Hindawi Publishing Corporation

Journal of Industrial Engineering

Volume 2013, Article ID 790291, 19 pages
http://dx.doi.org/10.1155/2013/790291

Research Article
Implementing Lean Practices: Managing
the Transformation Risks

Antony Pearce and Dirk Pons

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

Correspondence should be addressed to Dirk Pons; dirk.pons@canterbury.ac.nz

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

Academic Editor: Eleonora Bottani

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

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

1. Introduction could succeed or fail. Unfortunately there are no specific

tools for the selection and prioritisation of methods during
Lean is considered an essential attribute of a successful implementation.
manufacturing endeavour [1]. The underlying principle of This paper explores the implementation of lean, with
minimisation of waste for maximisation of productivity has a particular focus on the choice of lean tools that are
become profoundly influential since being developed into relevant to specific situations. We apply a risk management
the lean construct [2–4]. As lean has matured, it has been perspective, in the sense that the implementation of lean can
applied ever wider [5, 6]. This includes industries other than be an opportunity for the organisation (if implementation
manufacturing and into manufacturing industries that were succeeds) or a threat (failed implementation and wasted
not natural early adopters. It is this latter category that is the organisational effort, and resistance against future attempts).
focus of the present paper. Thus we explore the intersection between strategic risk
There is no doubt about the general relevance of lean management and lean implementation. We show how risk
principles. However the implementation in specific organi- considerations can be built into a method that can help
sations is not straightforward and is not always successful. identify which lean tools are most appropriate for a given
Sometimes this is because the principles were sound but the situation. We close with a case study demonstrating the
implementation failed [7–9], that is, a change management method for a small manufacturing organisation.
problem. But in the more general case, removing change
management issues from consideration, there is still the
difficulty of deciding which of the many lean tools to apply in 2. Existing Approaches to
the situation. This is important because lean includes many Lean Implementation
methods, and the relevance thereof is situationally specific.
Implementing lean therefore requires some specific decisions, Lean implementation involves selecting appropriate tools
and the outcome has an element of risk: the implementation from the lean arsenal to achieve process excellence. However
2 Journal of Industrial Engineering

Nemawashi
A3
Big P. map management

VS map 5S

Cellular TPM
Mfg.
Lean methods

Heijunka Kanban

5 whys Poka-yoke

SMED JIT

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

there is a danger of focusing overly on the tool benefit and focussed on the minimisation of waste of any form [2, 3,
striving for process excellence but neglecting the sustainabil- 5, 7]. When wasteful action is eliminated the result is that
ity of the lean tool within that specific work culture. Every less effort, space, and capital are required and lead time
time a new method is implemented there is risk introduced is reduced whilst quality increases and the cost of quality
to the organisation: both an opportunity and a threat. On the decreases [5, 10]. From its manufacturing roots, lean has
one side is the benefit of the technique and on the other side subsequently expanded to business practice generally [11, 12].
are the detriments. Relevant questions are: Lean management is becoming the standard for systematic
productivity improvement [1].
(1) What is the benefit of the lean technique under
consideration and how likely or difficult is it to
achieve? (Is it worth doing this?) 2.1.1. Lean Tools. Superficially, lean comprises a set of tools
and techniques (kanban, 5S, TPM, SMED, etc.), and the naive
(2) How do the usage of the lean technique and its
implementation decision is simply which tools to implement.
benefits relate to the sustainability of the change inter-
Figure 1 illustrates the multiplicity of tools available. Work
vention? (Would doing this have long-term benefits?)
has been done on the classification of tools [13–15] and
In this paper we are particularly interested in the situational the relevance of tools to specific wastes [16]. These go part
applicability of lean tools and specifically the organisational way to addressing the problems with implementation, but
decision making that precedes the implementation of lean. situation specificity has not been achieved; that is, it is still
There are three issues: which of the many lean tools to not possible to identify which tools are most appropriate in
implement in a specific situation; how to make a balanced which situation. Consequently practitioners frequently lack
evaluation of the risks (opportunities and threats) for each the means to make informed decisions about which tools to
candidate tool; and how organisational culture affects the implement in their situation.
success (or otherwise) of the change management implemen-
tation. 2.1.2. A Typical Implementation. A typical lean implementa-
tion involves an initial value stream mapping (VSM) which
2.1. Lean Management, Its Principles, and Methods. Lean is a defines the journey of improvement. Next there is the organ-
strategy developed for production improvement. It originated ising of the house. This might involve flexible work systems
in the mass production setting of the automobile industry, and (especially) 5S (sorting, straightening, systematic clean-
specifically the Toyota Production System. It is primarily ing, standardizing, and sustaining). Thereafter other specific
Journal of Industrial Engineering 3

tools are implemented as relevant. These include standard This introduces a time dimension to the implementation,
work, single minute exchange of dies (SMED), total produc- since culture is not instant. Consequently it may be necessary
tivity maintenance (TPM), and mistake proofing (Jidoka). to build that culture. Specifically, lean is implemented in
Further advancements might involve supply and demand, stages over time, by selecting tools that are appropriate to
through just in time (JIT) pull systems and Heijunka (level the organisation at that point in time. It may be wiser to first
scheduling) [17]. Also relevant is the integration between implement simpler methods with the view of engagement and
lean and production planning and control systems such as acceptance of staff as opposed to attempting to immediately
materials resource planning (MRP). This is not always easy introduce the more complex lean tools. These become small
due to the lean emphasis on pull, whereas the reality is that “wins” that build momentum and staff confidence [7, 27, 28].
many manufacturers benefit from hybrid production flow Employees need to be engaged to support a difficult method
control [18]. Systems are being developed to operationalise (like JIT). Thus, even though certain lean tools may hold the
this [19], though a detailed explanation is beyond the present promise of high returns, they may also be risky to implement.
scope. Failure could ruin future chances of success and engagement.
Therefore weaknesses in a typical lean approach can be Implementation of lean is therefore an organisational
in fixation on tools as an end in themselves. This promotes strategy regarding the changing of culture over time, by
isolated improvement rather than optimisation of the entire the selective and progressive implementation of lean tools
production system and an incomplete appreciation of the role that are situational relevant for that organisation at that
of leadership for organisational development. time, followed by further implementation later when the
culture has caught up. Practitioners typically describe this
deliberate temporal progression as the lean journey [7, 12, 33].
2.1.3. Organisational Culture and Change Leadership. In the Thus the concept of continuous improvement (CI) applies
context of organisational change we look for methods that not only to the technical operations but also the strategic
will support sustainability, that is, obtaining enduring ben- implementation at organisational level. The residual difficulty
efits. The decision to implement lean is typically a decision is that of deciding which lean tools are relevant for the
of senior management, that is, a top-down change initiative. organisation at that point in its journey. This is a question
While there are many models of the change management to which we return, and in the next section we show how
process [20–24], the process is not always as successful as consideration of organisational risk can lead to a solution.
intended [25, 26]. As change management shows, abrupt
changes result in resistance [21, 27, 28]. At the deeper level
lean is a culture, that is, a set of organisational attitudes, rather 2.2. Risk Management. All ventures that an organisation
than a mere use of tools [29, 30]. The sustainability depends undertakes have risk, that is, uncertain opportunity and
on organisational culture and the collective response to the threat. The risk management (RM) methods encourage a
change. Furthermore, many of the lean tools are sophisti- deliberate and integrated consideration of both these out-
cated in their requirement for a particular type of culture, comes. Various standards have defined risk in the sense of
including strong intrinsic motivation at the shop-floor level both negative and positive aspects, for example, [34–36].
for the processes (e.g., kaizen, 5S, quality circles, work cells, Other core concepts in the RM method are the partitioning of
and six sigma). Thus implementing lean requires a change the problem into two variables, consequence and likelihood.
management process that fosters the outcomes, hence change Thus the analysis task reduces to determining first the magni-
leadership through coaching [21, 27] as opposed to merely tude of the outcome, which may be positive or negative, corre-
directive top-down change. In a lean system the respect for sponding to opportunity or threat, respectively, and then the
humans principle is equally important as the elimination of likelihood of that outcome. The magnitude of the outcome
waste [2, 11]. Lean is commonly associated with the latter may be represented quantitatively or qualitatively. Likewise
and the respect for humans component is largely neglected. the likelihood may be quantified in a probability or expressed
True lean involves a focus on the people of an organisation, as a subject qualitative statement (very rare. . .almost certain).
creating a culture that empowers staff at all levels to make These two variables are then combined to give an overall score
innovative changes that improve productivity by reducing for the risk. If the variables are all quantitative then a simple
wasteful action (muda). This creates dynamic and flexible product operation is used, but qualitative variables require a
learning organisations of emergent change [7, 31, 32]. Efficient mapping process. The process is repeated for several scenarios
and effective communication processes enable collaboration under consideration and the RM method assists the decision
and consensus along with shared vision and engagement making by identifying the scenario with the highest risk (or
[7, 32]. In this way “respect for humans” works synergetically lowest as the case may be).
with and for “waste elimination.” Neglecting the human com- The risk management method is particularly effective for
ponent jeopardises the sustainability of the change and makes quantitative variables and has therefore found widespread
it difficult to reach the level of cultural excellence for contin- adoption in engineering, finance (particularly insurance),
uous improvement [7, 8, 30]. A popular representation of this and project management situations. Although the method as
is the iceberg model of Hines et al. [7], with the lean tools, pro- a whole claims to be applicable to strategic decision making
cesses, and techniques being the visible component above the even at the highest level of the organisation and examples of
waterline, with the unseen supporting functions being strat- this are available [37], this is not a particularly well-developed
egy, leadership, and employee behaviour and engagement. capability of RM.
4 Journal of Industrial Engineering

In lean implementation we are particularly focused on a method for assessing the risks of lean practices. Importantly,
what is desirable in terms of lean success and sustainability this method is able to accommodate a specific organisational
and undesirable in terms of failure of the implementation. context. We then applied the method to a case study firm.

2.3. Intersection between Lean Implementation and Risk Man-

agement. There has been some prior work at the intersection 4. Results
of these two bodies of knowledge. One line of enquiry,
4.1. Conceptual Model for the Integration of Risk and Lean.
although perhaps not risk management per se, has been
We start with the principles of risk management (RM) and
to identify critical success factors for lean implementation
lean. RM has a clear set of principles [35], whereas these
[7, 38–40]. Innovative frameworks and manufacturing tech-
are more tacit in lean. We therefore recast the contemporary
niques, for example, core competency based framework
understanding of lean into a set of principles and then
[41] and emergent manufacturing methods [42], have been
compare and contrast these with those from RM.
applied to reduce specific “risks.” The two methodologies have
The results are shown in Figure 2. The major difference
been compared [43] and applications in lean itself have been
in the function of risk management is to explicitly address
used to identify and treat uncertainties (risks) in construction
uncertainty, whereas lean explicitly addresses wasted effort
projects [44, 45]. Processes including supply chain modelling
through the optimisation of flow. Nonetheless there is a clear
have been used to support mitigation of risks [46–49]. The
fit between the principles. Both lean and risk management
applicability of RM in selecting lean six sigma projects has
focus on “value”. The risk approach protects value and lean
been identified [50].
supports this by focusing on providing customer value. Both
Regarding the specific question of how to manage the
are systematic and data driven. Both implementations are
risks in the implementation of lean, there has been work
tailored to the organisation, take into account human and
on matching of lean systems strategy to risk identification,
cultural factors, aim to be inclusive of the entire system
using a systems engineering approach [51], and use of project
(not compartmentalised or locally focused), and include
management methods [52]. It has been suggested to merge
all stakeholders in the processes. Both are dynamic and
lean thinking and “high reliability” [53] to balance the
responsive to change and facilitate continual improvement of
nonbuffered, “fragile” nature of lean [54]. There is lack of
the organisation.
methods to improve the reliability of lean implementation
Next we compare the frameworks. Again, RM is more
[55]. In summary, reviewing the literature we found little to
organised in this regard and already has a framework and we
no application of a standardised risk assessment to a lean
create a comparative one for lean. To do this we merge the
implementation project.
lean iceberg model [7] and the 5 principles of lean [12]. The
Two other methodologies have some relevance. These
results are shown in Figure 3.
are Agile manufacturing and Theory of Constraints. However
The lean concepts are synonymous to those of the risk
neither of these have shown any major integration with risk
management strategic process. The mandate and commit-
management, though some movement has been made in that
ment of the framework is synonymous with management
direction examples: for JIT see [56], for TOC see [57].
commitment, strategy, leadership, and alignment within the
While the lean and risk management practices each have
organisation. This is made more clear from the detailed
well-established literature, there is currently no integration
definition in the standard [35] (cf. [7]). The cycle itself,
between the two. This is despite the fact that the implemen-
design, implement, monitor, review, and continually improve,
tation of lean is full of risks: both the opportunities that
is a simple PDSA (or PDCA). This cycle came out of the
the managers seek to capture, and the threats and failed
quality and continuous improvement field [58, 59] which
implementations that too frequently result.
are consolidated in lean thinking. The five key principles of
The purpose of this paper is to develop a methodology for
lean [5] can be shown to relate to the PDSA cycle although
assessing the risks—both the threats and the opportunities—
possessing specific meaning to lean thinking, that is, defining
of the lean methods. The particular area of interest is con-
value and planning for the flow of value with as little waste as
textual decision-making: we wish to be able to better identify
possible and the goal of perfection in view.
the lean tools that are relevant to specific situations. The area
The final part of the conceptual model is creating an
under examination is SME manufacturing firms, because lean
integrated process model. This is achieved by overlaying the
is particularly difficult to implement in such organisations.
lean processes on the risk management process; see Figure 4.
This is worth attempting, for the potential to avoid failed lean
The ongoing communication process indicated as key to good
implementation, the attendant wasted organisational effort,
risk management is very much a part of continuous improve-
resistance against future attempts.
ment and lean. Toyota developed particularly efficient and
effective means of communication to allow consensus and
3. Approach collaboration throughout along with the engagement and
input from all staff. Techniques such as A3 management, with
Our approach to this problem was to reconceptualise the the catchball process or nemawashi, are integral to the TPS
decisions surrounding lean implementation as a risk man- and lean learning organisations; see [7, 32]. Establishing the
agement problem. We consequently developed a conceptual context is synonymous to defining value from the customer
framework for treating lean in this way. From this we created viewpoint. The context in risk management strictly is both
Journal of Industrial Engineering 5

Risk management principles Learn summary of principles

(1) Creates and protects value. (1) Focuses on creating customer value.

(2) Is an integral part of all organisational (2) Integral part of organisations processes and
processes. procedures.
(3) Lean thinking and techniques support
(3) Is part of decision making. decision making.

(4) Addresses waste through optimisation of flow.

(4) Explicitly addresses uncertainty.
(5) Has structured yet dynamic processes and
methods.
(5) Is systematic, structured, and timely.
(6) Improvements based on review of current
conditions and value in eyes of customer.
(6) Is based on the best available information.
(7) Implementation tailored to the organisation
based on key lean principles.
(7) Is tailored. (8) Involves respect for humans and an
enabling culture.
(8) Takes human and cultural factors (9) Inclusive of entire system (not
into account. compartmentalised or focused on local
efficiencies).
(10) Enables dynamic learning organisations of
(9) Is transparent and inclusive.
emergent change.
(11) Facilitates continuous improvement for
(10) Is dynamic and iterative. perfection.

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

Management
Mandate and commitment, leadership,
commitment strategy, and alignment

Design of
Plan
framework
(value, VSM)

Continual Continuous
improvement Implementing Act (continue Continuous Do (implement
improvement improvement /flow)
of framework to perfection)

Monitoring and
review of Study (review/
framework measure)

Risk management strategic process Lean management strategic process

(framework)

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

internal and external looking and so in reality crosses with and formulating ideas and passing into the communication
the mapping of the value stream. For simplicity sake we have process for consensus. Risk treatment is the appropriate
included VSM in the risk assessment area, that is, looking application of various lean methods chosen through the
at the current state and opportunities for improvements assessment process. The PDSA cycle is built into the process
to get to a desired future state. In the assessment analysis for monitoring and review.
step we have identified the 5 whys tool for root cause In some ways it is not surprising that the risk management
analysis (RCA). Other tools could similarly be used (e.g., approach matches with lean management, since both had
Ishikawa fish bone diagram). Evaluation of risk has been roots in the quality and continuous improvement systems
overlaid with A3 management. This an A3 sheet for reporting [4, 6].
6 Journal of Industrial Engineering

Define
value
Lean Establish context Lean:
communication PDSA
processes: cycles
Risk assessment
catchball, A3

Communication and consultation

VSM

Monitoring and review

management, Risk identification
and nemawashi

Risk analysis 5 whys

Organisational
development A3
∗ Risk evaluation manag-
Leadership ement
∗
Culture
development
∗ Risk treatment
Change
management/ Methods
leadership

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

4.2. Developing a Mechanism for Implementation. Having Impact-likelihood qualitative assessment

achieved a broad conceptual integration of risk and lean, the High
next step is to develop an operational method, a mechanism likelihood X Y
for the application of RM to lean decision making. This
Likelihood of

needs to be suitable for practitioners. We assume that some-

one contemplating implementing lean has already acquired Medium
background knowledge of various lean tools (see Table 1) likelihood Q
and focus our method on supporting the decision-making,
identifying the factors that could be considered. We do this by
following the risk management process taking particular care Low
likelihood Z W
to represent the organisational factors, as these are known Low Medium High
to be crucial for successful implementation. The results are impact impact impact
shown in Table 1. Impact on
X is a high likelihood but has low impact event.
4.2.1. Process. Standard tools for the strategic scanning of Y is high likelihood with high impact event.
risks are PESTEL and SWOT. These are for environmental Z is a low likelihood with low impact event.
scanning and identification of risks in the form of inter- W is a low likelihood with high impact event.
nal strengths and weaknesses and external opportunities Q is a medium likelihood with medium impact event.
and threats (hence SWOT) and may be characterised by
Figure 5: Likelihood-Impact qualitative assessment example plot.
political, economic, and other variables (hence PESTEL).
The integration of these with strategic risk management
has already been demonstrated [37]. The strategic risks are
primarily qualitative, as opposed to quantitative, and hence particularly important at the outset of an implementation to
a matrix mapping is appropriate (as opposed to quantitative ensure momentum and sustainability [7, 27, 28].
treatment). In summary, we have established a method whereby the
We therefore apply qualitative graphical techniques to implementation of lean can be considered a type of risk, with
represent the risk for lean implementation. We plot, as potential positive and negative outcomes. We have created
orthogonal variables, the impact of each specific lean tool, a method that is able to identify the risk associated with a
and the likelihood of achieving that impact; see Figure 5. specific aspect or tool of lean. The next section illustrates the
In this regard we use impact where the RM method uses application to a case study.
consequence, but the two are comparable. The impact is the
effect on the organisation in regard to lean transformation. 5. Application to Case Study
The chart aids in identifying where initial wins or easy
implementations can be targeted. Note that high likelihood 5.1. Characteristics of the Firm. The case study is a small
(low difficulty) events can be critical even if the immediate to medium enterprise (SME) that is a make-to-order and
impact is not high. This is because gaining small wins is design-build manufacturer specialising in complex parts and
Journal of Industrial Engineering 7

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

Risk management process Lean implementation

AS/NZS ISO 31000 Application
Lean systems reduce waste activities and increase value to customers, thereby
Set context increasing productivity and profitability. Internal context of resources and staff culture
and sustaining the change. External context of market conditions.
Perform risk assessment by: (see (1)–(3))
(1) identification of sources, areas, Lean methods have risk associated with their use, benefits, and detriments impacting
impacts, and events, various areas.
(2a) analysis to understand the risk
Qualitative discussion of detriments or risks of sustainability of lean method (source)
its causes, sources, (see (2b)) and other
or entire lean implementation in context of the tools and consequences of tool use.
pertinent factors,
(2b) consequences and likelihoods,
Expert opinion (qualitative) is incorporated as charts. The chart shows our qualitative
confidence sensitivity, and other
assessment of likelihood and consequence for various tools; refer to Figure 5.
pertinent factors,
In the context of organisational change we look for methods that will support
sustainability. There is a decision from management (a mandate) to support lean to
meet business goals but wisdom is required in the lean implementation for building a
culture for sustainability. This involves selecting the right methods at the right time. It
(3) evaluation for assisting the decision is necessary to get “wins” in the view of the staff up front. This is not necessarily the
making process including risk tolerance biggest wins but small wins to gain momentum and staff confidence. We cannot
of parties. tolerate high risk even when high return is possible at the start of an implementation
that is, where staff are not yet engaged to support a difficult method (like JIT). Failure
could ruin future chances of success and engagement.
Communication at the start of an implementation, is key to impart the vision and
break down goals to give critical steps for change.
Prescribe treatment of risk Treatments we prescribe in general cover the following:
To maximise benefits and minimise adequate communication with development of new identity for staff; prioritisation of
detriments, increase the positive and time for business running and improvement activity; and prior conditions met
decrease the negative likelihood and adequately (including previous methods, training of and engagement of staff) for any
consequences. methods implemented.

assemblies. It is representative of the many SMEs that are a strategic decision. To compete within the international
actively trying to decide which parts of lean are relevant market the firm needed to show the value of a local supplier
to them and how to implement them. The firm (“SI”) is by reducing lead time and manufacture costs and developing
based in New Zealand and has 20 employees. Typically ability to handle demand variability (e.g., achieving flow and
production is of small to medium size runs, high-variety eliminating wasted effort including reducing run setups) as
low-volume (HVLV). The firm possesses an advanced CNC well as increasing quality. Lean methods can be used to treat
equipped plant, has precision assembly capability, and takes these areas and therefore lean was considered a strategic
pride in project management, that is, providing the full priority.
solution including concept and design development, build, At the strategic level the firm needed to treat key factors
commissioning, delivery, and after-sales support. for success and sustainability of lean. These factors have been
Historically lean has been the preserve of the large high- identified [7, 12, 27, 32, 60] and summarised in Table 2.
volume manufacturers typified by the automotive industry.
However as the lean method has matured and spread to 5.2. Evaluating Risk within the Lean Strategic Principles. One
other industries, it has been applied to smaller and more of the authors (AP) worked half-time for six months in the
specialised firms, like that considered here. Lean adoption is firm as part of a government-industry-university partnership.
also driven by competitive pressure, particularly the opening This provided the contextual knowledge for our analysis. We
of global markets and the resulting exposure to more efficient then took each of the strategic principle tools and evaluated,
competitors. Therefore even the small firms have to consider for this firm’s context, the impact and ease of implementation
how they preserve competitive advantage and deliver value to (see Tables 3 and 4). We then plotted these on the risk chart;
customers. These firms, being small, typically cannot afford see Figure 7.
to employ specialised staff for this purpose. They also have All the principles in this first set are of higher level and
limited resources for implementing new programmes like seen as critical to lean success and sustainability; however it
this. is important to understand the challenges or level of difficulty
faced. In our representative case we see particular areas of
5.1.1. Strategic Mandate. In the case of this firm, the need difficulty for SI around process flow, for example, flow and
to adopt lean was identified at board level, that is, was value stream analysis and application of pull systems. This
8 Journal of Industrial Engineering

Lean strategic principles: impact-difficulty qualitative assessment

for lean practice success and sustainability

“likelihood”
Culture

difficulty
High
building

Low
Difficulty of success and
Com.
pro.

sustainability
All
Define staff

difficulty
Medium
value
CI More
difficult
but still
Pull: understand VSM necessary.
Flow
principle, be
“likelihood”

difficulty careful with tools

High
Low

Pull

Low Medium High

impact impact impact
Impact on success and sustainability

CI: continuous improvement

All staff: all staff involved in CI (kaizen)
VSM: analysis of value stream
Com. pro.: communication process

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

Table 2: Lean risk treatment at a strategic level. not so heavily in the process flow tools (although process
improvement would occur as a result).
Leadership commitment with the vision and its For the same reasons, value stream and flow are assessed
communication for engagement of staff. The
Change as having only medium/high impact in the SI case. In contrast
initial steps of change and ongoing “wins” for
leadership these would have high impact in a continuous production
momentum of change. The development of a new
organisation identity. facility.
Physical, human (availability and capability), and Pull is very difficult in SI’s case and would need particular
Managing adaption as suggested in the table. SI may need to use pull
financial resources need to be managed for
internal of order to pull paperwork but push material to the process
amounts of training, learning, and implementing
resources for flow. This would change where higher quantity production
changes.
Managing permitted and even temporary or isolated flow lines could be
Use of consultant (sensei) or other external introduced.
external
resource for training.
resources
Market conditions and forecasts (risk), demand 5.3. Prioritising Lean Methods: SI Case Study. There are many
Other factors variability, and expected product mix (variety), different methods or tools of lean. These were each evaluated
among others. for the SI case, in a way complementary to the strategic
principles. The likelihood and impact of these methods is
plotted in Figure 8.
is because of the make-to-order nature and complicated We do not attempt to justify the implicit judgements in
processes of their business. This is reflected in the Likelihood- Figure 7 whereby a particular method is given the impact
Impact chart for these factors. and difficulty scores shown. Instead we suggest that this
In Figure 6 we see the medium level difficulty but high requires a contextual knowledge by the person performing
impact of defining value, and having all staff involved in the assessment. In this particular case the first author was
enterprise wide continuous improvement. Defining value is seconded to the firm as part of the research project and spent
key to understanding what the customer desires and what considerable time learning the context in which Shamrock
wasted effort is that is, what should be eliminated through operated. The assessment presented as Tables 3 and 4 provide
improvement. The communication process presents the insight to the process.
vision of value and continuous improvement to all staff and The purpose here is to identify small wins (sometimes
allows for staff engagement and development of a learning called “low hanging fruit”) to increase chances of sustain-
organisation and hence also high impact. This suggests that ability. Here the tools more applicable to the make-to-order
the big wins for a make-to-order enterprise like SI would be business are featured in the top right corner. In contrast
in the culture excellence for continuous improvement and the tools for fine improvement of production efficiency,
 Table 3: Strategic principles: lean key principles and higher order processes risk analysis table (reference case SI).
Detriments/barriers
Treatments
Analysis of risk to sustainability
Brief description Benefits sought To maximise benefits, and Dependants
of method or entire
eliminate or minimise detriments
implementation effort
(A) 5 Strategic
principles
Take to the required extent
Journal of Industrial Engineering

Requires survey of customers, only—dependent on size and

Lean begins with defining may challenge traditional customer pool and current
Gives clear strategic focus
value from the customers thought of what the company situation; for example, need to Voice of the
(1) Defining value based on what the customer is
point of view, that is, what is should be focusing on and pull in more customers may need customer.
willing to “pay for.”
not value is waste to eliminate. therefore create conflict of wider survey.
identity and resistance. Be prepared to develop new
identity based on outcomes.
Training and prioritizing are key.
Requires training and at higher Take only to the extent required
Analysing of processes and levels all staff are involved. Can for the current state of
waste there in by mapping be simplified process where operations. Involve key persons
(2) Process/value current and the desired state. improvements and waste are from functional groups rather
Gives a health check on now
stream mapping Complexity depends on need. more obvious but as more detail than all staff except where key to
and identifies key processes or Value must be
(VSM) In principle start with core is required it is an involved and general training or staff identity
faults with a system. Gives clearly defined.
(difficult for process. time consuming exercise. development.
future goal and direction.
Shamrock case) This, together with defining This is difficult in the Shamrock At Shamrock initially
value, sets the vision and case due to the complicated concentrate on information flow
course of action. jobbing processes that rarely (rather than cellular layout) and
repeat. try to identify core processes for
mapping and improvement.
Flow is a key concept to lean. Takes skill and training to Training in lean “flow
It is seen ideal to approach one understand flow and adjust the thinking”—try reading The Goal
piece flow. Process flows systems, for example, to make [62] and Lean Thinking [12].
should be made as visual as flow logical and visible. Typically Promote to staff the reason why
Reduces lead times, makes
(3) Flow/one piece possible. involves changing of habits (e.g., it is necessary and educate them
problems visible (bringing
flow Concepts like FIFO are FIFO) and takes rearrangement about the benefits of flow. VSM done
them to the surface) and
(difficult for introduced. of physical and human resources adequately.
supports quality at the source
Shamrock case) Lean is “not trying to optimise (e.g., cells). At Shamrock initially
(see below under Tools).
the utilization of people and Again this is difficult in the concentrate on information flow
equipment but optimise the Shamrock case due to the (rather than cellular layout) and
flow of material;” [2] includes complicated jobbing processes try to identify core processes for
information. that rarely repeat. mapping and improvement.
9
 10

Table 3: Continued.
Detriments/barriers
Treatments
Analysis of risk to sustainability
Brief description Benefits sought To maximise benefits, and Dependants
of method or entire
eliminate or minimise detriments
implementation effort
Takes skill and training to
A progression from higher end of
understand properly.
flow thinking to ensure flow is
Powerful in reducing waste Promotes a lack of stability
Process initiated by the well developed.
and lead time. Inventory because buffers
customer’s order “pull.” Can use buffers to support
(4) Pull stores have all sorts of reduced—difficult for job shop
The goal is to reduce batch stability but not ideal.
(difficult for problems (space, quality, and project based style Flow
size to approach one piece Use training of staff to overcome
Shamrock case) damage to stored goods, organisations.
flow/JIT manufacture. See also resistance (see Flow above).
superseded parts, sales Again this is difficult in the
“JIT” below. May need to use pull of order to
pushing on old stock). Shamrock case due to the
pull paperwork and push
complicated jobbing processes
material to flow.
that do not repeat.
Build into processes (and
Continuous improvement via
(5) Journey to Drives continuous Needs culture). Target small wins at the
PDCA (plan, do, check, act Value, VSM, flow
perfection improvement. Perseverance/sustainability beginning, maintain momentum,
cycle) of above steps.
and leverage a new staff identity.
Use of A3 management, Development of the process is
Training, persistence, building
nemawashi, and Consensus reached, staff required e.g., training in A3
(B) Effective into procedures processes and
catchball—that is, concise engaged, vision shared. All management. Sustainability and
communication regularity; try weekly meetings,
reporting and feedback for contributing to the one goal discipline required for regular
processes tailor process to business
consensus through simple and and vision. but not excessive
situation.
effective communication. communication.
Create new employee identity
Emergent change from all Training and engagement of staff and train them in simple problem
Lean engages all staff in
(C) All staff kaizen adding up to significant required. Meets resistance “not solving techniques for example, 5
continuous improvement.
change. Also positive culture. my job description.” Whys. Assess whether to remove
negative influences among staff.
Journal of Industrial Engineering
 Table 4: Methods: selection of lean and complementary methods risk analysis table (reference case SI).
Detriments/barriers
Treatments
Analysis of risk to sustainability
Brief description Benefits sought To maximise benefits, and Dependants
of method or entire
eliminate or minimise detriments
implementation effort
(A) Lean methods
5S—sift, sort, Training required (to Develop new culture and
General organisation, General efficiency and basis
sweep, standardise, low/medium level). expectation, use visual cues,
cleanliness, and maintenance. for on-going improvements.
sustain Needs sustainability. develop new identity.
Journal of Industrial Engineering

Find a mechanism to drive root

Training required (to low level).
cause analysis of issues/events
Basic root cause analysis tool; Simple effective way of doing Once trained if not used and
and ask why for daily activities.
5 Whys—root ask why 5 times. Get to the root cause analysis and simple ideas not acted on can be a
Implement suggestions to get
cause analysis root of the issue so it does not way to get people thinking negative experience, and reason
momentum and show
repeat. about analysis. for disinterest and failure in
commitment (maybe even when
future.
not ideal).
Emphasis on visualisation of Visualises processes, makes
flow and systems of control waste visible. See other aspects, for example, 5s See other aspects, for example, 5s
Visual systems
and reporting. Part of 5s, flow See other aspects, for example, and Flow. and Flow.
and all aspects of lean. 5s and Flow.
Quality at source means
control is given to the worker
at the source of the issue—for
Make training a priority with key
example, on the production
Training required (to staff and then build training into
Quality at the line. Jidoka is the respect for Quality problems are not
medium/high level). daily activities.
source, Jidoka, and humans principle which repeated, engagement of
If ignored, momentum/morale Systems for capturing ideas for
Poka-yoke includes mistake proofing worker.
lost. poka-yoke and ensuring they get
(Poka-yoke) and in cases
implemented.
extends worker control to
even shut down the
production line.
Make training and kaizen a
SMED—single Setup time down, shorter runs
Reduced setup time for priority with key staff and then
minute exchange of possible and economically Training required (to
machinery. Only essential build training into daily activities
dies viable, enables reduced lead medium/high level). Downtime
internal setups made. External for others.
(particularly times and ultimately JIT. whilst working on
setups preferred to reduce Balance and make priorities clear
beneficial to (particularly beneficial to improvements.
downtime. (how much to spend on
Shamrock) Shamrock due to short runs).
initiatives versus day job).
Flexibility of employees and Training of staff and their
Quick changeover and easily Communication process for
Flexible work equipment preferred over engagement required (to
expanded systems, resources change and benefits. Develop
systems complicated rigid or medium level). Loss of specific
where required new identity.
automated machinery. staff roles and responsibilities.
11
 12

Table 4: Continued.
Detriments/barriers
Treatments
Analysis of risk to sustainability
Brief description Benefits sought To maximise benefits, and Dependants
of method or entire
eliminate or minimise detriments
implementation effort
Ensuring machines
maintained to secure against Training of staff and their Select right people, train in
Total productive unnecessary downtime and Less downtime. engagement required (to appropriate skills, and give
maintenance catastrophic failure—should Health and safety improved. medium/high level). understanding to staff (build new
(TPM) incorporate continuous Skill of staff. identity).
improvement also.
Simple tool for
replenishment/pull system.
Typically a card (e.g., kanban
card) but could be a bin or
another identifier that flags for
Links separated processes Visual systems and no shortcuts
replenishment and specifies
Kanban together for pseudoflow where Needs setup and organisation. help to enforce the documented 5S
details (supplier, qty, location).
ideal flow is not possible. procedures.
One rule of kanban is to
review its size (i.e., reduce the
buffer towards one piece flow
as part of continuous
improvement).
Suggested to hold finish goods
only (in production situations) or
Lack of stability because buffers push and flow used. Both at pull
removed. of order by customer.
Process takes much planning, Must be well prepared for
Just in time (JIT) training, and teething during implementation: Staff training
Flow achieved,
manufacture. Goods arrive just in time for WIP and lead time down, implementation. for their understanding and
needs Heijunka
(difficult for processing or assembly. quality up. Negative results to culture engagement, other process
(level scheduling)
Shamrock case) possible during teething. prepared as much as possible,
Again this is difficult in the ready for on-going teething
Shamrock case due to the internally and with suppliers. Use
complicated jobbing processes. pilot and positive staff member
willing to try. Consider carefully
before implementation.
Level scheduling is smoothing Level selling/marketing. Keeping
Heijunka (level demand—we include also takt Difficult in Shamrock scenarios buffer of finished goods to help
This is key to enable JIT/one
schedule) & takt time here which is easiest due to high fluctuating demand, (but not parts throughout entire
piece flow effectively without
time (pulse) understood as average for example, job shops system). Flow achieved
excessive idle time or overtime
(difficult for demand in time (e.g., 2 parts make-to-order and project based Understand in terms of the
in production.
Shamrock case) per minute or two quotes per manufacture. specific business and where it is
day, two invoices per week). most applicable there.
Journal of Industrial Engineering
 Table 4: Continued.
Detriments/barriers
Treatments
Analysis of risk to sustainability
Brief description Benefits sought To maximise benefits, and Dependants
of method or entire
eliminate or minimise detriments
implementation effort
Journal of Industrial Engineering

(B) Complimentary
Methods
Business systems Information collaborative Ensure the solution is right for
software and reduced data entry and your environment (many may be
Typically implementation times,
production control Interactive IT databases which codification of knowledge. better with simple kanban
culture change, and
technology e.g., may incorporate logarithms Particularly useful at planning boards and
customisation requirements all
ERP for scheduling and financial Shamrock because of high replenishment systems).
extensive. Can be expensive and
(particularly management. administrative demands on Get well prepared and ensure to
restrictive.
beneficial to complicated processes and have the right skill, resources,
Shamrock) customer requirements and technical support on hand.
TOC is in itself a standalone
process improvement Does not implicitly include
Incorporate for flow training and
technique with its own philosophy and culture of staff
Great for training and use as suitable as a
Theory of overarching philosophy. It engagement and
supporting flow thinking. complimentary method but be
constraints (TOC) identifies bottlenecks “capacity empowerment—typically
Read the book The Goal [62] careful not to affect overarching
constrained resources” that consultant driven and not
strategy.
need to be targeted to improve sustained as a standalone.
flow.
Six sigma is in itself a
standalone process
improvement technique with High level training and highly
its own overarching time consuming exercise to use.
Fine improvement of Use and train only as required in Other simpler
philosophy. It is most well Workers can become too
Six sigma processes after basic obvious the meantime; use VSM and 5 methods
known as a statistical method narrowly focused on statistical
waste eliminations is made. whys for early results. exhausted.
of process analysis and tools when simple problem
improvement, Six sigma can solving is all that is required.
be applied as a tool within a
lean philosophy.
13
14 Journal of Industrial Engineering

Lean methods: impact-difficulty qualitative assessment

for lean practice success and sustainability These activities have
low resource needs,

“likelihood”
readily give early results

difficulty
Difficulty of success and sustainability

Low
5S and build a culture

High
5 in readiness for
whys VS
Kanb.
future lean activities
TPM
SMED

difficulty
Medium
Qual.
Last on the list,
TOC
exhaust other
avenues first More diffcult, H and
hold off till T
“likelihood”

Six
sigma culture built ERP
difficulty
Low

High

JIT

Low Medium High

impact impact impact
Impact on success and sustainability
VS: visual systems
Qual.: quality tools—quality at the source, Jidoka, and Poka Yoke
SMED: single minute exchange of dies/reduced setups
TPM: total productive maintenance
Kanb.: kanban
JIT: just in time manufacture
H and T: Heijunka (level schedule) and takt time (pulse)
ERP: business systems software
TOC: theory of constraints

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

for example, six sigma and JIT, are in the bottom left. lean initiatives (except for some higher order principles) until
These were assessed as particularly difficult to implement in ERP is well achieved and the resources are freed to focus on
this particular situation, and the benefits would be limited. other lean implementation activities. This also implies that
Implementation of TOC thinking would be more beneficial if they had a clean slate and had not begun implementing
than six sigma or JIT in this case. Kanban is positioned in the ERP it may have been more beneficial to consider some of
middle, and while (in this situation) it may not be relevant the simpler tools first. This could have benefited them with
for pulling production, it could still be useful for ordering further staff engagement and built culture excellence and
consumables. Managers and business owners at SI broadly staff engagement before implementing ERP with its higher
endorsed the validity of this analysis of the situation. requirements on resources and perceived level of change.

5.4. Implications for SI. Of interest is the high impact of ERP 5.4.1. Beyond Production. We have noted that lean has been
in SI’s case. This is something difficult to implement but if applied effectively beyond manufacturing or production
implemented right could have great effect. This is particularly businesses. Although SI is a manufacturing business we
because at SI production was partially being constrained observed they had many gains to be made in their admin-
by flow in the office. ERP implemented right would sim- istration centre (hence a high priority for ERP). Whether or
plify quoting, planning, purchasing, and general data entry not the physical transformation of goods took place in their
requirements which are identified as serious bottlenecks at own workshop there was much waste to be eliminated in
SI (more so than specific physical production processes). It their office. These lean office gains illustrate the competitive
could also give other benefits such as business reporting. SI advantage of lean beyond manufacturing businesses.
has much to benefit in understanding the holistic nature of
its systems and the interaction between the factory and office 5.5. Application to Other Manufacturers. The implications
processes. would be similar for other make-to-order, design to order,
Resource constraints are significant in SMEs and deter- job shop SMEs, although ERP requirements may drop where
mine how much the organisation can achieve at any one products do not demand a lot of records and data entry or
time. In this particular case SI had just embarked on an process control (as compared with SI’s high tech and precision
ERP implementation that is somewhat separate from an engineering customers).
enterprise wide lean journey. Because of the difficulty of ERP For firms of higher production (e.g., low-variety high-
implementation our suggestion would be to hold off all other volume) we would see more relevance in the emphasis on
Journal of Industrial Engineering 15

Lean strategic principles impact-difficulty qualitative assessment

for lean practice success and sustainability

“likelihood”
Culture

difficulty
High
building

Low
Difficulty of success and
Com.
pro.

sustainability All
Define staff

difficulty
Medium
value
CI

VSM
Flow
“likelihood”

difficulty
High
Low

Pull

Low Medium High

impact impact impact
Impact on success and sustainability
CI: continuous improvement
All staff: all staff involved in CI (kaizen)
VSM: analysis of value stream
Com. pro.: communication process
(a)

Lean methods: impact-difficulty qualitative assessment

for lean practice success and sustainability
These activities have
low resource needs,
“likelihood”

difficulty

readily give early results

Difficulty of success and sustainability

Low

5S
High

and build a culture

5 in readiness for future
whys VS
Kanb. lean activities
TPM
SMED
difficulty
Medium

Qual.

TOC

H and
T
“likelihood”

Six
ERP
difficulty

sigma
Low

High

JIT

Low Medium High

impact impact impact
Impact on success and sustainability
VS: visual systems
Qual.: quality tools—quality at the source, Jidoka, and Poka Yoke
SMED: single minute exchange of dies/reduced setups
TPM: total productive maintenance
Kanb.: kanban
JIT: just in time manufacture
H and T: Heijunka (level schedule) and takt time (pulse)
ERP: business systems software
TOC: theory of constraints
(b)

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

process flow principles and tools. We have illustrated these manufacturing and is complementary to strategic decision
and other likely changes by placing arrows overtop of the making regarding manufacture [3] and environmental con-
previous charts; see Figure 8. siderations [61], among others.

6.2. Implications for Practitioners. For practitioners, that is,

6. Discussion those managers in organisations that are considering what
parts of lean to implement, the primary implication is that
6.1. Outcomes: What Has Been Achieved? This work encom-
they should not only focus on the high impact lean methods
passes lean thinking and methods, lean implementation,
but also consider a staged approach. We recommend they
organisational change, and risk management. Exploring the
deliberately select lean methods that will build lean culture
literature at the intersection between risk management and
through small wins and staff engagement, before progressing
lean transformation we found no application except for
to more overly lean methods. Lean implementation involves
piecemeal usage of methods and aspects of lean loosely tied
a transformation of the organisation, and initially the journey
to risk. There was little evidence of risk management and lean
(i.e., the human dimension of the change process) is as
implementation being integrated by practitioners.
important as the destination.
The present work makes several novel intellectual contri-
In making the decisions about lean, our suggestion is
butions. The first is methodological, in that it demonstrates
that managers consider applying the method given here, by
a way to integrate risk management into decision making
evaluating the impact of each of the lean principles and
when implementing lean. This method makes the detriments
tools and the difficulty of implementing them in that specific
(the threat component of the risk) more explicit and therefore
organisational context. We suggest that the organisational
amenable to treatment. The method achieves a high level of
context is very important, and that the analysis is best
integration between the two management methods. We did
done by someone who has deep understanding of how the
this by comparing lean management with risk management as
organisation operates. At the same time it is also important
codified in the ISO standard [35] and developing a common
that the analyst understands the capabilities of the various
framework with lean.
lean principles and tools. In this paper we have only identified
A second contribution is that the method provides a way
these by name, as a full description would overwhelm the
to explicitly identify the organisation difficulty of implement-
present paper. However we recommend practitioners gain
ing lean practices. This is important, because although these
the necessary lean knowledge by consulting one of the many
organisational difficulties have previously been identified in
excellent texts or employing an expert.
general terms (e.g., the lean iceberg model), it has up to
Another implication for practitioners is that the method
now been difficult to determine how those apply to specific
we propose here is closely aligned to the risk management
situations. Thus variables that were once general situational
method. Consequently there should be no impediment to
variables (or contingency factors to use the change manage-
including the lean risk assessment alongside other risk
ment term) can now be included in the decision-making. The
management practices. Alternatively, if the risk management
method, while not specifically providing a temporally phased
framework [35] is not already part of the organisation’s
approach to lean implementation, encourages the decision-
practices, then we would suggest that consideration should be
maker to explicitly evaluate which lean methods are relevant
given to exploring that too, since it is not much more effort
to the organisation at the time under consideration.
than to do so. The management approaches are complemen-
The third contribution is that we have piloted a method
tary and mutually supportive having synonymous principles,
for applying lean to organisations other than high-volume
framework, and process.
manufacturers. In particular, the method was developed in
a challenging type of organisation: an SME involved in high-
variety low-volume manufacturing. This type of organisation 6.3. Limitations and Implications for Further Work. A lim-
has otherwise found it difficult to implement lean, as seen in itation of this work is that the case study was more of a
the late adoption. The method and the case study bring out cross-sectional rather than longitudinal design and on only
implications and provide solutions that could be relevant to one firm. This naturally limits the external validity (limits
other types of organisation too. The case study showed that it the ability to generalise to other situations). It would be
is possible, given contextual knowledge of the organisation, interesting to apply the method to a firm or multiple firms
to predict which lean methods are most important in the over time to assess how well the predicted lean methods
setting. This enables the prioritisation of organisational effort, actually performed and how decision making priorities adjust
something that is relevant to all organisations but particularly in time.
to SMEs with their limited resources for such endeavours. Another limitation is that the analyst needs both con-
A fourth contribution is that we have now built another textual knowledge of the firm and knowledge of the lean
conceptual component in a model for high-value manu- methods. We have explicitly identified that need in our
facturing. This is of national strategic importance to small recommendations to practitioners. It would be interesting
countries like New Zealand, whose manufacturing industries to know just how much knowledge practitioners really have
cannot easily compete with other countries that have low about lean. The root of failed implementations of lean
labour costs and high production volumes. We suggest that might be ignorance, which would also limit our method.
intelligent implementation of lean is necessary for high-value It would be interesting to do a widespread survey of the
Journal of Industrial Engineering 17

extent of lean knowledge and check whether that causes poor [5] J. P. Womack and D. T. Jones, Lean Thinking, 1st Ed.: Banish
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Shamrock Industries Ltd. (New Zealand), particularly Mr. P. profiles,” Robotics and Computer-Integrated Manufacturing, vol.
Fogarty, to support this research project and provide case 23, no. 6, pp. 684–689, 2007.
study material. A portion of this work was supported by [18] D. Pons, “System model of production inventory control,” Inter-
the Ministry of Science and Innovation Education Funding national Journal of Manufacturing Technology and Management,
through the New Zealand Government, and this is acknowl- vol. 20, no. 1–4, pp. 120–155, 2010.
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“Extending value stream mapping: the synchro-MRP case,”
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