Assessment of the Lean effect on business performance: the case of manufacturing SMEs

Abstract

Purpose The purpose of this paper is to research the way in which Lean practices are affecting the performance of manufacturing small and medium enterprises (SMEs), analyzing the effects of Lean practices on companies’ operational, financial and market performance. Design/methodology/approach An online questionnaire was distributed among Portuguese organizations that fitted the category of SMEs and belonged to the manufacturing sector. A sample of 329 enterprises was analyzed with partial least squares–structural equation modelling. Four hypotheses on the impact of Lean practices on company performance were tested. Findings The results show that the effects of Lean on performance are positive, which stresses the benefits attainable with the implementation of Lean practices. The aggregated implementation of Lean practices, namely, customer involvement, statistical process, continuous flow and total productive maintenance leads to improvements in company’s global performance measured by market, financial and operational performance measures, and also improves each of these performance measures individually. It was also noticed that financial capability is one of the indispensable factors for the successful implementation of Lean practices. Research limitations/implications The results contribute to the investigation on the topic, broadening the literature on the implementation of Lean practices in companies around the world. Practical implications The research outcomes may be used as a motivation for other SMEs to implement Lean practices by acknowledging the positive impact on their performance. Furthermore, the degree of Lean implementation in the particular industry may constitute a signal for government and/or economic decision makers to define incentives such as fiscal benefits for companies that engage in Lean implementation programmes, partly financing workers cross-training, among other necessary investments. Originality/value This is the first study that examines the impact of the effect of Lean on operational, financial and market performance in a discriminated and simultaneous way.

Lean production myths: an exploratory study

“…This myth is a consequence of the growing number of lean practices as well as of the ambitious lean intention of influencing all business areas. It also stems from studies indicating the joint use of several lean practices tends to produce superior outcomes (Valente et al, 2020). This wide scope demands synergistic relationships between lean practices, giving rise to myth 1 as follows:…”

“…Myth 9 derives from myth 8, being related to the financial impacts of lean systems. Waste reduction as a result of lean implementation is generally associated with higher profitability (Valente et al, 2020). Despite possible investments for setting up a lean system (e.g.…”

“…Why it is a myth: lean initiatives are poorly connected with financial metrics (Netland et al, 2015), and they usually do not account for the costs of lean implementation, which may be significant especially for small and medium-sized firms (Valente et al, 2020). Furthermore, evidence on the net effect of lean on financial performance is mixed.…”

“…to produce superior outcomes (Valente et al 2020). This wide scope demands synergistic relationships between lean practices, giving rise to myth 1 as follows:…”

Lean bundles within Jordanian manufacturing SMEs and their effect on business performance

“…Shrafat and Ismail (2019) stated that there is no complete agreement in the classification of the most common lean practices that aim to improve organizational performance since researchers differ in their categorizing, reflecting variances in the context of the researchers. Created at an operational level, lean is made up of several tools and practices that were designed to help support the implementation of lean thinking in the manufacturing firms(Valente et al, 2019). D. Wickramasinghe and V. Wickramasinghe (2011) recognize the lean concept as an array of related practices connected as a system.…”