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Production Planning & Control: The Management of


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What is the leanness level of your organisation in lean


transformation implementation? An integrated lean
index using ANP approach
a b a
Wai Peng Wong , Joshua Ignatius & Keng Lin Soh
a
School of Management, Universiti Sains Malaysia, 11800 Minden, Penang, Malaysia
b
School of Mathematics, Universiti Sains Malaysia, 11800 Minden, Penang, Malaysia
Published online: 02 Apr 2012.

To cite this article: Wai Peng Wong , Joshua Ignatius & Keng Lin Soh , Production Planning & Control (2012): What is the
leanness level of your organisation in lean transformation implementation? An integrated lean index using ANP approach,
Production Planning & Control: The Management of Operations, DOI: 10.1080/09537287.2012.674308

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Production Planning & Control
2012, 1–15, iFirst

What is the leanness level of your organisation in lean transformation implementation?


An integrated lean index using ANP approach
Wai Peng Wonga*, Joshua Ignatiusb and Keng Lin Soha
a
School of Management, Universiti Sains Malaysia, 11800 Minden, Penang, Malaysia; bSchool of Mathematics, Universiti
Sains Malaysia, 11800 Minden, Penang, Malaysia
(Received 27 June 2011; final version received 7 March 2012)

We develop a lean index to assess the leanness level of the organisation in sustaining lean transformation. This
‘lean index’ is developed from theory, and is quantified using a multi-criteria approach i.e., analytic network
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process (ANP). This index provides a useful measure for sustainable lean performance because it adopts a holistic
approach of performance measurement based on the socio-technical perspective which considers the
interdynamics of human, system and technology.
Keywords: lean; performance; analytical network process; socio-technical

1. Introduction non-lean behaviour (e.g. demotivation, dissatisfaction,


Lean manufacturing had been engraved in the heart of drop in performance), which are all the reverse effects
manufacturing practices as one of the corporate of desired lean outcomes.
strategy to bring the organisation to the forefront of To sustain leanness in organisations, we need to
business excellence. Organisations are striving to be discard the non-lean behaviour created by incongru-
lean in order to remain globally competitive. From the ence of focus. Instead of focusing performance at the
lens of lean transformation, organisations aim to enterprise level, many stakeholders of the organisation
achieve ‘leanness’ in their operations. There have still focus on subsystem level due to the lack of
been numerous reports on organisations cutting wast- understanding of interdependencies. Optimising per-
ages to achieve leanness (Jannes et al. 2009, Vinodh formance at enterprise level requires a radial rethinking
et al. 2011); however, there is still void in understand- of how the organisation is managed through the use of
ing what is ‘leanness’ for sustainability purpose. This is ‘lean’ principles and practices. Based on lean principle,
mainly due to conflicting deliverable measures of the focus of lean for sustainability purpose should be
‘leanness’ which leads to non-lean behaviour overall to deliver ‘value’ to all its stakeholders; and value is
in the long run (Mahidhar 2005). For instance, each directly affected at the links between the activities
(execution) and strategies taken, of which linkages are
department may give different emphasis to their people
provided by performance systems. Individual metrics
following each respective key performance indicators
focusing on a specific performance aspect (e.g. quality
(KPIs). Hence, employees face a dilemma on what is
department focusing on quality, production depart-
the focus in lean here. The persistency of this dilemma
ment focusing on delivery, etc.) cannot represent the
among employees could decrease their motivation in
overall leanness level. Hence, in order to promulgate a
doing their job, and cause a reverse impact leading to
common focus on leanness, an integrated performance
non-lean behaviour. Hence, without a congruent focus,
index is greatly needed. Wan and Chen (2008) have
this has led to many issues in the organisation
further supported this statement by saying that a
e.g., frequent conflicts/arguments among departments
leanness measure is needed which can synthesise the
(every department focusing on their own KPI);
various aspect of the overall leanness into an integrated
employees are not clear of the management objectives
measure.
and directions, and experience a decrease in overall
In this article, we crystallise this by developing an
performance. According to Mahidhar (2005), if non-
integrated leanness index to reduce conflicts and
uniform performance measures of lean are used across
mismatch of objectives. Through this unified index,
various subsystems in the organisation, this will lead to focus of all departments can be aligned, and employees

*Corresponding author. Email: wongwp@usm.my

ISSN 0953–7287 print/ISSN 1366–5871 online


ß 2012 Taylor & Francis
http://dx.doi.org/10.1080/09537287.2012.674308
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2 W.P. Wong et al.

will be more willing to work together to achieve a typical assessment until the degree of adoption of its
shared objective. By reducing conflict and strengthen- principles (Feld 2000, Conner 2001, Jordan et al. 2001).
ing the cohesiveness among departments, sustainable Among the surveys, Lean Enterprise Self-Assessment
performance can thus be achieved. The rest of this Tool developed by lean aerospace initiative at MIT
article is presented as follows. In Section 2, the was the most popular one. It was later extended with a
literature review on lean is discussed. The details of maturity model (Nightingale and Mize 2002). From
the development of the integrated leanness index several indicators (e.g. nine determinants by Soriano-
are illustrated in Section 3. In Section 4, an illustrating Meier and Forrester 2002), the model was later
example is presented. Then, in Section 5, manage- enhanced to 36 indicators in six groups (Sanchez and
rial implications, some important issues and Perez 2001), followed by 101 metrics to match wastes
limitations are discussed. We conclude this article (Pavnaskar et al. 2003). The problem with these self-
in Section 6 with suggestions and future research assessment tools is the nature of subjectivity; the
works. predefined lean indicators of a questionnaire may not
fit every system perfectly. Further, these sets of
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indicators operate in a ‘frustum manner’, i.e., clearly


separating the nature of the indicators, e.g., cost-based
2. Literature review: leanness measure of
indicators, and non-cost-based indicators. In reality,
manufacturing systems
these indicators may implicate or affect one another
2.1. Lean and leanness measure directly or indirectly. The non-consideration of the
Lean is a philosophy, an organisation and a set of interrelations of the indicators thus made many of
specific techniques (tools) (Paez et al. 2004). Its these tools not to estimate the leanness level appropri-
implementation is guided through value stream map- ately for each organisation.
ping (VSM) (Rother and Shook 1998, Dinesh and From the quantitative side, various approaches had
Vaibhav 2005), i.e., an approach that uses structures to also been developed to measure leanness. For example,
delineate between ‘value’ points and maps them based Srinivasaraghavan and Allada (2006) have measured
on relationships. leanness by calculating the Mahalanobis distance
‘Leanness’ refers to the degree of the adoption and between the current state of the system and the
implementation of lean philosophy in the organisation. benchmarking performance. In this method, the per-
Several researchers had examined ‘leanness’ in the formance benchmark needs to be gathered from peers
organisation through some measures. For example, and competitors, thus, the outcome greatly depends on
Karlsson and Ahlstrom (1996) have used a set of the quality of the benchmark. Alternatively, individual
measures summarised in a form of checklist to assess index for lean based on one single metric has also been
the extent of leanness. McIvor (2001) and Soriano- developed to assess leanness. Levinson and Rerick
Meier and Forrester (2002) have examined leanness (2002) have developed the manufacturing cycle effi-
by using some key variables (e.g. lean supply, ciency (MCE) index to represent leanness level in terms
production cost and quality) to evaluate the degree of time-based performance while Fogarty (1992) has
of leanness in the organisation. The measures for developed the value added efficiency (VAE) index to
leanness are very much context-dependent based on assess leanness from value-added performance per-
each organisation needs and objectives (Radnor and spective. Detty and Yingling (2000) have utilised
Boaden 2004). simulation models with several performance metrics
to quantify leanness level. Meanwhile, researchers also
explored various operational research techniques to
2.2. Tools for assessing leanness measure leanness, such as using data envelopment
With reference to the definition of leanness which is the analysis (DEA) (Wan and Chen 2008) and fuzzy logic
degree of realising lean principles, the term leanness (Vinodh and Balaji 2011). In a nutshell, the quantita-
assessment thus refers to the process or tools for tive tools to measure leanness are thus mostly confined
measuring leanness. The tools for assessing leanness to individual measures or indicators, and an integrated
can be basically divided into two types, qualitative and measure that combines various measures that quanti-
quantitative. We will first discuss about qualitative fies the level of leanness has not been developed.
assessment, then discuss the quantitative tools. The Next, we will develop an integrated leanness index
qualitative tools are such as the various lean assess- that considers the interrelationships among the indi-
ment surveys. Survey has been a common tool to assess cators of lean. Specifically, this index will be able to
leanness and the complexity of the survey ranges from sustain ‘leanness’ of performance in the long run.
Production Planning & Control 3

3. Development of an ‘integrated leanness index’ denominator i.e. a ‘good lean performance’ based on
3.1. Interrelating the metrics through a common the combination of these three metrics. To develop this
platform common platform, one needs to examine the interre-
lations of the metrics from the perspective of practices
To develop the index, first, we need to understand the
that the lean focus on. For example, if lean focus is on
metrics that are used to track ‘leanness’, in other
people (or people oriented), then by using people
words, the performance determinants. Traditionally,
improvement as the objectives, the conflicting impact
the performance determinants are cost, on-time deliv-
from these metrics can be minimised and the integra-
ery and quality (Agarwal et al. 2006); some may also
tion of the metrics can be accepted with less defiance
include productivity and safety (Allen et al. 2001). This
from the entire organisation. In order to associate with
article will utilise the top three common performance
the focus of lean, we need to revisit the philosophy and
metrics. In the early years, researchers focused on
link it to the management organisation theories in the
individual metric, e.g. Levinson and Rerick (2002)
following section.
(MCE) and Fogarty (1992) (VAE) have focused merely
on on-time delivery and value-added activities, respec-
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tively, while Katayama and Bennett (1999) have


focused merely on quality and productivity. More 3.2. Common platform derived from theoretical
recently, researchers began to explore the influence of viewpoint
each metrics on one another. For example, Detty and Lean represents a change in production system (orga-
Yingling (2000) have tried to group several perfor- nisation system) paradigm that transformed through
mance metrics (e.g. productivity, cost and quality) to phases. The ‘change’ element in lean principles thus
outline the overall leanness and Leung and Lee (2004) made it possible to link its philosophy with resource-
have developed the new value creativeness as the lean based view (RBV) and its extension i.e., dynamic
index by grouping some of the metrics. Note that capability (DC) theory. Lean principle has resonance
though past researchers had explored grouping the with RBV due to the origin resource point (e.g. man,
metrics, however, due to the nature of the metrics machine and materials) and the end effect of customer
which are different from each other, these methods are value as well as the aligning of resources to allow value
difficult to synthesise the group of metrics into an to flow. The RBV of the firm suggests that resources
integrated leanness measure. Furthermore, even acts to create or preserve competitive advantage for the
though past models are extremely useful, they only firm; alignment of resources to allow value to flow
provide problem-tool connection without a quantita- denotes the way to create and preserve; and the final
tive measure of leanness. An objective quantitative value at the end customers denotes the competitive
integrated measure of leanness that addresses the issue advantage, i.e., the value of the firm which the
of lean sustainability is yet to be established for lean customers thinks only the particular firm possesses it
practitioners. and other competitors do not have it. DC is defined as
For a meaningful integrated lean index, we have to ‘the firm’s ability to integrate, build and reconfigure
understand how these three metrics interrelate with internal and external competences to address rapidly
each other. Intuitively they are indivisible; for instance, changing environments’. It is extended from RBV. The
cost is affected by quality and on-time delivery, extension is viewed in the following way: in addition to
e.g., high quality increases cost through more frequent the earlier assertion, DCs framework further asserts
inspections and higher consumptions of resources. that core competencies should be used to create short-
Additionally, when on-time delivery to customers is term competitive positions which in turn can be used to
extended, the organisation will incur additional oper- build longer term competitive advantage. Bititci et al.
ational costs. As lean implementation is carried out (2011) have stated that in DCs theory, resources need
synchronously throughout the organisation, the rela- to change form through managerial process which
tionships among these metrics become more complex. includes reconfiguration, leveraging, learning and cre-
Conflict of interest and incongruent objectives from ative integration. This fits the lean approach exactly.
different structure or departments will occur. This To implement lean, the organisation needs to go
conflicting impact will eventually invalidate the results through the lifecycle of adoption, adaptation, accep-
of the performance indicator. Hence, to have an tance and use to enhance values. Resources in lean
integrated measure, one needs to wade off the con- environment, e.g., employees, work environment, tools
flicting affect. One possible way is to cast the interre- and equipment, will undergo this cycle and transform
lations of the three metrics through a common to a more value-added form (Bowman and Ambrosini
platform to which the objective is towards a common 2003). Based on the above explanation of how RBV
4 W.P. Wong et al.

and DC relates to lean concept, this supports the use of performance need to be identified by the inherent
these two theories to model the platform for the lean interrelations of the elements in the organisations that
index. Regarding the issue of what kind of elements or interact with each other. For instance, adequacy of
characteristics should the platform inherit, let us resources (capability) and impact of corporate align-
review the lifecycle of lean implementation. The ments require the understanding of causal relationship
question of ‘what is the lean focus in each stage of among the efforts and activities that had been taken.
the cycle’ would provide us the answer to the earlier Based on the support from the literature (Agarwal
question, i.e., what is the element that the platform et al. 2006), the enablers for each dimensions can be
should possess. In the adoption stage, lean focuses on categorised as follows. For resource capability, it can
the ‘process-centred approach’ such as waste elimina- be characterised by three measures (enablers) i.e.,
tion and cost reduction. As it moves on to the labour skill (LS), machine condition (MC) and mate-
adaptation phase, human-centred approach is injected rials quality (MQ). Higher values of LS, MC and MQ
through empowerment and management of the human would increase leanness level. Planning control and
resources in the work design. Ultimately, in the full- execution involves how resources are controlled and
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scale adaptation of lean practices, integration of the managed to support production. This enables organi-
human and technological practices is required sation to become leaner. Effective workers scheduling
(Karwowski et al. 1994, 1997). (WS), machine scheduling (MS) and materials plan-
As lean greatly relies on the active interaction of ning (MP) are important to organisation to achieve
these two elements, an integrated lean index can be leanness level. Another key characteristic of lean
modelled using this platform i.e., the socio-technical organisations is the implementation of various projects
platform. This view is also supported by Niepce and with IT support. Improvement projects (e.g. kaizen,
Molleman (1998) who found similarities between lean 5S) (IP), data accuracy (DA) and means of information
and socio-technological design by analysing some lean (EDI) enable organisations to become lean through
performers. A socio-technical view is indeed important conducive and supportive technical environment.
to assess leanness of organisation, as the dynamics of Corporate alignment (CA) refers to top leadership
human and technical systems needs crucial consider- support in implementing lean and how well this is
ation due to their intertwined effect and they are the communicated to affect the employees work attitude to
main driving forces for sustainable performance. support lean transformation throughout the organisa-
tion. Hence, leadership (L), employees work attitude
(EA) and communication (C) are the main enablers of
3.3. Socio-technical paradigm – dimensions and corporate alignment and intra-organisation alignment.
enablers and their interdependence For these cases, lean experts i.e., the group of senior
managers involved in lean implementation were sought
From RBV concept, resources (e.g. labour or work- to provide feedbacks on the enablers. We interviewed a
force (human) capabilities, machine capabilities, mate- group of senior managers and asked them to identify
rials) are the asset positions that can be deployed what were the enablers (i.e. the elements) that would
creatively (strategically) in order to develop new (more) affect lean performance in their company. Collectively,
capability. Apart from the physical form of resources, they agreed that the above-mentioned elements would
salient type of resources also includes systems, tech- affect lean performance. A few other elements were
nology, corporate alignment (e.g. leadership, culture, also suggested such as market condition and customer
communication) (Lichtenstein and Brush 2001). From demand. However, due to the reason that these two
DC concept, enhancing resources can be viewed in elements had no direct effect on lean performance from
terms of planning and utilisation of resources, and the socio-technical point of view, we have to omit
improving them through projects and systems imple- them. Therefore, based on the senior managers’ opin-
mentation. The endogenous approach of treating ion in lean environment and support from the litera-
resources needs to be complemented by corporate ture, the enablers were identified. Next, we introduce
and intra-organisation alignment in order to create the the framework for the integrated lean index.
greatest impact on performance. With this, the perfor-
mance dimensions can be categorised into four groups,
i.e. resource capability, planning control and execution,
projects implementation and corporate alignment. 3.4. The integrated lean performance framework
The dimensions can be further deciphered into their The main focus of this framework is to develop
enablers, which refer to the more refined elements that an integrated leanness index by considering the
affect the dimensions of performance. Changes in interdependent relationship among the performance
Production Planning & Control 5

determinants, dimensions and enablers. This provides sub-criteria that control the interactions; in the
a more accurate approach for determining leanness second phase, it consists of network of influences
performance in the complex decision environment, among the elements and clusters (note: network varies
which involves various stakeholders with various from criteria to criteria), and hence here also, different
concerns and issues. super-matrices of limiting influences are computed for
Past literature had identified some techniques or each control criteria and finally each one of these
approaches to quantify a performance index, for super-matrices is weighted by the priority of its control
example, DEA (Wan and Chen 2006) and statistical criteria and results are synthesised through addition
technique (Srinivasaraghavan and Allada 2006). DEA for the entire control criterion. The operationalisation
and statistical techniques are good methods, without of the leanness framework is depicted in Figure 1.
preassigning weights, they can be used to measure In the proposed framework, leanness is modelled
multiple inputs and outputs. The strength of these based on the socio-technological platform, which is the
methods i.e. without pre-assigning weights to any foundation for sustainable lean enterprise perfor-
performance measure can also be their drawback. mance. One should optimise the technological and
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Managers often have their own opinions on what human systems to sustain organisation performance
performance measures are more important than others. (Genaidy and Karwowski 2003). A brief comparison of
Further, these measures are interrelated, therefore the proposed framework with past lean performance
subjective opinions are important to be captured. In frameworks is discussed next. The past lean perfor-
this case, analytic hierarchy process (AHP) and/or mance frameworks are such as the performance prism
analytic network process (ANP) can be a good (pyramid), balanced score card and framework of
alternative in evaluating lean performance. AHP has evolution. The performance prism structured the
been a popular research and application tool for multi- performance indicators across various functions and
attribute decision-making, while ANP techniques had business units and integrated the objectives with
only a few applications in the literature. Both are operational measures; however, it did not provide
matrix manipulation approaches developed by Saaty any mechanism to identify casual relationship between
and Takizawa (1986), with the development of AHP measures across the functions and levels (Cross and
that took place slightly earlier than ANP. Due to the Lynch 1988). The balanced scored card utilised the
added strength of ANP which allows analysis of scorecard approach to integrate measures and also
interdependencies among criteria and among alterna- identified the linkages with strategy maps (Kaplan and
tives with respect to each criterion, the ANP technique Norton 1992). The linkages between the measures are
is more suitable to use in our case. Note that the ANP presumed and unidirectional and the deployment
technique had been applied in information system system did not break down into subsystems level. On
(Lee and Kim 2000), in quality management (Karsak the other hand, the evolution framework (Kennerley
et al. 2002), in environment practices and programs and Neely 2003) focus not only on the results, but also
(Sarkis 2002) and in project management (Meade and on drivers for success; it provides a procedural
Presley 2002). Yet, to the best of our knowledge, ANP enhancement to the performance framework in addi-
has not been applied in ‘lean management’. Since this tion to the structural approach of the previous two
technique is feasible, it is reasonable to use it in our frameworks. However, it may only promote local
case. ANP allows more complex relationships among optimisation as it does not explicitly integrate the
the decision levels and the lean attributes. The inter- concept for continuous improvement. Our proposed
action or interrelationship can be controlled through ANP-lean index framework, in contrast define and
the coupling of phases that comprise the hierarchies of establish interrelationship among the factors of sus-
criteria and sub-criteria. The integrated leanness index tainable performance and the resulting integrated lean
can then be synthesised through the weighted priority index is able to provide a unified set of measures across
of the control criteria through the evaluation of the systems to avoid local optimisation of decisions.
super-matrices in ANP.
The pros of ANP are that it can capture
interdependencies and the requirement for hierarchy
(being an important component here) is less strict than 3.5. Quantifying the integrated leanness index
AHP. Hence, ANP allows more complex relationships Let us define these notations: K is the set of enabler, J
among the decision levels and attributes to be is the set of dimension, A is the set of determinants.
analysed. The operations in ANP can be briefly Let P ¼ (Pja)j2J;a2A be the relative importance weight of
described as follows: in the first phase, it consists dimension j on the determinant a, WD ¼
of control hierarchy of network of criteria and ðWD kja Þk2K;j2J;a2A is the relative importance weight for
6 W.P. Wong et al.

Integrate
leanness
index

Performance determinants Cost Quality On-time delivery

Performance dimensions

Corporate & intra- Projects & IT Planning control and Resource capability
organisation alignment implementation execution
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EA C DA ED MS MP MC M

L IP WS LS

Performance enablers

–Leadership (L) –Improvement projects -Workers scheduling -Labour skill (LS)


- Employees work (e.g. kaizen, 5S) (IP) (WS) -Machine condition
attitude (EA) -Data accuracy (DA) -Machine scheduling (MC)
- Communication (C) - Means of information (MS) -Materials quality
(EDI) -Materials planning (MQ)
(MP)

Figure 1. ANP-based framework for modelling integrated leanness index.

enabler k of dimension j of determinant ‘a’ for the considered (though the effect would be minimal). Let
dependency (D) relationship between enabler’s com- us define Sskja as the relative impact of alternative
ponent levels, that is, the dependence among the paradigm s on enabler k of dimension of j of
enablers with respect to each dimension, and subse- determinant a. As such, the integrated weight W0
quent with respect to each determinant. The question which is the product of the relative importance of all
asked to the respondents in order to obtain the values weights can be calculated as follows:
of WD is, for example, ‘What is the relative importance
of leadership compared to employees work attitude on
J X
X Kja
W0 ¼ Pja WD I
kja Wkja Sskja : ð1Þ
controlling corporate and intra-organisation align- j¼1 k¼1
ment?’. WI ¼ ðWIkja Þk2K;j2J;a2A is the stabilised relative
importance weight for enabler k of ‘j’ dimension in the Lindex is the integrated leanness index, thus can be
determinant ‘a’ for interdependency (I) relationships estimated as the product of integrated weight with
within the enabler’s component level. As the frame- the relative importance of the performance determi-
work is modelled based on the socio-technical para- nants (Ca) i.e.,
digm (i.e. encompass human and technical or process Lindex ¼ W0  Ca : ð2Þ
aspect), during the real discussion with the experts, the
silo influence of a diverged paradigm (e.g. more A mini focus group was conducted on a group of
towards human focus, or alternatively more towards experts comprising four senior managers to obtain the
technical focus) is indeed significant. Hence, the values of the relative weights. This method was chosen
relative impact of alternative paradigm needs to be because it is more cost effective and through the
Production Planning & Control 7

‘cascading’ or ‘chaining’ effect of group members, it is Due to rising cost of operations and increasing
able to provide more insights and data that would be competitions in the semiconductor market, the com-
less accessible without interaction found in a group pany decided to adopt ‘lean manufacturing practices’ a
setting (Nachmais and Nachmais 2008). For obtaining year ago. The main principle behind lean philosophy is
the relative weights, we followed Saaty’s (1996) to cut down wastages to increase profits. Similar to
recommendation of using a scale of 1–9, where 1 many reported cases (Vinodh et al. 2011), lean imple-
implies equal impact and 9 implies stronger impact of mentation in this company receives enormous resis-
the row element than the column element. If the tance because employees were reluctant to change. The
manager feels that the column element has stronger changes do not merely include technical aspects
impact than the row element, reciprocal of numbers (e.g. work procedures, systems and environment), but
from 1 to 9 is assigned accordingly. The weighted also involve the soft aspects, which are mentality and
priority or e-vectors (Saaty 1996) are then calculated attitude of the employees. The company experienced a
from the pair-wise comparison matrices using relative marked decrease in job satisfaction (almost 50%) and a
weights obtained from managers. sharp increase in employees’ complaints after it started
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Next we discuss the application of the ANP-based implementing lean. The unfavourable working envi-
framework for measuring leanness in a semiconductor ronment thus led the top management to hire an
manufacturing company (the case company). Note external consultant to motivate the dissatisfied work-
that the elements of this framework were proposed ers. Thus, this was how the research collaboration
based on the suggestions and feedbacks from the started. Under the theme of ‘Lean Transformation
managers. Recall that earlier we mentioned that based Research’, a total of five different projects were
on the ANP method, the senior managers were identified in this collaboration and our project is one
interviewed first to decide the major criteria and the of them. Note that, in other words, our project can be
subsequent detailed criteria for evaluating the lean viewed as a subproject of the main project i.e., Lean
performance. As such, the proposed model is validated Transformation Research. Our project aims to address
with the experts’ (i.e. the managers’) support. The one of the crucial problems in the organisation which is
network structure composes of three major criteria and the incongruence of performance measure for lean,
numerous detailed criteria as shown in Figure 1. leading to conflicts among departments (every depart-
ment trying to fulfil their own KPI), and causing
demotivation and low job satisfaction among the
employees. To overcome this problem, we propose an
4. Case study – an application example
ANP framework which will be able to provide an
A case-study approach was chosen because it has a integrated leanness index that aims to align the focus of
distinct advantage in situations when in-depth and all departments. Note that, though only a single case
detailed questions such as ‘how’ or ‘why’ questions are study is conducted using this framework, this frame-
asked about a contemporary set of events over which work is generic and is applicable to all other companies
the investigator has little or no control (Yin 2003). This that are implementing lean. Figure 2 illustrates in detail
research uses a single case study because the centre of the steps of how the case study is conducted.
focus here is to investigate the organisation thoroughly To increase the robustness of the study, we now
in its lean transformation program. The advantage of provide more details about each phase of the study.
focusing on a single company here is that the
researchers are able to gain a valuable perspective of Phase 1: preparation
the organisation while at the same time they are able to This was a preliminary stage whereby researchers
overcome the constraints of the study i.e., time, budget from both sides (academic and industry) get to know
and manpower. The drawback of a single case may be each other. An introductory session was held by the
probably that its results will be difficult to be gener- project leader and respective counterparts for the
alised. Nevertheless, the proposed framework is thor- related projects were introduced. For the academi-
oughly theoretically grounded to assure external cians, we were briefed on the case study company
validity and generalisability of the findings. The background and their expectations on the projects. In
proposed framework has been examined in a multi- return, we shared our research interests and experi-
national semiconductor manufacturing company. This ences with our industrial counterparts.
case company is located at the Bayan Lepas Free
Phase 2: familiarisation
Trade Zone, Penang. This organisation has been
established in Malaysia for more than 10 years and We ventured deeper into the research work by
has approximately 2000 employees in its Penang plant. visiting the company. We familiarised ourselves with
8 W.P. Wong et al.

Lean transformation–operations These managers were then asked to identify the deter-
performance minants, dimensions and enablers for lean performance.
Location: case study company
Phase 4: data collection

Phase 1: preparation In this phase, the data collected was the ‘collective
• Establish contact with company representatives agreement’ on the relative weights of the determinants,
• Arrange first week interviews or meetings with key dimensions and enablers. As mentioned, a mini focus
people involved in lean implementation
• Understand the company background
group was conducted comprising a total of six persons:
four senior managers and two moderators who were
academicians. The interviews were conducted on site
Phase 2: familiarisation i.e. on the production floor of the plant. Two sessions
• Introductory presentation outlining the case study details of interviews were conducted. The first session was
• Familiarisation with people, processes and plant rather short because not all the four managers were
• Mapping the key information flows
present due to the busy production schedule. It was
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only after the second session that we were able to


Phase 3: design factors obtain all the relative weights from the respondents.
• Establish key roles and flows
• Choose the determinants of performance
Phase 5: analysis
• Identify dimensions and enablers
After the weights were obtained, the weights were
inputted into the excel file and analysis were then
Phase 4: data collection
carried out using excel spreadsheets. The lean index
• Methodology presentation and the relative importance of each criterion were
• Live data collection through focus group obtained through the matrices calculation in ANP
• Decision groups are made up of experts (i.e. managers approach. The results were presented to the company
of lean) in the organisation
and recommendations were made to them on how to
measure lean performance.
In a nutshell, the whole study took approximately 1
Phase 5: analysis
• Computation of lean index year. The data collection phase required the longest
• Joint presentation and discussion of results amount of time which was approximately 5 months,
• Report of results and recommendations and then followed by the analysis phase which took
about 2 months to complete. Overall, there were many
follow-ups, discussions through phone and email
Figure 2. The five phases of lean operations performance
case study. communication throughout the research period.

the plant, the environment, the systems, the production


process and we also met the employees involved in 5. Discussion and implications of results
lean. A few visit trips were made and thereby, we were To facilitate the discussion of the ultimate end results,
finally able to identify the links between the people, we first outline the methodology in ANP and provide
flows and processes. the corresponding results accordingly. Based on the
steps in ANP, the chronology of the analysis of results is
Phase 3: design factors
as follows. Note that here we had chosen one of the
After we became more familiar with the company, determinants i.e., on-time delivery to explain the whole
we engaged in a deeper discussion with our counterparts process from step 1 to step 5. We have also explained
to discuss about the key roles and information that were how to derive the values defined in Section 3.5. The
required for the research. Our counterparts suggested to similar process is applied to the other two determinants
focus on one value stream as a start, then later only (cost and quality). Hence, with this, we hope that the
expand the focus to other value streams. Agreement was readers will be able to follow and understand clearly
obtained on which value stream that we should select. how the values for each of the parameters were
Basically, selection of the value stream was based on the obtained.
criticality and urgency of the issue that need to be
Step 1: model construction and problem structuring
addressed. Upon the identification of the value stream,
key senior managers from various processes of the value The top most elements in the hierarchy, which
stream were introduced to the academicians. comprisesthe performance determinants, are
Production Planning & Control 9

decomposed into sub-criteria i.e., the performance the determinants. Table 1 shows the pair-wise com-
dimensions and enablers. Recall that the model parison of determinants, and Table 2 shows the pair-
requires identification of attributes at each level wise comparison between the determinants and dimen-
(i.e. the dimensions followed by enablers and a sions (e.g. for on-time delivery).
definition of their interrelationships). The ultimate Table 3 shows the pair-wise comparison matrix for
objective of this hierarchy is to identify the determi- dimension (e.g. resource capability) under the deter-
nants that will be significant for improving the minants (e.g. on-time delivery). The number of pair-
performance of lean, and ultimately estimate the wise comparison matrices is dependent of the number
leanness level using an integrated index, which captures of enablers that are included in the determinant of the
the influences of dimensions and enablers of the lean performance hierarchy. There are 12 pair-wise
selection process. The list of determinants, dimensions comparison matrices for each determinant required at
and enablers can be referred to in Figure 1. this level of relationships (i.e., three enablers per
dimensions  four dimensions per determinant).
Step 2: pair-wise comparison matrices between
component/attribute levels Step 3: pair-wise comparison matrices of
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interdependencies
On the scale of 1–9, the decision-makers (or the
managers for our case) have been asked to respond to a To reflect the interdependencies, in network, pair-
series of pair-wise comparisons with respect to an wise comparisons among all the enablers are con-
upper level ‘control’ criterion. These are conducted ducted. Table 4 illustrates one such case.
with respect to their relative importance towards the The last step in pair-wise comparison following the
control criterion. In the case of interdependencies, network hierarchy structure of ANP/AHP (Saaty
components within the same level are viewed as 1996) is the comparison for each alternative of the
controlling component for each other. Levels may lean paradigms on the determinants, dimensions and
also be interdependent. Through pair-wise compari- enablers. Table 5 shows an example of a pair-wise
sons between the applicable enablers of performance comparison matrix for alternative’s impact on on-time
dimension cluster, the weighted priority (e-vector) is delivery, resource capability and LSs. Note that there
calculated (Saaty 1996). Similarly, the pair-wise com- will be a pair-wise comparison matrix for each enabler
parison matrix for the relative importance of each of under each dimension, for each determinant. Since
there are three enablers per dimension and four
the dimensions of lean on the determinant of lean is
dimensions per determinants, hence, there will be 12
conducted. There are three matrices, one for each of
sets of relative weights (or eigenvectors) for every
determinant. And as there are three determinants, in
total there will be 36 sets of relative weights generated
Table 1. Pair-wise comparison of determinants. from this pair-wise comparison. These weight (or
eigenvector) values will be used in Table 8 to calculate
On-time
delivery Quality Cost Eigenvector
the integrated weight.
Step 4: super-matrix formation and analysis
On-time delivery 0.714 0.806 0.455 0.658
Quality 0.143 0.161 0.455 0.253 After analysing the interdependencies, the super-
Cost 0.143 0.032 0.091 0.089 matrix can be formed and the final scores (relative
importance measures for each enabler for each deter-
minant) can be evaluated. Table 6 shows the

Table 2. Pair-wise comparisons of dimensions with respect to on-time delivery.

Planning Projects Corporate


Resource control and & IT and intra-organisation
On-time capability execution Implementation alignment
delivery (RC) (PC) (PI) (CA) Eigenvector

RC 0.077 0.043 0.031 0.125 0.069


PC 0.154 0.087 0.031 0.125 0.099
PI 0.385 0.435 0.156 0.125 0.275
CA 0.385 0.435 0.781 0.625 0.556
10 W.P. Wong et al.

super-matrix for the determinant – on-time delivery, Note that since there are 12 pair-wise comparison
there will be two more similar tables for the other two matrices, one for each of the interdependent enablers in
determinants, i.e., quality and cost that need to be the ‘on-time delivery’ hierarchy, there will be 12 non-
evaluated. zero columns in the super-matrix. Each of the non-zero
values in the column in super-matrix M is the relative
importance weight associated with the interdepen-
dently pair-wise comparison matrices.
Table 3. Pair-wise comparison matrix for resource cap- Note also that the values in Table 6 are before
ability under the on-time delivery determinant.
convergence, which means the values are not stable. In
On-time order to get a long-term stable set of weights, the
delivery LS MC MQ Eigenvector super-matrix needs to be converged. This is usually
done by raising the power of the super-matrix to an
LS 0.714 0.806 0.455 0.658 arbitrarily large number. In our example, convergence
MC 0.143 0.161 0.455 0.253
MQ 0.143 0.032 0.091 0.089 is reached at 74th power. Table 7 illustrates the weight
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values after convergence, e.g., for determinant on-time


delivery.
Step 5: calculation of the integrated leanness index
Table 4. Pair-wise comparison matrix for enablers under
on-time delivery, resource capability and LSs. We then calculate the leanness index based on
Equations (1) and (2). Table 8 shows the relative
LS MC MQ Eigenvector weights for each attribute and the integrated weight for
the index in each paradigm for determinant on-time
MC 0.833 0.833 0.833 delivery. Note that in Table 8, the Pja values are
MQ 0.167 0.167 0.167
obtained from Table 2 i.e., the eigenvector of each
associated dimension, WD kja was obtained from the
eigenvectors of Table 3, WIkja from Table 6 and S
values from Table 5. The product of the weights, Pja
WD I
kja Wkja Sskj were then calculated for each dimension,
Table 5. Pair-wise comparison matrix for alternative’s and finally the integrated weight W0 following
impact on on-time delivery, resource capability and LSs.
Equation (1) for each alternative lean paradigm is
Process Human estimated by summing the values of the product
oriented oriented Socio-technical weights. The results from Table 8 show that the
(L1) (L2) (L3) Eigenvector integrated weight for on-time delivery with respect to
each alternative paradigms is 0.055 for process-
L1 0.083 0.040 0.130 0.085
L2 0.500 0.240 0.217 0.319 focused, 0.089 for human-focused and 0.283 for
L3 0.417 0.720 0.652 0.596 socio-technical. Since the highest integrated weight is
0.283, this means that socio-technical paradigm best

Table 6. Super-matrix M for on-time delivery before convergence.

On-time delivery LS MC MQ WS MS MP IP DA MI L EA C

LS 0.000 0.833 0.833 0 0 0 0 0 0 0 0 0


MC 0.833 0.000 0.167 0 0 0 0 0 0 0 0 0
MQ 0.167 0.167 0.000 0 0 0 0 0 0 0 0 0
WS 0 0 0 0.000 0.833 0.833 0 0 0 0 0 0
MS 0 0 0 0.833 0.000 0.167 0 0 0 0 0 0
MP 0 0 0 0.167 0.167 0.000 0 0 0 0 0 0
IP 0 0 0 0 0 0 0.000 0.889 0.889 0 0 0
DA 0 0 0 0 0 0 0.833 0.000 0.111 0 0 0
MI 0 0 0 0 0 0 0.167 0.111 0.000 0 0 0
L 0 0 0 0 0 0 0 0 0 0.000 0.900 0.900
EA 0 0 0 0 0 0 0 0 0 0.889 0.000 0.100
C 0 0 0 0 0 0 0 0 0 0.111 0.100 0.000
Production Planning & Control 11

suits the environment for lean transformation if the the company is 0.662 (note that in comparison to the
only determinant (evaluation criteria) is on-time other alternatives, the impact of silo-typed paradigm is
delivery. minimal and thus negligible). Note also that the results
In a similar manner, the integrated weights were from Table 8 show that on-time delivery (Ca ¼ 0.658) is
calculated for the other two determinants which are the most important determinant for leanness perfor-
cost and quality. After obtaining the integrated mance. The result indicates that the management of
weights, the integrated leanness index can then be lean should focus on improving on-time delivery. This
estimated using Equation (2). Table 9 shows the result could be due to the customer pressure for on-
integrated leanness index values. Note that the weights time delivery. Quality (0.253) and cost (0.089) play the
for the determinants are the eigenvector values from next most important roles but are less important than
Table 1, while the index for the alternatives with on-time delivery. The obtained results were validated
respect to each determinants are estimated from the with the managers and they agreed that it was coherent
preceding section (e.g. from Table 8 for the determi- with their perception. Thus, this validates that the
nant on-time delivery). The indexes are normalised to socio-technical framework was indeed suitable to be
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facilitate benchmark and ease of references. the base for the lean performance measurement. To
From Table 9, based on the socio-technical para- further validate our framework, we conducted the
digm, the current leanness level (lean performance) of sensitivity analysis with respect to the variations in the

Table 7. Super-matrix M for on-time delivery after convergence (M74).

On-time
delivery LS MC MQ WS MS MP IP DA MI L EA C

LS 0.455 0.455 0.455 0 0 0 0 0 0 0 0 0


MC 0.403 0.403 0.403 0 0 0 0 0 0 0 0 0
MQ 0.143 0.143 0.143 0 0 0 0 0 0 0 0 0
WS 0 0 0 0.455 0.455 0.455 0 0 0 0 0 0
MS 0 0 0 0.403 0.403 0.403 0 0 0 0 0 0
MP 0 0 0 0.143 0.143 0.143 0 0 0 0 0 0
IP 0 0 0 0 0 0 0.471 0.471 0.471 0 0 0
DA 0 0 0 0 0 0 0.406 0.406 0.406 0 0 0
MI 0 0 0 0 0 0 0.124 0.124 0.124 0 0 0
L 0 0 0 0 0 0 0 0 0 0.455 0.455 0.455
EA 0 0 0 0 0 0 0 0 0 0.403 0.403 0.403
C 0 0 0 0 0 0 0 0 0 0.143 0.143 0.143

Table 8. Weight indices for on-time delivery.

Pja WD I
kja Wkja Sskja

Dimension Pja Enabler WD


kja WIkja S1 S2 S3 s¼1 s¼2 s¼3

Resource capability 0.069 LS 0.658 0.455 0.085 0.319 0.596 0.002 0.007 0.012
0.069 MC 0.253 0.403 0.692 0.084 0.223 0.005 0.001 0.002
0.069 MQ 0.089 0.143 0.607 0.090 0.303 0.001 0.000 0.000
Planning control and execution 0.099 WS 0.658 0.455 0.539 0.164 0.297 0.016 0.005 0.009
0.099 MS 0.253 0.403 0.679 0.079 0.241 0.007 0.001 0.002
0.099 MP 0.089 0.143 0.679 0.079 0.241 0.001 0.000 0.000
Projects and IT implementation 0.275 IP 0.747 0.471 0.071 0.217 0.712 0.007 0.021 0.069
0.275 DA 0.189 0.406 0.071 0.206 0.723 0.001 0.004 0.015
0.275 MI 0.064 0.124 0.253 0.089 0.658 0.001 0.000 0.001
Corporate and intra-organisation alignment 0.556 L 0.736 0.455 0.065 0.197 0.738 0.012 0.037 0.137
0.556 EA 0.211 0.403 0.063 0.256 0.681 0.003 0.012 0.032
0.556 C 0.053 0.143 0.063 0.375 0.562 0.000 0.002 0.002
Integrated weight, W0 0.055 0.089 0.283
12 W.P. Wong et al.

Table 9. Leanness level (or lean indexes).

Lean Normalised
On-time index values
Alternatives delivery Quality Cost (Lindex) for (Lindex)

Weights 0.658 0.253 0.089


Process-focused 0.055 0.042 0.048 0.051 0.120
Human-focused 0.089 0.094 0.119 0.093 0.218
Socio-technical 0.283 0.292 0.252 0.283 0.662

experts’ (or managers’) opinion towards on-time Sensitivity analysis plot


delivery, cost and quality.
0.606
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0.506 Process-focused

Norm
5.1. Sensitivity analysis 0.406 Human-focused

Sensitivity analysis is important to validate the effec- 0.306 Socio-technical

tive use of any quantitative decision model (Agarwal 0.206


et al. 2006). In our research, sensitivity analysis is 0.106
0 5
implemented to find out the changes in the lean index
Row average
for process-focused, human-focused and socio-
technical paradigms with variation in the managers’ Figure 3. Sensitivity analysis on robustness of paradigms.
opinion in assigning the relative weights for the
determinants. Overall objective of sensitivity analysis
is to see the robustness of proposed framework due to unlike cost and quality which is more silo-typed
variation in the managers’ opinion in assigning the focused. Costs are affected by how well the process is
weights during comparison. Based on the interviews in control, hence it is more process focused. While
with the managers, we understand that the overall quality is associated with the capability of the process,
objective of the company is to improve on-time both (i.e. quality and process capability) are actually
delivery, which is an important market winning criteria affected by the skills and knowledge of the employees
in the semiconductor industry. Note that the results (e.g. if training was provided to the workers as
obtained from earlier section correspond exactly with continuous improvement efforts, this could lead to
the perception of the managers, that is more weight is higher quality of the product and services offered),
emphasised on on-time delivery, compared to cost and therefore, quality is more oriented towards human-
quality. Therefore, the determinant, on-time delivery is focused paradigm. Note that from Figure 3, if the
chosen as the variable. We further examine through relative weight given to on-time delivery if less than 5,
sensitivity analysis, if the weights given to on-time the socio-technical paradigm still remains as the
delivery varies, will the priority on the alternatives preferred environment for lean implementation.
paradigms change? This question is relevant because, Similarly, if the value is more than 5, the priority of
the weights were obtained from subjective judgements socio-technical paradigm does not change. Hence, it is
of the respondents, e.g., if a different group of senior pertinent to mention that to sustain lean performance
managers was interviewed, different relative weights in an organisation, the desired lean performance alone
will be obtained. cannot be achieved either by process or by human-
In the present ANP framework, managers have focused paradigm. Process and human paradigms are
assigned a relative weight of 5 to on-time delivery in not mutually exclusive, therefore proper combination
comparison with quality and cost on lean performance. of process and human which is the socio-technical
With this relative weight, the integrated lean index for paradigm is required to suit the need for sustainable
socio-technical lean environment is the highest fol- lean performance.
lowed by human-focused and process-focused (refer In a nutshell, the results as depicted in Figure 3
Table 9). This implies that when the perception of show that the socio-technical-based framework is
managers is more inclined towards on-time delivery in robust. The values of the leanness index in the socio-
comparison to quality and cost, they will prefer a lean technical paradigm do not significantly change with
environment to be socio-technical. Both social and variation in the opinion of decision-makers in assign-
technical aspects contribute towards on-time delivery, ing the weights. Further, the leanness values in this
Production Planning & Control 13

paradigm always supersede the values in other para- in the company. The preliminary version of the module
digms. This result exactly fits the perceptions of the had been presented to the managers. Although there
managers, hence the proposed framework is validated. were some minor resistance from the managers as they
It should also be noted that higher values of the lean thought that the framework was very complex, never-
index indicate better performance. From our analysis, theless, since the module was a very simple program
based on the current performance of the company, the with minimal space storage requirements, it was
leanness level varies between 0.5 and 0.6. accepted by the managers. Managers also accepted
the suggestion of monitoring the leanness level like a
cpk chart to know whether the lean level is in control
5.2. Implications or not. Being part of the main project under the
umbrella of ‘Lean Transformation Research’, this
From the academic perspective, this research has project together with the other four projects had
extended the theories of RBV and DCs to the area of significant impact in the lean transformation process in
lean operations, which to the best knowledge of the the organisation. In particular, the managers gave
authors had not been explored before. A lean perfor-
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feedback that it is much clearer now to the employees


mance framework was constructed using these under- what the focus of lean is and the integrated lean index
pinning theories and this framework has been has managed to align the different objectives of various
validated through the results obtained which were departments. There are less fire-fights and conflicts
coherent with the perceptions of the managers. Besides, among employees. All these create a conducive work-
the method used in this research is trans-disciplinary, ing environment, which eventually helps to prolong the
which combines the operational research technique lean behaviour among the employees. As such, the
e.g., ANP with the theoretical method i.e., using proposed measure is able to sustain the lean perfor-
grounded theories to prove an assertion or certain mance of the organisation. Further improvements on
assumptions. Hence, this innovative method will pave the module are still on-going. The improvements
the way towards the exploration of more trans- include enhancing the module with graphical user
disciplinary type of research in future. interface and extending the structures to include
From the practitioner perspective, it is proved measures of evaluating a lean supply chain.
through the validation with the managers that the
socio-technical paradigm-based framework is suitable
to model lean performance. Lean should be seen as a 6. Conclusion
direction, rather than as a state to be reached after a This research has provided an overall view of how
certain time and, therefore, the focus lies on the ANP can be applied for lean performance evalua-
collective decisions on rankings of all managers from a tion. The stand taken here is of an overall view of
socio-technical perspective, and not on the actual the organisation. The ANP methodology adopted
values of the individual determinants (performance here arrives at a leanness index, which is quite
indicators). The output from the model which is the useful for decision-makers engaging in performance
lean index serves as a measure to operationalise lean assessment. The purpose of the leanness index is to
implementation for sustainable performance through align the focus to sustain lean behaviour among the
creation of a common goal and a direction for the employees of the organisation. The ANP method-
employees to focus. To achieve sustainability, the lean ology is a robust technique for integrating the
index can be further monitored using the concept of various dimensions governing an organisation’s lean
statistical process control (SPC). The lean index values performance. It also allows a vivid framework to
can be recorded in a chart similar to the SPC charts. A be communicated to the decision-makers. The ANP
lower limit range can be imposed to monitor the lean approach captures the various criteria and their
level. For example, if the lower limit is set at 0.5, and if relationships as well as interdependencies across and
the value of the lean index is less than 0.5, this indicates along the hierarchies.
that the leanness level is out of control. This could be However, there are limits to the present research.
probably due to natural variations or unassignable The main limitation is that the focus presently is
cause (i.e. a particular problem). Hence, investigations broader and confines to a cross-sectional analysis of
should be carried out to find out the cause of leanness the firm. This means that performance evaluation
deterioration. By using such monitoring technique, monitoring between stages or time-based monitoring is
managers can sustain leanness performance. not modelled. Nonetheless, such capabilities can be
The proposed framework and methodology have easily extended and provided for in subsequent
been developed into a simple excel module for the users research.
14 W.P. Wong et al.

The second improvement could be in extending


the present ANP structure to include measures of Keng Lin Soh started teaching in
evaluating a lean supply chain. Taking from a more Universiti Sains Malaysia (USM),
in-depth perspective, an organisation may intend to Penang, Malaysia in 1995. He teaches
Operations Management, Quality
analyse the performance of its business unit in Management and Project
relation to the overall supply chain of the organisa- Management. He also supervises
tion. In such situations, sensitivity analysis can be undergraduate and graduate students
provided for each business unit, relative to the overall in research. The research topics that
company’s performance and supply chain. Another have come his way are lean
manufacturing, quality management, logistics and transpor-
aspect, of performance evaluation in a supply chain, tation. Keng Lin’s other responsibilities include that of
is in time-based monitoring decisions which can be introducing new courses into the operations management
readily automated, where performances are derived curriculum.
from lead time and stock levels. Hence, lean moni-
toring can be integrated with both subjective and
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objective data.
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