Impact of Lean Manufacturing on Operational Performance: A Study of Sri Lankan Manufacturing Companies

Abstract

The purpose of this paper is to examine the extent to which lean management practices are adopted by manufacturing organizations in Sri Lanka and their impact on firms’ operational performance. Using a survey questionnaire, data were collected against 13 lean practices from 45 middle and senior managers belonging to 45 manufacturing firms in Sri Lanka. 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 companies (SMCs) and large companies (LCs) based on size. The multiple regression models were employed to investigate the effects of three lean constructs on operational performance for both small and medium and large company’s categories. 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. According to results which found from the analytical tools indicates the positive relationship between lean practices and operational performance. JIT and waste management constructs have a less significant impact on operational performance in both LCs and SMCs whereas flow management construct has a significant impact on LCs compared with SMCs. The paper provides insights into the adoption of lean practices in an Asian context and using survey data, and provides further evidence regarding the relationship between lean practices and operational performances.