Organisational Change Management Framework for Lean Manufacturing Implementation

Transcription

1 15-ICIT 26-28/7/11 in Malaysia ST-2: Enterprise Innovation for SD Paper #: P-1 of 6 Organisational Change Management Framework for Lean Manufacturing Implementation Norani Nordin Department of Technology Management, College of Business, Universiti Utara Malaysia rani@uum.edu.my Baba Md Deros 1, Dzuraidah Abdul Wahab 2, Mohd Nizam Ab. Rahman 3 Department of Mechanical and Materials Engineering, Faculty of Engineering and Built Environment, Universiti Kebangsaan Malaysia hjbaba@eng.ukm.my 1, dzuraida@eng.ukm.my 2, mnizam@eng.ukm.my 3 ABSTRACT Lean manufacturing system has been widely applied in manufacturing companies worldwide. However, the low rate of success towards the lean transformation in many countries has given a cause of concern. Many literatures had pointed out that the main reason is due to the failure in managing the change process during lean manufacturing transformation. This paper attempts to develop a framework for lean manufacturing implementation. The framework is of particular significance not only because it is about lean manufacturing, but it is set in a context of process change in lean manufacturing transition. This study employed an explanatory mixed method approach, which began with survey distribution, and then the general picture was further refined by conducting in-depth interviews on Malaysia automotive companies. The quantitative and qualitative results shows that the key factors to smooth lean manufacturing transition are: change readiness, leadership and management, change agent system, team development and empowerment, communication, and review system. This stream of lean implementation efforts are the basis of the development of organisational change framework in lean manufacturing implementation. This framework may add to the body of knowledge for both academics and practitioners. At the theoretical level, the framework has important strengths because it explicitly framing the relationship between change management and lean manufacturing implementation. Failure to recognize the required organisational changes to adapt lean manufacturing system will hinder the long-term benefits to the organisation. The framework also may provide practitioners with a better understanding on the lean transition process to minimize resistance and conflicts and thus improve its chance of success. Keyword: lean manufacturing, organisational change, mixed method research, framework development. 1.0 Introduction Today, change is not an exception but a steady going process. As change has its own impact on both processes and people, thus attention is required. Organisational change management is a practice that ensures the personal elements are aligned with the business strategy, technology and business process. Jones et al. (Jones, 2007) defined organisational change as the process by which organisations move from their present state to some desired state to increase their effectiveness. Whereas, Greenan et al. (Greenan, 2003) pointed that organisational change is the change in the distribution of power, skills, information or communication with the changes in the distribution of skills and in skill requirement. It is suggested that, if a company is to change to a lean organisation, the company also needs to change the way they value the different dimensions of work.

2 15-ICIT 26-28/7/11 in Malaysia ST-2: Enterprise Innovation for SD Paper #: P-2 of 6 The change to lean manufacturing system is a radical process and not an easy task (Smeds, 1994). Lean manufacturing represent a holistic approach to change. In order to create the foundation for lean manufacturing to take hold, a significant organisational change must occur within the organisation. According to Narang (2008), the process of lean transition requires significant changes in the functions of the company. In the analysis of managing the change towards a lean enterprise, Smeds (1994) mentioned that lean transition requires emergent strategy. This emergent strategy emerges when the environment of the organisation becomes recognised and legitimised. Changes that requires in lean manufacturing can be divided into four categories as suggested by Cao et al. (Cao et al., 2000). Table 1 show the changes requires during the transition to lean manufacturing. Table 1: Organisational Changes Required in Lean Manufacturing Implementation Categories in Changes in lean manufacturing organisational change Changes in process Application of the full set of lean tools, multi-skilled worker. Changes in function, coordination and control relationship with suppliers and customers, information Teamwork building, cross-functional movement, network transparency, participative management, teamwork rewarding. Changes in values and Teamwork, open communication and information sharing, human behaviour Changes in power within the organisation continuous improvement culture, knowledge learning and sharing. Decentralised responsibilities, autonomous leadership. So far, there is little discussion about the link between the organisational change management and lean manufacturing implementation. In fact, one of the major challenges of lean implementation is guiding the change journey as detailed in the implementation plan. This is because lean manufacturing requires change in structure, system, process and employee behaviour (Narang, 2008). This idea leads to the necessity for more research for the successful implementation of lean manufacturing process where the organisational change is effectively managed. Therefore, we need to understand what is the nature of organisational change in lean manufacturing and what are the elements needed to ensure the successful implementation of lean in a manufacturing firm. The aim of this paper is to develop a framework for lean manufacturing implementation. Hopefully, the manufacturing firms will benefit from this study by using the lean manufacturing implementation framework in their pursuit to becoming more efficient and competitive in the market place. 2.0 Research methods For this study, an explanatory mixed method design was employed, where the organisational change factors in lean manufacturing implementation were first investigated by quantitative method and then further explained by qualitative approach. In this design, the quantitative and qualitative data were collected sequentially, where the first phase was survey distribution and then followed by in-depth interviews to help explain or elaborate on the quantitative results. The advantage of this research design is the quantitative data and results provide a general picture of the research problem; and then more analysis is done through qualitative data collection that will refine, extend and explain the general picture (Leech & Onwuegbuzie, 2009). Survey In this stage, a questionnaire was developed for data collection. In order to achieve the objectives of the study, the Malaysian automotive manufacturing companies were selected as the target population. The list of the manufacturing companies consists of electrical, electronic, metal, plastic, rubber and other automotive components. The manufacturing companies involved in this study were ranged from medium to large companies, with more than 50 employees. The decision made in this study is based on the studies done by Shah and Ward

3 15-ICIT 26-28/7/11 in Malaysia ST-2: Enterprise Innovation for SD Paper #: P-3 of 6 (2003), Bonavia and Marin (2006), and Perez and Sanchez (2000). From their studies, it is shown that small manufacturing companies are less likely to implement lean manufacturing concepts due to certain limitations and barriers. The personnel involved in the survey were those from managing directors, manufacturing and/or production managers and executives, and also quality managers and executives. The questionnaire consisted of four parts: (a) the background information of the organisation (year of establishment, ownership, number of employees, and quality system certification); (b) the lean manufacturing implementation (lean practices implementation,); (d) the organisational change factors and (d) the respondent information (job title, department and years of employment). In the case of reliability test, all the results proved the survey instrument have high internal consistency with Cronbach s alpha values 0.70 and therefore it is reliable. Case study Three Malaysian automotives manufacturing companies were chosen for the indepth interview. These companies were selected based on their willingness to participate and experience in implementing lean initiatives. The authors prepared the data collection by first contacting each company to be studied to gain their cooperation, explained the purpose of the study, and recorded the key contact information. A semi-structured interview guide was developed upon a common case study protocol inferred from the review of literature, and quantitative survey done prior to the case study. The interview protocol was developed to probe the lean manufacturing implementation and organisational change efforts in each case company To improve the research reliability, the same interview protocol was used to different interviewees for triangulation purposes. The need for triangulation arises from the ethical need to confirm the validity of the data obtained (Yin, 1993). The interview subjects are questioned with regard to their actual experiences. The interviews were conducted for approximately two hours for each respondent. They involved key personnel in the company that are directly involved in the implementation of lean manufacturing as shown in Table 2. Table 2: Summary Of The Case Companies Background Company A Company B Company C Type of product Electronics Metal Electrical Company age (years) Company ownership Foreign Local Joint Venture Company size Large Large Large Lean effort 3.0 Results and Discussion 1996 (1 st attempt), 2002 (2 nd attempt) 2004 (1 st attempt), 2007 (2 nd attempt) Aug 2009 The baseline for organisational change in quantitative analysis involved the Kendall s tau correlation coefficient and Kruskal-Wallis test. The Kendall s tau correlation coefficient displayed statistically significant positive relationship of organisational change factors with lean clusters. The result also indicates that lean companies can be associated with higher organisational change factors especially production team (r=.464). Followed by effective communication (r=.441), and leadership and management support by middle management (r=.422). Another important finding of this quantitative study is the Kruskal-Wallis test result on organisational change factors in lean clusters. The result showed there are statistically significant differences of organisational change factors in different type of lean clusters. The qualitative data gained from interviews conducted has resulted with seven categories and 28 child nodes. Those categories included change readiness, leadership and management, communication, change agent system, team development, workers empowerment, and review system. The highest percentage of keyword coverage among the interviews was change

4 15-ICIT 26-28/7/11 in Malaysia ST-2: Enterprise Innovation for SD Paper #: P-4 of 6 readiness. This revealed that change readiness should be applied comprehensively to facilitate smooth lean manufacturing transition. Among the initiatives suggested and implemented by the interviewees were create awareness of lean manufacturing, give ample attention and time for change process, and create sense of need and urgency. Next categories followed by change agent system, workers empowerment, and team development. These findings further support the survey results which indicate that the highest correlation is between the lean clusters and production team. 4.0 Framework development Figure 1: Proposed Organisational Change Framework in Lean Manufacturing Implementation Based on the insights that have been identified through the mixed-method research discussed in previous sections, the Organisational Change Framework in lean manufacturing implementation has been developed. The proposed change framework has two interacting cycles: readiness for change, and implementing change as shown in Figure 1. Before a company is ready for change, a sense of urgency need to be established. The pressure to change to lean manufacturing system could have arisen from domestic and international markets pressures for competitive products. The competitive products require technical improvement, quality improvement and the cost reduction (Sohal & Egglestone, 1994). Therefore, it is the responsibility of the Top Management to ensure Needs for Change are well communicated and established, in order to create the sense of urgency to change to lean manufacturing system. For the change to take hold and success, the organisation and the people who work in that organisation must be ready for the transformation. The readiness for change can be addressed by identifying and understanding the Need for Change, having clear and consistent Vision and Strategies, and creating a strong Change Agent Team. It is suggested that the Top Management should create and communicate the Vision and Strategies that everyone in the company can relate. Strong leadership are capable of exhibiting excellent program management styles, permeates vision and strategy for change program, and could highly motivate the workforce (Achanga et al., 2006; Stewart, 1998). Next, in creating the readiness to change is the development of strong Change Agent System. This Change Agent System is a system to assist the translation of change process so that lean manufacturing concepts could be understood by all people in the company. The role of lean change agent is crucial as most of the employees are not familiar with the new lean work environment, and it requires a behavioural and mindset change due to the different expectation for performance and value (Herron & Braiden, 2007;

5 15-ICIT 26-28/7/11 in Malaysia ST-2: Enterprise Innovation for SD Paper #: P-5 of 6 James, 2006; Jorgensen et al., 2007). Therefore, it is important that those who lead the change projects should have the skills, competencies and aptitude to implement lean manufacturing. Following clarity on readiness for change, the next step of the company should do is to take up and implement the lean tools and techniques or Processes. Liker and Hoseus. (2008) pointed out that the main purpose of lean tools is to highlight and identify the wastes or problems within the organisation. When the root cause is identified, it is possible to continuously improve the system. Since lean manufacturing is known as a system, the tools and techniques of this system cannot be adopted in isolation. All the techniques in lean manufacturing are developed to support the implementation of lean principles and overall organisation s strategy (Herron & Braiden, 2007; Melton, 2005). As the top circle of the proposed framework more engaging the strategic alignment, the lower circle stresses on the needs to be understood, measured and approved. The Implementing Change is very crucial in lean manufacturing. The implementation of change must be aligned with the operational issues, so that people in the company can understand how they will affect and what must be done to address the challenges in the organisation. Effective Communication, Employees Empowerment, and System and Control are the essential sources for lean success. Effective Communication by information transparency, knowledge sharing, continuous learning and continual evaluation of lean effort will ensure the smooth transition to lean manufacturing system. In the next stage, the Workers Empowerment of lean culture can be nurtured through training, motivation and reward system (Balle, 2005; Dahlgaard & Dahlgaard-Park, 2006). Appropriate training on concept and basic principles, and reasons of lean could give greater level of understanding of lean and encourage motivation and innovation in the work culture and employees attitudes (Crute et al., 2003; Lee-Mortimer, 2008). The next step is System and Control. The ability to quantify the effort and progress towards lean should enable more successful and longer lasting change. The elements that usually been monitored and analysed are performance measurement, communication system, business and physical processes, and improvement records (Bhasin, 2008; James, 2006; Melton, 2005). The framework lower circle closes when the steps return to the Processes, for it is smooth organisational change which make the processes work or not, resulting in sustainable lean manufacturing implementation. When the change management process has been successful, the company typically absorbs the change. Taking another trip round the circles will verify the change process and anchoring lean manufacturing in the culture, where changes have become part of the way we do things around here. Organisational change should be seen as a dynamic process, and lean manufacturing should be regarded as intended direction, rather than a steady state. Lean manufacturing represents a unique culture that grows and improves with time. For the transformation towards lean system, people should have a better understanding about lean and also need to be aware about the organisational change management principles. 5.0 Conclusion This framework represents a road map, which a manufacturing company could use as a guide towards successful implementation lean manufacturing implementation. However, the organisational change framework needs additional verification and testing, in order to ensure to identify whether the factors that need to be taken into account in engaging lean manufacturing implementation are applied.. Often practitioners are very keen to implement lean manufacturing system especially Small and Medium Enterprises (SMEs) but there exhibits a lot of uncertainty to the process of implementation. Failure to recognize the required organisational changes to adapt lean manufacturing system will hinder the long-term benefits of the organisation. The framework of organisational change is intended to provide practitioners with a better understanding of the lean transition and a clear guidance to minimize the resistance and conflicts for the implementation of lean and thus improves its chance of success.

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