A multi-criteria decision-making model for the justification of lean manufacturing systems

Abstract

In recent years, organisations are facing stiff competition in both domestic as well as global markets due to the impact of globalisation and rapid development of technologies. To achieve a competitive advantage over other firms in these circumstances, some managers’ attempt to transform their organisation by implementing highly successful management philosophies proposed by Japanese and Western management gurus, such as Just-In-Time (JIT), Total Quality Management (TQM), Total Productive Maintenance (TPM), Six-Sigma (SS), Lean Manufacturing Systems (LMS) etc. On the other hand, some managers’ bank on highly sophisticated, technology based systems such as Flexible Manufacturing Systems (FMS), Computer Integrated Manufacturing Systems (CIMS), Information Systems (IS) that enable e-business through the use of software packages for Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Customer Relationship Management (CRM) etc. But an intriguing question that has not been answered completely is: ‘how do managers make a decision of implementing a ‘management based and people oriented philosophy and practice’ (say LMS) or a technically sophisticated system (say CIMS)?’ Implementing such massive change management programmes require a strong justification for the managers to convince the top management, as it involves huge investment and creates a longstanding impact on various resources. But such justification problems are quite complex. Traditional techniques cannot be applied as they do not account for intangible factors and benefits offered, which necessitate the use of Multi-Criteria Decision-Making (MCDM) models. Hence in this paper, an attempt has been made to demonstrate the application of a MCDM model, namely, the Performance Value Analysis (PVA) to analyse the alternatives (i.e., change management programmes) based on its impact on various performance measures of an organisation. A detailed algorithm of the PVA model is demonstrated using a case situation, which showed that LMS is the best for the given situation, as it results in overall improvement in the performance of the organisation.