Lean Manufacturing Practices In Small And Medium Enterprises Finance Essay

Introduction

Thin fabrication is a taking fabrication paradigm with a systematic attack, used to place and extinguish waste, by concentrating on production costs, merchandise quality and bringing, and worker engagement. The dogma of ‘lean ‘ production is riddance of waste both within the house and across the supply concatenation ( Womack & A ; Jones, 1996 ) . There is force per unit area on the companies to bring forth faster, better and less expensively with existing resources and this can be merely achieved through acceptance of Lean attack or Thin Manufacturing Practices.

Hire a custom writer who has experience.
It's time for you to submit amazing papers!


order now

The current concern environment is characterized by the outgrowth of extremely dynamic and cost-driven planetary competition. Cost decrease and uninterrupted betterment are going progressively important to the hereafter industry. In this context, the little graduated table sector are confronting tough competition ne’er before from the big graduated table sector and the entry of foreign companies in India. The Small and Medium Enterprises, SMEs sector plays a important function in the economic development of any state. It is high clip that these little and average graduated table industries must fit themselves in order to get the better of the challenges before them. Research surveies have found that the most of the SMEs were non cognizant the Thin Manufacturing Techniques and few companies that have implemented thin patterns have non achieved its full benefit. Adoption of Lean Manufacturing Practices will assist the SMEs to be competitory to confront the planetary challenges. The paper attempts to turn out the acceptance of Lean Manufacturing Practices in SMEs consequences in better operational benefits.

SME Challenges Ahead

With globalisation and unfastened market regime the challenges for the little and average endeavors are at big. The large inquiry is ‘Whether the SMEs are ready to confront the challenge? ‘ Harmonizing to a survey conducted by All India Management Association, AIMA on little endeavors in India the SSIs are characterized by high cost of production, deficiency of standardisation and most significantly incompatibility in merchandise quality. These issues are found common in SMEs in developed states like USA, UK, France and Australia. To last and develop their activities in an progressively competitory environment, little and average endeavors have to pull off issues like cost decrease and uninterrupted betterment ( E D Fassoula, 2003 ) . It is critical for the Indian houses to cast the compulsion with economic systems of graduated table and learn to do the most out of bing capacities and machinery and in this regard the function of thin fabrication is of strategic importance ( Badar alam Iqbal, 2004 ) . Thin fabrication typically is considered the sphere of big OEMs, but following a Thin doctrine can besides pay great dividends for smaller contract makers and occupation stores ( Patrick Waurzyniak, 2004 ) .

Thin Manufacturing Systems

The term ‘Lean ‘ was foremost coined by James Womack, Daniel Jones and Daniel Ross in “ The Machine that Changed the World ” ( Womack et al, 1990 ) . Thin fabrication is a taking fabrication paradigm with a systematic attack used to place and extinguish waste by concentrating on production costs, merchandise quality and bringing, and worker engagement. The dogma of ‘lean ‘ production is riddance of waste both within the house and across the supply concatenation ( Womack & A ; Jones, 1996 ) .

In the 1950s, Taiichi Ohno, developer of the Toyota “ just-in-time ” Production System, created the modern rational and cultural model for Lean Manufacturing and waste riddance. Thin benefits include reduced work-in-process, increased stock list bends, increased capacity, cycle-time decrease, and improved client satisfaction.

Thin fabrication system encompasses a broad assortment of Lean tools including 5S, just-in-time, Kaizen, Kanban, SMED that reduced conversion times, value watercourse function, cellular fabrication, provider direction and so on.

Thin Manufacturing Practices

Lean is a philosophical attack in placing and extinguishing waste ( non-value-added activities ) through uninterrupted procedure betterment. Waste is anything that is unneeded and does non add value to the terminal merchandise. Once identified, waste can be prioritized and eliminated in a manageable and structured mode ( Orlando Valota, Yi Sun and Z Zhang, 2005 ) . The end of Lean is to turn uninterrupted procedure betterment into a competitory arm. Thin rules determine the ends of thin fabrication ( Womack and Jones, 1996 ) present value specification, value watercourse, waste riddance, flow, pull, and uninterrupted chase of flawlessness as the thin principles. ) . Thin production is a multidimensional attack and encompasses a broad assortment of direction patterns, including just-in-time, quality systems, work squads, cellular fabrication, provider direction and so on ( Menaka S, 2007 ) . Quality rules are frequently practiced in smaller organisations in an informal manner ( Jorn Sturkenboom, Ton van der Wiele and Alan Brown, 2001 ) . There is force per unit area on companies to bring forth faster, better and less expensively with existing resources and this can be merely achieved through usage of engineering or a thin attack. Most of these are Nipponese in origin but we avoid overacting this, stressing that many of these techniques are in fact common sense applied in a structured manner ( Prof David Little, Alastair McKinna, 2005. Successful acceptance of Lean patterns offers many advantages in stock list decrease, quality sweetening, proper planning and programming, and client satisfaction.

Adoption of Lean Practices in SMEs

The reappraisal of literature indicates the importance and tendencies in Thin fabrication patterns in little graduated table sector for the past decennary in assorted surveies conducted in widespread acceptance of thin patterns. Peter Strozniak ( 2001 ) states that, still less than 20 per centum of makers say they have widely adopted other thin patterns such as lot-size decrease, constriction remotion and focused-factory production systems. JIM Lorienz ( 2003 ) finds that merely one in five little and mid-sized organisations are prosecuting tilt. SMEs are non cognizant of the advantages presented by thin, non interested, or do non believe they can utilize the rules of tilt to assist their organisations. SMEs are known to be handicapped by many factors which include high cost of procurance and selling, disused engineering, high cost of recognition in the manner of bettering their fight. Harmonizing to Aberdeen research ( 2006 ) most mid-sized makers suffer from the deficiency of procedure integrating. Best-in-class makers have improved their return on assets with long-standing and well-run fabrication uninterrupted betterment programmes such as thin. Esam Shehab ( 2006 ) reiterates saying that continued incredulity within SMEs about the benefits of tilt to their concern. Unfortunately, the thought of using thin fabrication has non been adopted by meaningful Numberss of SMEs with any strong belief. Although thin fabrication is going a popular technique for productiveness betterment, SMEs are still non certain of the cost of its execution and the likely touchable and intangible benefits they may accomplish. Most of the companies fear that implementing thin fabrication is dearly-won and clip consuming ( Pius Achanga, Esam Shehab, Rajkumar Roy and Geoff Nelder, 2005 ) . Implementing thin at a smaller store is non like the attack taken at big OEMs, but most of the basic thin rules are the same, “ It does n’t differ that much, you merely have to calculate out how to use it to your concern. That ‘s the biggest challenge of all. All the tools are at that place, you have to calculate out which 1s are traveling to acquire the occupation done Patrick Waurzyniak, ( 2004 ) .

To go globally competitory, it is necessary that little and average graduated table houses should be cognizant and acceptance of Thin rules. Successful acceptance of Lean patterns would assist houses to cut down its fabrication cost and directs to uninterrupted betterment. This paper focuses on widespread acceptance of Lean Manufacturing Practices in SMEs with a Thin Enterprise Vehicle attack.

The Lean Enterprise Vehicle Approach

In developing a clear definition of what precisely leanness mean for the medium sized companies, the writers mostly relied on the theoretical account developed by Gary Corner ( 2001 ) that demonstrates thin execution utilizing the Lean Enterprise Vehicle with four wheels and a grip to maneuver. ( Fig.1 ) . The Thin Vehicle attack is a simple and easy method for SMEs to follow thin patterns. Each wheel on the Lean waggon ( Fig.1 ) symbolizes one of four critical concern rules they are ; Production and Inventory Management ( PIM ) , Entire Quality Management ( TQM ) , Entire Organizational Buy-in ( TOB ) , and Lean Manufacturing Techniques ( LMT ) .

Thin Manufacturing Techniques

Entire Quality Management

Vision

Entire Organizational

Buy-in

Production and Inventory Management

Fig.1. The complete Lean waggon ( Beginning: Gary Corner, 2001 )

The grade of thin acceptance is assessed based on the four critical concern rules such as ; Production & A ; Inventory Management PIM, Total Quality Management TQM, Total Organizational Buy-in TOB, Lean Manufacturing Techniques LMT. Each concern rules consist of set of Thin patterns that supports to accomplish thin fabrication. The Thin patterns are represented as cardinal public presentation indexs under the four concern rules that are taken for the research survey are reviewed and described as follows. The concern rules can be characterized by a set of cardinal public presentation indexs that encompass a wide array of patterns which are believed to be critical based on the reappraisal of literature and considered of import for its execution.

Research Methodology

A measurement instrument was developed in a questionnaire format which was designed to mensurate the acceptance of thin patterns in a balanced attack concentrating the little and average sized makers. The points for the measurement instrument were developed through a comprehensive reappraisal of literature in the field. A study was carried out through informations aggregation. The population was defined as “ Manufacturers with an one-year turnover between Rs.2 -10 crores as classified by Reserve Bank of India ” . 500 houses were identified from the members ‘ directory of District Industries Centre, DIC. Questionnaires were sent by postal mail addressed to Vice-Presidents or General Managers of the companies. Seventy two responses were received, matching to a response rate of 14.4 per cent. Short direct interviews through assignments, was carried out for companies those who were loath in supplying fiscal information. The questionnaire was constructed with the purpose to measure the Lean acceptance that consists 3 parts. The first portion contains a set of inquiries to cognize about the demographic inside informations about the company, the nucleus 2nd portion contains 7 concepts and 84 points in entire, and the concluding portion contains points associating to measuring of organisational public presentations. Primary informations collected was processed for analysis that enabled to execute testing of research hypothesis.

Variables used to mensurate the Business Principles

The paper attempts to turn out acceptance of thin fabrication patterns that consequences in better operational benefits and in bend the organisational public presentation. The questionnaire measured the two dependent variables, the operational benefits and organisational public presentation. The questionnaire contains 7 concepts out of which 4 concepts straight relates to the concern rules which are Production and Inventory Management ( PIM ) , Entire Quality Management ( TQM ) , Entire Organizational Buy-in ( TOB ) , and Lean Manufacturing Techniques ( LMT ) . These four concern rules were identified by Garry Corner ( 2001 ) . The points were modified and reframed harmonizing to the features of little scale fabrication houses that suits to mensurate the assessing variables. These concepts includes 52 independent points that measures the Adoption of Lean Manufacturing Practices ( ALMP ) , which is the dependent variable. A five-point Likert graduated table was used in the questionnaire for each of the points for the respondents to bespeak the grade of acceptance of thin patterns. The five-point evaluation graduated table was in the order, 1-not implemented, 2-Just started implementing, 3-Implemented partly, 4- Implemented well, and 5-Achieved Full execution. The mean and standard divergence is calculated for each concern rule to measure the degree of acceptance. The staying three concepts namely, external factors ( EXFACT ) , merchandise features ( PROCH ) , execution challenges ( IMPCH ) , contains 32 points were taken as dependent variables. The five-point Likert graduated table was used in the order, 1-Strongly disagree, 2-Disagree, 3-Neutral, 4- Agree, and 5-Strongly agree. The undermentioned research hypothesis was framed for this paper:

H1: SMEs those have achieved important operational benefits ( measured in footings of rejection rate, machine down clip, bringing lead clip employee morale ) have acceptance of thin fabrication patterns ( measured by Production & A ; Inventory Management PIM, Total Quality Management TQM, Total Organisational Buy-in TOB, Lean Manufacturing Techniques LMT ) .

Dependability and Validity Trials

Dependability and cogency trials were conducted utilizing SPSS package to do certain that the questionnaire was dependable and valid. The Cronbach ‘s alpha to prove the inter-item dependability of each concern rule was performed. The dependability trial for Production and Inventory Management ( PIM ) concern rule is shown in Table 1. One point was removed ( Product routing-PIM6 ) to better the value of Alpha. Initial consequences arrived showed an alpha value of lower limit 0.66 which is considered acceptable for the survey. Apart from this, all the other cardinal variables show a dependability value that is above the minimal bound. The mean, standard divergence and dependability alpha values of all the concern rules are shown in Table 2.

PIM ITEMS – Dependability ANALYSIS ( After point omission )

Item-total Statisticss

PIM

Items

Scale Mean if Item Deleted

Scale Variance if Item Deleted

Corrected Item- Total Correlation

Squared Multiple Correlation

Alpha if Item Deleted

PIM1

30.6667

14.2333

.6233

.6646

.5762

PIM2

31.0000

15.6000

.3953

.7031

.6243

PIM3

31.5238

16.5619

.1141

.5791

.6971

PIM4

30.9524

17.9476

.0692

.7309

.6826

PIM5

31.3810

15.3476

.5165

.8060

.6046

PIM7

31.3333

15.0333

.4573

.6565

.6104

PIM8

30.7619

14.4905

.5892

.5545

.5845

PIM9

31.3333

15.8333

.3717

.7229

.6293

PIM10

30.8095

18.1619

.0732

.2913

.6772

PIM11

31.8095

16.8619

.1736

.7041

.6694

Dependability Coefficients 10 points

Alpha = .6625 Standardized point alpha = .6735

Table 1: PIM – Dependability ANALYSIS – Scale ( A L P H A )

RELIABILITY ANALYSIS – Business Principles

Concept

Mean

Std Dev

Alpha

Operational Benefits

3.690

0.584

Organizational Performance

3.714

0.479

PIM

3.458

4.080

0.663

TQM

3.415

5.409

0.795

TOB

3.269

4.559

0.624

LMT

3.269

5.789

0.962

Table 2 demoing dependability analysis-scale ( A L P H A )

Consequences of the hypotheses proving

H1: SMEs those claim that they have achieved important operational benefits ( measured in footings of rejection rate, machine down clip, bringing lead clip employee morale ) have made widespread acceptance of thin fabrication patterns ( measured by Production & A ; Inventory Management PIM, Total Quality Management TQM, Total Organizational Buy-in TOB, Lean Manufacturing Techniques LMT ) .

The arrested development analysis performed indicates the consequences as shown in Table 2. The concern rules have strong correlativity between them for widespread acceptance thin fabrication that has achieved important operational benefits. Six variables entered the equation for PIM concern rule. Value Stream Mapping, Standard Operating Procedure, Set-up Time Reduction, Jidoka ( Autonomation ) , Cellular Layout, Visual Controls variables entered the equation. In table 2a, Visual Controls explains with highest discrepancy of 89.1 % and Value Stream Mapping explains with lowest discrepancy of 27.6 % and all were extremely important ( p & lt ; 0.01 ) . Sing all the variables for PIM concern rule, the theoretical account explains 50.2 % of discrepancy. Similarly, TQM, TOB and LMT explain a discrepancy of 66.3 % , 72.9 % and 98.9 % severally that supports the H1.

Model Summary

Business Principle

Roentgen

R Square

Adjusted R Square

Std. Mistake of the Estimate

PIM

.709

.502

-.107

.61452

TQM

.814

.663

.252

.50522

TOB

.854

.729

.322

.48108

LMT

.994

.989

.924

.16091

Table 2: Consequences bespeaking the grade of relationship of

concern rules towards benefits achieved

Table 2a: Model Summary

Model

Roentgen

R Square

Adjusted R Square

Std. Mistake of the Estimate

Value Stream Mapping

.526

.276

.238

.50981

Standard operating process

.737

.543

.493

.41603

Set-up clip decrease

.804

.647

.585

.37644

Jidoka

.868

.754

.693

.32378

Cellular Layout

.916

.839

.785

.27087

Ocular Controls

.944

.891

.844

.23093

Forecasters: ( Constant ) , Value Stream Mapping, Standard Operating Procedure,

Set-up Time Reduction, Jidoka ( Autonomation ) , Cellular Layout, Visual Controls

Dependent Variable: BeneAchMean

Further, from the analysis it was found that merely 24 per cent of the SMEs have achieved a mark above the average value in all the four concern rules ( shown in chart 1 ) . 24 per cent of the SMEs have non achieved the mean mark in any of the concern rules. Analyzing the acceptance of concern rules by houses, Production and Inventory Management and Lean Manufacturing Techniques were less adopted when compared to Total organisational buy-in and Entire quality direction rules.

Number of Business Principles adopted by SMEs

Chart 1 shows per cent of SMEs adopted figure of Business Principles ( BP ) above mean

Business Principles adopted by SMEs

Chart 2 shows per cent of SMEs adopted concern rules above mean

Decision

Thin execution requires an appraisal of the current techniques and the extent in which it is adopted in the company. Based on the mean values, utilizing the wagon-wheel attack to measure the thin acceptance countries for betterment can be identified to accomplish a balanced tilt that consequences in successful acceptance of thin patterns. Although thin fabrication is going an increasing popular technique for productiveness betterment, many companies are still non certain of its execution and the benefits they may accomplish. SMEs by and large find it hard to follow thin fabrication patterns and transform into a thin organisation. Many research surveies were done on thin execution but merely few with organisational position. This paper attempts to turn out that acceptance of Lean fabrication patterns by fabricating houses has better operational benefits. The consequences arrived supports the proposed hypotheses that the concern rules have strong correlativity between them for widespread acceptance thin fabrication that have achieved important operational benefits. The major determination is that houses that claim themselves thin have non extensively enforced thin patterns. The findings supports the theory stated by ( Womack and Jones, 1996 ) that thin rules determine the ends of thin fabrication. The paper besides provides a way for farther research to measure the degree of balance a steadfast possesses in each concern rule and on which it is lacking.

x

Hi!
I'm Heather

Would you like to get such a paper? How about receiving a customized one?

Check it out