Improving the competitiveness of the North East companies by implementing lean manufacturing using change agents

1
Improving the competitiveness of the North East
companies by implementing lean manufacturing
using change agents

• Colin Herron, One NorthEast
• Chris Hicks, University of Newcastle upon Tyne
  Business School

2
Productivity (GVA per job) vs. Participation
(jobs per population of working age) - 2003
3
NE sectoral performance, sector growth and
regional significance
Increasing manufacturing productivity is a
regional priority
4
North East Productivity Alliance (NEPA)

• The aim is to increase productivity by
  transferring lean manufacturing from the
  automotive industry to other sectors.
• Methodology based upon Nissan/Industry Forum
  supplier development initiatives.
• This paper reports on 30 interventions at 15
  companies.

5
The transfer of management innovations from Japan
(Lillrank, 1995)
Losses occur during technology transfer
6
The NEPA framework for transferring lean
manufacturing
NMUK /IF
Companies
NEPA
Japan
Abstraction of lean practices
Application of lean practices
Losses occur during each stage of technology
transfer
7
Status at end of first year

• Group 1 (5 companies) - no practical knowledge
  of lean. Quite problematic, required the most
  support and made the slowest progress.
• Group 2 (4 companies) - about to embark on, had
  a change in management and a strategy. These
  companies made good progress a with capable
  change agents supported by dynamic management.
• Group 3 (4 automotive companies) 3 were aware of
  lean manufacturing. They became the most
  problematical because they overestimated their
  capabilities and they were resistant to outside
  thinking.
• Group 4 (2 companies) - aware of lean
  manufacturing, but they did not know how to
  introduce it. One company was very successful,
  whereas the other was virtually unchanged.

8
Conclusions

• Manufacturing productivity particularly important
  in the North East.
• Productivity was lower than achieved by Japanese
  companies due to transmission losses.
• Total savings to date are 4.36 million with an
  average saving per intervention of 149,000.
• With the Industry Forum evaluation method, which
  ignores the highest an lowest cases the average
  saving was 106,000
• Total returns were eight times the cost.
• NEPA supported lean manufacturing are an
  effective way of addressing regional productivity
  problems.