Critical Success Factors for Lean Transformation: An Empirical Study in a Tier-Structured Supply Chain in Auto-Component Industry in India

Lean transformations are considered to reduce the time from customer order to delivery by eliminating sources of waste in the production flow. Furthermore, many other benefits have been associated with lean manufacturing, which includes increased flexibility, more profitability, enhanced efficiency, decreased costs of production, enhanced customer satisfaction, more just in time production, ergonomic betterment for the workers, elevated reliability of products, universality of the concept. In recent time, lean has been considered as the new manufacturing paradigm because lean management is viewed as a managerial approach focused on enhancing customer value through the elimination of non-value adding steps from work processes. However, research on lean implementation showed poor results, with less than 10% of the companies achieving sustained success. It is clear that though lean is being studied from various perspectives, there is still a big gap in terms of identifying the critical success factors which would combine the operational aspects, leadership elements and the other softer elements such as organizational culture. Moreover, numerous challenges towards adopting lean practices and its implementation have been observed. In India, despite the interest in both industry and academia, lean manufacturing continues to be a mirage. Therefore, developing the understanding on the factors that influence lean transformation becomes essential. The present study assessed the critical success factors for lean implementation in a lean supply chain context. A conceptual framework was formulated based on the extant literature and hypotheses were developed. Understanding of lean concepts, tier structure and organizational hierarchy were determined as the independent variables and perceived performance and actual performance of the organization were adopted as dependent variables. Furthermore, organizational culture and leadership style were adopted as moderating variables. The study adopted a positivistic research philosophy along with a descriptive and explanatory research purpose. A quantitative research method was chosen where structured questionnaire was used for data collection. The target population for the present study were the leaders of Indian auto industry which have undergone lean transformation. The questionnaire, after modifying based on a pilot study, was sent to 220 leaders, out of which 207 of them completed the full questionnaire with a response rate of 94.09%. The respondents were majorly 31- to 40-year-old males with a bachelor’s degree in engineering, working as managers in the selected organizations with one to 10 subordinates working under them, representing the middle hierarchy, and a work experience of more than five years. Exploratory factor analysis for the various factors showed that for the understanding of lean concepts, the subfactor of organization was most significant in explaining the total variance, followed by leadership and flow, while for leadership styles, integrity followed by sensible risk, and encourages innovation were highly significant, and flow followed by productivity and quality in perceived performance. The hypotheses testing was conducted by using linear regression, Process macro, and structural equation modelling (SEM), whichever was deemed fit to derive meaningful inferences. The linear regression analysis revealed that understanding of lean concepts has a statistically significant influence on overall actual performance. Out of the various subfactors of understanding of lean concepts, there is a significant influence of ‘Training’ and ‘Productivity’ on actual performance. The study findings further demonstrated that understanding of lean concepts had a significant impact on perceived performance. In addition, PLS-SEM model showed that the impact of the tier structure of the organization instead of the organizational hierarchy showed a statistically significant impact on the understanding of lean concepts. Also, leadership styles positively impact the actual performance of the organizations and organizational culture exerted a significant impact on the actual and perceived performance. Furthermore, the moderating role of organizational culture on the impact of understanding of lean concepts on actual performance and perceived performances were found to be significant. Moreover, it was found that there were significant levels of moderation by leadership styles on the relationships between understanding of lean concepts on actual performance as well as on perceived performances. Based on the findings, the present study provided theoretical, practical and societal implications. In addition, the limitations of the present study and future scope was extensively discussed.
Keywords: Lean transformation; Organizational culture; Leadership styles; Actual performance of companies; Perceived performance of companies; Organizational hierarchy