Impact of lean strategy on operational performance: a study of Thai manufacturing companies

Abstract

Purpose – The purpose of this paper is to examine the extent to which lean management practices are adopted by manufacturing organizations in Thailand and their impact on firms' operational performance. Design/methodology/approach – Using a survey questionnaire, data were collected against 13 lean practices from 187 middle and senior managers belonging to 187 Thai manufacturing firms. Using factor analysis these lean practices were then clustered into three higher level constructs namely just in time (JIT), waste minimization and flow management. The responding firms were categorized into small and medium enterprises (SMEs) and large enterprises (LEs) based on size and Thai-owned, foreign-owned and joint venture firms based on ownership. The multiple regression models were employed to investigate the effects of three lean constructs on operational performance in different categories of firms. The operational performance is measured by four parameters such as quick delivery compared to competitors, unit cost of products relative to competitors, overall productivity and customer satisfaction. Findings – The results indicate that all three lean constructs are significantly related to operational performance. JIT has a higher level of significance in LEs compared with SMEs, whereas for waste minimization there is a higher level of significance for SMEs compared with LEs. Flow management has a much lower level of significance for both SMEs and LEs. With respect to ownership, JIT is highly significant to operational performance for all three ownership groups (Thai, foreign and joint venture). Foreign-owned companies show a higher level of significance on operational performance for both waste management and flow management than Thai and joint venture companies. Originality/value – The paper provides insights into the adoption of lean practices in an Asian context and using survey data as opposed to case studies, and provides further evidence that lean practices are significant in enhancing operational performance.