Development of a Structural Model with Prioritizing and Ranking of Vital Enablers for Successful Adoption of Lean Production System in Indian SME

Abstract

In today's competitive global business environment, every businesses must refine their manufacturing strategies to survive and thrive. Among various manufacturing strategies, the Lean Production System (LPS) stands out as a key strategy and applicable across industries of all sizes. Key benefits of LPS include the elimination of non-value-added activities, reduced cycle time, enhanced product quality, increased productivity, and cost reduction. Though large organizations in India have demonstrated greater awareness and adoption of LPS, the successful story on adoption of LPS in SME are very meagre and this is mainly due to non-availability of structured model (or conceptual model/framework) for SME. To address this research gap, four objectives: (i) to identify all the unique enablers/factors which are expected to impact the LPS implementation and to determine the vital enablers that act as significant enablers in LPS adoption in SME, (ii) to develop an initial micro level structural model, considering the vital enablers determined for successful adoption of LPS in SME, (iii) to validate and finalize the proposed initial micro level structural model, and (iv) to prioritize and rank the vital enablers involved in proposed structural model are addressed in this study. The initial objective of this study is addressed in two phases. The 1st phase involves a comprehensive analysis of the literature on LPS within SME mainly to identify all unique relevant enablers. Accordingly, 32 unique enablers are identified. To manage the enablers comfortably while adopting LPS in SME, Pareto analysis is carried out in the 2nd phase and determined 16 vital factors based on cumulative percentage of occurrences in the literature. As part of the 2nd objective, considering 16 vital enablers identified through Pareto analysis, a macro-level structural model is developed using the Total Interpretive Structural Modelling (TISM) approach with the data collected from 25 experts through a questionnaire. Further, the driving and dependency power of these enablers is determined using Cross impact matrix multiplications applied to classification (MICMAC) analysis. Utilizing both MICMAC and TISM approaches, the House of Lean Production System (HoLPS) is developed for highlighting the hierarchy level of the vital enablers considered in this study. For validating the proposed macro level conceptual model, the required measurement variables for each of the vital enablers are considered using both review of literature and brainstorming technique. Using the measurement variables, the proposed macro level structural model is extended and is termed as the proposed micro-level structural model for adopting LPS in SME. Descriptive research method is employed for validating and finalizing the proposed micro-level structural model for the successful adoption of LPS in SMEs in Objective 3. For this, specifically, (a) an instrument is developed and finalized by carrying the required pilot study, (b) finalized questionnaire is distributed to entrepreneurs and employees of textile spinning SME in Tamil Nadu using simple random sampling method for collecting the primary data; (c) the primary data collected from 300 respondents is used mainly to (i) perform Confirmatory Factor Analysis (CFA) for assessing how well the identified measurement variables represent the vital enablers, (ii) understand the statistical significance of each of the relationships between the vital enablers existing in the proposed micro-level framework, (iii) confirm the statistical significance of the relationships existing in the proposed micro-level framework for its totality using the Structural Equation Modelling (SEM) approach. The final objective involves the application of Integrated Multi-Criteria Decision-Making (MCDM) methods: AHP and BWM, to rank and prioritize the vital enablers, assuming the vital enablers considered are independent to each other. For this, the required data is collected from 30 experts across industry and academia and the vital enablers considered are ranked and prioritized through the integrated MCDM methods. From the proposed structural model, MICMAC analysis and the developed HoLPS, it is observed that the vital enablers: financial capability, commitment and support from top management, effective leadership, effective communication, and continuous improvement are the key enablers for successful LPS adoption. Further, from the ranking and prioritizing of the vital enablers, it is observed that the vital enablers: commitment and support from top management, a shared improvement vision, effective leadership, effective communication, and financial potential are the top five critical enablers. From these, managers are advised to prioritize these enablers, utilizing the HoLPS model as a guide to strategically integrate lean practices and enhance organizational performance. The study has two limitations: a limited sample size considered, and a specific SME sector and region only considered, which may affect the generalizability of the results. Further, the research did not consider emerging technologies. With this, the future research will include a broader sample size across various sectors and regions, exploring the impact of emerging technologies such as Industry 4.0, IoT, and AI, and examining the integration of LPS with other management practices like Total Quality Management (TQM) and Agile methodologies.