Impact of Lean Strategy on Operational Performance: a Study of Apparel Manufacturing Companies

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1. Introduction

The Apparel Industry in Sri Lanka plays a key role in shaping the country’s economy which has being plagued by a thirty year old civil war. With peace restored the country is focusing all its attention on economic and development activities to rebuild the country. The Apparel industry accounts for 15.7% of total GDP of the country (Cbsl.gov, 2011). It is also one of the main export industries of the country, with an industry growth rate of 5.2%. The Sri Lankan Economy is heavily dependent on the apparel export for both employment and foreign exchange earnings (Kelegama, 2005). The export market of Sri Lankan Clothes primarily consist of the US and Europe. However the industry is facing stiff competition in the region and it needs to improve its performance to compete with its larger rivals (Weerarantne, 2004). In order to counter this Government of Sri Lanka initiated Lean training workshops in order to improve the productivity of the Apparel industry as a whole (Charlesdagher, 2011)

Background of Study

Lean strategy involves eliminating waste from the production process, thus achieving higher level of quality, productivity and better customer competiveness (Nicholas, 1998). Formal writing on the concept of lean began in Toyota and was known as the Toyota Production System. The Toyota production system is not just a set of tools. It is the culture that was developed by Toyotas founders which is based on continuous improvement and elimination of waste. Tachii Ohno first started using TPS in the 1950’s where he focused on eliminating waste by reducing non-value adding expenditure in the value process (Liker, 2003). Since then many organization have adopted elements of Lean thinking into their own business process. The key difference between lean and other productivity techniques is that total cost simply doesn’t refer to individual cost like transport and warehousing but rather the total cost of delivering value to customers (Goldsby & Martichenko, 2005).

Problem Statement
In order for the apparel industry to further grow and compete in the international market, it needs to achieve high performance standards. It is evident from the research carried out by Taj & Morosan (2011), and Rahman et al, (2009) that lean strategy increase performance and improves quality of manufacturing. However these researches were not carried out in Sri Lanka. The research was carried out in different countries, which have different context in terms of economical and social factors. So in order to avoid irrelevancy it is necessary to carry out a research in Sri Lanka. This would fill the gap that was caused by different context. So a better understanding of how lean strategy affects apparel manufacturing performance can be ascertained.

Objective of the Research

The primary objective of this research is to examine the extent to which lean strategies are adopted by apparel manufactures in Sri Lanka and their impact on firms’ operational performance. The research would also establish the current Lean strategies used by apparel manufacturers. Furthermore a differentiation would be made between SME’s and LE’s

Significance of the Research

Academia
Not many direct researches have being carried out in relation to lean strategies used Sri Lankan apparel industry. So this research would provide a starting point for future research to be carried out. Industry

Provide an understanding to all types’ manufacturers about the benefits of Lean and how it can improve performance. Government
The research would give the government a better understanding about the apparel industry performance and can help shape future government policies. Scope of the Research
The Scope of the study is to analyze the performance of Sri Lankan apparel manufacturers, who have being operating for more than 5 years. Questionnaires will be aimed senior and middle level managers in the production and operation field....
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