Abstract

Since the early 1990s lean manufacturing has been employed by companies looking to reduce costs, increase efficiencies and improve quality. Academic studies of the financial benefits of lean manufacturing are mixed in their results, where some show benefit and others do not. The objective of the current work was to confirm a financial benefit of lean manufacturing, while also establishing whether such a financial advantage was sustainable. Financial data was collected for a large number of companies in the manufacturing sector, over the period from 1990 to 2010. The data were used to show correlation between inventory turns and return on assets (ROA), where turns were a measure of the leanness of a firm or an industry. A positive correlation between turns and ROA showed evidence of financial benefit from lean implementation, confirming previous results from a smaller-scale study. It was then shown that about 45% of firms studied had a competitive advantage that could be attributed to their level of leanness. Firms with a competitive advantage were compared to peer companies and it was found that about 60% are able to sustain their competitive advantage for more than 10 years.

Degree

College and Department

Ira A. Fulton College of Engineering and Technology; Technology

Rights

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