Relationships Between Operations Strategy and Lean Manufacturing: an Exploratory Study
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African Journal of Business Management Vol. 7(5), 344-353, 7 February, 2013 Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM12.811 ISSN 1993-8233 ©2013 Academic Journals Full Length Research Paper Relationships between operations strategy and lean manufacturing: An exploratory study Edgard Rasquini Arnas1, Ana Beatriz Lopes de Sousa Jabbour2* and Patrícia Saltorato1 1Industrial Engineering Department, UFSCar - Sao Carlos Federal University, Sorocaba, São Paulo, Brazil. 2Industrial Engineering Department, UNESP - Univ Estadual Paulista, The Sao Paulo State University, Bauru, Sao Paulo, Brazil. Accepted 19 December, 2012 This paper analyzes the relationships between the competitive priorities of operations and the principles and enablers of lean manufacturing, identifying and understanding the existence of different degrees of implementation of lean manufacturing’s principles and enablers for different competitive priorities. Using two exploratory case studies conducted in 2010 with operations managers from Brazilian auto part manufacturers it was concluded that although some of lean manufacturing’s principles and enablers have similar impacts on two or more competitive priorities, the competitive priority costs requires a greater degree of implementation of lean manufacturing's principles and enablers than the competitive priority quality, creating an allusion to the sand cone theory of competitive priorities. Key words: Lean manufacturing, operations strategy, competitive priorities, auto part manufacturers, case study, Brazil. INTRODUCTION One of the organizations’ key element of success is the and Fernandes (2005) in the most recent literature on alignment of their strategies and their tactics operations management, there are many programs that (Laosirihongthong et al., 2010). In other words, for an propose helping companies remain competitive, for organization’s success, the strategic guidelines (or example, lean manufacturing, responsive manufacturing, business objectives) should guide program choices agile manufacturing, world class manufacturing, mass (production practices) and these should contribute customization, among others. towards the organization’s operational performance. Literature on operations strategy underscores the These objectives are guided by two aspects in importance of investing in Lean Manufacturing (LM) initia- accordance with Womack (2006): what needs to be done tives to improve a company’s operational performance to satisfy clients; and what needs to be done to survive (Pont et al., 2008). Cua et al. (2001), Rho et al. (2001), and prosper as a business. Shah and Ward (2003), Pont et al. (2008), Gebauer et al. Operations strategy, based on competitive priorities, (2009), Mackelprang and Nair (2010) and Rahman et al. translates the clients’ needs to be met by the operations (2010) identified the relations between competitive management function, in order to satisfy them (Slack and priorities and some LM principles and enablers, that is, Lewis, 2003). And there are a series of decision areas to the use of LM principles and enablers will eventually support the competitive priorities that include issues contribute towards improved organizational performance. related to operations management. According to Godinho However, thus far, little has been discussed in literature about the relations of the degree of implementation of LM principles and enablers needed to achieve different competitive priorities. Therefore, this study tries to *Corresponding author. E-mail: [email protected], answer the following question: is there a difference in the [email protected]. degree of implementation of LM principles and enablers Arnas et al. 345 for different competitive priorities of operations manage- ments in physical installations and which are irreversible. ment? And, if this difference exists, how can it be justified The infrastructural decisions describe the systems, in literature? In this sense, this paper tries to identify and policies and practices that determine how structural understand, through two case studies at automotive aspects of organization are managed. companies, specifically the auto part segment, if there According to Voss (1995), the content of operations are differences in the degree of implementation of LM strategy also has a logical hierarchy of decisions. The principles and enablers used by these companies to definitions of competitive priorities act as guidelines for support their competitive priorities and, if yes, how this structural decisions and these guide the infrastructural fact can be explained. decisions. Thus, there is an important dependency in This study is presented as follows: First, the literature terms of competitive priority format because they review on operations strategy, lean manufacturing and its determine the best way to specify and mix structural and relations are discussed; the research methodology is infrastructural production resources. explained; also, characterization of the studied com- Many authors recognize four competitive priorities: (a) panies and presentation of the case studies results are the quality offered in products and services, (b) speed so discussed; and lastly, research conclusions. the product processing time and delivery can be shorter than the competition, (c) flexibility to adapt to changes in demand or production processes, and (d) lower costs LITERATURE REVIEW than the competitors (Ward et al., 1996; Devaraj et al., 2004; Wang and Cao, 2008). Hill (1993) classifies the Operations strategy priorities into two criteria of performance: Hayes et al. (2008), in a top down perspective, define (a) Order winning criteria – which contribute directly and strategy in three different levels: Corporate, business and significantly towards the business and winning an order. functional. At the highest level, corporate strategy defines This is what makes the client give preference to its the markets in which the corporation wants to enter and product or service over the competition; how it acquires and allocates the resources fundamental (b) Order qualifying criteria – which may not be the main to the activities. At the second level, the business determining factors for competitive success, but they strategy is associated with each unit, division or product determine the minimum performance that criterion should line, specifying the business scope, positioning itself in have for the company to be considered by the client. the sector to achieve and maintain a certain competitive advantage. At the last level, the functional strategies There are three perspectives for understanding define how each department/area will contribute towards competitive priorities found in literature: trade-offs, business strategy. cumulative (or sand cone) and integrative, the latter being The operations management function and, conse- a perspective that tries to integrate characteristics from quently, operations strategy have great potential for the first two. creating a competitive advantage for companies (Skinner, According to the trade-offs perspective suggested by 1969). According to Hayes et al. (2008), operations Skinner (1969), the keys to operations strategy success strategy is a set of goals, policies and self-imposed are in the identification of the priority choices, restrictions that describe how the organization plans, understanding that there is incompatibility between directs and develops all the resources invested in the competitive priorities, implying the choice of one priority operations management function to better fulfill its to the detriment of others. Thus, focusing resources on mission. Leong et al. (1990) deal with the studies that certain objectives reduces their availability to others, involve operations strategy in terms of content or creating trade-offs whereby a factory cannot be excellent process. The content is the series of decisions made in all performance criteria. within the domain of operations strategy, while the However, Hayes et al. (2008) defend the idea that a process means the means through which the operations company can reach superior performance in several strategy is formulated. This paper aims at studying the competitive priorities, with some reinforcing the others, content of operations strategy, since this is more rather than functioning as trade-offs. This approach was common in literature. discussed in the studies by Ferdows and De Meyer The content of operations strategy is defined by the (1990), where the authors raised evidence through a competitive priorities and decision areas (Voss, 1995). study with 167 companies, underscoring that it is possible The competitive priorities represent the performance to obtain good performance in all competitive priorities competences on which the operations management through a sequence over time in a cumulative manner. function will focus to meet the needs of the target clients. They make an analogy with a sand cone, where the sand These decision areas are divided into structural and represents the various action programs implemented infrastructural. According to Hayes and Wheelwright gradually. They created the perspective of a cumulative (1984), the structural areas refer to long-term invest- implementation model for the competitive priorities based 346 Afr. J. Bus. Manage. on the quality priority (first layer of sand) and at the top, those LM ideas that guide an action or decision towards the cost priority (last layer). Thus, the company would