OPERATIONS AND PROCESS

MANAGEMENT : THEORY AND

APPLICATIONS
FINAL EXAM

Prepared by

Majio Moshi Mujaya (242221061)

UNIVERSITAS AIRLANGGA SURABAYA

FAKULTAS EKONOMI DAN BISNIS
MAGISTER MANAJEMEN
2022.
Lean and Sustainable Supply Chain

A lean supply chain is a supply chain that is working at its peak efficiency. It delivers the items
or products to the end user with the least amount of loss and waste while maintaining enough
flexibility to accommodate unforeseen delays. So basically focus on eliminating as much waste
as possible. Moves that are not needed, unnecessary processing steps, and excess inventory in the
supply chain are targets for improvement during the learning process. Some consultants in
industry have coined the phrase value chain to refer to the concept that each step in the supply
chain processes that deliver products and services to customers should create value. If a step does
not create value, it should be removed from the process. Lean production may be one of the best
tools for implementing green strategies in manufacturing and service processes.
Lean manufacturing is based on the just-in-time (JIT) production ideas developed by Toyota in
Japan. Even while JIT rose to prominence in the 1970s, some of its principles date back to the
United States' early 1900s. When streamlining his moving assembly lines to produce cars, Henry
Ford applied JIT techniques. He used the bottom of car seat packing boxes as the floor board of
the automobile, for instance, to reduce waste. Although Japanese industry began utilizing some
aspects of JIT in the 1930s, it wasn't until Tai-ichi Ohno of Toyota Motors employed JIT to
advance Toyota's cars in terms of delivery time and quality in the 1970s that JIT became
completely polished.
Client value is something that the customer is prepared to pay for in the context of lean
production. Materials and information are transformed into what the client wants through value-
adding activities. Non-value-adding activities use up resources while having no direct impact on
the outcome the consumer wants. Therefore, anything that does not provide value in the eyes of
the client is considered waste. Defective goods, excess production, inventory, excessive motion,
processing steps, transportation, and waiting are a few examples of process wastes.

Lean suppliers are able to respond to changes. Their prices are generally lower due to the
efficiency of lean processes. Lean Procurement The term e-procurement relates to automatic
transaction, sourcing, bidding and auctions using Web-based applications, and the use of
software that removes human interaction and integrates with the financial reporting of the firm.
Lean Manufacturing Lean manufacturing systems produce what the customers want, in the
quantity they want, when they want it, and with minimum resources. Lean Warehousing This
relates to eliminating non–value-added steps and waste in product storage processes. Lean
Logistics Lean concepts can be applied to the functions associated with the movement of
material through the system. Lean Customers Lean customers have a great understanding of their
business needs and specify meaningful requirements.

Discussion

Small and medium-sized businesses (SMEs) are important to the global economy, yet they are up
against fierce competition in increasingly globalized marketplaces. Additionally, these
businesses usually display a dearth of crucial resources for organizational and technological
changes as distinguishing characteristics. They frequently pollute more than larger businesses
and are less productive. In order to produce sustainable results in a dual meaning of sustainability
techniques that can be sustained over time, businesses all over the world are now implementing
augmented lean. (Bratt et al., 2021).

Sustainable supply chain management, as defined by (Seuring, 2018), is the control of material,
information, and capital flows as well as collaboration between businesses along the supply
chain while taking into account objectives from all three dimensions of sustainable development,
namely economic, environmental, and social, which are derived from customer and stakeholder
requirements. The supply chains of the larger firms must include the SMEs. A larger
organization distributes the risk and duty of sustainability to its suppliers, who are primarily
SMEs. The organization's economy, environment, and social components are given top priority
under the sustainability triple bottom line concept (Elkington, 1997).

I'll attempt to describe the Lean and Sustainable Supply Chain to Small and Medium-Sized
Enterprises (SMEs) from this point of view. I'll utilize three studies based on SMEs to illustrate
my point and to support my conclusion.

The term "small and medium enterprises" is not standardized globally (SMEs). The definitions
from the European Union, for example, are frequently used and are based on a financial metric or
the number of employees. Some definitions, like the Japanese, may make a distinction between
temporary and permanent personnel. Depending on the industry, even the same nation, like the
USA, may have various SME definitions. In this perspective, it was considered that all articles
citing "small and medium enterprises" or "small- and medium-sized firms" with the acronym
"SME" were referring to a same word. It is also thought that the word "SME" may include
microbusinesses (often defined as companies with less than ten employees) and independent
contractors.

SMEs and decreased productivity are frequently linked. This is explained by their failure to
generate economies of scale, the challenges they encounter when trying to obtain financing or
investments, their lack of the necessary skills, and their informal nature. Additionally, there are
other traits that could influence how well SMEs function, including the industrial sector,
management, technology, technical marketing proficiency, and innovation.
(Qureshi et al., 2022a)
. Here are some of the papers that have been written about lean principles in SMEs with
an eye toward implementation and results.

“Accomplishing Sustainability in Manufacturing System for Small and Medium-Sized

Enterprises (SMEs) through Lean Implementation “ (Qureshi et al., 2022).

To achieve sustainability in the production system, a business enterprise like a manufacturing

unit tries numerous technological breakthroughs and strategic initiatives. Implementing lean
manufacturing is one such initiative that aids SMEs in producing value-added goods with higher
profitability and reduced waste. Lean adoption in SMEs is difficult, though. Therefore, when
attempting to implement lean, it is crucial to adhere to a structured framework and manage the
critical success factors (CSFs). Finding, evaluating, and ranking the CSFs of SMEs' lean
implementation is the aim of this study so that they may be managed to achieve successful lean
implementation. The interpretive structural modeling (ISM) approach is used to represent the
CSFs of lean adoption that were identified through a thorough analysis of the literature. In order
to categorize and comprehend the importance of each CSF for a lean implementation, MICMAC
analysis is also performed. The relationship modeling for each CSF of a lean implementation is
provided by ISM and MICMAC. The Delphi method is then used to validate the ISM model.

Methodology of Research
The study used mixed-approach-based methodologies because lean deployment has not been
well studied in the Indian context. In this article, the CSFs for lean implementation are identified
through a literature analysis and shortlisted using the Delphi method. Additionally, it classifies
the detected CSFs by MICMAC, ranks them using IRP, and links them together utilizing ISM
relationship modeling approaches. As a result, several research methodologies have been used.

Discussion of the study,

Firstly, By implementing numerous measures including modernizing equipment, implementing

new IT systems, and implementing creative production techniques, SMEs are attempting to
maintain their market position. These SMEs can improve their business-level performance and
competitiveness by implementing lean manufacturing techniques to lower their manufacturing
costs and boost the value of their current products.

Secondly, The existing contextual relationships must be taken into account while evaluating the
lean implementation CSFs. Thus, prior to really implementing lean in the industrial sector, each
CSF's role can be examined. As a result, it will be simple to allocate resources and maximize
them, which is what practicing managers and management are most concerned about. According
to the phonetic transcription, "government," "financial capabilities," and "top management
support and commitment" all have a big impact on how well SMEs implement lean.

Third, The ranking is also valuable for adopting preventative measures to manage CSFs.
Additionally, this information will be useful because the extent of CSF adoption in lean
manufacturing may affect the outcomes . For effective lean implementations, key information
may be provided via CSF rating. The stakeholders in lean manufacturing might also benefit from
the ranking. The extent of each CSF will be disclosed to both employers and employees. The IRP
could be used to take the place of the AHP process because there is a chance that decisions will
be made with prejudice. Because these judgment biases are less likely to occur when IRP is used,
decision-making accuracy is increased.

When compared to large corporations, the SME's decision-making process will be quicker and
more flexible, and early management of such CSFs will aid in ensuring the success of lean
implementations. The ISM, MICMAC, and IRP methodologies may be used by different
industries to highlight the important connection between lean CSFs for a successful lean
deployment. This work's logical expansion might be made into other industries to identify shared
CSFs. Results from the exploratory analysis and structural equation modeling could be
intriguing.

Another study is “Impact of Lean and Sustainability oriented innovation on Sustainability

performance of Small and Medium Sized Enterprises: A Data Envelopment Analysis-based
Framework” (De et al., 2020).

Lean and sustainability-oriented innovation both sustainably increase the competitiveness of

small and medium-sized businesses (SMEs). Lean promotes efficiency, whereas innovation that
is sustainable places more of an emphasis on response. Although lean and sustainability-oriented
innovation (SOI) have each been studied independently, there is a knowledge vacuum regarding
the combined impact of lean and SOI on the sustainability of SMEs' supply chains. SMEs
confront intense competition and limited resources. As a result, the only way for their supply
chain to be sustainable is through the best possible trade-off between economic, environmental,
and social business factors. The objective of this paper was to comprehend the combined impact
of lean methods and innovation that is focused on sustainability on the supply chain
sustainability performance of SMEs. The study applies a Data Envelopment Analysis (DEA)-
based methodology to a number of SMEs in India's Eastern region. The suggested framework
considers economic, operational, environmental, and social factors as output criteria and lean and
sustainability-oriented innovation as input criteria.

This study was able to demonstrate how the lean philosophy and SOI affect the supply chain
sustainability of SMEs. While SOI focuses on product, process, and organization innovation,
lean approaches only address process improvement. Because SOI and Lean concepts have
different levels of attention, a trade-off is necessary to achieve sustainability. The study found
that while trying to apply lean and sustainability-oriented innovation concepts to achieve
sustainability, there are certain commonalities.

Due to the high implementation costs involved with lean, it can be difficult for businesses to
attain sustainability although innovation can help. The suggested framework assists SMEs in
implementing appropriate strategies and programs to increase their sustainability. Economic,
operational, environmental, and social parameters are taken into consideration as outputs, while a
variety of lean and sustainability-oriented innovation approaches are taken into consideration as
inputs.

The findings show that SMEs can approach sustainability by implementing a particular lean and
sustainability-oriented innovation methodology. The suggested DEA-based approach for
analysing the effects of lean and sustainability-oriented innovation on sustainability performance
enables SMEs to implement the best mix of lean and sustainability-oriented innovation strategies
in order to achieve sustainability.

In light of the results and methodology shown above, this study assists managers and policy
makers in three different ways. First, it helps them concentrate on separating SMEs into efficient
and inefficient SMEs. The SMEs can then compare themselves to relevant peers SMEs and, after
learning from the benchmark SMEs, establish their own SWOT-derived strategies and projects.
When they connect with benchmark SMEs, they learn about common interactions and get the
inspiration to come up with their own improvement projects.
The last study witch i have been analyse is “Could Lean Practices and Process Innovation
Enhance Supply Chain Sustainability of Small and Medium sized Enterprises? “
(Kumar et al.).

Lean practices (LP) are adopted by small and medium-sized businesses to cut waste throughout
their organizational value chain, which aids in achieving sustainability. In order to fulfil both
customer needs and legislative requirements, process innovation (PI) has also been implemented
through cleaner production, environmental management systems, eco-design, etc. Less is known
about the combined influence of sustainable practices, lean practices, and process innovation on
sustainability performance, despite earlier studies demonstrating their individual effects.
Furthermore, there aren't many research on how lean methods and Process innovation affect
sustainability performance as mediators. This is significant since achieving sustainability
performance is thought to be made possible by lean approaches and process innovation.

Development of a Conceptual Model and Hypotheses

Hypothesis 1: Lean Practices (LP) enhance sustainability performance (SP) of SMEs

Hypothesis 2: Process Innovation (PI) enhances sustainability performance (SP) of SMEs

Hypothesis 3: Sustainability Practices (SPr) enhance sustainability performance (SP) of SMEs

Hypothesis 4: Sustainability practices (SPr) enhance sustainability performance (SP) of SMEs

through mediation effects of Lean Practices (LP)

Hypothesis 5: Sustainability practices (SPr) enhance sustainability performance (SP) of SMEs

through mediation effects of Process Innovation (PI)

Methodology

The study uses both quantitative and qualitative methods to show how LP and PI help SMEs
become sustainable. The SMEs in the UK's Midlands were used as the source of the data for the
current investigation.
The results of all 5 hypotheses indicate a positive significant difference. In contrast to the effects
of lean and sustainable strategies, this link is weaker.

Lean emphasizes resource efficiency throughout the value chain, which helps achieve both the
targeted economic and environmental performance. Although in fact SMEs could take a lean
method to concurrently achieve all the necessary performances (economic, environmental, and
social) depending on how the latter has been embraced in their system. It is worthwhile to
discuss how lean approaches affect sustainability performance.

Process innovation may result in improved resource efficiency with increased capital investment
thanks to lean principles, which may need process modification. (hypothesis H1), the predictor of
lean practices on the sustainability of SMEs was highly statistically significant. As a result, the
analysis's findings, at least for the current dataset, fully support earlier theoretical studies'
conclusions that LP contributes to sustainability.

Due to intense competition, SMEs face difficult business conditions. When making strategic,
planning, and operational decisions, they frequently give economic considerations precedence
over environmental and social ones. According to studies, SMEs do not change the
environmental impact of their products and operations until they are under pressure from the
government and their customers. Many SMEs have embraced lean, which focuses on the
economics, in order to reduce costs throughout their value chain and achieve superior
environmental performance.

Policymakers and SME owners/managers can benefit by learning how to combine sustainable
practices, lean methods, and process innovation for improved sustainability performance. This
enables SMEs to be more sustainable by figuring out ways to improve their sustainability
performance, such as implementing LP or PI or a suitable combination of both on top of their
regular sustainability policies.

Lean practices are economy-focused, which encourages SMEs to use them more in order to
achieve sustainability. Small and medium-sized businesses may sustain their supply chains by
making the proper trade-offs between economic, environmental, and social concerns at all of
their decision-making levels, including strategic, planning, and operational ones. Superior
sustainability performance of the supply chain for SMEs is made possible by a mix of
sustainability practices, lean practices, and process innovation.
 References

Bratt, C., Sroufe, R., & Broman, G. (2021). Implementing strategic sustainable supply chain
management. Sustainability (Switzerland), 13(15). https://doi.org/10.3390/su13158132
De, D., Chowdhury, S., Dey, P. K., & Ghosh, S. K. (2020). Impact of Lean and Sustainability
Oriented Innovation on Sustainability Performance of Small and Medium Sized Enterprises: A
Data Envelopment Analysis-based framework. International Journal of Production Economics,
219. https://doi.org/10.1016/j.ijpe.2018.07.003
Elkington, J. (1997). Cannibals with forks. The Triple Bottom Line of 21st Century. Erol-Kantarci,
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Kumar Dey, P., Malesios, C., De, D., Chowdhury, S., & Abdelaziz, F. ben. (n.d.). Could Lean
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Qureshi, K. M., Mewada, B. G., Alghamdi, S. Y., Almakayeel, N., Qureshi, M. R. N., & Mansour, M.
(2022a). Accomplishing Sustainability in Manufacturing System for Small and Medium-Sized
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(2022b). Accomplishing Sustainability in Manufacturing System for Small and Medium-Sized
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