Implementing Lean techniques within micro-enterprises: a case of Cedar Labels

1. POMS 2017, Seattle, WA 28th Annual Conference Implementing Lean techniques within micro-enterprises: a case of Cedar Labels Lauren Kate Minshull Dr Benjamin Dehe

2. Introduction / Background This is the golden age for small firms(Lord Young, 2015) Micro firms dominate small business and have been increasing rapidly since 2001 >90% of UK private sector businesses in 2013 were micro-firms (Lord Young, 2013) Contributing to 33% of employment and 18% of the countries turnover (House of Commons, 2015) However, they often lack structures, resources, long term strategies and continuous improvement mechanisms (Haksever,1996, Kuratko et al, 2001; Nwankwo, 2000) Moreover, quality management research in micro organisations is very limited (Kuratko et al, 2001; Nwankwo, 2000; Prasad & Tata, 2009)  This research delves into the implementation of Lean techniques (5S, SMED, JiT and TPM) within a micro-manufacturing in the UK

3. Micro Organisations Micro organisation has less than 20 employees and less than £2m turnover, a small organisation as less than 100 (Haksever, 1996; Matlay, 1999) Micro organisations contribute to 53% of jobs in the EU and have a large role in generating income and employment (European Commission, 2013; Liberman-Yaconiet al, 2010) Their characteristics are: low profit margin; cash flow issues; limited training and staff development; informal quality controls; narrow customer base; lack of power over suppliers; lack substantial resources and flexibility to promote continuous improvement (Vickers ,1990)

4. Quality Management within Micro Organisations ‘Total quality isn’t just for the big guys’ (Crosby,1988; Shea & Gobeli, 1995) Micro and small firms can apply QM principles just as well as the larger firms (Cook et al.,1998; Barrier, 1992; Prasad & Tata, 2009). However, due to the lack of the specific skills and knowledge of QM and Lean there are doubts and scepticism (Haksever,1996) and, the results and improvements promised from their implementations have not been achieved in micro organisations (Nwankwo, 2000)

5. Lean thinking There are multiple definitions of Lean (Bhamu& Sagwan, 2014). Lean is a methodology, composed of a set of tools, techniques, systems and principles enabling a firm to reduce waste, streamline processes and implement CI in order to enhance performances (Womack et al., 1990; Rawabdeh, 2005; Bamford et al., 2015) Significant improvements in lead times, quality, productivity, customer satisfaction and cycle times have been reported by companies once Lean has been implemented (Lowe et al., 1997; Sohal and Egglestone,1994; Melton, 2005; Bamfordet al., 2015)

6. Lean thinking T&T 5S: more than house keeping technique (sort, set in order, shine, standardize and sustain (Hoet al, 1995; Kobayashi, 2008) SMED: Rapid Changeover techniques and Systematic setup time reduction(Shingo, 1985) JiT: streamline manufacturing operations and promote pull (Shah and Ward, 2007) TPM:Enhance equipment effectiveness and maximise equipment output (Garcia-Alcaraz et al, 2014)  These techniques were selected as they form the foundation of Lean thinking

7. Gap analysis & Research Questions There is insufficient empirical research of Lean in micro organisations (Kuratkoet al., 2001). Research conducted on quality in micro organisations seems often separated (Prasad & Tata, 2009). There are little evidence of Lean tools and techniques such as 5S, SMED, JiT and TPM implementations in micro organisations. RQ1: Can a micro organisation effectively implement Lean tools and techniques?  RQ2: To what extent implementing Lean tools and techniques in a micro organisation reduce lead-time and improve productivity?

8. Methodology Action research, using a case study as a method to explore the phenomenon (Yin, 2014). Training and implementation of 5S, SMED, JiT and TPM in sequence over a 5 month period. Each technique followed this process: one-week training/pilot, two-week data collection, one-week evaluation and reflection including qualitative data collection through interviews. 2 weeks data collection also took place before implementation to compare the impact of the T&Ts. The quantitative data collected was based on the flexographic process: make ready times volume produced for the period Lead times Throughput accounting Productivity (P) = Throughput/Operating Expenses

9. Findings – case study Cedar Labels Ltd was established in 1985 as a self adhesive label manufacturer. The company provides hot-foil, flexographic and thermal transfer printed labels. There are 4 permanent employees at the company and 1 part time employee 2 manufacturing processes in the company are hot-foil and flexographic. There are 3 hot-foil machines, each with different capabilities and a rewind to finish the product and 1 flexographic machine with one rewind machine The flexographic process is lengthy and complex.

10. Findings – Productivity

11. There were several significant improvements in productivity from the implementation of Lean tools and techniques Findings – Productivity • Dynamic process that creates variation • Learning curve • Cumulative curve

12. Findings – Lead time

13. Findings – Lead time Some implementations conducted in a significant decline of lead times. Dynamic process that creates variation

14. Discussion There were significant improvements in the productivity and lead times (Ahujaand Kamba, 2008; Cakmacki, 2009; Lowe et al, 1997). The employees became more optimistic about the effects of the Lean T&Ts on the business, speculation about reductions in errors, reduction in machine stoppages and the effects taking place immediately. The employees learnt a vast amount during the study indicating employees that are more skilled.  This is suggesting that Lean increases productivity and reduces lead times also in micro organisation.

15. RQ1: Can a micro organisation effectively implement Lean T&T? The findings suggest that the case study company, Cedar Labels Ltd, was successful in implementing Lean T&Ts Start by the basic tool: 5S and developed the toolbox further progressively Focus on the training and the implementation Identify the most suitable process (flexographic) Plan and respect the implementation process (disrupt production) There were no major issues preventing the implementation suggesting that ‘Lean isn’t just for the big guys’ (Shea and Gobeli,1995; Lechleitner, 2014; Rymaszewska, 2014) The employees at Cedar Labels claim to have gained more knowledge and skills

16. RQ2: Implementing Lean T&T in a micro orga.reduce lead-time and improve productivity? Lean T&Ts implemented at Cedar Labels Ltd led to reduce lead-time and improve productivity. Productivity was significant in 80% of the tests Lead times were reduced significantly in 50% of the tests This coincides with the literature, Lean provides significant improvements in lead times and productivity (Lowe et al, 1997; Sohal and Egglestone, 1994; Bamford et al., 2015). The most significant improvements were after JIT and TPM  aspect of maturity One explanation for these such improvements is that the combination of T&Ts together has had a major impact, as opposed to one technique only. SMED and TPM primarily enabled lead time reduction TPM and JIT primarily enabled productivity improvement.

17. Conclusion The main concern throughout the research was ‘firefighting’ which, unlike the other issues: commitment, support, resources, was extremely hard to overcome for a micro-organisation. It was concluded that Lean practises improved the skills of the employees, and changed the employees’ attitudes towards continuous improvement. This study contributes to the scarce and limited body of knowledge of Lean implementation within micro organisation especially regarding SMED and TPM. It is appreciated that the isolation of these techniques is extremely difficult due to the way the study was designed. Future comparative studies in micro organisation would be beneficial to corroborate these findings

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