Impact of lean practices on operations performance and business performance: Some evidence from Indonesian manufacturing companies

Abstract

Purpose

This study aims to investigate the relationship between lean practices, operations performance (OP), and business performance (BP).

Design/methodology/approach

This survey-based study was a cross-sectional study. The samples were drawn by using stratified random sampling procedure from large Indonesian manufacturing companies based on the directory provided by the Data and Information Center of Indonesian Ministry of Industry with the final number of respondents of 139. Four main hypotheses were developed and tested statistically by applying multivariate data analyses.

Findings

The results provided evidence that lean practices should be implemented holistically. Lean practices have a positive and significant impact on both OP and BP. Moreover, OP partially mediates the relationship between lean practices and BP.

Research limitations/implications

The data used in this survey represent self-reporting by mainly the middle or top management in production.

Practical implications

This study contributes to the lean manufacturing (LM) body of knowledge by identifying the relationships between the LM practices, OP, and BP. Understanding these relationships will help practitioners in making better decisions in manufacturing organizations as well as enable application of the concepts in this study to other contexts such as service organizations.

Originality/value

Although there are a growing number of anecdotal and empirical evidences in favor of LM in manufacturing environment, there has been almost no theory-building and methodologically rigorous research examining the link between LM, OP, and BP. This study is addressed to fill this gap.

Citation

Nawanir, G., Kong Teong, L. and Norezam Othman, S. (2013), "Impact of lean practices on operations performance and business performance: Some evidence from Indonesian manufacturing companies", Journal of Manufacturing Technology Management, Vol. 24 No. 7, pp. 1019-1050. https://doi.org/10.1108/JMTM-03-2012-0027