by Wood (2004) are combined,
the fifth principle; perfection can be created. It does not end here, continuous improvement.
The definitions in section 2.2 almost all mention waste as an important factor, but what is
waste exactly. In the main literature (Wood, 2004; Harrison & Van Hoek, 2008; Bhasin &
Burcher, 2006; Taylor & Brunt, 2001; Tracy & Knight, 2008; Liker, 1996; Womack & Jones,
1996) there are a total of seven types of wastes defined which increase the time from
customer order to delivery.
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1. The waste of overproduction: When you are producing too much or too soon, the flow of
information and materials is disrupted and results in excess inventory (Hines & Taylor,
2000). The same can be said for the delivery of goods, delivery too much products or too
early. This often happens to keep employees busy, this is a clear indication that something is
wrong with the flow of the processes (Wood, 2004);
2. The waste of unnecessary waiting: Waiting occurs when time is not being used effectively
or inefficiently creating long periods of inactivity for people, information or goods (Hines &
Taylor, 2000). This results in an interrupted flow for the operator and assembly product and
waiting for the customer, this will have a negative effect on the lead-time and could result in
loss of customers (Harrison & Van Hoek, 2008);
3. The waste of transporting: The movement of materials and carrying paperwork between
departments which do not add value are examples of transport waste (Wood, 2004). The
assembly of a product usually consists of several processes, moving finished parts from
process one to the next adds no value to the product (Harrison & Van Hoek, 2008);
4. The waste of inappropriate processing: Inappropriate processing is working processes
with the wrong set of tools, procedures or systems. Most of the times a simpler approach and
other tools are more effective (Hines & Taylor, 2000). When multiple processes or
workstations make use of the same source, this could lead to the last process needing the
resource having to wait for resupplying of the resource because other processes already
used it (Harrison & Van Hoek, 2008). It is also referred to as a process that is not capable
of meeting the quality standard needed to satisfy the customer (Ohno, 1998);
5. The waste of unnecessary inventory: When there is unnecessary inventory this uses
excessive storage capacity and delays products or information, resulting in high costs and
poor customer service (Hines & Taylor, 2000). A common cause for too much inventory is
setting the minimum order quantities to high (Wood, 2004);
6. The waste of unnecessary motions: When the workplace is poorly organized the result can
be poor ergonomics which causes the operators needing to bend and stretch extra and
searching for their lost tools (Hines & Taylor, 2000). The same applies to operators having to
walk between workstations (Harrison & Van Hoek, 2008);
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7. The waste of defects: Defects are mistakes made by machines and people, they cause
interruptions and have a negative impact in efficiency. Defects cause a lot of paperwork
concerning errors and mistakes (Wood, 2004).
According to Womack & Jones (2003) these 7 wastes are not complete yet, there is an
eighth waste. This is “Unused Human Talent”, which means the design of goods and
services which do not meet customer needs (Womack & Jones, 2003). This can be the
product development hours spent when the product is not launched, or the customer does
not buy it which is a waste of development hours (Bicheno and Holdweg, 2009).The eight
wastes are displayed in figure 3 below:
Waste/waiting
(Non value adding for
the customer)
2. Waiting
1. Overproduction
7. Defects
8. Unused
Human Talent
6. Unnecessary
Motions
5. Unnecessary
Inventory
4. Inappropriate
Processing
3. Transport
Figure 3: The seven wastes (Wood, 2004) + eighth waste (Womack & Jones, 2003)
2.5 Tools of lean
Lean efforts are guided by philosophical principles, while the application in practice makes
use of additional tools. There is a wide range of different tools and techniques to assist lean
management (Tracy & Knight, 2008). In this section the 5 most prominent tools are explained
while using the lean principles discussed in section 2.4 from Womack & Jones (1996).
After the value of each product has been identified the process proceeds to step two, specify
the value stream. In order to perform step two a tool called Value Stream mapping is often
used (Manos et al., 2006). This tool is a very powerful technique in order to identify waste
and make plans from improvement in your processes. In Appendix 1 a correlation matrix is
displayed which links the seven wastes defined by Ohno (1998) to the best fitting Value
Stream Mapping tools. This assists in selecting the correct fitting tool for a certain company
(Taylor & Brunt, 2001).
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For the third step, creating flow in the process there are many tools to use, a very famous
one is Just-in-time (JIT). JIT is the delivery of items just before they run out (Manos, 2006). If
a workstation runs out of materials, it grinds to a halt and the following processes as well,
which means a disruption of the entire process (Slack et al., 2007).
The fourth principle shows that the customer should pull the products through the processes
(Wood, 2004). The most commonly used tool for this issue is the Kanban System. Kanban is
a method of operationalizing a pull based system for planning and control. In short, a product
or service will only be provided when asked for (Slack et al., 2007). Kanban is a visual
system which uses plain cards with the number of parts or products required on them. Items
will only be replenished when the user or customer asks/pulls for it (Manos, 2006).
The final step is the pursuit of perfection (Womack & Jones, 1996). Completing the five steps
once is not enough, companies must seek continuous improvement (is the process still
running as optimal as possible?), the cycle keeps repeating; this is called Kaizen (Slack et
al., 2007; Manos, 2007). The rate of improvement is not that important but the momentum is
(Slack et al., 2007). Small continuous successes or improvements, every week or month.
2.6 Lean bundles
Lean bundles help to improve operational performance and are usually part of a lean
implementation (Shah & Ward, 2003). The four overall bundles are discussed namely; just-
in-time (JIT), total production maintenance (TPM), total quality management (TQM) and
human resource management (HRM).
Just in time (JIT): JIT is a broad philosophy of management which focuses on the
elimination of waste and to enhance the process quality of all processes (Harrison & Van
Hoek, 2008). Just-in-time is the production of products/services at the exact moment they are
needed, not before they are needed, and not after they are needed (Slack et al., 2007).
JIT is a production system that focuses on the minimization of raw materials and work in
progress (WIP) inventory, while controlling the defects and minimizing them (Fullerton &
McWatters, 2001). That is not all; JIT aims for production in a level (stable) production
environment which is achieved by simplifying the production processes and in order to do
this you need flexible and multi-skilled employees.
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The Just-in-time concept is completed after being developed over the last few decades from
a pure manufacturing technique towards a philosophy of improvement (Vokurka & Davis,
1996).
Total production maintenance (TPM): TPM is a maintenance program which both focuses
on improving production and enhancing employee morale and job satisfaction (Slack et al.,
2007). The word „total‟ in total productive maintenance has three different meanings which
explain the principles of TPM (Wang & Lee, 2001):
1. Total effectiveness: productivity, cost, quality delivery, safety, environment, health, morale.
2. Total maintenance system: maintenance prevention and maintainability improvement.
3. Total participation of all employees.
The ultimate goal of TPM is to increase productivity in factory and equipment. The
management should organize small group activities in which they create commitment and
prepare/train the employees in being solely responsible for their machines while operating it.
To achieve this, the six big losses in TPM need to be reduced; reduced yield, process
defects, reduced speed, idling and minor stoppages, set-up & adjustment and equipment
failure (Wang & Lee, 2001).
Total quality management (TQM): TQM is a philosophy in the way it can organize quality
improvement (Slack et al., 2007). It puts quality at the center of all that is done in an
operation. The „total‟ of TQM can be summarized into the following; meeting customer needs
and expectations, covering all parts and every person of the organization, examine all quality
related costs, getting it right the first time and the development of system and procedures
which result in a continuous process of improvement (Slack et al., 2007).
The last step of the lean principles (in pursuit of perfection) is continuous improvement which
is closely linked with TQM. In order to facilitate TQM two techniques are used, Plan-do-
check-act and Standardize-do-check-act (Taylor & Brunt, 2001). Plan-do-check-act is a
process in which 4 steps are followed. First a project is planned by having a explicit project
strategy, then the right people are selected for the project, a check is done to see if the
project is balanced between customer and business needs and finally the project is
implemented via project management process tools (Srivannaboon, 2009).
Standardize-do-check-act is the same except for the first action; standardize. This consists
out of maintenance and setting standards and then working in accordance to them and
improve and keep improving (Kume, 2002).
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Human resource management (HRM): The final lean bundle designated by Shah & Ward
(2003) is human resource management. The human resource of an organization are the
expertise and the effort provided by the employees (Grant, 2007). Companies are constantly
looking for effective methods to monitor performance and potential of their personnel, and
most important how to enhance performance and personnel (Grant, 2007).
To achieve this enhancement a variety of practices is used; job design, job enlargement,
cross-training programs, work teams, formal training programs, employee involvement,
problem solving groups, cross functional work force and self-directed work teams. These last
two are somewhat special since they are higher level practices which include several lower
level ones listed before (MacDuffie, 1995; Shah & Ward, 2003). Another important issue to
facilitate human resources and gain the most of them as a business, is the key intangible
resource: organizational culture. When all the previously mentioned practices and resources
are in place, the human resource will gain the highest return rate (MacDuffie, 1995; Shah &
Ward, 2003; Grant, 2007).
2.7 Advantages of lean
The reduction of waste is always a good thing. Reduction of waste can result in several other
advantages for companies if they decide to go lean.
The main advantage of lean is the fact that it increases competitiveness (Liker, 1996; Taylor
& Brunt, 2001). More advantages are the possible reduction in inventories, cost of quality
and lead-time by 90% with an increase in human resource productivity of 50% (Lathin, 2001).
Lean manufacturing can possibly reduce all eight wastes by 40% and reduce costs by at
least 15% to even 70%. The space and inventory requirements can be decreased by 60% as
well as boosting productivity with 15-40% (XR Associates, 2003). This can be achieved
because lean can possibly reduce the number of needed changeovers and increases the
speed of changeovers by 60% (XR Associates, 2003). With a lean focus on waste reduction
and improving the flow time there is less variation (no extremes, both in shortage or overflow)
and a constant output which results in less inventory (Nave, 2002).
Lean provides shorter lead-times, the benefits of this are the increased production speed and
the reduction in costs of production (Nave, 2002). Not only does the lead-time decrease with
75% but the on-time deliveries as well by more than 99% (Pavnaskar et al., 2003)
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Womack & Jones (1996) support several benefits already mentioned above namely:
improved productivity (double or even quadruple), less inventory and work in progress and
lead-times can drop from months to days or from weeks to minutes. All of the above
advantages are summarized in Table 1.
Advantage Benefits in percentages
Changeovers Decrease 60%
Cost of quality Decrease by 90% Human resource productivity Increase 50%
Waste Reduce by 40% Space and inventory requirements Decrease by 60% / 90%
Productivity Increase of 15-40% Lead-times Decrease by 90%
On time delivery Increase to 99% on time Table 1: Advantages (Womack & Jones, 1996; Liker, 1996; Taylor & Brunt, 2001; XR Associates,
2003; Pavnaskar et al., 2003)
2.8 Disadvantages of lean
In this section the downside of lean is explained, what are the disadvantages and reasons
not to implement lean management. The disadvantages are explained in three important
overlapping issues; costs, employees & culture and processes.
Costs: Following the principles of lean often requires a complete dismantling of the previous
physical plant setups and systems and this is extremely costly (Wood, 2004). As explained in
the lean bundles, the employees are very important as well for all types. Training them also
brings costs for the company (Shah & Ward, 2003).
In Japan there are a lot of problems with traffic directly linked to lean production (Cusumano,
1994). The majority of Japanese companies produce lean, which means that all those
companies are delivered with JIT. Being relatively small and densely populated Japan suffers
from major traffic jams. Transport suffers as well, resulting in increased transportation costs
and delay costs (Cusumano, 1994).
The location and the type of company can be a disadvantage. If a company depends on
delivery via sea over long distances, lean becomes impossible. Choosing air freight as an
option results in increased costs. Lean does not work in every type of business in every
location (Levy, 1997). But companies can still try to be as lean as possible (De Haan &
Yamamoto, 1999).
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Employees and culture: As stated in the lean bundles, lean focuses on “smart” input from
employees to help keep improving the processes and being adaptable to change, it‟s
becoming more and more difficult to find good workers (Cusumano, 1994).
When management places the focus on the implementation of lean and demands intense
participation of employees the regular managerial issues are neglected or even ignored
(Nave, 2002).
Processes: Nave (2002) makes another comment on one of the goals of lean, eliminating
waste. Especially in service providing there are processes which do not add value directly
but indirectly improve the experience of the customer. When for example a bank needs to
remove waste it could remove things like paintings, comfy chairs, the television and
expensive magazines from the waiting room, leaving a barren area with plastic chairs and a
simple clock. When this waiting room is aligned with the rest of the bank with luxurious seats
and informal reading material customers will be more at ease and make a purchase sooner
than coming out of the white empty room. Caution with service providing products is
necessary (Nave, 2002).
Having a lean supply chain also bring risks. When you depend on your supplier to have JIT
delivery you can maintain a very low stock level. The downside of no buffers is that your
production will grind to a standstill whenever a supplier has a problem, like a fire or power
outage, this is called supply chain vulnerability (Liker, 2003).
Overall: Lean only works with a stable and predictable demand which makes lean not
suitable for enterprises operating in volatile markets (Christopher, 2000). Lean is the best
option when working with little variety (Christopher, 2000). In Table 2 below the
disadvantages are displayed.
Disadvantage Drawbacks
Initial investment High costs Transportation Traffic jams, sea freight (too slow), air freight
(too expensive)
Need for “smart” employees Only small number of those people available Employee focus Neglect of management issues
Rigorous elimination of processes Removal indirectly value adding processes Culture Dependence on people and culture
No buffers, issues (fire, power outage) Vulnerability Needs predictable demand Difficult in volatile markets
Needs little variety and high volumes Difficult in markets with lots of variety and low flexible volumes
Table 2: Overview disadvantages of Lean
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2.9 Summary
The philosophy of lean has been defined via the five common principles of lean. Moreover,
the seven (or more) waste have been explained in detail. The tools and lean bundles have
been explained followed by the advantages and disadvantages of lean. With this chapter a
clear understanding of lean has been established and further insight will be provided in the
next chapters.
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Chapter 3: Critical success factors of lean
3.1 Introduction
Implementations of lean can either be successful or fail. Lean is difficult to implement and
even the biggest companies of the world sometimes fail an implementation. This chapter
provides an explanation of the critical success factors in order to answer research question
2.
3.2 Example of an unsuccessful implementation of lean
In 1998 Wal-Mart entered the German market. Wal-Mart tried to implement its lean retailing
system which worked perfectly in the United States. After eight years, in 2006, Wal-Mart left
Germany due to failure of implementing lean retailing. The first reason is the fact that Wal-
Mart could not dominate the market and change the distribution channel like they did in the
U.S. to cut costs and offer extremely low prices (Christopherson, 2007). In the United States
Wal-Mart defeated all competition by offering such low prices that no other company could
compete with them. Wal-Mart could only use prices as low as this by dominating the supply
chain and demand low prices from suppliers and alter the distribution channel to reduce the
costs for Wal-Mart (Christopherson, 2007). In Germany they could not undercut the
competition and lure customers with low prices since other German supermarket firms (Lidl
and Aldi for example) already used price as the main competing weapon. Wal-Mart used
lean as a part of their cost reduction strategy but could not get lean to work in Germany.
The second issue were the unions in Germany. Unlike the U.S., German unions were
relatively weak but due to cultural differences and normal German values (not accepted by
Wal-Mart) there were constant attacks on Wal-Mart in the media. Wal-Mart refused to accept
the German overall collective agreements, in Germany companies have collective
responsibilities which are none existent in the United States. The German workforce did not
accept this treatment and refused to adapt to the lean way of working (Christopherson,
2007).
3.3 Success factors
There are four major success factors concerning the implementation of lean management.
These four factors are relevant for large multinationals but for small and medium enterprises
(SME) as well (Achanga et al., 2006). The four main success factors for lean implementation
are displayed in figure 4:
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50%
30% 10%
10%
Skills & Expertise
(10%)
Finance
(30%)
Leadership &
Management
(50%)
Culture of recipient
organisation
(10%)
Figure 4: Four main success factors lean implementation (Achanga et al., 2006)
3.3.1 Leadership and management: The people who are responsible for the
implementation of lean should have strong leadership characteristics, should be extremely
capable project managers and need to be able to adjust quickly. This is often not the case
when the implementation is a failure (Achanga et al., 2006). Whenever good leadership is
displayed to the workforce and they feel they are in the hands of a capable person the
effective skills and knowledge are increased and stimulated to develop (Achanga et al.,
2006).
A second issue is poor cost and schedule estimations and planning, these cause problems in
the project of implementation resulting in over budgeting and delays of the actual
implementation, not meeting the deadlines (Al-Mashari et al., 2003). This view is supported
by Umble et al., (2003), the surveys this author conducted explained this was the cause of
failure according to 77% of the respondents. Without proper leadership and management a
lean implementation is bound to fail.
3.3.2 Finance: Finance is a crucial factor for the succeeding of any project. Financial
resources are needed to hire consultants and possibly for training of personnel (Achanga et
al., 2006). As said in the leadership and management section, poor planning of financial
costs is a major obstacle with any implementation (Achanga et al., 2006; Al-Mashari et al.,
2003). SME‟s usually want to know the exact implementation costs and the benefits before
they want to commit to an implementation project which makes finance very important
(Achanga et al., 2006).
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3.3.3 Skills and expertise: For Western manufacturers, in order to compete in the future,
the highest chances lie in the use of people, intellectual capital, creativity and sense to
innovate and differentiate (Achanga et al., 2006). Usually manufacturers have employed low
skilled workers simply because they are cheap. These type of workers are not suited for the
ideas of lean and skill enhancement, they do not embrace technology advancement
(Achanga et al., 2006). Trainings are usually lacking. Only the initial and responsible people
are trained in a quick manner which is insufficient to prepare them for their role and make
sure everyone has the needed skills to perform tasks (Ortiz, 2008).
3.3.4 Culture of recipient organization: The 3 factors above all benefit from a positive
organizational culture towards lean. Especially for the SME‟s this can be a major issue due to
the fact that the culture in these types of businesses usually reflects the owners cultural
views and beliefs. These cultures are usually very rigid and managers will have an incredible
hard time to try and move their workers towards the lean culture (Achanga et al., 2006). In
addition is usually is the manager himself who is the boss. Another issue is the fact that after
the implementation is completed the project enters a vacuum with personnel resisting it,
hence it is very important to motivate the entire workforce to embrace lean (Umble et al.,
2003). There are numerous tools like the seven deadly wastes, JIT, kaizen, and so on, but
the personnel on the floor make or break the implementation (Ortiz, 2008). Changing the
culture can be difficult but companies who can change the culture are usually successful in
the implementation of lean (Achanga et al., 2006; Ortiz, 2008).
Prativedwannakij (2009) conducted a study into the issues with Kaizen implementation in
other countries. He came to the conclusion that cultures with: high power distance, strong
uncertainty avoidance, collectivism, femininity and short term orientation are making it more
difficult for Kaizen to reach its potential (Prativedwannakij, 2009). In practice this means that
cultures with accepted differences between the rich/powerful and the poor/powerless,
strongly regulated cultures, group focused and short term thinking have a negative influence
on lean implementation (Prativedwannakij, 2009).
Lean culture
Although every company has its own way of conducting implementations, a lean culture is
still needed to cause lean thinking (Esfandyari & Osman, 2009). Changing a culture can be
very difficult but Esfandyari & Osman (2009) provide some solutions. The lean culture can be
achieved by two type of improvements namely; by inter- and intra organization
improvements. In Table 3 & 4 the steps to achieve this are shown:
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1. Develop a learning environment
2. Create a strategy of change and communicate how to achieve the goals
3. Assign responsibilities within pilot programs first and then entire organization
4. Make decisions at the lowest level and promote lean leadership at all levels
5. Conflict control
Table 3: Inter-organization improvements (Esfandyari & Osman, 2009)
1. Develop supplier relationships (mutual trust and commitment)
2. Focus on customer
3. Maintain the challenge of existing processes (example: customer assistance to suppliers)
4. Long-term commitment
Table 4: Intra-organization improvements (Esfandyari & Osman, 2009)
Lean manufacturing is successful only when individuals running the business are committed
and dedicated. Failure comes in to play when management provides poor support,
procedures and standards are weak and the absence of accountability and vision (Ortiz,
2008). In order to get all four success factors on acceptable levels commitment and
dedication from management as well as the regular workers needs to be at a maximum
(Achanga et al., 2006).
Another success factor are support systems. Can management produce useful reports on
performance and use the information to motivate the work force. Most of the times the actual
production runs smooth and efficient however the support staff are highly inefficient and often
forgotten. Dedication is important, especially from the floor operators, this is key (Ortiz,
2008).
3.4 Summary
There are several causes for success or failure of lean implementation. Leadership and
management are extremely important. Commitment and dedication are part of the culture
transfer to a lean culture, with poor management support and lack of leadership this process
is bound to fail.
There are two ways to achieve the lean culture, using inter-organizational and intra-
organizational improvements. Beside the culture there are other factors which play an
important role like the availability of support systems (for example: performance reports).
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Chapter 4: Country performance & improvement options
4.1 Introduction
This chapter discusses the three geographical regions (Japan, United States and the United
Kingdom) and the influence of their locations on the performance of lean implementations.
In section 4.2 the country influence is explained from case studies performed by several
authors, after which the results are used to create two new models. The first model is a
spider web which displays benefits and weaknesses of a certain country. Secondly a
roadmap guiding companies through the important success factors which shows what areas
should be focused on and how problems can be prevented or resolved.
4.2 Country influence
An exemplary research in this area was conducted by Oliver et al., (2002). From the year
1994 till 2001 they kept track of the improvements which emerged after the implementation
of lean. This resulted in a ranking in which Japan had the most benefits from lean in
productivity. Japanese plants were able to improve their productivity with 20% while the
plants in the United States and the United Kingdom were struggling with declining
productivity rates. This is explained in Table 5 below:
Japan United Kingdom United States
Average change labor productivity 1994-2001 + 20% - 13% - 2%
Product defect rate (2001) 81 416 111
Change in defect rate 1994-2001 - 58% - 75% - 35%
Table 5: Productivity, Quality and Change over time, 1994-2001 (Oliver et al., 2002)
The product defect rate explains the number of defects in 2001, Japan has only 81, while the
United Kingdom had 416 although the United States are close with 111 defects. And the
change in defect rates from 1994-2001 shows overall decrease of defects, the United
Kingdom has the highest change rate but that is logical because they had a lot more defects
to begin with.
With these numbers is to be expected to see Japanese companies in the top-10 components
manufacturers in the world, but this is not the case, currently only 1 firm in the top-10 is from
Japan, the other 9 are either from Europe or the United States (Oliver et al., 2002). Even
though Japanese manufacturers perform better operationally, their financial status is usually
worse than that of their European of American counterparts, this explains the top-10 (Oliver
et al., 2002).
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A reason why Japanese companies are better in bringing lean into practice is due to the fact
that Japanese companies have extended relationships with their suppliers. They almost
solely depend on each other. Suppliers only deliver to one company, when that company
orders less the supplier might go bankrupt. The issue occurs less in U.S. and E.U.
companies because their supplier relationship is less intense (Oliver et al., 2002).
Lean culture is achieved among other via extensive supplier relationships (Esfandyari &
Osman, 2009), hence Japanese companies are better in lean. The lean culture also focuses
on supplier relations as well as customer relations. On both these areas the Japanese
companies are way ahead of their competitors from the United Kingdom and the United
States which is displayed in table 6 and 7 below:
Japan United Kingdom United States
Number of suppliers 78 32 56 Incoming defect rate 463 3861 7752
% of late deliveries from suppliers 3.5% 4.4% 12%
Frequency of delivery from suppliers (every x hours)
6,1 41,0 25,5
Table 6: Supplier relations (Oliver et al., 2002)
Japan United Kingdom United States Number of customers 3.0 2.4 2.3
% of late deliveries to customers 0.1% 4.8% 4.2%
Finished goods inventory (hours) 2.4 69.6 30.0 Frequency of delivery to customers (every x hours)
4.1 15.5 10.2
Table 7: Customer relations (Oliver et al., 2002)
Skills and expertise of the personnel are also studied in the research of Oliver et al. (2002).
Table 8 explains that around 88% of the operators are involved in problem solving groups
versus 70% in the U.K. and 52% in the United States. Personnel in Japanese companies
make almost 25 suggestions for improvements per year while only 2 in United Kingdom and
only 4 in United States companies are made.
Japan United Kingdom United States
% of operators involved in problem solving groups
88.1% 70.0% 52.0%
Suggestions per head 24.5 1.9 4.0
Annual target per operator 19,3 2,0 13,3 % of suggestions from production operators
69.0% 87.4% 42.3%
Table 8: Problem solving and improvement (Oliver et al., 2002)
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4.3 New models
All the information from the previous chapters can be brought together in two newly
developed models which are explained in this section. The first model describes the strength
and weaknesses of countries in combination with the success factors derived from Chapter
3. The second model provides a plan/route for companies to follow with the goal of a
successful implementation and avoiding pitfalls or forgetting important issues.
4.3.1 Web of factors
The first model is named the web of factors and utilizes the four success areas from Chapter
3, namely; finance, management & leadership and culture of recipient organization of the
main factors and commitment & dedication as the fourth. These four are the most important.
Skills and Expertise is a facilitating factor rather than a main factor, training needs to be
provided by the management while personnel needs to be committed and dedicated to their
training in order to succeed, the same can be said for the entire implementation, dedication
and commitment from both management and personnel are required to create a lean culture
The web of factors links the success factors discussed in Chapter 3 to the three countries
(Japan, U.S. and the U.K.). The web of factors displays performance on each factor, these
rating are not exact but an estimate. The model is built up in stages, first Japan is displayed
and explained followed step by step by the United States and the United Kingdom (figure 5,6
and 7):
Figure 5: Web of factors: Japan added
Japanese companies receive a low score on finance, since their financial position is
described as fragile by Oliver et al., 2002. Changing the culture towards a lean culture is a
strong point of Japanese companies, this can only be achieved by motivation and inspiration
Page | 26
by leaders and management. Both management and employees display commitment and
dedication (Table 8 from Oliver et al., 2002). Next is the performance of the United States:
Figure 6: Web of factors: United States added
The United States are strong in finance and set high achievement goals. This puts their
management and leadership on a fairly high score (Oliver et al., 2002). The U.S. face equal
problems as in the United Kingdom with bureaucratic organizations and difficulties changing
the culture (Table 6 and 8). The last addition is the United Kingdom performance:
Figure 7: Web of factors: United Kingdom added
As stated by Oliver et al. (2002) companies from the United Kingdom have strong financial
positions but usually lack in the management and leadership area. United Kingdom
companies tend to be bureaucratic and difficult to change (Achanga et al., 2006). This leads
to a low score on culture as well, since the management and leadership are unable to
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properly motivate the employees to be committed and dedicated to change the lean culture
(Table 8).: Adding the countries together results in the following figure 8:
Figure 8: Web of factors: Japan (Yellow), U.S. (Green) and U.K. (Purple) combined
With this web of factors a manager can prior to deciding to implement lean or start the
implementation check if all the weak points which usually occur in their country are covered.
For example: a company from the U.K. can see that finance is a strong point which should be
used to assist management and leadership, which in turn can motivate personnel to be
committed and dedicated to form a lean culture and successfully implement lean.
4.3.2 Road to successful implementation
Using the web of factors provides managers with an insight in the standing of their company
in the respective country they wish to implement lean. Knowing the strong and weak points is
not enough. Managers want to know how to handle an implementation. To illustrate a
roadmap towards successful implementation the following model in Figure 9 is proposed:
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Finance
Management and
Leadership
Commitment and
dedication
Support Systems
Succesful
Implementation
Culture of recipiënt
organization
Skills and
Expertise
Question to
implement lean
Figure 9: Roadmap to successful implementation
The blue box shows the question to implement lean and how to do it. The red boxes are the
main factors, the orange box demonstrates the facilitating factor while the yellow box shows
the support factor, this all ends in the green box; successful implementation.
Finance is the first factor, for every investment enough money is needed, for enlisting the
help of consultants, training personnel (increasing skills and expertise), purchasing systems
and changing production processes.
With help of consultants and training, management and leadership can be improved and
brought to the proper level. The management needs to select the proper training programs
for the personnel to increase skills and expertise. Management and leadership is closely
linked with commitment and dedication, having a two-way function. In order to motivate and
lead, the management needs to be committed and dedicated to the implementation of lean
while also creating commitment and dedication with the personnel; in the end the personnel
needs to be lean on the work floor.
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Management and leadership with commitment and dedication lead towards a changing
culture in the recipient organization to a lean culture. This process is reinforced even more
when previously mentioned skills and expertise are increased (motivator).
With the achievement of a culture change the company is not finished yet, it should be
checked if the culture is moving towards lean. This can be done using support systems,
these can for example create performance reports for management to check, analyze and
adapt the organization wherever needed. Making the proper investments in all the factors
can result in a successful implementation of lean.
Although this model is proposed to help in a successful implementation, the road towards a
successful implementation of lean can still be difficult.
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Chapter 5: Conclusion
5.1 Introduction
This chapter consists of two parts namely; conclusions and limitations & recommendations.
The conclusions provide the answer to the main research question and elaborates on the
findings. The limitations and recommendations provide an insight into the way the research
has been conducted and provide options for future research.
5.2 Conclusion
This research thesis has the goal of answering the research question which has been
discussed in chapter one: “What are the success factors companies should consider when
implementing lean in different countries and how can they make the implementation
successful?”. While focusing on three geographical areas (Japan, the United States and the
United Kingdom) this thesis tries to explain the relation between success of lean
implementations in different countries and how failure can be prevented.
In order to get a clear picture of what lean really is, lean has been defined using the
principles of lean. After defining lean the assisting bundles and tools for lean in practice are
explained, followed by the advantages and disadvantages of lean. With lean defined the
research explains the success factors concerning lean implementation using several case
studies. Finally the success factors are combined with the countries and show their
respective performance. This outcome is presented in a new model called the „web of
factors‟. With the performance of countries mapped, a roadmap towards a successful lean
implementation is developed and presented in a second new model called „roadmap to
successful implementation‟.
Lean is a management approach towards customer satisfaction and removal of all wasteful
activities from the supply chain. When implementing lean there are six different success
factors. Finance, Leadership & Management, Commitment & Dedication, Culture of the
Recipient Organization are the main factors with a facilitating factor and a support factor;
Skills & Expertise and Support Systems. The most important factor of success for lean turns
out to be Culture of the recipient organization, if a company is able to change the culture,
lean is usually successful. In order to get to a lean culture, leadership & management are
extremely important. The management needs to motivate the workforce and make them
committed & dedicated to the change. Nonetheless, changing culture is always a difficult
process.
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After determining the factors, these are linked to the three geographical areas (web of
factors). Japan scores best on three out of four factors, with the United States and the United
Kingdom only performing better in the finance factor. The United Kingdom outscores the
United States on three factors but both the U.K and U.S. are close with a lead for the United
Kingdom. In order to answer the research question this thesis finally provides a new model; a
roadmap towards a successful implementation. This model shows which process managers
should follow if they want to come to a successful implementation. It displays the important
success factors and their individual linkages. The model is used as a road map showing
which factors need to be utilized and improved in order to successfully implement lean
management.
5.3 Limitations & recommendations
This research highlighted three distinct geographical areas in which the United Kingdom
could represent Europe while Japan and the United States speak for itself. These are the
three major competing markets of our current world.
There are lots of upcoming markets like Asia, with countries like China, India and South
America with Brazil for example. Performance on the factors might be different in these
countries, there could also be other factors which play a role in these countries. These
countries also have totally different cultures then the three geographical areas discussed in
this research. For future researchers this would be an interesting research area. How does
lean fare in the upcoming markets (For example: Brazil, Russia, India and China) and what
are the difficulties concerning implementation with these countries?
This research displays culture as an important part of lean implementations being successful.
Culture has been discussed in this thesis only in a general fashion. This particular area could
be investigated in more detail, especially the links with commitment & dedication and
leadership & management. The key to successful lean implementation seems to be the
culture flip towards a lean culture. If these relations could be thoroughly explained and
researched an even better roadmap could be created.
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Appendix
1. Selection matrix for the seven wastes value stream mapping tools (Taylor & Brunt, 2001)
