The starting point for this dissertation is the assumption that implementing lean production in an operation leads to an increase in productivity, enhances quality, shortens lead times, and reduces costs. As a result of these single improvements a superior competitive position is achieved. Based on a literature review that compares several approaches to define lean production, a two staged concept is developed that comprises ten different practices of lean production. These practices are linked with ten performance indicators, which are grouped into three different perspectives: shareholder, cost, and process perspective.
The assumption that the lean production practices have an impact on the performance measures is tested with a questionnaire.
In total 76 respondents delivered the data to test the 100 links between lean production and performance. The results show that lean production implementation has a measurable impact on the performance parameters and a weaker impact on the cost perspective measures. The results are supported by previous findings that show equivocal results regarding the impact on measures, like "Return on Sales".
Table of Contents
1. Introduction
2. Literature Review
2.1. Lean Production
2.1.1. The philosophic approach towards lean production
2.1.2. The segmented approach along the value chain
2.1.3. The conceptualized approach of single practices
2.2. Lean production and performance
2.2.1. Studies on lean practices and firm performance
2.2.2. Studies on lean production adoption and firm performance
2.3. Performance Measurement
2.4. Implications from literature review
3. Methodology
3.1. Conceptual framework
3.1.1. Conceptualization of lean production
3.1.2. Conceptualization of financial performance
3.1.3. Itemisation of conceptual framework
3.2. Research design
3.3. Data collection
3.3.1. Survey design
3.3.2. Selection of participants
4. Results
4.1. Knowledge about lean production
4.2. Knowledge about financial performance measures
4.3. Links between lean production and performance
5. Analysis of results
5.1. Correlation analysis of knowledge and impact
5.2. Analysis of differences
5.3. Variances in the sample
6. Conclusion and Recommendations
Research Objectives and Themes
The dissertation aims to investigate the relationship between the implementation of lean production practices and the resulting financial performance of a firm. It seeks to clarify whether practitioners can effectively measure this link or if performance improvements are merely assumed, by analyzing data collected from lean production professionals through a specialized conceptual framework.
- Conceptualization of lean production based on core practices.
- Evaluation of financial and non-financial performance metrics.
- Assessment of the correlation between knowledge of lean practices and perceived performance impacts.
- Analysis of the link between lean production implementation and shareholder-oriented financial results.
Excerpt from the Dissertation
2.1.1. The philosophic approach towards lean production
The starting point for what today is called lean production was the breakthrough change in production management that Toyota established more than 50 years ago. This system was called the Toyota Production System (TPS). According to Ohno (1988, p.4), ‘The basis of the Toyota Production System is the absolute elimination of waste.’ The lean approach to management is to find continually less wasteful ways to create value from the perspective of the end-use customer (Grasso 2005). According to (Womack et al. 1990) the guiding principles on this lean journey are:
Define value, and identify the value stream for each product (or service)
Eliminate all unnecessary steps in every value stream
Make value flow, which requires rethinking the entire work organization
Pull all activity by the customer, or, in other words, produce to customer demand
Pursue perfection continuously
The lean approach is a never-ending journey towards perfection through continuous improvement. This actually means constantly seeking and implementing better and less wasteful ways of performing processes than the ways we knew previously. Most important is the differentiation between value-adding activities and non-value-adding activities. The latter can be eliminated or reduced by searching for ‘waste’ in all processes.
Summary of Chapters
1. Introduction: Outlines the origins of lean production from the Toyota Production System and establishes the primary research objective of investigating its link to financial performance.
2. Literature Review: Compares various academic definitions of lean production and performance measurement, identifying gaps in empirical evidence regarding financial outcomes.
3. Methodology: Details the development of a conceptual framework that links 10 lean practices with 10 performance indicators and explains the design of the Internet-based survey used for data collection.
4. Results: Presents empirical data regarding the knowledge level of practitioners and the perceived links between lean production practices and performance outcomes.
5. Analysis of results: Utilizes statistical methods like correlation analysis and ANOVA to evaluate the data, testing hypotheses about knowledge, impact, and variances across different participant groups.
6. Conclusion and Recommendations: Synthesizes findings, concluding that while lean production positively impacts process and cost measures, evidence for direct influence on shareholder-perspective financial measures remains elusive.
Keywords
Lean Production, Financial Performance, Performance Measurement, Toyota Production System, Operational Performance, Return on Assets, Just-in-Time, Value Stream Management, Lean Accounting, Shareholder Perspective, Cost Perspective, Process Perspective, Practitioner Survey, Management Accounting, Efficiency
Frequently Asked Questions
What is the core focus of this dissertation?
The paper explores the relationship between the implementation of lean production practices and firm financial performance, specifically investigating whether organizations actually measure this impact or rely on assumed benefits.
What are the central themes of the research?
The study focuses on conceptualizing lean production, defining financial and non-financial performance metrics, and evaluating the connection between internal lean practices and external financial results.
What is the primary objective of this work?
To determine if lean production practices directly influence shareholder-oriented financial performance and to understand the level of knowledge practitioners possess regarding these links.
Which scientific methods were employed?
The research utilizes a comprehensive literature review followed by an analytical survey of 76 lean professionals, using Pearson correlations and ANOVA for statistical data interpretation.
What topics are covered in the main section?
The main sections cover the conceptual framework of lean and performance, the methodology of survey-based data collection, and a detailed analysis of the impact of 10 specific lean practices on 10 performance indicators.
Which keywords characterize this dissertation?
Key terms include Lean Production, Financial Performance, Performance Measurement, Return on Assets (ROA), Just-in-Time (JIT), and Value Stream Management.
What is the main finding regarding shareholder perspectives?
The study found no measurable direct impact of lean production implementation on financial measures from a shareholder perspective, such as Return on Sales (ROS) or Return on Assets (ROA), despite practitioner beliefs in a positive correlation.
How does industry type impact lean effectiveness?
The analysis indicates that while some variance exists, the impact is generally consistent within specific industries, though the research highlights that chemicals industry data showed higher variance in the sample.
- Quote paper
- Tobias Oden (Author), 2012, Lean Production. Impact on the Financials of a Firm, Munich, GRIN Verlag, https://www.grin.com/document/1331675
