1 - Lean Indicators and Manufacturing Strategies

International Journal of Operations & Production Management
Lean indicators and manufacturing strategies

Angel Martínez Sánchez Manuela Pérez Pérez
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Angel Martínez Sánchez Manuela Pérez Pérez, (2001),"Lean indicators and manufacturing strategies",
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Lean indicators and Lean indicators
manufacturing strategies
Angel MartõÂnez SaÂnchez and Manuela PeÂrez PeÂrez
University of Zaragoza, Spain 1433
Keywords Lean production, Manufacturing strategy, Flexibility
Abstract Develops and tests an integrated check-list to assess manufacturing changes towards
lean production. Using the results from a survey to manufacturing plants located in the Spanish
region of Aragon, analyzes which lean production indicators are more used to assess the
company's improvements in their production systems, and the determinants on the use of these
indicators.
Introduction
Lean production is a conceptual framework popularized in many Western
industrial companies since the early 1990s. Initially, the publication of the book
The Machine that Changed the World (Womack et al., 1990) started the
diffusion of some lean manufacturing practices developed by the most
competitive auto manufacturers in the world. Thereinafter, lean production
was studied in other industries (Womack and Jones, 1996; Moore and Gibbons,
1997). Some scholars have even suggested that rapid change industries have
adopted lean production versus mass production as a growth paradigm
(Duguay et al., 1997).
The interest on lean production is mostly based on the empirical evidence
that it improves the company's competitiveness (Billesbach, 1994; Oliver et al.,
1996; Lowe et al., 1997). The primary goal to introduce any lean production
program in a shop, factory or company is to increase productivity, reduce lead
times and costs, improve quality, etc. (Sriparavastu and Gupta, 1997). However,
according to AhlstroÈm and Karlsson (1996) it is not always easy to justify the
implementation of a lean production program due to productivity decreases in
the early implementation stages which are strongly discouraged under the
traditional management accounting systems. Therefore, some intermediate
indicators are needed to assess the changes taking place in the effort to
introduce lean production. Some scholars, like Karlsson and AhlstroÈm (1996)
have developed operational models based on the conceptual framework created
by Womack et al. (1990) and on case studies in manufacturing companies.
Other scholars have studied the diffusion of lean production strategies within
manufacturing companies (Avella et al., 1999).
However there are almost no empirical studies which have analyzed the use
of intermediate indicators to assess manufacturing changes towards lean
production. This paper is intended to contribute to the empirical literature on
lean production with an study on the use of lean indicators by manufacturing International Journal of Operations &
companies. Following the work of Karlsson and AhlstroÈm (1996), a check-list Production Management,
Vol. 21 No. 11, 2001, pp. 1433-1451.
model with 36 indicators is introduced founded in the literature and tests the # MCB University Press, 0144-3577
IJOPM model in a sample of manufacturing firms. The paper will add empirical
21,11 support to other surveys' results on the use of production indicators.
Another contribution of this paper is to the knowledge and diffusion of
Balance ScoreBoards. This technique requires the use of production
management indicators to establish an operative link between the company's
strategic vision and the employees' actions and jobs (Kaplan and Norton, 2000).
1434 However very little is known about the relationship between the use of
production indicators and the company's competitiveness. This paper is a first-
stage analysis in the search to find which indicators are the most used by
manufacturing companies. Later another follow-up study will check the
causality or the transformation process in implementing production indicators
to evaluate a company's competitiveness.

The paper is structured in the following way: the next section briefs the
model and the lean production indicators; the third section shows the results of
a survey to manufacturing companies on the use and usefulness of the
indicators; finally, some concluding remarks and future work to be undertaken
are included.
A lean production check-list

Lean production is a conceptual framework based on a few established
principles and techniques. Some of them affect exclusively the production
department, while others integrate several company functions. Even though
the implementation of these elements should be made gradually (Zayco et al.,
1997; AhlstroÈm, 1998), the proposed check-list assumes an integrated approach.
Figure 1 shows the basic structure of the assessment model according to the
most common lean production principles found in the literature. There are six
groups of indicators. Each group derives from common basic lean production
practices which contribute to improve the company's performance. No one
Figure 1.
A lean production model
company tries to implement all these groups at the same time as they do it step Lean indicators
by step. However, we assume that a company will eventually adopt all these
practices. Then the company will need a comprehensive check-list to assess
changes towards lean production.
The number of indicators in the check-list has been kept to a minimum. The
purpose is to make the model simple to use for small and medium sized
manufacturing firms. Some of these indicators have already been proposed in 1435
Karlsson and AhlstroÈm's model. Others were found in the literature on lean
production. Each indicator has been defined in order to be more quantitative
than qualitative, simple to understand and use, and based on user control
magnitudes (Neely et al., 1997). The next paragraphs briefly describe each
check-list group before testing their application in a sample of manufacturing
companies.
Elimination of zero-value activities

One of the main goals of lean production is the elimination of everything that
does not add value to the product or service (Womack and Jones, 1996). Though
this sort of activities may exist, and in fact do, in all the areas of the company,
the model only makes reference to the manufacturing activities. The reason is
that industrial companies usually eliminate first waste activities in the
manufacturing area. Therefore, Table I only enumerates indicators related to
zero-value activities in the manufacturing area.
Inventories are one of the main sources of inefficiency in industrial
companies. Generally, the storage does not add value to the product and it
should be eliminated whenever possible. There are several production
techniques that contribute to reduce inventories: one of them is to reduce the
time machines are standing due to breakdowns and malfunction through a
preventive and predictive maintenance (Suzuki, 1995); another technique is the
simultaneous reduction of manufacturing lot sizes and set-up times (Shingo,
1990); a third technique is the use of common parts to manufacture different
products in order to reduce inventories and lead times as well (Shen and
Wacker, 1997). Furthermore, inventories also hide other problems on many
occasions, preventing their solution like, for example, a defective maintenance
Indicator Definition Change
EF1 Percentage of common parts in company products "

EF2 Value of work in progress in relation to sales #
EF3 Inventory rotation "
EF4 Number of times and distance parts are transported #
EF5 Amount of time needed for die changes #
EF6 Percentage of preventive maintenance over total maintenance " Table I.
Lean production
Note: "The indicator should increase to progress to lean production. #The indicator should indicators of zero-value
decrease to progress to lean production activities elimination
IJOPM that forces the accumulation of stocks to prevent bottlenecks in the machines
21,11 which break down frequently.
Another source of zero-value activities is the transport of parts within the
company. This activity does not add value to the product either, but increases
lead time, which therefore is somehow essential to reduce. A useful technique is
the re-layout of machines in flexible cells, which eliminates the frequency of
1436 movements among machines and reduces the investments in handling systems
(Dominguez, 1995). Finally, a variable regarding the preventive maintenance
has also been included because it improves the performance of a just-in-time
(JIT) production and delivery system (Savsar, 1997).
Continuous improvement
Another lean production feature is the search for continuous improvement in
products and processes (Oakland, 1993). This process requires the involvement
of all production employees and the support of top management. Both are
necessary to create improvement teams (for example, quality circles) and to
train those workers. Table II shows the check-list indicators of continuous
improvement. The number of suggestions per employee and year is a basic
measure of the change towards this objective, while the percentage of these
suggestions that are eventually implemented in the company values the top
management support and the quality of the suggestions. Another technique
used in the search for continuous improvement is the involvement of
production line workers in the identification and adjustment of defective parts,
in order to prevent such defective parts arriving at the quality control
department. In some factories the workers may even give a warning to stop the
production line or do it himself or herself, to avoid any defective parts moving
along the next production stage (Hirano, 1990). Therefore, a lean production
factory should have fewer quality control employees.
Multifunctional teams
Work organization in multifunctional teams greatly facilitates task rotation
and flexibility to accommodate changes in production levels. A study of Italian
MC1 Number of suggestions per employee and year "

MC2 Percentage of implemented suggestions "
MC3 Savings and/or benefits from the suggestions "
MC4 Percentage of inspection carried out by autonomous defect control "
MC5 Percentage of defective parts adjusted by production line workers "
MC6 Percentage of time machines are standing due to malfunction #
Table II. MC7 Value of scrap and rework in relation to sales #
Lean production MC8 Number of people dedicated primarily to quality control #
indicators of
continuous Note: "The variable should increase to progress to lean production. #The variable should
improvement decrease to progress to lean production
manufacturing companies (Forza, 1996) found that lean production companies: Lean indicators
used more teams in problem solving, that the workers performed a higher
variety of tasks, and that the proportion of implemented suggestions was
higher than in non-lean production companies. However, the increase in the
number of tasks accomplished by each worker requires the company to take a
greater training effort on quality control, maintenance and so on. Boyer (1996)
in an study of 200 American manufacturing companies found that lean 1437
production companies invested more in training and facilities to make teams
work properly. Other studies also found this positive relationship between
training and lean production (Hancock et al., 1998; Hampson, 1999).
In addition to a greater training effort, the implementation of multifunctional
teams requires the potential workers to overcome resistance to increase the

number of tasks they perform. The training makes this adjustment easier but
there must be some changes as well in the compensation system in order to
remunerate explicitly this new flexibility (Karlsson and AhlstroÈm, 1995). It is
worth noting that teamworks do not only assume productive tasks but also
indirect tasks like maintenance or handling materials. The purpose is to reduce
indirect labour costs while transfering this responsibility to production line
workers.
Table III enumerates the indicators used to assess changes towards
multifunctional teams. The first indicator ± percentage of employees in
teamworks ± is the usual measure related to an early success or failure of this
program (Sillince et al., 1996). Other indicators related to the structure of the
teamwork that have not been included by reasons of simplicity are the
reduction in the number of job categories after the workers are integrated into
the teams, and the reduction in the number of hierarchic levels within the
manufacturing area after middle managers' responsibilities are assumed by the
leaders of the teamworks (Lowe, 1993). The last indicator (EQ5) is useful to
later stages of lean production implementation when team leaders are not
elected by company's managers but by their own co-workers (Amelsvoort and
Benders, 1996; Huerta and Villanueva, 1997).
JIT production and delivery

JIT philosophy implies the delivery of any part in the necessary quantity and
at the right time. This practice is widely adopted among first-tier suppliers in
EQ1 Percentage of employees working in teams "

EQ2 Number and percentage of tasks performed by the teams "
EQ3 Percentage of employees rotating tasks within the company "
EQ4 Average frequency of task rotation "
EQ5 Percentage of team leaders that have been elected by their own team " Table III.
co-workers Lean production
indicators of
Note: "The indicator should increase to progress to lean production multifunctional teams
IJOPM the automotive industry: for example, in an study of Spanish automotive
21,11 suppliers, it was found that 63 percent of the surveyed companies delivered
parts at least once a day (AlaÂez et al., 1996). JIT delivery has been a key
element in the development of lean production in many companies (Hines,
1996).
A few important changes are necessary to reach this degree of flexibility.
1438 Some of them have already been included in the check-list of zero-value
activities. For example, set-up times reduction also contributes to the reduction
of lead times (Gilmore and Smith, 1996). Similarly the integration of the
automation equipment with the production information system is positively
correlated with the success of JIT performance (Yasin and Wafe, 1996). Then
Table IV only enumerates those specific indicators regarding JIT production

and delivery.
One of the implications of JIT production and delivery is the reduction of lot
sizes because it contributes to the reduction inventories and lead times. This
change towards JIT production and delivery is made gradually and therefore
two of the indicators in Table IV make reference to the percentage of
production that is delivered just-in-time to the next production line stage (P4),
or the percentage of deliveries that is received just-in-time (P2).
There are different development levels within a JIT production or delivery
system. For example, that an automotive supplier delivers components in the
same sequence that they will be assembled in the automakers' production line,
is a greater advance towards lean production than a company which delivers
components without any sequence. This is why another of the indicators (P3)
assesses the degree of integration between the supplierÂs delivery program and
the customer's production program.
Integration of suppliers
The integration of suppliers is a lean production feature that influences several
departments like R&D or logistics. Some scholars (Dyer, 1996) have shown the
competitiveness that the automakers derive from some specific buyer-supplier
relationships with their first-tier suppliers. This section of the check-list
(Table V) deals primarily with the supplier involvement in information and
P1 Lead time of customers' orders #

P2 Percentage of parts delivered just-in-time by the suppliers "
P3 Level of integration between supplier's delivery and the company's "
production information system
P4 Percentage of parts delivered just-in-time between sections in the "
Table IV. production line
Lean production P5 Production and delivery lot sizes #
indicators of JIT
production and Note: "The indicator should increase to progress to lean production. #The indicator should
delivery decrease to progress to lean production
Indicator Definition Change Lean indicators
I1 Percentage of parts co-designed with suppliers "
I2 Number of suggestions made to suppliers "
I3 The frequency with which suppliers' technicians visit the company "
I4 The frequency with which company's suppliers are visited by "
technicians
I5 Percentage of documents interchanged with suppliers through EDI "
1439
(electronic data interchange) or Intranets
I6 Average length contract with the most important suppliers "
I7 Average number of suppliers in the most important parts # Table V.
Lean production
Note: "The indicator should increase to progress to lean production. #The indicator should indicators of suppliers
decrease to progress to lean production integration
component design, as the previous section has already dealt with the delivery
integration of suppliers.
The suppliers can play a significant role in the customer's components
design. The main advantage to the customer from the supplier's involvement in
component design is that it may help to shorten prototype development times,
and therefore to reduce costs and gain competitive advantage in the market.
When the suppliers are not involved in component design, the manufacturer
has to invest extra time and resources to solve any problem their suppliers will
encounter when manufacturing a part they have not designed. On the other
hand, the supplier has more time to provide for production problems and to
innovate (Cusumano, 1994). The check-list assesses the degree of supplier
involvement with the percentage of parts designed under a buyer-supplier
cooperation (I1), and with the number of suggestions made to the company's
suppliers (I2).
The other group of check-list indicators deals with information exchange,
measured by the number and length of visits and stays by engineers and
technicians between a manufacturer and their suppliers (I3 and I4), and the
number and value of the documents interchanged with suppliers (I5). An
increase in these indicators also represents a change towards lean production
because it reduces inefficiencies and eliminates activities that are not value
added (Banerjee and Srivam, 1995). For example, Dyer (1994) found an inverse
relationship between the number of man-days of face-to-face contacts among
engineers' manufacturers and suppliers, and two variables: the number of
defects by vehicle and the development time of a new model.
Similarly, the use of EDI gives more advantages to the companies with Just-
in-Time production and delivery systems than to those companies without them
(Banerjee and Golhar, 1993). Finally, another result of supplier involvement is
the reduction in the number of suppliers and the increase in length-contracts for
the main components (Cusumano and Takeishi, 1991; Sohal and Egglestone,
1994); this greater stability in the contracts allows the suppliers to reduce lot
production sizes and to increase the frequency of deliveries (Dyer, 1996).
IJOPM Flexible information system
21,11 Lean production implies a decentralization of responsibilities to production line
workers and a decrease of the hierarchic levels of the company. The efficient
operation of a lean organization requires the diffusion of information to all
levels (Womack et al., 1990; Womack and Jones, 1996). The aim is to deliver
timely and useful information down to the production line. The content of that
1440 information must be as much strategic as operational. The strategic
information type deals, for example, with the company's production plans or
sales forecast, while the operational information may be related to the factory's
productivity or quality performance. In the same way, the production
information system should allow the operation of the different factory sections
or groups of machines to integrate between them and with the production
planning department. Table VI enumerates the indicators related to the flexible
information system.
Methodology and sample of study

To test the degree of aplication of this check-list, a mail survey was carried out
among automotive and industrial machinery manufacturing companies of the
Spanish region of Aragon during the first quarter of 2000. The population
sample included 107 companies with more than 50 employees. Small firms with
less than 50 employees were excluded from the study because these companies
are less likely to adopt lean production practices such as multifunctional teams
or JIT production. The automotive and machinery industries were chosen
because other studies indicate that they are the most intensive adopters of JIT
and other lean production techniques (Womack and Jones, 1996; Sriparavastu
and Gupta, 1997; Sohal and Egglestone, 1994). As a consequence there should
be a greater diffusion of lean production related concepts and techniques within
these industries than in the others.
First, each company's operation managers was contacted by phone to
explain the aim of the study. Twelve companies declined to join the survey due
to confidentiality reasons. Upon agreement with the remaining 95 companies a
questionnaire was mailed to each company's operation manager. After a
follow-up by phone and a second mailing, a total of 41 useful questionnaires
were received. In the final sample, 12 companies had more than 250 employees
S1 The frequency with which information is given to employees "

S2 Number of informative top management meetings with employees "
S3 Percentage of procedures which are written recorded in the company "
S4 Percentage of production equipment that is computer integrated "
Table VI. S5 Number of decisions employees may accomplish without supervisory "
Lean production control
indicators of flexible
information system Note: "The indicator should increase to progress to lean production
and the other 29 companies were small and medium sized firms with more than Lean indicators
50 employees. The statistical distribution of the questionnaires received by
industry and company size indicates that there are not significant differences
with the original population.
The survey had three objectives. First, to get to know the use and usefulness
of these check-list indicators. Second, to obtain the relationships between
indicators that would establish a dependence relationship between the lean 1441
production practices on which those indicators are based and measured. And
finally, to analyze the influence that the company's manufacturing objectives
has on the use of lean production indicators.
Results and discussion

Use of indicators
Table VII shows the descriptive statistics on the use of each indicator by the
surveyed companies, as well as the importance or usefulness given by users and
non-users to control lean production changes with this check-list. The three
more used indicators (in more than 80 percent of the companies) were: the time
needed for set-ups and die changes (EF5); the percentage of production
procedures documented in the company (S3); and the value of defective products
and materials in relation to sales (MC7). The indicators less used (in fewer than
20 percent of the companies) were: the number of decisions employees can make
without consulting their supervisors (S5); the percentage of parts co-designed
with the suppliers (I1); and the percentage of team leaders that have been elected
by their own team co-workers (EQ5). Regarding the six groups in the check-list,
the most average used is the elimination of inefficiencies (70.73 percent of
average use) followed by continuous improvement (60.98 percent), while the less
used is the involvement of suppliers (36.24 percent).
Table VII also shows the percentages of use of each indicator according to
the size of the company. It was expected that larger companies would use more
these indicators more than the smaller companies because some lean
production practices ± flexible information systems or JIT production- require
investments in information technologies and reengineering that companies
with few resources cannot afford. Most of the indicators are more used in large
companies that in the small and medium sized companies. These differences
are significant at the 99 percent level in two indicators: rotation of inventories
(EF3) and the percentage of employees in teams (EQ1). The other three
indicators with significant differences at the 95 percent level are: the value of
work in progress in relation to sales (EF2), the percentage of time machines are
standing due to malfunction (MC6), and the percentage of parts co-designed
with suppliers (I1).
With respect to the importance or usefulness of the check-list indicators,
Table VII shows that the three most important indicators in the surveyed
companies were: the inventory rotation (EF3); the lead time of customers'
orders (P1), and the percentage of production procedures that are
documented in the company (S3). This last indicator was also one of the
IJOPM three most used by the companies. The three less valued indicators were: the
21,11 average length contract with the most important suppliers (I6); the number
of decisions that employees may accomplish without supervisory control
(S5); and the percentage of team leaders elected by their own
1442 Use in small Degree of Degree of

Use (% and medium Use in large Degree of usefulness by usefulness by
Indicator firms) sized firms companies usefulness non-users users
EF1 73 77 64 3.54 3.36 3.62

EF2 76 65 93** 3.61 2.80 3.87***

EF3 76 62 100*** 3.80 3.20 4.00**
EF4 63 65 60 3.29 2.87 3.54*
EF5 85 81 93 3.44 2.00 3.69***
EF6 51 50 53 3.10 2.60 3.57***
MC1 66 62 73 3.20 3.36 3.11
MC2 61 58 67 3.15 3.00 3.24
MC3 56 54 60 3.29 3.06 3.48
MC4 44 35 60 2.83 2.17 3.67***
MC5 49 42 60 3.37 2.90 3.85***
MC6 76 65 93** 3.71 2.70 4.03***
MC7 80 77 87 3.51 2.38 3.79***
MC8 56 54 60 2.80 2.00 3.43***
EQ1 63 42 100*** 3.20 2.93 3.35
EQ2 59 54 67 3.32 2.76 3.71***
EQ3 63 58 73 3.05 2.27 3.50***
EQ4 27 19 40 2.22 2.00 2.82***
EQ5 5 3 6 1.83 1.82 2.00
P1 68 77 53 3.76 2.92 4.14***
P2 49 50 47 3.17 2.71 3.65***
P3 39 38 40 3.15 2.76 3.75**
P4 32 23 47 2.98 2.54 3.92***
P5 54 50 60 3.15 2.37 3.82***
I1 17 7 33** 2.39 2.18 3.43***
I2 34 35 33 2.51 2.15 3.21***
I3 63 65 60 2.85 2.20 3.23***
I4 54 50 60 2.66 1.95 3.27***
I5 32 27 40 2.37 1.89 3.38***
I6 20 23 13 2.12 1.70 3.88***
I7 34 23 53* 2.44 2.07 3.14***
S1 68 69 67 3.27 2.62 3.57***
S2 73 77 67 3.07 2.18 3.40***
S3 83 81 87 3.71 3.00 3.85*
S4 37 38 33 2.93 2.38 3.87***
S5 17 23 6 1.83 1.53 3.29***
Notes: The definitions of the indicators can be found in Tables I to VI. The percentage of
Table VII. use is over the total number of companies in each group. The degree of use of each indicator
Percentage of use and has been valued with a five-step Likert scale from 1 (not important) to 5 (very important).
degree of importance of The differences of means in the degree of use and importance have been tested with the
different indicators t-student test ± *p<0.1 **p<0.05 ***p<0.01
co-teamworkers (EQ5). These two last indicators were also less used by the Lean indicators
surveyed companies.
The two columns on the right of Table VII indicate that, in all but a few
indicators, the different value given to each indicator by user and non-user
companies is significant at the 99 percent level. On the other hand, the degree of
usefulness was greater in the large companies than in the small and medium
sized companies for almost all the indicators, but the differences were only 1443
significant at the 99 percent level for the following indicators: EF3 (inventory
rotation), MC1 (employee suggestions), MC6 (machinery malfunction time),
EQ1 (employees in teamworks) and P3 (delivery supplier integration).
Relationship of lean indicators

After quantifying the use and importance of each lean production indicator in
the surveyed companies, Table VIII shows the results of a contingency analysis
to test 12 dependence relationships. We assume the hypothesis that the degree
Chi-square Likelihood
Hypothesis of indicator relationship test ratio
1. The frequency with which suppliers' technicians visit the 55.27*** 49.39***
company (I3) ± the frequency with which company's suppliers
are visited by technicians (I4)
2. Percentage of employees working in teams (EQ1) ± number 35.48*** 30.42***
and percentage of tasks performed by the teams (EQ2)
3. Percentage of common parts in company products (EF1) ± 21.11** 22.96***
percentage of parts co-designed with suppliers (I1)
4. Percentage of parts co-designed with suppliers (I1) ± number 25.68** 20.06*
of suggestions made to suppliers (I2)
5. Percentage of parts delivered just-in-time by the suppliers (P2) 22.81** 23.58**
± level of integration between suppliers' delivery and the
company's production information system (P3)
6. Percentage of preventive maintenance over total maintenance 25.96* 30.68**
(EF6) ± percentage of time machines are standing due to
malfunction (MC6)
7. Lead time of customers' orders (P1) ± percentage of parts 25.40* 28.62**
delivered just-in-time between sections in the production line (P4)
8. Percentage of documents interchanged with suppliers through 26.12* 23.70*
EDI or intranets (I5) ± percentage of production equipment that
is computer integrated (S4)
9. Number of suggestions per employee and year (MC1) ± Savings 25.21* 20.80
and/or benefits from the suggestions (MC3)
10. Number of suggestions per employee and year (MC1) ± 17.60 19.07*
percentage of implemented suggestions (MC2)
11. The frequency with which information is given to employees 15.91 18.24
(S1) ± number of suggestions per employee and year (MC1)
12. Percentage of team leaders that have been elected by their own 8.87 11.44
team co-workers (EQ5) ± number of decisions employees may Table VIII.
accomplish without supervisory control (S5) Contingency analysis
between different lean
Note: Level of significance ± *p<0.1 **p<0.05 ***p<0.01 production indicators
IJOPM of usefulness of an indicator is an indirect measure of the actual degree of
21,11 diffusion of that lean production technique in the company. Therefore if we test
the dependence interrelationship between two indicators we will be indirectly
testing the joint application of two lean production techniques.
Three of the hypotheses tested have a significant dependence at 99 percent,
and four other hypotheses at 95 percent. The results for the other hypotheses
1444 indicated that the relationship of dependency is very weak or non-existent. The
first relationship with a strong dependency is between the technical visits and
assistance to and from the suppliers. This implies that between these
companies and their suppliers there is a two-way technology flow which
suggests a joint approach to the resolution of technical problems. The second
strong relationship is between the percentage of employees in teamworks and

the number or percentage of tasks accomplished by the teams. This
relationship suggests that there is a progressive transfer of functions and
responsibilities as the teamworks grow in number within the manufacturing
area. Finally, the third relationship is between modularity (percentage of
common parts in the company's products) and supplier involvement in
component design, which suggests that the supplier involvement is greater in
those companies whose product modularity is also greater.
There are four pairs of indicators which are dependent at the 95 percent
level. First, the percentage of parts co-designed with the suppliers is strongly
valued in those companies that also valued cooperation with their suppliers
through technical assistance. This relationship suggests that companies which
involve their suppliers in component design are initially or eventually more
active as well in technology transfer with those suppliers. The involvement in
component design is usually a late stage in a buyer-supplier relationship. Once
both buyer and supplier have developed a trusting relationship they start to get
involved in technological innovations.
The fifth significant relationship in Table VIII means that the integration
between the supplier's delivery system and the manufacturer's MRP system
facilitates JIT delivery. Some of the automotive suppliers surveyed had
integrated their MRP system with the automaker's in order to reduce lead times
and inventories. Similarly the seventh relationship links customers' orders lead
time with the percentage of parts delivered JIT between sections in the
production line. As stated before, those surveyed companies which adopted JIT
techniques mainly did it to reduce lead times.
Finally, another significant relationship at the 95 percent level ± hypothesis
number six ± establishes that companies which are interested in reducing the
time machines are standing due to malfunction, are also devoted to increase the
percentage of preventive maintenance over total maintenance. Preventive
maintenance reduces machines' malfunction and breakdowns and therefore
there must be a dependence between both practices of continuous improvement
and inefficiencies reduction.
Two other relationships were tested but they were not found significant. The
number of suggestions made by employees and the amount of information they
received was not significant maybe because this information was not related to Lean indicators
the type of suggestions. The percentage of team leaders elected by their own
team co-workers and the number of decisions employees may accomplish
without supervisory controls were not related indicators either, maybe because
both types of decentralization measures do not have to be implemented at the
same time but separately.
1445
Determinants of the use of lean production indicators
Once that the use and usefulness of the check-list indicators have been
evaluated and their dependence relationship has been tested, the last section
of the paper analyzes the determinants of the use of the lean production
indicators with the company's age, size and manufacturing focus. The
company's age was measured by the number of years that the company had
been in operation, while the company's size was measured by the number of
employees. The manufacturing focus was valued asking the operation
managers to distribute 100 points among the objectives of cost, quality,
flexibility and lead time ± according to their relative importance in the
company's manufacturing strategy ± and calculating the standard deviation
of those values. When a company scores 25 points to each dimension the
standard deviation would be zero and it will indicate no manufacturing focus
whatsoever.
It was expected that the company's age was negatively correlated with the
average use of indicators because lean production implies organizational and
layout changes, which are costlier in an older factory. The older the factory, the
smaller number of indicators will be used because lean production will be less
implemented. On the contrary, it was expected that the relationship between
company size and average use would be positive because the largest companies
have more skills and resources to adopt some of the techniques involved in lean
production. Finally, the hypothesis established for the manufacturing focus
was a positive relationship because some of the indicators already suggest a
manufacturing focus such as the value of scrap for manufacturing operations
focused on quality. Table IX shows the results of the regression analysis
carried out to test these hypotheses. The variables behaved as expected but no
one was significant.
Given the lack of adjustment of the proposed model, a logistics regression
was also made for each indicator. The dependent variable has been the use of
Strategic
Constant Age Size focus
Coefficient 0.468*** 0.009 0.002 0.030

t-student 6.32 0.46 1.51 0.72 Table IX.
R = 0.28 R2 = 0.079 F = 1.05 p = 0.38 n = 41 Lineal regression on
the average use of lean
Note: ***p<0.01. Source: Own elaboration indicators
IJOPM each indicator as a dummy. The independent variables have been the
21,11 company's age and size, as well as the four manufacturing objectives of cost,
flexibility, quality and lead time. This last variable has been operated as a
dummy with 0 when the value of the manufacturing objective is 25 points or
less, and 1 if the value is higher than 25 points. The logistics regression has also
been carried out using directly the valuation assigned by the companies to each
1446 manufacturing objective, but the results show the same significant variables.
Table X shows the results of the logistics analysis. The table only includes the
independent variable(s) which enter(s) into each indicator model, as well as the
model's goodness of fit.
The results from Table X indicate that only 18 indicators had at least one
significant explanatory variable (the significant variables obtained were the

same even if the strategic focus was taken as a dummy or as a numerical
variable). Most of these variables are manufacturing objectives. For
example, the use of the percentage of inspection carried out by autonomous
defect control (MC4) seems to be possible in companies with a manufacturing
focus on quality, while the use of the percentage of time machines are
standing due to malfunction (MC6) is obtained in companies which focus on
lead time.
Significant
independent
Indicators variable Wald value Goodness of fit Chi-square
EF2 Size 3.21* 36.26 6.85***

EF3 Size 3.19* 34.28 6.78***
MC4 Quality 7.93*** 41.00 8.94***
MC6 Lead time 4.12** 40.99 6.19**
MC8 Lead time 4.85** 41.00 5.17**
EQ2 Flexibility 3.81** 40.99 4.65**
EQ3 Cost 5.60** 41.00 7.17***
EQ4 Quality 6.34** 41.00 7.99***
P2 Quality 5.20** 41.00 5.59***
P3 Quality 10.89*** 41.00 13.62***
P4 Cost 5.62** 40.99 9.12***
P5 Quality 5.39** 41.00 5.87**
I1 Size 5.95** 41.59 7.48***
I2 Lead time 4.31** 41.00 4.57**
I4 Quality 5.39** 41.00 5.87**
I7 Quality 5.01** 40.99 5.49**
S1 Lead time 5.56** 40.99 6.08**
S3 Quality 3.99** 41.00 5.64**
Note: The logistics regression has been carried out by introducing step by step the
variables that are significant and fulfill the entry and exit criteria of the Wald and Rao
Table X. statistics. The variables of each model have been: as dependent variable the use of each
Logistics regression of indicator as a dummy; as independent variables the factory age (number of years in
lean production operation), the size (number of employees), and the four manufacturing objectives ± cost,
indicators quality, flexibility, and lead time ± as dummy variables. *p<0.1 **p<0.05 ***p<0.01
Quality was the most influential manufacturing focus in the use of indicators Lean indicators
because it explained the use of eight lean production indicators. Lead time was
the second strategic dimension of importance (four indicators), while the less
important were cost (two indicators) and flexibility (one indicator). Quality
explained for example the use of the percentage of inspection carried out by
autonomous deficit control (MC4). Companies which gave more importance to
quality as a production objective, were using more intensively this indicator 1447
since it emphasizes the employees' control over the production process to avoid
the circulation of defective parts.
Lead time explained the use of such indicators as the percentage of time
machines are standing due to malfunction or the percentage of components

delivered just-in-time. Companies with a reduced lead time must control any
possible breakdown because it would delay deliveries. They should also put
pressure on their suppliers to reduce delivery times which would reduce their
own.
Flexibility explained the use of the number and percentage of tasks
performed by the teams (EQ2). Companies which used this indicator are those
that had a strategic focus on flexibility because teamworking for design and
production is actually a way to introduce functional flexibility in the company's
workforce. On the other hand, the strategic dimension of cost explains the use
of two indicators: the percentage of employees rotating tasks within the
company, and the percentage of parts that each production line section delivers
Just-in-Time to the next one. Task rotation allows such problems as
absenteeism to be overcome with smaller costs while JIT production reduces
cost inventories.
Production indicators and manufacturing strategies

Following these results, we can discuss the importance of various indicators for
developing manufacturing strategies for different types and sizes of
organization. Future work should analyze the causality link between the use of
production indicators and the company's competitiveness. In the mean time, we
can propose some relationships based on the results from previous paragraphs
that may be useful to the development of a Balance ScoreBoard for
manufacturing companies.
Table XI lists those indicators which have been found previously significant
and that appeared in Tables VIII and X. We have associated each production
indicator with at least one manufacturing objective dimension. If a positive
relationship was found between the use of two indicators (Table VIII), the
second indicator was also included in the same manufacturing objective group.
This way we are able to design integrated groups of indicators according to
each manufacturing objective. Companies that emphasize a specific objective in
their manufacturing strategies may find it useful to include those indicators
belonging to that manufacturing objective in their manufacturing information
and control system.
IJOPM For example, companies with a manufacturing emphasis on flexibility
21,11 should control the percentage of employees working in teams, and the number
and percentage of tasks performed by those teams. Further research would
have to study if there is a positive relationship between the increase in the
number of employees and tasks performed in teams, and the company's
flexibility and competitiveness. Regarding the company size, Table VII showed
1448 that the percentage of employees working in teams was an indicator
significantly more used in larger companies than in small and medium sized
firms.
Due to the lack of significant differences in the use of indicators between
large and small companies (see Table VII), almost all indicators proposed in
the ScoreBoard of Table XI may also be found suitable for small and medium
sized companies. Even though Balance ScoreBoards are being implemented
mainly in large and multiplant companies, small companies are also in need of
manufacturing information systems. Therefore these small companies could
also integrate and follow up the evolution of the indicators proposed in Table
XI to control their operations according to the specific manufacturing
objective.
Concluding remarks
This paper has tested the use of a check-list model by a sample of
manufacturing companies. The model includes 36 indicators to assess changes
towards lean production proposed from a review of the literature. The
indicators have been classified into six groups: elimination of zero-value
activities; continuous improvement; team work; JIT production and delivery;
suppliers' integration; and flexible information system.
The paper had three objectives: to evaluate the use of lean production
indicators, to analyze some relationships between the use of these indicators,
and to study the influence that the company's manufacturing objectives have
on the use of lean production indicators. These three objectives were achieved
by the paper's descriptive analysis. First, we measured the degree of use of
each indicator with a five-step Likert scale. Sixty percent of lean indicators
Quality Flexibility Lead time Cost
MC4 EQ2 MC6a EQ3

EQ4 EQ1a MC8 P4
P2 I2 P1
P3 S1
P5 I1a
Table XI. I4 EF6
ScoreBoard indicators I7*
to be taken into S3
account for each
manufacturing Note: adenotes which indicators were found to be more used in larger companies than in
objective small firms
were used by more than half of the surveyed companies, and 17 percent were Lean indicators
used by more than 75 percent of the companies. As it was expected, the results
showed that the average use and the degree of importance of most indicators
was significantly greater in the large companies than in the small and medium
sized firms. Some lean production practices ± i.e. flexible information systems
or JIT production ± require resources that smaller firms cannot afford.
The second achieved objective was to test a positive relationship between 1449
the use of some lean production indicators. The strongest pair of relationships
were: the technical visits and assistance to and from the suppliers; the
percentage of employees in teamworks and the number or percentage of tasks
accomplished by the teams; and the modularity and supplier involvement in

component design. Other pairs of indicators were positively related as well
although less significant. The implications of these results are useful for
companies interested in establishing a Balance ScoreBoard. The development
of production indicators which are related to the company's competitiveness is
an important issue in the creation of a Balance ScoreBoard since these
indicators are links between the top management strategic vision and the
employees' actions and operations plans.
Following these results, additional work should be undertaken in order to
analyze the relationship between the use of these ± and other ± indicators and
the company's competitiveness. Even more, little is known about the
correlation between the joint use of these lean production indicators. If the use
of some indicators is somewhat redundant, this information should be taken
into account to design reliable groups of indicators. Those groups which
contribute positively to a company's competitiveness should be sequentially
analyzed and controlled.
The third and last objective of the paper was to analyze the influence of the
company's manufacturing focus on the use of lean production indicators. Four
manufacturing objectives were included in this analysis: quality, lead time,
flexibility and cost. Even though the company's age and size were also included
as independent variables, only manufacturing objectives showed up as
explanatory variables for most indicators. This result is a good starting point
to a further study on the relationship between the use of indicators and the
company's competitiveness. A manufacturing focus on quality or any other
dimension is one of the main determinants of competitiveness for many
industrial companies. Therefore, analyzing the relationship between
manufacturing focus and production indicators is one of the gaps to be filled in
order to develop Balance ScoreBoards in the manufacturing area. Besides and
according to these results, the paper proposes that some production indicators
should be included in the company's manufacturing information system.
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1 - Lean Indicators and Manufacturing Strategies

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International Journal of Operations & Production Management

Lean indicators and manufacturing strategies

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Lean indicators and Lean indicators

to evaluate a company's competitiveness.

A lean production check-list

Elimination of zero-value activities

Indicator Definition Change

EF1 Percentage of common parts in company products "

Indicator Definition Change

MC1 Number of suggestions per employee and year "

teams requires the potential workers to overcome resistance to increase the

JIT production and delivery

Indicator Definition Change

EQ1 Percentage of employees working in teams "

Table IV only enumerates those specific indicators regarding JIT production

Indicator Definition Change

P1 Lead time of customers' orders #

Methodology and sample of study

Indicator Definition Change

S1 The frequency with which information is given to employees "

Results and discussion

1442 Use in small Degree of Degree of

EF1 73 77 64 3.54 3.36 3.62

EF2 76 65 93** 3.61 2.80 3.87***

Relationship of lean indicators

strong relationship is between the percentage of employees in teamworks and

Coefficient 0.468*** 0.009 0.002 0.030

significant explanatory variable (the significant variables obtained were the

EF2 Size 3.21* 36.26 6.85***

machines are standing due to malfunction or the percentage of components

Production indicators and manufacturing strategies

Quality Flexibility Lead time Cost

MC4 EQ2 MC6a EQ3

accomplished by the teams; and the modularity and supplier involvement in

Lowe, J. et al. (1997), ``High-performance manufacturing: evidence from the automotive

Applications 38:8, 10454-10461. [CrossRef]

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EF2 76 65 93 3.61 2.80 3.87*