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
Regional policy seeks to increase productivity and participation • Productivity (GVA per job) vs. Participation (jobs per population of working age) - 2003
Lower than average manufacturing sector performance UK manufacturing has relatively low GVA growth NE has high reliance on manufacturing NE sectoral performance, sector growth and regional significance Increasing manufacturing productivity is a regional priority
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.
The transfer of management innovations from Japan (Lillrank, 1995) ‘Losses’ occur during technology transfer
The NEPA framework for transferring lean manufacturing NMUK /IF Companies NEPA Japan Application of lean practices Abstraction of lean practices Losses occur during each stage of technology transfer
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.
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.