AUTOMOTIVE INDUSTRY IN MALAYSIA: SUSTAINING LEAN IMPROVEMENTS (SLI)

LEAN IMPROVEMENTS

For more than 40 years, lean manufacturing techniques have been achieving outstanding success rates. First in Japanese plants, and now in advanced factories throughout North America, it has proven to be a cost effective and flexible approach to achieving superior customer satisfaction (Kivell, 2012). Hence, this paper’s proposed that SLI depends on three aspects such as standards work (Murphy, 2001; Foschi, 2009; Graban, 2009), employee involvement (Cabrera et al, 2003; Jones and Kato, 2005) and continuous improvement (Pay, 2008; Terziovski and Sohal, 2000; Schlichting, 2009) which have adopted the conceptual proposed by Schlichting (2009). However, some amendments constructs have been made based on this paper’s proposed.

Standards work is the current one best way to safety completes an activity with the proper outcome and the highest quality (Graban, 2009). Taiichi Ohno is often quoted as declaring that improvement will be occurring while applying a standard work. Tim Whitmore, Vice President of Consulting Services at Simpler Consulting, elaborates on this quote by saying that the principles of lean do not work well when everyone is allowed to choose their own work method or work sequence in which to do a job: the outcome is unpredictable; flow and pull are impossible (Schlichting, 2009 cited in Whitmore, 2008). Many researchers have done their study in this area. For instance, a study by Murphy (2001) makes a research in incentives which has focused on performance measures and pay-performance sensitivities but has largely ignored the performance standard, which generates important incentives whenever plan participants can influence the standard-setting process. According to Murphy (2001), internally determine standards are directly affected by management actions in the current or prior year, while externally determine standards are less easily affected. The finding showed that companies using budget based and other internally determined performance standards have less-variable bonus payouts and are more likely to smooth earnings, than companies using externally determined standards.

With reference to previous studies related to employee involvement definition, Apostolou (2000) concluded that employee involvement is regarded as a unique human being, not just a part in a machine and each employee is involved in helping the organization meet its goals. Each employee’s input is solicited and valued by management. Currently most researchers agree that employee involvement is one of the major causes of the increase in running the business. This is clearly supported by Cabrera et al. (2003) results, which showed a highly significant positive relationship between competition and employee involvements. Besides that, it may also be due to the fact that employees that are in direct contact with the customer are more aware of their needs and, therefore, have valuable information regarding how to better serve the client. Thus, organizations will be able to improve their customer service, if the employees are involved in the decision making process. This is also coincides with another author like Jones and Kato (2005). This is because, Jones and Kato (2005) presented an econometric case study for employee involvement on manufacturing firm performance. One of the findings showed that employee involvement will produce improved enterprise performance through diverse channels such as: (i) membership in offline teams initially enhances individual productivity by about 3% and rejection rates by about 27%; (ii) these improvements are dissipated, typically at a rate of 10 to 16% per 100 days in team; (iii) the introduction of teams is initially accompanied by increased rates of downtime and these costs diminish over time. In addition: (iv) the performance-enhancing effects of team membership are generally greater and more long-lasting for team members who are solicited by management to join teams whereas the cost of team membership (increased downtime) is smaller and diminishes more rapidly as team members engage in learning by doing for such solicited members; similar relationships exist for more educated team members.

Furthermore, continuous improvement, also known as kaizen event, is arguably the most critical of SLI. The concept behind continuous improvement is that changes are made and continually improved upon. Although perfection will never be achieved, the goal is to continue reaching for it through small improvements. Evidence showed that numerous organizations that have deployed continuous improvement initiatives have not been successful in getting what they set out to achieve. Results of a 2007 survey of US manufacturers showed that while 70% of plants had deployed lean manufacturing techniques, 74% of these were disappointed with the progress they were making with lean (Pay, 2008). However, the advantages of continuous improvement have been found in previous literatures. The data analysis from Terziovski and Sohal (2000) revealed that the motivation to adopt continuous improvement is relate to improve quality conformance, increase productivity, to reduce costs and improvement in delivery reliability. Schlichting (2009) has also identified the advantages of continuous improvement namely: (i) reduce the cost; (ii) move towards the goal of regaining profitability; (iii) reducing transportation; (iv) eliminate the waste of waiting; and (v) decrease the utilization.

In conclusion, based on the current findings above, standard work, employee involvement and continuous improvement are a foundational element of SLI methodologies. Without these, the gains made from organizing work cells, creating flow production, and starting continuous improvement teams will only be temporary.