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Lean Manufacturing Implementation Influence On Energy Efficiency

International competition and customer demands are forcing radical changes to occur in manufacturing organizations. Rawabdeh (2005) stated that companies worldwide that are realizing the importance of being part of the global market are searching for operational methods to increase their competitive power. Bala-Subrahmanya (2006B) affirmed that the competitiveness of a firm can be improved by improving the efficiency of the major factor inputs of production.

Nagesha (2008) demonstrated that energy, in addition to other factors like capital, land and labor, has been considered a key input of the industrial production output. Hence, the more the industrial production, as a result of economic development, the higher the levels of energy consumption and the more the exploitation of energy resources (Al-Ghanim, 2003). In addition, energy represents a significant variable cost item of manufacturing processes (Al-Ghanim, 2003). Therefore, energy saving can play a significant role in reducing direct production costs and the sales price which, in turn, increases the corresponding profit and strengthen the competitiveness of the products in the market (Mizuta, 2003). Accordingly, it is clear that improving energy efficiency becomes a crucial objective for organizations that seek to sustain in highly competitive environment.

However, several studies (Rohdin and Thollander, 2006, Kablan, 2003 and Nagesha and Balachandra, 2006) highlighted the existence of many barriers that inhibit firms to successfully implementing projects to enhance their energy efficiency. The most critical barrier cited in literature is the financial limitations. Bala-Subrahmanya (2006B) claimed that financial constraints would prevent many of the small enterprises from achieving energy efficiency by means of up-grading technology. Rohdin and Thollander (2006) stated that limited access to capital may prevent energy efficiency programs from being implemented.

According to Kablan (2003), companies believe that the cost of energy conservation projects will raise the price of their products and, in turn, reduce their competitiveness. Besides, the rapidly changing customer demands and the highly competitive market environment lead organizations to direct their investments and efforts towards production-, quality- and marketing-related improvement programs in order to realize improvements in their manufacturing performance. Such programs have been given higher priority over improving energy utilization (Rohdin and Thollander, 2006).

Hence, there is a need for a strategy/methodology to improve energy efficiency with minimum required investment while combining improvements in energy efficiency with improvements in other manufacturing performance measures. In this context, lean manufacturing is considered one of the management initiatives that focuses on intensifying the effective utilization of resources (including; materials, human, capital, time, physical plant equipment, information and energy) (Papadopoulou and Ă–zbayrak, 2005). Thus, it is generally accepted that implementing lean manufacturing may enhance, among others, energy efficiency.

1.2 Statement of the problem

In spite of the general acceptance that implementing lean manufacturing may enhance the efficient utilization of energy resources, previous studies concerning lean manufacturing implementation did not stress on how and to what extent applying lean principles and practices can contribute in improving energy efficiency. Therefore, the current study intends to investigate this relationship.

1.3 Research objectives

With the aim to explore how and to what extent lean manufacturing implementation has influence over energy efficiency, the main objective of this research is to develop and validate a mathematical model for linking lean manufacturing to energy efficiency. For achieving this objective, the proposed model will be developed through investigating two arguments. The first argument is to explain how energy efficiency can be improved by improving other manufacturing performance measures. The second argument is to explore the role of lean manufacturing implementation in enhancing these manufacturing performance indicators which, in turn, will contribute in improving energy efficiency. Consequently, the research aims to achieve the following objectives:

Determine the influence of improving manufacturing performance measures over energy efficiency.

Understand the concept of lean manufacturing, its components / elements / practices and the achieved results from applying these practices in the manufacturing organizations.

Build and test a mathematical model to link between lean manufacturing practices and the energy efficiency in the Egyptian manufacturing organizations.

1.4 Research hypotheses

Hypotheses for this study topic are as follows:

H1: Implementing lean manufacturing practices improves labor efficiency.

H2: Implementing lean manufacturing practices improves capacity utilization.

H3: Higher labor efficiency will lead to higher energy efficiency.

H4: Higher capacity utilization will lead to higher energy efficiency.

1.5 Significance of the Study

This study, through investigating the relationship between the level of implementing lean manufacturing principles and practices and the efficient utilization of energy resources, provides added valuable knowledge that can improve manufacturing efficiency and competitiveness.

The theoretical value of the mathematical model developed in this study is that it represents a starting point for further empirical studies that are needed to validate the proposed relationships in different types of industry and different countries and to further investigate the extent to which implementing each of lean manufacturing practices affect the utilization of energy resources.

For practitioners, the developed mathematical model provides a roadmap to extend the widely recognized benefits of lean manufacturing implementation to include its effect on the utilization of different manufacturing resources including labor, equipment and, in turn, energy. This emphasis could significantly improve efficiency of resources utilization and, in turn, add competitive advantage to the Egyptian manufacturing organizations.

1.6 Organization of the Remainder of the Study

Each chapter of this thesis starts with an introduction that specifies the aim behind the chapter. At the end of each chapter, there is a summary of what was achieved in that chapter. Generally, the thesis is structured in eight chapters, which are introduced below:

Chapter 2 provides a literature review of the current literature on the issue of energy consumption and efficiency in manufacturing organizations. At first, the importance of improving energy utilization at both firm and economy levels and the issue of measuring energy efficiency will be declared. Then, the barriers to achieve energy efficiency improvements in the industrial sector will be explained. Also, chapter 2 will discuss the strategies / methodologies that were mentioned in literature to improve energy efficiency. Finally, the relationships between energy efficiency, at one hand, and different manufacturing performance indicators, at the other hand, will be explored in order to provide the intended model.

Based on existing literature, a conceptual model is developed to demonstrates the influence of organizational performance over energy efficiency in order to redirect management interest towards the efficient use of energy resources. The organizational performance is represented by two indicators; labor efficiency and capacity utilization, which represent how an organization utilizes its resources. The developed model represents the starting point to investigate the extent to which implementing manufacturing improvement programs affect the utilization of energy resources.

Chapter 3 addresses the main confusions associated with lean manufacturing which are the lack of a consistent definition for the concept and the conflict about what exactly comprises it. Such confusions obstruct measuring and assessing the progress occurred as a result of lean implementation. Therefore, chapter 3 attempts to clarify and resolve these confusions by conducting an extensive literature review to be the basis for proposing a conceptual definition, designing an implementation framework and developing an operationalized model for measuring progress towards lean manufacturing.

At first, a conceptual definition that stresses both the philosophical and practical perspective of the lean concept is proposed and further supported by explaining the main principles behind the lean philosophy. Then, a framework for lean implementation is provided which combines lean practices into four inter-related bundles namely; TQM, JIT, TPM and HRM based on the essential theme and objectives of each one. Finally, reviewing literature regarding the implementation of all practices, which were specified in the implementation framework, is used to identify operational indicators and its desired directions to be used in assessing changes towards lean implementation. The remainder of chapter 3 details the methods used for empirically assessing the reliability and validity of the measurement scales.

Chapter 4 intends to develop the conceptual model that links lean manufacturing to energy efficiency. For achieving this objective, chapter 4 investigates the role of implementing lean manufacturing principles and practices in enhancing manufacturing performance as represented by labor efficiency and capacity utilization. In this regard, the lean implementation framework, provided in chapter 3, will be used to identify the specific association of each of the lean four bundles of practices, on one hand, and the manufacturing performance indicators (labor efficiency and capacity utilization), on the other hand, through conducting in-depth review of existing literature. Finally, a conceptual model that links energy efficiency to lean manufacturing implementation will be proposed and the associated hypotheses for the model relationships will be formulated.

Chapter 5 discusses the methodology used in the study. Chapter 5 started by providing a brief background of the literature on different research philosophical and methodological issues, in general. Then, the chapter discussed the current research design, in details, through identifying the research strategy which includes the research methodology and the specific methods for gathering and analyzing data till reaching the final results and drawing conclusions. In that sense, this chapter discusses a description of the nature of the research and its major objectives, the theoretical framework for hypotheses, the types of inquiry utilized to create significant data for the study and the procedures for conducting the research. Thus, this section intends to describe the current research journey from a methodological point of view with an attempt to identify the selections about the research strategy and methods.

Chapter 6 presents the survey research which is performed with the aim to validate the operationalized model developed in chapter 3. This chapter describes the details of the entire process for conducting this survey. Thus, chapter 6 will begin by developing the survey instrument, identifying the research population and conducting a pilot test. This will be followed by describing the data collection process and analysis procedures. Finally, The chapter will present a discussion on the findings from data analysis.

Chapter 7 details the empirical work conducted for building the mathematical models that explain the influence of implementing lean manufacturing over the energy efficiency in the manufacturing organizations. The mathematical models will be constructed to serve as a means to verify or otherwise refute the conceptually defined relationships in chapter 4. In this chapter, another survey research is designated to collect data required for achieving this objective. This chapter will present the entire process of conducting this survey including research population, survey respondents and data analysis and results.

Chapter 8 presents a summary of the key conclusions that can be drawn from this research. It represents the contribution to the body of the knowledge that this research provides. It also provides a discussion on the limitations of the research. The implications this work has for theory will be examined in detail with some recommended future work being posed. The implications for practice are also considered in this chapter.

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