research thesis (final)

Master’s Thesis: MSc. Logistics Author: Altaf Hussain

Declaration of Originality

This project is all my own work and has not been copied in part or in whole from any

other source except where duly acknowledged. As such, all use of previously

published work (from books, journals, magazines, internet etc.) has been

acknowledged within the main report to an item in the References or Bibliography

lists.

I also agree that an electronic copy of this project may be stored and used for the

purposes of plagiarism prevention and detection.

Copyright Acknowledgement

I acknowledge that the copyright of this project report, and any product developed as

part of the project, belong to Coventry University.

Signed: Date:

Office Stamp

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ACKNOWLEDGEMENT

All glories to Almighty Allah (God) who has created us with the ability to think and

curiosity to explore into different dimensions. I would like to thank my parents and my

sister for their constant, never ending and beloved support.

I would like to thank Mr. Alan Richards for being my supervisor. Without his kind,

flexible and cooperative guidance, I would never be able to produce such a highly

professional piece of work.

I would also like to thank to the Computing and Engineering department of Coventry

University which has provided me ample knowledge and expertise to explore into the

research and generated the set of skills required to produce this research. With

special thanks to Dr. Zulf Khan for his constant support throughout the MSc.

Programme.

I also owe many thanks to Alan Woodford (Warehouse Manager) of WYKO-ERIKS

for providing me the opportunity to work on their premises and gaining in-depth

knowledge of their complete logistics’ processes and spending their precious time

while completing the questionnaires or have extended any type of help in the

completion of this report.

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ABSTRACT

Producing perfect and defect free services have long been desired and it is still

considered as an important strategic objective for the companies to build market

share in a global competitive economic environment. Continuous improvement of

company operations and processes and value added service is an absolute

requirement.

Value adding capability of an organization must be synchronized with both the

internal and the external value chain. Poor adding value capability equates to waste

and this usually exist in all parts of the organization through poor time utilization,

poor use of capital, stock and human resources.

Successful re-engineering demands a total closer linkage throughout the value chain

which comprises of customer order processing, IT infrastructure, and supply chain.

The main problem of the linkage is the poor coordination between the different

functions of the supply chain and logistics. If the product groups within the

organization can be identified from raw material input to final delivery to customer

and the existing value adding capability can be determined. These elements can

then be analysed and by process tracking and improved by using structured

methods. This leads to a systematic improvement of value adding capability by

removal of all non value adding elements and will bring improvements in customer

service levels, cost reduction and profitability.

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CHAPTER-1

1.0 INTRODUCTION:

To make the services the best, we need to continually improve and develop them by

testing and implementing new ideas and approaches to service delivery. The tools

and techniques for the improvement process are many, but the whole process of

moving from an idea to successful implementation can be broken into different parts.

According to Mugglestone M. et al. (2007), the organizations must develop, test and

use a high level improvement process for all of its areas of work, which must also

incorporate the traditional improvement techniques but also draw on evidence and

experience from three domains:

The processes that organizations use for the development of new products and

services. Theory and wider concept of thinking about how design and design science

can be transferred into organizational processes. Evidence from how innovation and

creativity can be best utilised within organizations.

However, there are different tools and techniques are used to improve the areas of

work. Among them techniques KAIZEN (Continuous Improvement) and Lean

Management is widely spoken.

According to Liker (1996, p.481), lean management is defined as a philosophy when

implemented reduced the time from customer order to delivery by eliminating

sources of waste in the production flow. Hines and Taylor (2000) stated that lean is

concerned with reducing waste at all levels; it is also about changing corporate

culture. Some organizations think implementing lean is about reducing the human

resource but Moore (2001) and Convis (2001), state that lean should not lead to

redundancies.

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Lean identifies the waste into the form of overproduction, waiting, transportation,

inappropriate processing, inventory, unnecessary motions and defects.

The author tried to gain the comprehensive knowledge of the practices exercised by

the non manufacturing organizations into their logistics processes. And looked for

the areas of improvement where lean and kaizen can be applied to improve the

efficiency.

1.1 AIMS OF RESEARCH:

The research aims to gain the comprehensive knowledge of current practices used

in the logistics of non manufacturing organizations. Research will satisfy the

following goals.

1) Look into the existing problems in supplychain.

2) Implement Lean and Kaizen to improve the practices.

3) Suggest solutions to solve the problems.

1.2 OBJECTIVES OF RESEARCH:

The author set the following objectives to meet the above mentioned goals.

Objective-1:

Implement Lean and Kaizen to improve the logistics of non-manufacturing

organizations.

Explanation

This objective will fulfil the need to understand the concepts of lean and Kaizen and

their successful implementation to the logistics of non-manufacturing organizations.

Objective-2:

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Examining different models to improve the logistics and creating value chain.

Explanation

Looking into different models that can help in maximising the efficiency of the overall

processes and create customer focused robust supply chain.

Objective-3:

Elimination of waste internally and reducing cost.

Explanation

Reducing waste related to the inbound logistics and outbound logistics with primary

focus on reducing the cost.

Objective-4:

Examining the improved IT systems to expedite the processes.

Explanation

Suggesting and observing the IT systems used by the organizations to maximise

their efficiency and throughput.

1.3 RESEARCH JUSTIFICATION:

Lean and Kaizen in the past have been implemented in augmenting the production

process but its study to the logistics of non-production environment has never been

considered successful. Therefore, author aims to conduct research on implementing

Lean and Kaizen to the logistics of non manufacturing organizations. Following are

the main factors which actually give the motive for the research.

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1.4 SELECTING LEAN AND KAIZEN AS A MAJOR AREA OF STUDY:

According to several empirical studies, Lean, Kaizen and waste management

involves identification and removal of unnecessary steps in organizational system

and processes. If the waste is not managed effectively, there are less possible

chances of improving the service provided to customers. Several non manufacturing

organizations inevitably fail to exploit Lean’s and Kaizen full potential to make a

significant difference. Therefore, this motivated the author to explore this area of

study as a final research thesis.

1.5 SELECTING UK AS A COUNTRY OF STUDY:

Lean was introduced as an approach with the concern of elimination of waste and

stressing on continuous improvement (CI). Lean has earned a widespread attention

over the years, which has been well documented in the literature. In United Kingdom

(UK) there are so many non-manufacturing businesses which are using Lean and

Kaizen knowingly and without knowingly. This has given author an opportunity to

explore lean and kaizen as means of identifying the areas of improvement and

identifying the waste removal techniques for the non-manufacturing businesses. The

research will provide new views about improvement techniques and effective

implementation of lean in different set of environments.

1.6 SELECTING ERIKS AS A CASE STUDY:

ERIKS group is the undisputed European market leader for industrial products and

services fulfilling the twin roles of specialist and total supplier to all segments of the

industry. ERIKS has both the forward and reverse logistics operations. But the study

only focuses on the forward logistics. Author has been given an opportunity by

ERIKS to work with its Regional Distribution Center which has provided an insight

into the different logistics processes and areas of improvement. Therefore, including

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ERIKS as a case study will help in understanding the logistics’ processes and how

Lean and Kaizen can be implemented to remove waste.

1.7 RESEARCH STRUCTURE:

The research is divided in to nine (9) chapters. Chapters in chronological order along

with a brief outline are listed below:

Chapter-1: (Introduction)

The chapter explains about the nature and the background of the research

highlighting the objectives and basis of the research.

Chapter-2: (Literature Review)

This chapter includes the background of current literature on Lean Management and

Kaizen which is necessary to address the issues raised in the research objectives.

Chapter-3 (Conceptual Framework)

This chapter encompass the literature about various improvement models with a

reflection on their processes and implementation.

Chapter-4 (Research Design)

This chapter gives the overall view of the research design taking into account the

methodology undertaken to do primary research and explains the type of research,

questionnaire, data and tools used.

Chapter-5 (Case Study)

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This chapter discusses the ERIKS (UK) as a case study representing the

organizations of similar nature. This chapter highlights about ERIKS operations and

the problems faced by the logistic department on the daily basis.

Chapter-6 (Implementation of Lean Model)

Chapter-7 (Data Results and Analysis)

Chapter-8 (Conclusion and Recommendations)

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CHAPTER-2

2.0 CRITICAL LITERATURE REVIEW:

This chapter explains the current issues and literature on Lean Management and

Kaizen. The chapter discloses the key topics related to Lean and Kaizen and

highlighting the organizational behaviour adopting lean, waste elimination, lean as a

learning system, indicators and strategies and how to achieve lean processes.

2.1HISTORICAL BACKGROUND OF LEAN:

Lean was introduced as an approach to manufacturing whose primary aim was the

elimination of waste and stressing the need for continuous improvement. Lean has

remained the focal point of the research over the years. Some of the research

findings are ambiguous while on the other hand some studies succeeded in

providing awareness of the lean potential

According to Hines P. et al. (2004), implementation of Lean has made a great impact

both in academic and industrial sectors. It has spread into many other industry

sectors beyond the automotive industry and studies show that there has been an

ample development and ‘localisation’ of the lean concept.

According to Repenning and Sterman (2001) state that companies use lean

initiatives as a fad and conclude that there are number of tools, techniques and

technologies available to improve operational performance but despite dramatic

success in few firms most efforts to use them fail to produce significant results.

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2.1.1 ORIGIN OF LEAN:

The fierce competition imposed by mass production system during and after World

War II led the Toyota Motor Company (TMC) to a thorough study of the production

system of the American Automobile Industry. The solution offered by Toyota led to

the complete reconstruction of the company and gave birth to the introduction of an

alternative production system which is referred to as Toyota Production System

(TPS). Just In Time (JIT) philosophy was introduced in the framework of this new

production system and the value of the system was proven to the global

manufacturing industry and a great number of organizations across the globe

hastened to implement this model of production to their own production systems.

As the popularity of the system increased and more companies implemented JIT, a

third wave of research emerged in 1980s. This time the focal point of the research

was ‘Lean Manufacturing’. The term ‘Lean’ was introduced by Krafcik (1988) at that

time the leading researcher in the International Motor Vehicle Program (IMVP)

conducted at the Massachusetts Institute of Technology (MIT).

2.1.2 DEFINITION OF LEAN:

According to American Production and Inventory Control Society (APICS) dictionary

(Cox and Blackstone, 1998), Lean is defined as:

‘Lean is a philosophy of production that emphasizes the minimization of the amount

of all the resources (including time) used in various activities in the enterprise. It

involves identifying and eliminating non-value adding activities in design, production,

supply chain management, and dealing with customers. Lean producers employ

teams of multi-skilled workers at all levels of the organization and use highly flexible,

increasingly automated machines to produce volumes of products in potentially

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The term ‘Lean’ was introduced by Krafcik (1988) to refer to a manufacturing

approach that:

‘Compared to mass production it uses less of everything-half human effort in the

factory, half the manufacturing space, half the investment tools, and half the

engineering hours to develop a new product in half the time. Also it requires keeping

far less than half the needed inventory on site, results in many fewer defects, and

produces a greater and ever growing variety of products.’

2.1.3 CRITICAL ELEMENTS OF LEAN:

Ozbayrak M. et al. (2003), investigated the key implementation elements of Lean.

The elements in this context refer to tools, techniques, methodologies or practices

that can be implemented in the framework of the adoption of either JIT or Lean

Management (LM). The list of elements is given below:

Production floor management.

Product/Process- oriented.

Production Planning.

Lean implementation.

Work-force management.

Supply chain management.

Lean has evolved with an extensive range of tools but not all the proposed lean

enablers are necessary vital for the implementation. Therefore, the selection of lean

tools should be utilised in specific case or certain application. There are considerable

disparities dealing with the issue of the lean implementation is the failure of the

former to keep track of the ongoing lean evolution. Also there is great challenge that

other companies face adopting lean principles is that lean systems are inherently

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knowledge intensive. Much of the knowledge is captured from highly refined systems

and processes.

2.2 HISTORICAL BACKGROUND OF KAIZEN:

The first well known and most stated proponent of Kaizen was Imai, who wrote

KAIZEN- The Key To Japan’s Competitive Success (1986). He described the

concept, core values and principles, its relation to other concepts and the practices

used in the improvement process.

Lillrank and Kano (1989) refer to Kaizen as the ‘principle of improvement and it is

used as an axiom to define other concepts.

According to Imai (1986), Kaizen is process oriented, i.e. before results can be

improved, process must be improved. But it does not necessarily mean that results

are not important but the management attention should be directed towards creating

sound processes since it is believed that good results would follow automatically.

Also, it requires the evaluation criteria which can monitor and bring attention to the

improvement process itself, while simultaneously acknowledging the outcome. The

number of suggestions, implementation and participant rates are used as prime

criteria for evaluating the improvement process in terms of employee efforts,

supervisor and first line manager support.

Second principle of Kaizen states that lasting improvements can only be achieved if

innovations are combined with an ongoing effort to maintain and improve standard

performance levels. Since it is distinctive in its focus on small improvements of work

standards. There can be no improvement where there are no standards which in

presence denote the relation between Kaizen and maintaining standard operating

procedures for all major operations.

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Third principle of KAIZEN states that it is people oriented and should involve

everyone in the organization from top management to workers at the shop floor.

According to Imai, there are three types of KAIZEN activities each with its own form

and focus in overall improvement.

1) Management oriented KAIZEN concerns the gradual improvement of systems

procedures such as planning and control, organization, decision making processes

and information systems but also to some extent the improvement of machinery and

equipment.

2) Group oriented KAIZEN is represented in Quality Control Cycles (QCC) and other

small group activities in which employees focus primarily on improving work

methods, routines and procedures.

3) Individual oriented KAIZEN is primarily focused to improve one’s own work i.e. on

the spot improvements of work methods, routines and the use of resources.

2.2.1 KAIZEN FRAMEWORK FOR CAPABILITY DEVELOPMENT:

Bessant et al. (1994) recognised the need for a Continuous Improvement (CI)

framework for capability development. It shows the key characteristics of a

successful organization’s implementation and maintenance of CI programmes.

Bessant et al.’s model shows the characteristics that an organization needs to

develop CI capability. Bessant and Caffyn (1997) illustrated their earlier model which

consists of five stages of development in the evolution of CI capability which is

shown in the Table-I below:

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Source: Bessant and Caffyn (1997) Table-I

Stages Of Development Typical Characteristics

1.Natural/Background CI

Problem solving random

No Formal Efforts or structure

Occasional burst punctuated by inactivity and

non-participation.

Dominant mode of problem solving is by

specialists.

Short term benefits.

No Strategic Impact.

2. Structured CI

Formal attempts to create and sustain CI

Use of a formal problem solving process.

Use of participation.

Training in basic CI tools.

Structured idea management system.

Recognition System.

Often parallel system to operations.

Formal deployment of strategic tools.

Monitoring and measuring of CI against these

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3. Goal Oriented CI goals.

In-line system.

4. Proactive/Empowered CI

Responsibility from mechanisms, timings etc.

devolved to problem solving units.

High level of experimentation.

5. Full CI Capability

CI as the dominant way of life.

Automatic capture and sharing of learning.

Everyone actively involved in innovation

process.

Incremental and radical innovation.

2.2.2 SHIFT FROM KAIZEN TO PERFORMANCE MEASUREMENT:

Kaizen and radical re-engineering are popular approaches to enhance process

performance. All the organizations adopt suitable metrics for measuring

performance. Management tasks are inherently complex and involve all details of the

process, the total database of relevant events, huge amount of data which would be

necessary to reveal the complete picture. Sometimes the management is flooded

with data or too few. Selectivity plays an important role for guiding the management

process. According to Bond T.C. (1999), the classic feedback model managers must

regulate performance by monitoring outputs and then adjusting the inputs to achieve

target rather than controlling a task by considering all the individual data elements

necessary to describe the status of the system. Therefore, when implementing

Kaizen managers must take into account the right amount and choice of data to

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begin the change in the processes so that there must not be a mismatch between

intentions and outcomes.

2.2.3 CORE THREADS OF PERFORMANCE MEASUREMENT:

According to Chang R. (1995), the core threads that weave through the quality

performance measurement are based on quality award criteria and certification

guidelines and are listed below:

Intense customer focus: Product and service characteristics which add some value

to the customer and increases customer reliability and satisfaction is the basis for the

organization’s quality improvement system

Senior Management Involvement: Senior management must be personally

involved when establishing and communicating performance measures and

priorities. Because senior management instils the performance measurement

concept, reinforce customer focus and support workforce participation.

Deployment of Strategic Objectives: Employees at all levels must understand their

specific role and responsibilities for developing and implementing strategies and

plans for achieving quality improvement goals. Because objectives and quality

improvement goals must be linked and deployed in a systematic fashion to all

functional work groups.

Continuous Learning and Development: Investment for workforce learning and

development is important ingredient to acquire the organization’s performance

improvement goals.

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2.2.4 Conclusion:

Improvement should be in corporate and certainly central to different types of

management techniques such as JIT, TQM and BPR. According to Chang R. (1995),

Changes in the processes can be continuous and discontinuous. Improvement can

be termed as small incremental change (Kaizen) or innovative step change (Process

Re-Engineering).

Kaizen and lean are characterised by workers on the shop floor identifying problems

and processing solutions. Small scale tuning of system is likely to be low cost,

generated from an intimate knowledge of a small part of the system. Progress is

likely to be largely outside the control of management who are not the sponsors of

change but only play at most a supporting role but management must act as key to

encourage improvement and not leave things to chance.

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CHAPTER-3

3.0 CONCEPTUAL FRAMEWORK:

As according to Grunberg T. (2003), there is a range of methodologies and

techniques to improve the effectiveness and efficiency of the operational activity.

Methods are different from each other the way improvement is achieved and

implemented. This chapter includes the literature about different improvement

models that can be used to implement Lean and Kaizen. It unfolds the key topics

related to the implementation of Lean and Kaizen in organizations. As there is a

range of methodologies and techniques aimed at improving the effectiveness and

efficiency of organizational processes. Also, it discusses the assessment and

performance management of the organization after the implementation of Lean. The

following discussion will look at different improvement models with their aims and

implementation processes are discussed.

3.1 Background of Improvement Models:

It is quite significant from the past practices that efforts to improve the processes of

organizations have been important since the dawn of the industrial era. The first well

known documented practitioners in the area of process improvement were Adam

Smith (1776), Eli Whitney (1800), Baggage (1832), Frank B. and Lillian Gilberth

(1900), Taylor (1903) and Henry Ford (1913).

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3.2 Lean Extended Enterprise Reference Model (LEERM):

3.2.1 Introduction to LEERM:

The Lean Extended Enterprise Reference Model (LEERM) is a structured model for

assisting companies, their customers, and suppliers in transforming to total value

stream conversion of Lean. It provides a structured methodology for creating a

customer-centric organization followed by aligned execution to increase customer

value.

LEERM is shown in the Figure 3.1 and the architecture of LEERM has four layers

which are referred to as Panels of Value Stream Integration as illustrated in the

Figure 3.2 below

Figure 3.1 Lean Extended Enterprise Reference Model (LEERM)

Source: Burton, Terence T. (2003) p-29

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Figure 3.2 LEERM Panels of Value Stream Integration


Each of the panels is described in more details as under:

3.2.1.1 Strategic Journey Panel:

This panel contains the seven fundamental building blocks that the top executive

management must incorporate in their organization if they want to achieve the Lean

Extended Enterprise improvement initiative:

Lean Extended Enterprise Vision/Leadership: This is the main brain and drive

behind any strategic improvement initiative. This involves aligning strategy,

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deployment and execution. It mentors the organization through the correct

improvement pathways, drives cultural and behavioural change, and achieves

financial results. Without this block, the improvement process is like just an ordinary

‘Flavour-of-the-month’ improvement program.

Lean Extended Enterprise Strategy: This block relates to thorough examination

and assessment of current value stream business processes and performance,

bench-marking of best in class performance, and recognition of consensus on gaps

between current and desired value stream performance from an extended enterprise

perspective.

Total Value Stream Perspective: This block recognizes multiple value streams,

value stream mapping, qualification and root cause analysis and ‘chunking out’ of

high impact, manageable improvement opportunities. This element helps the

organization to avoid the hardcore improvement initiatives.

Expanded Basic Principles Set: This block is the notion of integrated

methodologies and tools that enable LEERM. The basic purpose of LEERM is that

organizations must try to adopt all the improvement techniques because they do not

have the luxury of islands of isolated improvement.

Infrastructure and Expectations: It is related to establishing the values and basic

rules of conduct and behaviour by establishing a sense of urgency and recognition of

the need to change. This element also promotes the organizational values required

for success, such as trust, mutual respect, empowerment, teaming practices,

awareness/communication, recognition and rewards alignment, and other

behavioural adjustments.

Lean Extended Enterprise Methodology and Tools: This block involves education

via certification and deployment of an expanded arsenal of tools that address the

broader spectrum of requirements encountered in a collaborative total value stream

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setting. The total value stream consists of issues that require a much broader

spectrum of improvement methodologies than the five basic principles of Lean.

Lean Extended Enterprise Validation: It includes the correct metrics to align

improvement initiatives and link daily activities to LEERM improvement strategy. It is

also linked with verification of success by linking value stream performance to

financial performance. Validation closes the loop between improvement strategy and

improvement outcomes.

3.2.1.2 Best Practices and Principle Panel:

This panel describes the best practices and principles of Lean that can be applied

across the complete value stream and it expands upon the five basic principles.

Following are the five basic principles:

Leadership

Customer market focus.

Uniform improvement infrastructure.

Value stream processes.

Organizational Learning.

3.2.1.3 Implementation Panel:

This panel is like Plan-Deploy-Execute model of improvement. There is no

sequential or left-or-right model with an end. Organizations need to move around

and into the right circle and pursue the correct activities in the cycle. This is the

flexibility of the model that the organizations can go back into the deploy and plan

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stages from the execution stage and this is the characteristic of the model that

makes it interactive and continuous as CI.

3.2.1.4 Methodologies, Tools, and Enabling Technologies Panel:

This panel incorporates the KAIZEN, Lean, Six Sigma, ERP and other technologies

to acquire the bigger improvement of the Lean Extended Enterprise. The core of this

panel comprises of Kaizen, Lean and Six sigma methodologies providing the

guidance on the types of problems applicable to these tools. The outer layer

recognises the importance of leadership and innovation, knowledge of the tools,

focus of improvement, teaming and employee involvement and closed-loop

performance at the micro level.

The Lean Extended Enterprise phenomenon can be applied onto the service

organizations as well. The elements of LEERM can be re-adjusted to any processes

be it any type of service organization ranging from manufacturer of commercial

planes, a process industry, a bank, a health care institution, a retail or

distribution/logistics business etc.

The LEERM is basically based on the premise of value stream integration. In order

to achieve this, the organizations must develop a concrete strategy for their strategic

improvement initiatives. It must build the right infrastructure through properly

coordinated activities and acquiring comprehensive knowledge of best practices and

principles of a Lean Extended Enterprise. The most important thought is that it must

understand the methodologies, tools, and enabling technologies in order to apply the

right solutions to the best improvement opportunities.

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3.3 Six Sigma:

3.3.1 Introduction:

The origins of Six Sigma according to Raisinghani S.M. (2005) date back to the

manufacturing arena in the early 1980s by Motorola in revolutionizing the scope and

use of quality systems. Six sigma covers the techniques of problem solving with the

focus on optimization and cultural change.

According to Antony J. (2006), the term sigma is a measure that indicates the

deviation in the performance characteristic of a service from its mean performance.

The main focal point of six sigma strategy is to reduce variation within the tolerance

or specification limits of service performance characteristics. Also it focuses to

reduce cost by reducing the variability in the processes which leads to decreased

defects. Six sigma is also considered as a method to reduce waste, increasing

customer satisfaction and improving financial results. It adopts the use of statistical

methods which enable the organizations to understand the fluctuations in a process,

which allow it to pinpoint the cause of the problem.

According to Näslund D. (2008) Six Sigma is based on the DMAIC cycle (define,

measure, analyze, improve, and control) as shown in figure 3.3. This includes the

definition of the problem (D), measurement (M) of the problem (i.e. defects which are

responsible for the problem), data analysis (A) to discover the root cause of the

problem, improvement (I) of processes to remove the root causes of defects and

controlling (C) or monitoring processes to prevent perennial problem.

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Figure 3.3 Six Sigma Methodology

Source: Antony J. (2006), “Six Sigma for Service Processes”. Business

Process Management Journal. Vol. 12 No. 2, P-239

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According Antony J. (2006), following are the different phases of Six Sigma;

3.3.1.1 Define Phase:

Following are the steps involved in the define phase:

Define the problem accurately and specifically.

Identify stakeholders.

Understand the link between the problem at hand and the critically of the

problem from the perspective of the customers.

Conducting of the simple mapping of the processes both up- and –

downstream to identify the problem.

Establish the process inputs, outputs and various controls of the processes.

Forming a Six sigma project charter which clearly defines the roles of the

people and their responsibilities for the project. Defining the resource required

for the project and allowed time-frame for the project at hand. The charter

must also reveal the scope of the project, its boundaries and the key benefits

to internal and external customers.

Identifying the project sponsor and stakeholders and determine whether this

project is worth an effort using cost benefit analysis.

Identify all customers both internal and external and justify how this problem is

linked to customer satisfaction.

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3.3.1.2 Measure Phase:

Measure phase encompasses the following steps:

Identifying the current performance of the service process.

Decide what to measure (critical to quality characteristic) and how to

measure.

Establish a simple measurement system study (if applicable).

Determine how well our process is performing compared to others through

benchmarking exercise.

Identify the strengths and weaknesses and determine the gaps of

improvement.

3.3.1.3 Analysis Phase:

Following are the points must be looked at during the phase:

Uncover the root causes of defects in processes.

Understand the root causes of variability which lead to defects and prioritise

them for further investigation.

Understand the nature of data and the distribution or patterns of data.

Determine the key service process variables that may be linked to defects.

Financial quantification of the improvement opportunity (i.e. estimate of

potential financial benefits).

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3.3.1.4 Improve Phase:

The improvement phase of the methodology covers the following steps:

Develop potential solutions to fix the problems and prevent them from

recurring.

Evaluate the impact of each potential solution using a criteria-decision matrix.

Solutions that have a high impact on customer satisfaction and bottom line

savings to the organization need to be examined to determine how much

time, effort and capital will be needed to expand for implementation.

Assess risk associated with potential solutions.

Validate improvement (i.e. reduce defect rate or improve sigma quality level of

the process) by pilot studies.

Re-Evaluate the impact of chosen potential solution.

3.3.1.5 Control Phase:

The Control phase of the methodology comprise of the following steps:

Develop corrective actions to sustain the improved level of service process

performance.

Develop new standards and procedures to ensure long-term gains.

Implement process control plans and determine the capability of the process.

Identify a process owner and establish his/her role.

Verify benefits, cost savings/avoidance.

Document the new methods.

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Close project, finalise documentation and share key lessons learned from the

project.

Publish the result internally (monthly bulletins) or externally (conferences or

journals) and recognise the contribution made by the team members.

But the question lies if the Six Sigma paradigm can be implemented in the service

orientated organization. As Cho R.B. (2007), indicated that Six sigma is a powerful

business strategy that results in dramatic reduction in defects, errors, or mistakes in

service processes. According to previous researches, Six sigma is considered to

accelerate improvement in service quality by reducing the process variation and

eliminating non-value added steps.

However, the concept of Six Sigma was adopted by the manufacturing organizations

for the quality and process improvement but the service organizations are adopting

the methodology exponentially. The implementation of Six Sigma strategy in the

service processes is to understand how defects occur and then to devise process

improvements to reduce the occurrence of the defects resulting in improved

customer experience and enhanced customer satisfaction.

3.3.2 Benefits of Using Six Sigma:

According to Cho R. B. (2005), service organizations adopting Six Sigma business

strategy gain the following benefits:

Improved cross functional teamwork throughout the entire organization.

Transformation of the organizational culture from fire-fighting to fire-prevention

mode.

Increased employee morale.

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Reduced number of non-value added steps in critical business processes

through systematic elimination, leading to faster delivery of service.

Reduced cost of poor quality (cost associated with late delivery, customer

complaints, misdirected problem solving, etc.)

Increased awareness of various problem solving tools and techniques,

leading to greater job satisfaction for employees.

Improved consistency level of service through systematic reduction of

variability in processes.

Effective management decisions due to reliance on data and facts rather than

assumptions and instincts.

Transformation of organizational culture from being reactive to proactive

thinking or mindset.

Efficient and reliable internal operations, leading to greater market share and

satisfied shareholders.

3.3.3 Drawbacks of Using Six Sigma:

Most of the industry experts give the reason that service organizations are less

interested to adopt Six sigma is the view of it as a manufacturing solution. Also the

service organizations do not need many of the tools and techniques of the Six sigma

tool box. Also on the other hand, it requires huge training cost and training the most

talented people in an organization and converting them into the ‘change agents’.

3.3.4 Limitations of Using Six Sigma:

According to Antony J. (2006), like every other quality improvement techniques, it

has its own limitations. Some of the limitations identified are stated as under:

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In some scenarios, the frustration sets in as the solutions driven by the data are

expensive and only a small part of the solution is implemented at the end.

Sometimes the availability of quality data especially in processes where no data is

available to begin with.

According to Antony J. (2006), the prioritization of projects in many service-oriented

companies is still based on pure subjective judgement. Very few tools are available

for prioritising projects although selecting the right projects is one of the critical

success factors of its implementation.

The statistical definition of Six sigma is 3.4 defects or failures per million

opportunities. In the service processes, a defect may be defined as anything which

does not meet customers’ expectations or needs. It is quite not logical to assume

that all defects are equally good when calculating the sigma capability level of a

process.

Owing to dynamic market demands, the characteristics to quality (CTQ) of today

would not necessarily be a meaningful for tomorrow. CTQs should e critically

examined all times and refined as necessary.

The start-up cost for institutionalising Six sigma into a corporate culture can be a

significant investment. This particular feature would discourage many small and

medium size enterprises from the introduction, development and implementation of

Six sigma.

If organizations decide to implement Six Sigma, they must need to be aware of some

key risks that have to be managed; including focus, organization, culture,

capabilities, resources, training, projects and people. Its implementation all too fail

easily for so many reasons. Such as the lack of obvious management support

compromising its project team’s authority leading to their inability to undertake

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effort as team follow interesting projects that have little relevance to business needs.

Also, how an organization reacts to the data that is generated by a Six Sigma project

can be very disappointing and so the people are unlikely to co-operate unless they

feel assured by the senior management that any findings will only be used to help

the company move forward and not be used to beat them or departments over the

head with.

3.4 Assessing Changes and Performance Management:

Kaizen and Lean Management are popular approaches to enhance process

performance. All the organizations adopt a methodology for measuring performance.

According to Bond T.C. (1999), management tasks are complex in nature and the

number of states necessary to describe all possible futures and the corresponding

range of decisions that could be taken are limitless. In order to get the details of a

process requires the manager to access the total database of relevant events, an

enormous wealth of data, which uncovers the overall picture.

Performance measures (PMs) are there to give a mechanism for co-coordinating

process improvement policies developed by senior management. However, the profit

as the only performance measure is not acceptable because it encourages short-

termism. It is important that performance measures reinforce activity that is in the

best interest of the organization. Performance measures must be in accordance with

the organization strategy.

3.4.1Significance of a Performance Measurement System:

According to Bhasin S. (2006), several factors have contributed to the debate

concerning performance measurement systems; the literature indicates that:

Traditional accounting systems allocated overheads on the basis of direct

labor.

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The increased level of global competition concentrating on service, flexibility,

customization and innovation.

Varying external demands whereby customers expect both high levels of

service and that firms operate in identifiable ways.

Traditional metrics have not worked and the major shortages came into view

such as:

Traditional accounting measures are not suited for strategic decisions.

Traditional metrics are historical and hard to correlate.

They provide little information on the root problems.

The connection between financial and non-financial measure is fragile.

Little attention is paid to cross-functional processes as opposed to functional

ones.

Intangible assets are awarded modest attention.

They largely ignore value creation.

Often there are too many measures.

They encourage managers to minimize the variances rather than actively

seeking to improve continually.

Very rarely can we aggregate from operational to strategic levels.

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3.4.2 Relevance of Performance Measures to Lean Management:

There are so many guidelines those organizations need to contemplate in their

efforts to implement an effective performance measurement system. Most of the time

organizations use generic measures with little consideration of their relevance. The

biggest challenge is selecting the right measure for the appropriate level of the

organization.

There are three classes of performance measures. The bottom class resembles the

traditional measures concentrating on finance whereas the middle level has the more

balanced view. The highest level looks for casual relationships across the

organization. Accordingly, organizations need to adopt measures that facilitate

balancing external pressures, i.e. customer satisfaction, in conjunction with internal

pressures i.e. employee satisfaction. If seen differently, the internal measure may

intimate that a company is performing well but on the other side external measures

show poor performance.

Companies need to understand how key performance measure can guide and drive

an organization processes towards superior results. As lean have the following

benefits to offer:

Shorter cycle time;

Shorter lead times;

Lower WIP (Work in Process).

Faster Response.

Lower cost.

Greater Production Flexibility.

Higher Quality.

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Better customer service.

Higher revenue.

Higher throughput.

Increased profit.

Maskell and Baggaley (2004), emphasized on the need to realign the financial goals

with those that lean attempts to accomplish. They focus on the need to measure

financial progress from a perspective of relevant business issues and the real cost

instead of traditional standard cost methods. Performance measures should be

chosen enabling an organisation to gauge whether progress is being made against

targets and check points (milestones).

Organizations implementing lean must deploy early warning systems. The

milestones can indicate either the progress is being made or signal that the problems

need to be solved.

As lean is viewed as a process focused initiative that makes it fundamental for the

lean expedition to have periodic appraisals. Variation in time and quantity is found in

every process from supply chain demand amplification to the dimensional variation.

It is the greatest adversary of lean.

3.4.3 Different Approaches for the Assessment of Lean:

3.4.3.1 Balanced Scorecard:

According to Bhasin S. (2006), more than 60 percent of organizations use a

balanced score card. The balanced score card utilises 15-20 measures in four

dimensions:

1. Customer;

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2. Internal;

3. Innovation and learning along with; and

4. Financial.

Bhasin S. (2005) referenced Standard and Davis (2000) that the best measure to

track lean progress is total product cycle time that can be accommodated in a

scorecard approach. The related benefits include shorter lead time, greater flexibility,

lower inventory, better customer service and higher revenues.

The key reason to measuring the success of Lean using only one time dimension

may be misleading; short-term corporate success, i.e. sales and cash position, may

alter during the next year.

3.4.3.1.1 Draw backs of Balanced Scorecard:

The balanced score card is incomplete, since it fails to:

Emphasise sufficiently the contributions of employees and suppliers make

towards assisting an organization to achieve its objectives;

Recognize the role of the community in monitoring the environment in which

the company works;

Identify performance measures to assess stakeholders contributions; and

Distinguish between means and ends which is not very well defined; there

exist no clear provision for very long-term measures.

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3.4.3.2 Dynamic Multi-Dimensional Performance (DMP) Model:

The Dynamic Multi-Dimensional Performance (DMP) framework has different

characteristics which differentiates it from other frameworks. A positive point of this

model is its multi-dimensional perspective, which offers a more comprehensive view

of what organizational success means. The DMP has five major success dimensions

which are;

1. Financial;

2. Market;

3. Process;

4. People; and

5. Future.

The DMP framework gives an opportunity to introspect an organization’s

performance in multiple time horizons. The ‘financial’ represents the very short-term,

‘future’ looks at the very long term, ‘people’ dimension acknowledges the critical

roles of multiple stake holders and addresses a major limitation of the balanced

score card. Also, it has the flexibility that it can be implemented in different

organizations in different industries.

The DMP introspect various research streams, such as corporate entrepreneurship,

strategy, process, product development, marketing, economics and finance. It builds

around the balanced score card in identifying the importance of establishing cause-

and-effect relationships; if improved operational performance fails to improve

financial performance, this will indicate that the chain of cause-and-effect has not

been established correctly and needs review.

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3.5 Conclusion:

The LEERM is defined and the context that leads to its development described. In

near future more organizations will be using the LEERM paradigm. It relies on

advanced information and communication technology but is not dependent on

significant technological development. The primary challenge to the effective

realization of the LEERM is management practice and organizational development.

According to Antony J. (2006), on the other hand Six sigma is a business strategy

and a systematic methodology which leads to breakthrough in profitability through

leaping gains in service quality, productivity and performance. At present it has been

considered as a strategic approach to achieve excellence in operations and service

performance through the effective utilization of statistical and non-statistical tools and

techniques.

Performance measurement system has been developed to interact with a wider

environment. There are two fundamental dimensions to this environment. The first

one is the internal-that is the organization and the second is the external one-that is

the market within which the organization competes.

Two performance measurement methods has been discussed in the above context

which have their own pros and cons. Balanced score card and DPM are adopted in

different sets of environments where balanced score card takes account of

customer, internal, financial, innovation and learning perspective but whereas the

Dynamic Multi-Dimensional Performance (DMP) model focuses on financial

measures symbolizing the approach to the organizational success, customer/ market

measure, process measure, people development measure and preparing for the

future measures.

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CHAPTER-4

RESEARCH DESIGN

4.0 Introduction:

This chapter explains the methodology undertaken to do primary research. It

explains the type of research, questionnaire, data and tools used. It justifies the way

the author has reached the target respondents, and ensured validity and reliability of

the research. Author has used different diagrams and flow charts to elaborate the

activities as carried out during the process.

4.1Research Design:

According to Bryman A. and Bell E. (2003);

“A research design provides a framework for the collection and analysis of data. A

choice of research design reflects about the priority being given to a range of

dimensions of the research process”.

The dimensions include the importance attached to:

Expressing casual connections between variables.

Generalizing to larger groups of individuals than those actually forming part of

the investigation.

Understanding behaviour and the meaning of that behaviour in its specific

social context.

Temporary appreciation of social phenomena and their interconnections.

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Research design can be associated with different kind of research methods.

Research method according to Bryman A. et al. (2003) as;

“A research method is simply a technique for collecting data. It can involve a specific

instrument, such as a set completion questionnaire or a structured interview

schedule, or participant observation whereby the researcher listen to and watches

others.”

4.2 Selecting the Topic:

Coombes (2001) believes that selection of a topic for the research needs a careful

attention and consideration. Even though author had a major study area in his mind

prior to the start of the research (i.e. Lean Management and Kaizen for automobile

sector), but due to the hindrances in gaining the access to the information and to the

industry he has adopted to do a research based on a case study related to the

implementation of Lean and Kaizen to the logistics operation of a non-manufacturing

organization. He has worked diligently to narrow down the research area, which

should be measureable and achievable. O’Leary (2004) proposed the model helping

him in achieving the target showed in figure 4.1 as under;

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Figure 4.1 Getting Your Methodology Design on Target

Source: O’Leary (2004, p.89). The Essential Guide to Doing Research, Sage

Publication Ltd. London

4.3 Type of Research:

The author has adopted to conduct the qualitative research based on the case study

approach. According to Bryman A. and Bell E. (2007), some of the best-known

studies and management research are based on this kind of design. A case study

can be:

A Single organization

A single location such as factory, production site, or office building.

A Person.

A Single event.

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The most common association of the term ‘case’ is associated with a location, such

as a work place or organization. The case focuses upon the intensive examination of

the setting. It is best possible to associate the case study design with the qualitative

research. It is true that exponents of the case study design often favour qualitative

methods, such as participant observation and unstructured interviewing; these

methods are considered as instrumental in the generation of an intensive, detailed

examination of the case. Knights and McCabe (1997) suggest that the case study

provides a vehicle through which several qualitative methods can be combined,

thereby avoiding too great a reliance on one single approach.

4.3.1 Types of Cases:

Sometimes it is useful to consider a distinction between different types of case that is

sometimes made by writers. Yin (2003) distinguishes the following types.

The critical case: In this stance the researcher has a clearly specified

hypothesis, and a case is often chosen on the grounds that it will allow a

better understanding of the circumstances in which the hypothesis will and will

not hold.

The unique case: The unique or extreme case is, as Yin observes, a

common focus in clinical studies.

The revelatory case: The basis for the revelatory case exists when an

investigator has an opportunity to observe and analyse a phenomenon

previously inaccessible to scientific investigation. Much qualitative case study

research that is carried out with a predominantly inductive approach to theory

treats single case studies as broadly ‘revelatory’.

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The representative or typical case: It seeks to explore a case that

exemplifies an everyday situation or form of organization.

The longitudinal case: This type of case is concerned with how a situation

changes over time.

4.4 Credibility of Research:

According to Sunders M. et al. (2003), the credibility of research findings because

the scientific methodology needs to be seen for what it truly is and reducing the

possibility of getting the answer wrong which means the attention has to be paid to

two specific emphases on research design:

Reliability: Reliability can be assessed by posing the following three questions;

Will the measure yield the same results on other occasions?

Will similar observations be reached by other observers?

Is there transparency in how sense was made from the raw data?

Threats to Reliability:

Robson (2002) forces that there are four types of threats to reliability, the first is

subject or participant error which can be described by an example such as; if the

study is about the degree of enthusiasm employees have for their work and their

employer it may be possible that the questionnaire completed at different times of

the week which may produce different results. The second may be subject or

participant bias such as the employees will say what their bosses wanted them to

say. The third one is the observer error and the last one is the observer bias.

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Validity: It is concerned with whether the findings are really about what they appear

to be about.

Therefore, author in the context of the above stated threats has tried to avoid the

happening of both threats in obtaining the data from the interviews and

questionnaires.

4.5 Type of Data:

To carry out the reach process and make final conclusions, author has used two

types of data. I) Primary Data. II) Secondary Data.

Primary data consists of survey questionnaire (a mixture of structured and

unstructured questions). And secondary data consists of books, internet, library

services and journals etc.

4.6 Sampling:

There are different sampling methods which author could have used to carry out the

research. For an effective sampling it is mandatory to define the Elementary

Sampling Unit carefully.

4.6.1 Elementary Sampling Unit (ESU):

Baker (2003) defines sampling unit (sometimes called an elementary sampling unit

or ESU) as a specific individual or object that is to be considered in the survey.

According to this definition the ESU for the research are the individuals who were

working for ERIKS.

4.6.2 Sampling Type:

The sampling technique which the author used to carry out the research is ‘Multi-

Stage Cluster Sampling’ which is according to Bryman A. and Bell E. (2007) is

defined as ‘The units of population are divided into groups which in turn are known

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as clusters’. The author has chosen to do the research based on the case study of

the single organization generally representing the situation of the organizations of

the similar nature. Therefore, the clusters of the sample are related to the employees

working for different departments within logistics.

4.6.3 Sampling Size:

According to the ESU, author has defined the population evenly throughout the

whole organization within different departments involved in the logistics chain. Author

has used the email to reach the whole population by sending the questionnaire in the

email to the department heads.

4.7 Research Tool:

O’Leary (2004) defines the research tools as “the device a researcher uses to help

him/her collect the data, i.e. questionnaire, observation checklists, interviews

schedules etc.” The author has used the combination of three tools for the purpose

of acquiring the primary data:

I) Questionnaires.

II) Telephonic discussion.

III) Face-to-face interviews.

These tools have been applied in such a way that they mutually support each other

and diminish the chances of hindrances involved in each one separately.

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4.7.1 Questionnaires:

Questionnaires are the true picture of about the area of interest that researcher

wants to know. Research questions are very important and no research questions or

poorly formulated questions lead to a poor research. If not specified clearly, there is

a risk that the research will be unfocused. According to Bryman A. and Bell E. (2007)

stated that research questions are crucial because they will;

Guide the literature search;

Guide decisions about the kind of research design to employ;

Guide decisions about what data to collect and from whom;

Guide analysis of the data;

Guide writing up of the data;

Stop going off in unnecessary directions.

An example of a filled questionnaire is attached in the Appendix. The questionnaire

is a mixture of structured and non-structured questions.

4.7.2 Telephonic Discussion:

The use of the telephone in the research process was for the following purposes:

To introduce research and develop some sort of rapport.

To make it ethical by asking first on telephone and then sending emails for the

formal permission.

To speed up the process of filling the questionnaire.

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4.7.3 Face-to-Face Interview:

Interview is the prominent data collection strategy in both the quantitative and

qualitative research. The author has used the structured interview technique which

according to Bryman A. et al. (2007) is defined as:

“It entails the administration of an interview schedule by an interviewer. The aim is

for all interviewees to be given exactly the same context of questioning which implies

that each respondent receives exactly the same interview stimulus as any other”.

The objective of this type of interviewing is to ensure that interviewees’ replies can

be aggregated and it can be achieved if the replies are in response to identical cues.

4.7.3.1 Issues related to conducting Interviews:

Bryman A. et al. (2007) illustrated some of the issues related to conducting

structured interviews which are stated as under;

Know the Schedule: It’s the interviewer responsibility to be fully conversant with the

schedule. Because interviewing can be stressful for interviewers it can cause

interviewers to get flustered and miss questions out or ask the wrong questions.

Introducing the Research: This facet of interviewing research is of particular

importance because the prospective respondents have to be provided with a credible

rationale for the research in which they are being asked to participate and for giving

up their valuable time.

Rapport: This aspect of interviewing focuses on establishing a quick relationship

with the interviewer that encourages the participant to want to participate in and

persist with the interview. This is important because some respondent may initially

agree to be interviewed but then decide to terminate their participation because of

the length of time the interview is taking or perhaps because of the nature of the

questions being asked.

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Asking Questions: The objective of the structured interview is to ensure that each

respondent is asked exactly the same questions. Because variation in the ways the

questions are asked is a potential source of error. In structured interview, the

likelihood of this happening is lesser but cannot guarantee that this will not occur.

Recording Answers: An identical caution for identical reasons can be registered in

connection with the recording of answers by interviewers, who should write down

respondents’ replies as exactly as possible.

Clear Instruction: This stage describe that interviewers need instructions about

their progress through an interview schedule.

Question Order: Besides warning interviewers about the importance of not varying

the asking questions and the recording of the answers, they should also be

cautioned about the importance of keeping to the order of asking questions,

because, changing the questions order can result in certain questions being

accidentally omitted.

Probing: It is related to the interviews where the respondents need help with their

answers. It might be the case that where the interviewee does not understand

question and require further information or to clear from what they are struggling to

provide an adequate answer.

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4.8 Research Limitations:

The main research limitations are given as under;

1) Due to the short period of time and accessibility, author has only managed to

gain access to only one organization in UK which is included in the form of

case study in the later chapter.

2) Due to the lack of time, author was not able to implement the LEERM model

physically and measure the performance level after the implementation. This

can possibly be another area of research and can be useful for the

organizations of the similar nature.

3) Due to the short time period and less accessibility to the organization of the

similar nature, the data obtained by the author from one organization cannot

surely be the true picture for the other organization of the similar nature,

because each organization has a different set of logistics’ operations.

4) Author wanted to study the warehouse information management system used

by ERIKS, but due to the shortage of time and less accessibility to the data

from the information technology department of ERIKS, author was not able to

achieve the final objective.

4.9 Conclusion:

The overall methodology is illustrated by the following steps in Figure 4.2:

The first initial contact was done by telephone (Step-1) to gain permission to initiate

the distribution of the questionnaires. The questionnaires were sent to the

department heads (Step-2) where they have done copies and distributed to the

employees working within the logistics and warehouse section. Collection of

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questionnaires (Step-3). Contact on telephone to gain permission to conduct face-to-

face interviews (Step-4). Aggregation of information and data collected through

questionnaires and interviews. (Step-5)

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Figure 4.2: Steps taken to collect information from the respondents

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Chapter-5:

5.0 ERIKS-UK: A Case Study:

In this case ERIKS-UK has been represented as model for implementing the Lean

and Kaizen. This case study is going to provide the inner view of all the logistics

processes involved and the major problems often faced by the organization of similar

nature. This chapter will provide the detail structure of ERIKS logistics activities

involving different departments. And the later chapter will discuss the implementation

of Lean Extended Enterprise Reference Model (LEERM) to the logistics processes of

ERIKS.

5.1 Company Overview:

ERIKS group is the undisputed European market leader for industrial products and

services and it aspires itself to be in the top three suppliers for all the core activities

in the regional branches offering a wide range of quality mechanical engineering

components.

The activities of ERIKS group consists of the purchasing, storage, processing, sale

and distribution of an extensive range of high quality mechanical engineering

components along with highly developed technical and logistics services. Within

ERIKS there is a wide and in-depth knowledge of market developments, product

properties, product applications, processing of products, logistics, and a compatible

modern infrastructure.

ERIKS offer over 500,000 products to more than 60,000 industrial customers. ERIKS

make more than 1.3 million shipments to companies including the chemical, food,

machine and equipment construction, semi-conductor, petrochemical, construction,

offshore, metal, agriculture, energy and transport sector.

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ERIKS value chain consists of 500 qualified manufacturers, suppliers and ERIKS

believe in integration with their suppliers also educating their suppliers on extensive

technical and logistics knowledge also sourcing new producers and testing of

existing producers in order to provide the most innovative and competitive products.

It has independent brand policy by having good strategic agreements and good

conditions with the brand manufacturers passing the benefits to the customers.

ERIKS share in the market with respect to different segments is represented as

follows in figure 5.1:

Figure 5.1 ERIKS Different Market Segments

Source: ERIKS Company Profile

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ERIKS has believed in managing knowledge by establishing knowledge centers

wherever ERIKS is represented in the world. These knowledge centers are

responsible for stock keeping, product management, engineering and purchasing for

each core activity shown in the above diagram. ERIKS has integrated explicit

knowledge in all areas of its operations in different forms such as:

Market Know-How: Knowledge of the demand side of the market and the

supply side enables the company to offer new products and services and

allow entering new markets proactive and timely.

Product Know-How: ERIKS possess in-depth knowledge of products and

their properties and convey this knowledge in different types of technical

documentation.

Application Know-How: ERIKS believe in understanding current and future

applications (of their customers) and converting them into use of the right

products. Translating issues facing customer into new products.

Brainstorming sessions with customers on engineering the design and

maintenance of new products and systems (R&D).

Product-Processing Know-How: ERIKS has a strong customer driven

product portfolio and it ensures the availability of facilities (either in-house or

through third parties) to adapt existing products to the specifications. It also

offers maintenance facilities and services for the performance of maintenance

on components and systems.

Logistics Know-How: ERIKS analyse and streamline logistics streams and

develop and ensure the availability of logistics concepts tailored to fit the

customer.

The cost involved in the above activities involves the cost of technical services for

extensive engineering and processing facilities available to be able to deliver every

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conceivable solution within the entire range of mechanical engineering components.

Also there are other cost involved in the form of procurement cost which accounts for

the total cost of purchasing technical products. The level of procurement costs

(administration and logistic costs) depends upon the composition of the product

package and the type of environment (MRO or OEM). Cost also involves the cost of

complete handling of the supply of technical components via an extensive range of

VMI (Vendor Managed Inventory) solutions, complete with barcode scanning.

ERIKS focus on tailored design, manufacture and installation of the mechanical

equipments, providing integrated solutions, maintenance of installations and stock of

customized replacement components.

5.2 ERIKS (UK) LOGISTICS’ STRUCTURE:

ERIKS-UK has a Regional Distribution Center (RDC) and the complete distribution is

carried out from the RDC. It has several strategic business units across nationwide

responsible for the distribution of different kind of industrial supplies to different

customer base. For the research, author has observed the inbound and outbound

logistics’ processes of ERIKS (UK) and highlighted the problems within the area. The

Inbound and outbound logistics of ERIKS (UK) involved the following steps:

5.2.1 Inbound Logistics:

Receiving of Goods from Suppliers (Goods Inward).

Booking in Stock (Using the in-house warehousing management system

EMPERICA and WIS).

Marshalling (rechecking of the inventory of goods already booked onto the

system on the scanning guns).

Put-Away (Storage of goods in the allocations provided by the system).

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5.2.2 Outbound Logistics:

Order picking from the shelves, adjustable pallet racking and through picker matt

(automated physical storage system used by ERIKS to store light weight goods).

Jobs are allocated to the order pickers in their scanning guns. Order pickers pick

their jobs on their scanning guns which tell them the exact location and the type of

product.

Order pickers use the tote boxes to put the goods depending upon the weight and

size of the product. Boxes are individually assigned the RFID tags. These RFID tags

are read by the electronic circuits which are embedded into different lanes assigned

to the despatch for different branches represented with branch codes across the

country.

The despatch staff picks the goods from the lanes, print off the labels and put them

onto the packaging boxes. Scan the boxes once again to make sure the goods are in

right quantity and intended to be despatched to the right branch (identified by the

designated branch code). In case of heavy goods, goods are placed on the pallets

but the same way they are assigned labels and scanned through the scanning gun.

ERIKS (UK) uses private courier service provider (City Link) to despatch their

products to the branches across the country.

ERIKS (UK) can track their despatches through the use of IT system provided by

City Link but only the transportation from one end to the other without any guarantee

that goods reached the customer or the branch in the right quantity.

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5.3 Problems Related To Inbound and Outbound Logistic Of ERIKS:

Following are some of the problems that author has found about the inbound and

outbound logistics of ERIKS-UK which generally represents the day-to-day problems

faced by the service organizations like ERIKS;

The deliveries intended to go to branches across the country are first received

by RDC, they are opened, re-checked and then re-packed again. Thus,

increasing the cost of transportation and packaging.

Branches are treated as a separate business unit and invoiced separately.

Therefore, it makes difficult for the central business unit to control the

activities of the branches.

Small deliveries are cross-docked, which increases the time to reach to the

customer long and cost of transportation is doubled.

Product codes supplied by the suppliers are different to the codes set by

ERIKS. Which creates complication sometimes; when the products received

from the supplier do not bear any code. The warehouse staff needs to

manually allocate the product code on the basis of previous experience.

Conflict between two warehouse management systems used by ERIKS;

which creates the complication for the staff. Because, it takes time to for both

the systems to bridge each other. In return, there is a delay of generating

invoices and staff occasionally makes hand written invoices to the branches

and customers.

Inefficient management of the storage resources. Some of the inventory

sitting on the shelves takes ages to move and more or less redundant.

Ineffective use of labour resources. Multi-job allocation makes it difficult for

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When deliveries are received from the suppliers and they are cross-docked,

they need to be repacked and labelled again. This automatically increases the

cost of packaging and waste of labour.

Transportation of products is not safe by any means which causes several

products to get lost during the transportation or after the transportation.

Transportation manager spends most of his time in tracking despatches,

which is due to the lack of the tracking system for the despatches.

Less training on the warehousing management system; therefore, staff learn

the system on trial and error basis.

Inappropriate allocation of the storage makes it more difficult for the order

pickers to pick the products from the shelves.

5.4 Conclusion:

The place where ERIKS (UK) is now, has earned it with spending a significant

amount of time and money which also involves the process of learning and failure.

So, if ERIKS (UK) wants to achieve the customer satisfaction and greater market

share besides the other organization of similar nature, it is recommended that it has

to start improving their logistics process right now which is affecting the company

very heavily. The next chapter is going to discuss the implementation of Lean

Extended Enterprise Reference Model and will depict that how the processes can be

improved with the help of the model.

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Chapter-6:

6.0 Implementation of LEERM:

6.1 Introduction:

As discussed in the previous chapter that Lean Extended Enterprise Reference

Model (LEERM) is a structured model for transforming to total value stream

conversion of Lean.

LEERM is shown in the Figure 6.1 and the architecture of LEERM has four layers

which are referred to as Panels of Value Stream Integration as illustrated in the

Figure 6.2 below

Figure 6.1 Lean Extended Enterprise Reference Model (LEERM)


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Figure 6.2 LEERM Panels of Value Stream Integration


6.2 Implementation:

The author has applied LEERM every single layer to the processes of ERIKS (UK) to

improve and gain the objective of obtaining a lean logistic environment. As the first

layer of LEERM suggests that this panel must be incorporated by top executive

management in their organization if they want to achieve the Lean Extended

Enterprise improvement initiative:

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6.2.1 Strategic Journey Panel:

6.2.1.1 Lean Extended Enterprise Vision/Leadership/Strategy:

As the name suggests that it is strategic in nature which involves aligning strategy,

deployment and execution. ERIKS (UK) is determined to become the Europe

undisputed supplier of the industrial products.

It is necessary for the ERIKS management adopt the change and understanding the

continuous improvement and Lean behaviour. Messages enforcing change must be

conveyed non-verbally.

Targets must be clearly defined and communicated to the first line supervisors. Key

performance indicators (KPIs) trees must be developed for the individual section of

the logistics process.

Performance feedback must be taken from the employees not only from the

supervisors to the warehouse, transportation and purchasing manager. Such as the

managers must visit the RDC and ask anybody from a specific section to explain him

what is happening to the performance and the major reasons for variances.

The improvement process must be kept simple but focused.

Visual performance measures play a major role, in order to achieve this; all the

critical value drivers in every section of the RDC must be visually displayed and each

person knows accurately what the current performance is.

The transfer of knowledge, especially best practices must be accessible to everyone

in RDC.

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6.2.1.2 Value Stream Perspective:

From this panel all the processes which are redundant and causes hindrance in

value creation must be avoided. The waste from the chain must be removed.

Following are the processes that are found faulty in the complete chain.

Goods received from the suppliers intended for the branches coming to RDC for

booking in and separate invoice created by the RDC.

Goods are packed again which ultimately increases the time to reach and also

increases the transportation cost.

Goods are lost during the transportation because of the lack of any tracking system

such as Radio Frequency Identification (RFID) tags.

Because of the use of two warehouse management systems, there is always a delay

because the both systems are not bridge together and therefore cause delays.

Redundant inventory sitting in the storage causes the problem for the storage

allocation for new items. This in turn is also another form of financial liability.

6.2.1.3 Expanded Basic Principle set/Infrastructure Expectations:

As it has been explained earlier in the LEERM model explanation that this stage is

related to the implementation of methodologies and tools to enable LEERM, which in

this case the tool is Lean and Kaizen. Also the infrastructure expectations which is

related to establishing the values and basic rules of conduct and behaviour. In this

case the organization needs to build up the culture where it supports the training and

development. Also provides employees incentives if they want to further improve

their skills which in turn can help ERIKS to improve their work efficiency. Such as

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there are several short courses available from the Chartered Institute of Logistics

and Transportation (CILT).

6.2.2 Best Practices and Principle Panel:

From this perspective which includes the mixture of five characteristics of

Leadership, customer market focus, improvement structure, value stream processes,

and organizational learning. ERIK’s management needs to play a vital role in this

process because if the management is reluctant about the change and it does not

want to learn and implement new tools and techniques into the improvement process

then all the efforts will be wasted. If the employees are willing to participate in the

change process but if the management is not going to back the process then the

implementation is futile. It needs to provide integrated services solutions to their

customers which provide immediate availability of the products on the customer

premises. Such as if there is a mechanical fault comes to manufacturing plant in a

biscuit manufacturing firm and the machine is redundant for hours then it is a

complete loss for the firm. Here, ERIKS can setup the integrated services on the

clients’ premises so that its team is always ready to provide customer support and

can ensure the immediate availability of the products on clients’ premises.

This also solves the problem where the stock of some products overflows

progressing on providing the integrated services will reduce the inventory of some of

the products in the RDC which are physically bulky in nature and obviously reduce

the cost of transportation. Because in the RDC there are some products which are

sitting on the shelves for more than 40 years which is actually the waste of storage

space, and due to their enormous weight they require special handling and care.

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Chapter 7:

Data Results and Analysis:

7.0 Introduction:

This chapter presents the survey results along with a brief analysis on the findings.

The graphical representation of the results has been achieved to further clear the

picture. Appendix I provide the sample questionnaire in detail.

7.1 Section-A:

This section consists of structured questions designed to get information from the

respondents about their gender, age, work level, level of responsibility and access to

computers at home.

Question 1: Gender

Option: Male Female

Total of 40 respondents participated in the survey amongst them 28 were male and

12 were female.

Chart-1

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Question 2: Age:

20-23 24-28 29-35 36-40 40-45 45-50 50 above

The results show that most of the participants out of 40 were in the age bracket of 20

to 36 years some of the respondents were above 36.

Chart-2:

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Question 3: Work level in the organization:

There were 3 supervisors each for different section and rest of them were all on the

worker level.

Chart-3

Question 4: Level of responsibility:

Most of the workers have the intermediary level of responsibility within the hierarchy

but some of the workers and supervisors have the critical level of responsibility.

Chart 4 shows the statistical distribution of the values.

Chart-4:

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Question-5: Access of computer at home:

All of the respondents have the access to computer at home:

7.2 Section B:

This section consists of 5 structured questions which shows that does management

takes initiatives to help their employees learn and to help develop the understanding

about the critical logistical processes. The questions are measured at the scale of 1-

5.

1 Strongly Disagree 2 Disagree 3 Neutral 4 Agree 5 Strongly Agree

Question-6: Management support is available to enhance knowledge about process

efficiency.

Most of the participants conceded that there is a less support available from the

management in learning and developing the skills to increase knowledge about

process efficiency and the workers need to follow defined set of procedures to

complete their tasks. Chart 5 shows the statistical representation of the data

collected for the above said question.

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Chart-5:

Question-7: Preferred way of learning is ‘Learn by yourself’.

This question was particularly targeted towards the employee motivation to learn in

the working environment where management support is not available to learn new

things and techniques to enhance the efficiency of the processes. Most of the

respondents have learnt the things by their selves or by the help of the old

employees where management has not played any major role in providing the

support to expedite the progress. Chart-6 shows the graphical representation of the

data collected for the above said question.

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Chart-6

Question-8: Do you prefer to learn by using your own personal experiences?

This question is targeted towards the employee self motivation to learn the new

things by actively engaging their selves into the processes and learning by their own

experiences. The graphical representation of the data collected is shown in the

Chart-7.

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Chart-7

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Question-9: Does management take initiatives for training and development?

This question is directed towards the management support available for the

employees training and development in order to achieve the desired level of

efficiency and optimizing the level of employee performance. The graphical

representation of the data is shown in chart-8.

Chart-8

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Question-10: Does management supports learning by trying out new ideas and

techniques to see they work in practice?

This question focuses on the ability of the workers to adopt the new ways of doing

things which they are allowed to exercise during their normal course of work and

backed by the management. Graphical representation of the data collected is shown

below in chart-9:

Chart-9

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7.3 Section-C:

This section comprises of 10 structured questions mainly concerned with the internal

processes and the major areas where improvement is needed. The questions are

measured at the scale of 1-5.

1 Strongly Disagree 2 Disagree 3 Neutral 4 Agree 5 Strongly Agree

Question-11: Do the waste minimizing efforts are initiated by the management?

The response to this question was quite different because almost most of the

respondents have mixed opinions about this question. The 85 percent of the

response on management support shows the management is less interested to

participate in the knowledge expediting process. The graphical representation of the

data collected is shown below Chart-10

Chart-10

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Question-12: Does the implementation of two warehouse management system make

the processing fast?

This question was focused on the implementation of two warehouse information

management system (WHIMS), mainly the problem with the implementation of two

WHIMS is the communication and at the same time working on both systems makes

difficult for the users to understand the systems at the same time which is actually

the waste of monetary resources and training is required to train the staff on the

systems. Almost 90 percent of the staff disagrees with the fact that the

implementation of two WHIMS makes it difficult for the users to use both systems at

the same time. The graphical representation of the data collected is shown in Chart-

11.

Chart-11

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Question-13: Allocation of labor to different areas makes it easy for the workers to

concentrate on their area of expertise.

Most of the responses from the respondents disagree to the fact that switching the

labor to different areas makes it difficult for them to focus on their area of domain. 39

respondents out of 40 disagree with the statement. Graphical representation of the

data collected is shown below in Chart-12:

Chart-12

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Question-14: Direct branch orders (cross-dock) should not be sent to RDC but must

be sent directly to the branches.

Respondent agreed to the fact that the branch orders received by the RDC are a

waste of time, packaging and time to reach the end consumer. Graphical

representation of the data is shown in Chart-13:

Chart-13

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Question-15: Branches must be treated as part of the central business units instead

of separate business entity.

This question was focused individually focused on assessing the RDC and the

coordination of the branch operations. Most of the respondents agreed to the fact

that branches must be treated as a part of central business because of the so many

process redundancies when handling the branches separately. Graphical

representation of the data is given in Chart-14:

Chart-14

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Rest of the questions from 16 to 20 as given in the Appendix I are related to the

product classification, codes used, use of RFIDs, stock checking and avoiding

packaging waste. The average positive response (Agree/Strongly Agree) to these

questions is shown in the Chart-15 given below:

Chart-15:

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Chapter 8:

8.0 Conclusions and Recommendations:

This chapter highlights the conclusions which are accumulated on the basis of the

primary data acquired with the help of questionnaires. The conclusions will help the

author to make suitable recommendations.

8.1 Section A:

8.1.1Conclusion:

This section was focused on judging the average demographics, level of

responsibility, and intensity of their job level to gives the idea if the organization has

the capability of adopting the change and can participate in the change process of

the work force of ERIKS since the results show the most of the participants are in the

age bracket of 20 to 36 so there are less chances of hindrances in adopting the

change and 85% of the respondents have the intermediary level of responsibility

which can help in incorporating change in the organization.

8.1.2 Recommendation:

On the basis of this author can recommend that ERIKS must initiate the

implementation of Lean and Kaizen from the lower hierarchy of the process and

progress to the top. And can induce the motivation to learn the new techniques and

tools to enhance their efficiency of their processes.

ERIKS can conduct different workshops on the shop floor giving the staff opportunity

to learn on the work so they can exercise the techniques learn at the same time on

the floor.

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8.2 Section B:

8.2.1 Conclusion:

This section is compromises of five structured questions which are focused on the

management support for learning and employee motivation to learn new things. The

results of this section show that 85 percent of the respondents agree with the fact

that the learning process must be initiated by the organization and the organization is

less interested to provide the support for training and development. This is not so

helpful for the change process. If lean and kaizen needs to be implemented, ERIKS

must provide its ample support to produce a learning environment and encourage

the learning programs to help initiate and adopt the change process.

8.2.2 Recommendations:

According to Abott C. and Pedler M. (2008), ‘Action learning sets are communicative

spaces where participants can seek to understand the tensions between the

demands of their situations and their situations and their own views’. Therefore, in

the light of the above statement, ERIKS need to;

Organize the work staff into teams and empower them to exercise and learn

the new things on work in order to expedite the change process. These

practices can be vital and can help reduce the learning cost involved by

helping the employees learn in their own working hours.

It needs to incorporate the vision of the organizational goals into its workforce

and keeping focus on customer demands adopting new management style

and keeping the ample focus on expediting the organization processes into

the controlled manner.

The supervisor of each different department must setup workshops

concerning their own area of expertise to ask the workers about their

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problems while working and help them to learn the ways to solve those

problems which reduce the time they take to carry out their jobs and increase

their efficiency.

8.3 Section C:

8.3.1 Conclusion:

This section consists of 10 structured questions which are focused on different areas

of the warehouse operations internal and external. In the light of the analysis done in

previous chapter it can be concluded that ERIK’S internal and external logistics’

activities are not aligned and there is a need to minimize the redundant processes

and efforts must be made to produce an integrated system to minimize the waste

from the supply chain.

8.3.2 Recommendations:

In order to achieve the low level of waste and achieve high level of customer

satisfaction, ERIKS must adopt the following strategies:

Initiate the waste minimization efforts and adopt the Lean Extended

Enterprise Reference Model (LEERM) to achieve the objective.

Instead of using two warehouse management information systems (WHIMS),

must adopt only one WHIMS so that the processing of the information through

RDC to branches is quicker and less duplication of information can be

achieved.

Instead of allocating its labor force to different jobs, educate the labors in their

own areas so that their efficiency increases.

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Instead of receiving the branch orders to RDC, they should be sent directly to

the branches so that the waste of time, packaging and excess cost of

transportation can be avoided.

ERIKS must adopt a standardized system of categorization for it product

classification in order to avoid the confusion between the codes provided by

the suppliers and actual classification kept by ERIKS.

Stock check must be done on a weekly basis in order to avoid the waste of

redundant stock in RDC which is actually the waste of storage space and

money.

Use of RFID tags must be put into practice in order to avoid the stealing or

loss or damage of products during the transit. Most of the complains dealt by

the transportation manager are based on the loss or damage of products

during the transit which is actually the waste of his valuable time which he can

spent doing the job he is supposed to do instead of dealing the complains

about the products losses and damages.

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Appendix:

Appendix-I

An Example of filled questionnaire

Application of Kaizen and Lean Management: Improving Logistics of Non-

Manufacturing Organizations.

Respondent:

Section A:

1.Gender:

Male

2. Age:

20-50

3.Your working level in the organization:

1 (Worker) 2 (Supervisor) 3 (Management)

4.Your level of job responsibility:

1 (Normal) 2 (Intermediary) 3 (Critical) 4 (Very critical).

5.Do you have access to computer (PC) at home?

Yes

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Section B:

6.Management support is available to enhance knowledge about process efficiency.

e.g. 1 as strongly Disagree and 5 as strongly agree.

2

7.Your preferred way of learning new things is ‘Learn by yourself’.


1

8.Do you prefer to learn by using your own personal experiences?


2

9.Does management take initiatives for training and development?


1

10. Does management supports learning by trying out new ideas and techniques to

see they work in practice.


1

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Section C:

11. Do the waste minimizing efforts are initiated by the management?


2

12. Does the implementation of two warehouse management system make the

processing fast?


1

13. Allocation of labour to different areas makes it easy for the workers to

concentrate on their area of expertise.


1

14. Direct branch orders (cross-dock) should not be sent to RDC but must be sent

directly to the branches.


5

15. Branches must be treated as part of the central business units instead of

separate business entity.


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5

16. Product codes must be homogenous (same as the suppliers) in order to avoid

double entries into the system.


5

17. Classification of products must be done on the basis of their age in order to avoid

the redundant stocking.


5

18. Radio frequency tags (RFIDs) must be used to track and minimize the chances

of products stolen or lost.


5

19. Stock checking must be done every week during the weekend to update the

purchasing department weekly.

e.g. 1 as strongly Disagree and 5 as strongly agree

4

20. Packaging must be reused to avoid the packaging waste.


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Appendix-II

List of Figures and Charts:

Figure 3.1 Lean Extended Enterprise Reference Model (LEERM)…………….20

Figure 3.2 LEERM Panels of Value Stream Integration……………………….…21

Figure 3.3 Six Sigma Methodology………………………………………………….26

Figure 4.1 Getting Your Methodology Design on Target……………………….42

Figure 4.2: Steps taken to collect information from the respondents……….52

Figure 5.1 ERIKS Different Market Segments…………………………………….54

Figure 6.1 Lean Extended Enterprise Reference Model (LEERM)…………….60

Figure 6.2 LEERM Panels of Value Stream Integration………………………….61

Chart-1……………………………………………………………………………………65

Chart-2…………………………………………………………………………………….66

Chart-3…………………………………………………………………………………….67

Chart-4…………………………………………………………………………………….67

Chart-5………………………………………………………………………………….…69

Chart-6…………………………………………………………………………………….70

Chart-7…………………………………………………………………………………….71

Chart-8……………………………………………………………………………………72

Chart-9…………………………………………………………………………………….73

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Chart-10…………………………………………………………………………………..74

Chart-11………………………………………………………………………………..…75

Chart-12…………………………………………………………………………………..76

Chart-13………………………………………………………………………………….77

Chart-14………………………………………………………………………………….78

Chart-15………………………………………………………………………………….79

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Appendix-III

Research Proposal

Title:

Application of Kaizen and Lean Management: Improving

Logistics of Non Manufacturing Organizations.

Abstract:

Producing perfect and defect free services have long been desired

and it is still considered as an important strategic objective for the

companies to build market share in a global competitive economic

environment. Continuous improvement of company operations and

processes and value added service is an absolute requirement.

Value adding capability of an organization must be synchronized

with both the internal and the external value chain. Poor adding

value capability equates to waste and this usually exist in all parts of

the organization through poor time utilization, poor use of capital,

stock and human resources.

Successful re-engineering demands a total closer linkage throughout

the value chain which comprises of customer order processing, IT

infrastructure, and supply chain.

The main problem of the linkage is the poor coordination between

the different functions of the supply chain and logistics. If the product

groups within the organization can be identified from raw material

input to final delivery to customer and the existing value adding

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capability can be determined. These elements can then be analysed

and by process tracking and improved by using structured methods.

This leads to a systematic improvement of value adding capability by

removal of all non value adding elements and will bring

improvements in customer service levels, cost reduction and

profitability.

1. Aim:

To gain the comprehensive knowledge of current practices used in

the logistics of non manufacturing organizations. Find out the

existing problems, implementing lean and kaizen to the supplychain

to improve the practices and suggesting the solutions to solve the

problems.

Explore lean and kaizen techniques.

Explore improvement models.

Explore areas of improvement.

Explore waste removal techniques.

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2. Background:

According Berger A. (1997), with the Japanese re-export of several

prominent management concepts such as total quality control (TQC),

Just-In-Time (JIT) and lean production, the concept of Kaizen has

been introduced to the management arena. The first well known

proponent was Imai who wrote KAIZEN. He outlined the concept, its

core values and principles, its relation to other concepts and the

practices used in the improvement processes.

In modern economy, the requirement of the organizations to become

more responsive to the needs of customers and the changing

conditions of competition are driving the organization’s interest in

becoming effective, lean, customer-focused, able to add value,

quality driven, proactive rather than reactive.

The center of attention of the organization logistics and supply chain

activities is the value creation-from the customer perspective the

only reason for the firm to exist. If there is a careful consideration of

the steps required in the office to translate an order into a schedule

and many of the steps required in the process to create the service,

add little or no value for the customer.

Kaizen and Lean Management focus on developing a lean

enterprise where friction is absent. The term lean enterprise applies

to the complete supply chain. The main purpose of implementing

Kaizen and Lean Management techniques is to remove the waste

from the supply chain which can be according to Taiichi Ohno can be

defined in seven common forms of waste, activities that add cost but

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no value, production of goods not yet ordered, waiting, rectification of

mistakes, excess transport, excess processing, excess movement

and excess stock.

2.1 KAIZEN ( KYE-ZEN ):

“Bite of more than you can chew, then chew it. Plan more than you

can do, then do it”

-Anonymous

“The purpose of Standard work is not to stop progress; it is to

preserve progress”.

-Michael D. Regan

There is no mystique in the word ‘Kaizen’. It is a word used in

everyday conversation in Japanese, which simply means continuous

improvement. In 1970s, it was first used as a management concept

with a meaning of systematic approach to continuous improvement.

Since the time of its introduction, the concept has been revitalized

and implemented many times. It has become the part of the

everyday working life for many people around the globe.

It moves from the idea that ‘if its not broke do not fix it’, to ‘If it is not

broke do not ignore it because it will break one day’.

Bad business ignores the signs of disaster.

Good business spots the signs of disaster and deals with them.

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Kaizen business constantly reviews and monitors to preclude

disaster.

2.2 Lean Management:

The history of Lean Management can be linked with the Toyota

Production System (TPS) which is a philosophy invented by the

Chinese engineers Taiichi Ohno and Shiego Shingo (Inman, 1999).

Also TPS has been credited for the birth of JIT (Just-In-Time)

production method which is an important element of Lean

Management. The main focus of Lean Management is to eliminate

waste (Muda in Japanese) and as a result all the activities along the

value stream create value leading towards perfection. To reduce

waste from the value chain, efforts are done by implementing Kaizen

events.

2.3 Continuous Improvement (CI):

Originally the concept of the continuous improvement was brought to

Japan from the US after the Second World War to assist in the

reconstruction of the Japanese industry. The success of CI programs

in Western industry has been limited and the programs have primarily

been applied in the operations part of the business.

Bessant and Caffyn (1997) define continuous improvement as “An

organization-wide process of focused and sustained incremental

innovation. Also it is viewed as a particular set of routines that can

help an organization to improve the performance. Some key routines

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in an organization, such as learning from the experiences, and

capture, and deployment of individual learning.

Researchers viewed CI as a dynamic process, focus on improvement

programs and their relationship to the other organizational elements in

the organization and its environment. An improvement program in this

context is understood as an induced change effort, focused on

improving the effectiveness of the organization’s existing processes.

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3. Literature Review:

According to Hines P. et al. (1997) optimizing each segment of the

supply chain in isolation does not lead to the lowest-cost solution. In

reality it is necessary to look at the whole sequence of events, from

the customer order right back to the order given to the producer, and

forward through all successive firms making and delivering the

product to the customer. In trying to identify possibilities for

eliminating waste this makes most sense if it is done for the entire

chain. There is no single possible way of doing this. There are

several approaches developed and researches have been

conducted on the issue.

Emiliani M.L. (1998) has talked about lean behaviours where he

described the behavioural waste. Humans have repeated the same

mistakes for thousands of years which shows that humans rarely

understand their root causes. The concept of “Lean” behaviour is

analogous to lean production. Lean behaviours are defined simply as

behaviours that add or create value. It is the minimization of waste

associated with arbitrary or contradictory thoughts and actions that

leads to defensive behaviour, ineffective relationships, poor

cooperation, and negative attitudes. These behaviours are called

‘Fat Behaviours’ and must be eliminated as they display irrational

and confusing information that results in delays or work stoppages,

or the articulation of unsubstantial subjective thoughts and opinions.

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Hines P. and Rich N. (1997) have described the seven value stream

mapping tool. The focus of the value stream includes the complete

value adding and non-value adding process, from conception of

requirement through to material source and back again to the

consumer’s receipt of product, there is a clear need to extend this

internal waste removal to the complete supply chain.

They have drawn the tools from variety of origins such as

engineering, action research/logistics, operations management,

system dynamics and efficient consumer response (ECR).

After this mapping process is complete, each individual tool can be

used to with its associated benefits to undertake more detailed

analysis of the value stream with a view to its improvement.

New S.J. (1995) discussed about the framework for analysing supply

chain improvement. He pointed out that there is a major hindrance to

understanding the dynamics of supply chain improvement is in

untangling its various components. Managerial and commercial

reality is complicated. He represented a simple taxonomy which

uses a simple four dimensional scheme which includes four

dimensions that are ‘Specificity’, ‘Action/Investment’,

‘Location/Focus’ , and ‘Benefits’. Further describing the limitation of

the taxonomy such as the temptation of reductionism, transparency,

coverage concluded that the main benefit of using the simple

taxonomy is that it stimulates the structured analysis of the dynamics

of inter-firm relationships and highlights the important questions

which risk being overlooked in the hyperbole of supplychain

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Knowles G. and Warwood S.J. (2004) have explored the

implementation of Japanese 5S practices for the workplace

organisations in UK. They have discussed the rationale of using the

5S practices, their implementation, links with other performance

improvement initiatives, and barriers and benefits. They have

concluded that the 5S practice is in its nascent stages and the

organizations are implementing the principles of 5S across the

complete span of the organization rather than partially within a

function or a division.

Barker R.C. (1996) has discussed the implementation problems in

the development value chain. He discussed the existing standards of

value adding capability remain at low level of development despite

an increase in worldwide competitive pressure. He highlighted the

five critical areas seen as important to understanding the

development stages such as Just-In-Time (JIT) and throughput time

reduction, management flounder during implementation, the need for

new improvement models, and importance of value chain linkage.

These elements can then be analysed by process tracking and

improved by using structured. This leads to a systematic

improvement of value adding capability by removal of all non value

adding elements and will bring improvements in customer service

levels, cost reduction and profitability.

This research is mainly focused on the internal logistics of the non-

manufacturing organization creating an understanding of different

internal processes and implementing lean and kaizen to improve the

dynamics because if logistics is generally acknowledged as a

process, it is interesting to observe that what are the main

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organizational solutions adopted by firms to in order to manage the

logistics activities.

4. Objectives:

The main objectives of the research are to address the issues such

as:

1. Implementing Kaizen and Lean Management to improve the logistics

of non-manufacturing organizations.

2. The research will look into different models that can be applied to

improve the logistics and creating value chain.

3. Elimination of waste internally and reducing the cost.

4. Suggesting and discussing improved IT systems to expedite the

processes.

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5. Research Programme:

Following is the detailed research plan that includes the research

methodology and the specified time-scale (research schedule)

shown in the form of Gantt chart in the appendix.

5.1 Research Methodology:

The research will be descriptive and qualitative in nature. The

research will be using informal and in-depth means of surveys in the

form of questionnaires. It will take into consideration the logistics of

non manufacturing firms.

Qualitative research can consider two points of views either from a

deductive approach or inductive perspective.

According to Robson (2002) qualitative data analysis is associated

with such concepts and is characterized by the richness and fullness

based on the opportunity to explore a subject in as real a manner as

is possible. Because the qualitative data analysis gives the

opportunity to have ‘thick’ and ‘thorough’ abstraction or description

associated with qualitative data (Dey, 1993; Robson, 2002).

As Dey (1993) and Healey and Rawlinson (1994) clearly defined the

merits and distinguished qualitative data analysis on the merits that

qualitative data analysis is based on meanings expressed through

words, collection of results in non-standardised data requiring

classification into categories and the analysis is conducted through

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The research can use the inductive based analytical strategies and

procedures which are:

1) Data Display and Analysis;

2) Template Analysis;

3) Analytic Induction;

4) Grounded Theory;

5) Narrative Analysis.

This research will use data display analysis which is related to

organising and assembling the selected data into diagrammatic or

visual displays. Miles and Huberman (1994) stated that this form of

data displays are easy to generate and can be developed to fit the

data specifically, and will help to develop the analytical thinking as

work is going to be done through several iterations to develop a

visual form that is going to be the representation of the data.

Also the research will use the analytic induction which is defined by

Jhonson (1998: 28) as the intensive examination of a strategically

selected number of cases so as to empirically establish the causes

of a specific phenomenon.

For the above mentioned approaches interviews and questionnaires

to collect the primary data, and secondary data will be collected

through case studies, journals are the best options to collect the data

to support the research strategies.

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5.2 Research Schedule:

The research is going to start from 14th July 2008 and will last 7

working weeks till 5th of September 2008. The tentative working

schedule is given in the form of the Gantt chart in the Appendix

6. Resources:

The allocated budget for the research is £800 and the distribution is as

follows

6.1 Finance:

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Item1 Communication and Commuting

Expense.

£300

Item2 Questionnaires’ printouts and

postage.

£200

Item3 Stationery and interview equipment

such as voice recorder, data CD-

ROMs, audiotapes, printer cartridges,

printer papers etc.

£300


6.2 Supplementary Information Access:

i. Access to library for journals, books and library online resources, to gain knowledge of current procedures and practices in Supply Chain Industry.

ii. Access to various Internet resources, these include websites and forums.

iii. Discussions with the research supervisor and teachers from the Logistics and Supply Chain Management department.

Appendix IV: List of Tables:

Table-I…………………………………………………………………………….15

Appendix V: Gantt chart and Timeline:

Gantt chart:

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Timeline:

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research thesis (final)

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